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1 Chapter 04
2 Understand Business to Consumer Markets
Ethical Perspective
1. Advertisers: The ability to reach targeted customers at the right moment has been the goal of
advertising for decades. This new technology enables “just-in-time” advertising. As an
advertiser, would you consider mobile advertising? How would you address customer
concerns about privacy?
2. Cellular service providers: A potential source of revenue, the ability to target cell phone
users, is available today and represents very little incremental cost to the service provider.
Just because it is possible, should marketing companies be allowed to send mobile ads? How
do you safeguard the privacy of your customer?
3. Consumers: Ensuring customer confidentiality is an essential element of the contract
between cell service provider and consumers. Would you want to receive mobile ads?
1.1 KEY TERMS
demographics The characteristics of human populations and population segments, especially
when used to identify consumer markets.
family life cycle The changes in life stage that transform an individual’s buying habits.
lifestyle An individual’s perspective on life and manifests itself in that person’s activities,
interests, and opinions (AIO).
gender roles Behaviors regarded as proper for men and women in a particular society.
motivation The stimulating power that induces and then directs an individual’s behavior.
attitude Learned predisposition to respond to an object or class of objects in a consistently
favorable or unfavorable way.
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multiattribute model A model that measures an individual’s attitudes toward an object by
evaluating it on several important attributes.
perception A system to select, organize, and interpret information to create a useful, informative
picture of the world.
selective awareness A psychological tool an individual uses to help focus on what is relevant
and eliminate what is not relevant.
selective distortion The process in which an individual can misunderstand information or make
it fit existing beliefs.
selective retention The process of placing in one’s memory only those stimuli that support
existing beliefs and attitudes about a product or brand sender The source of the message in
communication.
memory Where people store all past learning events.
short-term memory The information an individual recalls at the present time. Sometimes
referred to as working memory.
long-term memory Enduring memory storage that can remain with an individual for years or
even a lifetime.
learning Any change in the content or organization of long-term memory or behavior.
conditioning The creation of a psychological association between two stimuli.
cognitive learning Active learning that involves mental processes that acquire information to
work through problems and manage life situations.
personality An individual’s set of unique personal qualities that produce distinctive responses
across similar situations.
brand personality The association between a brand and an individual’s specific personality
characteristics.
culture A system of values, beliefs, and morals shared by a particular group of people that
permeates over time.
language An established system of ideas and phonetics shared by members of a particular
culture that serves as their primary communication tool.
cultural values Principles shared by a society that assert positive ideals.
nonverbal communication The means of communicating through facial expressions, eye
behavior, gestures, posture, and any other body language.
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subculture A group within a culture that shares similar cultural artifacts created by differences in
ethnicity, religion, race, or geography.
family A group of two or more people living together and related by birth, marriage, or adoption.
household life cycle (HLC) A structured set of chronological activities a particular household
follows over time.
social class A ranking of individuals into harmonized groups based on demographic
characteristics such as age, education, income, and occupation.
aspirational purchases Products bought outside the individual’s social standing.
opinion leaders Individuals with expertise in certain products or technologies who classify,
explain, and then bestow information to a broader audience.
market mavens Individuals who have information about many kinds of products, places to shop,
and other facets of markets, and initiate discussions with consumers and respond to requests
from consumers for market information.
reference group A group of individuals whose beliefs, attitudes, and behavior influence
(positively or negatively) the beliefs, attitudes, and behavior of an individual.
desirability The extent and direction of the emotional connection an individual wishes to have
with a particular group.
degree of affiliation The amount of interpersonal contact an individual has with the reference
group.
primary group A reference group an individual has frequent contact with.
secondary group A reference group with which an individual has limited contact.
involvement A significant outcome of an individual’s motivation that mediates the product
choice decision. It is activated by three elements: background and psychological profile,
aspirational focus, and the environment at the time of purchase decision.
high-involvement learning The learning process in which an individual is stimulated to acquire
new information.
low-involvement learning The learning process in which an individual is not prompted to value
new information, characterized by little or no interest in learning about a new product offering.
real state An individual’s perceived reality of present time.
preferred state An individual’s desires that reflect how he or she would like to feel or live in the
present time.
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minimal information search When a consumer makes a purchase decision based on very little
information or investigation
extensive information search When a consumer makes a purchase decision based on a thorough
process of investigation and research
limited information search When a consumer makes a purchase decision based on incomplete
information and/or lack of personal knowledge
internal information search All information stored in memory and accessed by the individual
regarding a purchase decision.
external information search Additional information an individual seeks from outside sources
when internal information is not sufficient to make a purchase decision.
complete set The very large set of possible alternatives a consumer considers during the initial
search for information
awareness set A reduced set of possible alternatives a consumer considers after eliminating
available options based on gathered information and personal preference.
consideration (evoked) set A refined list that encompasses the strongest options an individual
considers in a purchase decision once he or she has obtained additional information and carried
out an evaluation.
emotional choice A product choice based more on emotional attitudes about a product rather
than rational thought.
attitude-based choice A product choice that relies on an individual’s beliefs and values to direct
his or her assessment.
attribute-based choice A product choice based on the premise that product choices are made by
comparing brands across a defined set of attributes.
post-purchase dissonance A feeling of doubt or anxiety following a recent purchase, generally
attributed with high-involvement, large purchases.
instrumental performance The actual performance features of the product in terms of what it
was promised to do.
symbolic performance The image-building aspects of the product in terms of how it makes the
consumer feel after purchase.
1.2 APPLICATION QUESTIONS
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1 As we have discussed, understanding the consumers in a target market is critical to creating
an effective value proposition. Assume you are the Vice President of Marketing for Regal
Cinemas. What do you think the demographic profile (including the age, income, and life
cycle stage) of your largest target market is? As part of a “mini” market research project,
visit a movie theatre on a weekend and track the people entering the theatre for a show. How
old are they? Are they families or people meeting friends?
4. You are the marketing manager for the Bowflex Series 7 Treadmills. You believe the product
appeals to both men and women. As you develop the marketing strategy what differences
might you consider in the product based on whether a man or woman is buying? What about
the marketing communications (message, choice of media)?
5. Disneyland has traditionally marketed to families; recently, however, new household life
cycle patterns have led to changes in the marketing strategy. Identify three household life
cycle stages that Disney may want to consider in the future.
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6. The consumer decision process varies by purchase for each individual. Compare and
contrast the consumer decision-making process you go through in buying gas for your car
with the purchase of a new home entertainment system. How are the processes similar and
how are the two purchase decisions different? Why do you think they are different?
MANAGEMENT DECISION CASE: Smartphones, Seniors, and Purchase Decisions
Questions for Consideration
1. After Jack purchases his phone and data plan, is it likely that he experienced cognitive
dissonance with his purchase? What evidence makes you answer the way you did?
2. What social and/or cultural factors played a role in this consumer purchasing the smartphone
and data plan? Which ones do you think were most important and why?
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3. The scenario described in the case is an illustration that not only do companies have to
overcome the hurdle of getting someone to buy their product but also have to educate
consumers on the proper use of the product after purchase. Otherwise, the consumer has a
product he/she may not properly use and thus achieves no value or satisfaction from the
purchase! What steps could Verizon Wireless take in the post-purchase time frame to ensure
that consumers get maximum value and satisfaction out of their purchase and avoid outcomes
such as Jack’s?
SUGGESTED VIDEO
Geek Squad: A New Business for a New Environment (8:43 minutes)
Description: "We're becoming slaves to today's technology." Founder and Chief Inspector
discusses the demand of providing a service in a humble manner. The complexity of new
technology is recognized and has created a service to assist the market.
1. How will the growing technological skills of consumers affect Geek Squad’s future?
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2. How does the level of involvement affect consumer’s choice of Geek Squad’s services?
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