Business Administration Department

BA342 Consumer Behavior Spring 2008

Dr. Geoffrey Lantos

CLASSROOM LECTURE/DISCUSSION OUTLINE

INTRODUCTION AND OVERVIEW

Note: Italicized Lantos textbook, (LT) Applications Exercises won’t be done this semester

INTRODUCTION TO BA 342: COURSE STRUCTURE AND REQUIREMENTS

I. Course overview: syllabus and exam template

^.Audio: 2003 Mercuries #3 Motel 6 “Business Talk”

II. Mandatory assignment: in-class team presentations

III. Assignment options: oral and written experiential applications exercises assignments, periodical article review, classroom debates, term paper project

IV. Resources: using the business library, proofreader’s marks, classroom lecture/discussion outline, transparency handout packet, 18 Ideas For Becoming A Master Student,

IV. Readings: Required reading: 2 cases, 3 book reviews; 2 articles.

V. Hand In: student information inventories (please hand in at end of class session)

INTRODUCTION AND OVERVIEW OF CONSUMER DECISION MAKING

(Related reading: Lantos Textbook (LT) Preface, Part One Introduction and Chapter One Introduction, “Yo! It’s Po Mo!”, LT Exercises 1 and 2)

I. The Nature of Consumer Behavior (CB)

A. Review: The Nature of Marketing and the Role of CB in It

^.Audio: 2005 Mercuries #46 “Tom’s Mailbag” (pets)

B. Definition of CB - those acts of consumers directly involved in obtaining, using, evaluating,

and disposing of economic goods and services, including the decision processes that precede

and determine these acts.

C. Consumer Behavior as Problem Solving

^. 2 categories of needs and wants (n&w):

1. Utilitarian/instrumental/functional n&w

2. Hedonic n&w–

a. experiential/transformational—pleasure, enjoyment, fun

b. symbolic/value expressive—personal expression, brand image

^. Videos: 2004 Clios # 13 Tooley’s Extra Dry “Quest”; Clios 40^th Pt. 2 #37 Norwegian Cruise Lines “Laws”

^.Audios: 2005 Mercuries #29 “Karaoke”; # 30 “Tango Lessons”

^. ^. Lantos Textbook (LT) Exercise 1: Types of Needs and Wants

^. 2 research paradigms to study n&w:

1. Positivism/Modernism: Quantitative research

2. Interpretivism/Postmodernism: Qualitative research

II. Marketing Management Philosophies

1. Production Concept

2. Product Concept

3. Selling Concept

4. Marketing Concept

^. Consumer Research and Marketing Intelligence

^. Consumer Sovereignty

^..LT Exercise 2: Marketing Management Philosophies, Question 1

5. Societal Marketing Concept and Corporate Social Responsibility (CSR)

^..LT Exercise 2: Marketing Management Philosophies, Questions 2, 3

^.Video: Rogaine (13 min.)

HISTORY OF CONSUMER BEHAVIOR RESEARCH AND THEORIES

(Related reading: Lantos Book Reviews on Everything You Heard is Wrong

and Business as a Calling: Work and the Examined Life, LT Exercises 8 and 4)

I. The Emergence of CB as an Academic Discipline

II. Traditional Motivational Models of CB: Pre-1960s Conceptualizations

1. Marshall's Economic Model: The Economic Consumer - Early 1900's

· The Consumer in Economic Theory: The "Rational" Consumer—The Utilitarian/Instrumental Economic Man

^. Video: 1994 Festivals #23 New York State Lottery “Toll Booth”

^. LT Exercise 8: The Economics Perspective

2. Pavlov's Learning Model: The Conditioned Consumer - 1930's Conditioning Process - Learning - an automatic response to a stimulus through a process of repetition, association, and reinforcement.

Drive Cues/Stimuli Response Reinforcement

Meat (UCS) Salivation (UCS) Meat

Hunger Bell (CS) (CS)

3. Freud's Psychoanalytical Model: The Irrational/Hedonic Consumer - 1950's

^. Video: The Fifties: Motivational Research and Ernest Dichter (4 min.)

^. Videos: 1993 Festival's #6 "New York State Lottery";( fantasy, not Marshallian rationality) 2004 Clios #31 Son

Playstation “Not Fit For This World”; (fantasy, socially irresponsible?)

^. Video: Clios 40th # 42 Dr. Scholl’s “Last to Know”

4. Veblen's Social-Psychological Model: The Social Consumer - 1950's

^. Video: 1993 Festivals #51 Samelio Shoes “BMW “"

^. LT Exercise 4: Traditional Theories of CB

^. Other life goals/motives/philosophies important to you? The meaning of life?

^. Video: 2004 Clios #6 Thai Life Insurance “Peace of Mind”

Market Segmentation and Positioning

(Related Reading: LT Chapter Two Introduction, LT Exercises 5, 6, 7)

I. Product Differentiation vs. Market Segmentation

II. The Market Segmentation Process

1. - Market segmentation - the act of subdividing a market into distinct and meaningful subsets

of customers who might merit separate marketing programs to satisfy targeted

consumers’ particular needs and desires.

a. identify bases for segmenting markets

Audio: 2003 Mercuries #9 Ikea “Very Rich”; #38 Ikea “Special Sale”

Audio: 2002 Mercuries #43 Four Eyes “Price Reduction”

b. develop target market profiles of resulting segments

2. - Target marketing- the act of evaluating, selecting, and concentrating on market segment(s)

that the company can serve most effectively and efficiently.

a. develop measures of segment attractiveness and evaluate segments regarding these

b. select the target market(s)

3. - Market positioning - physical and psychological differentiation of the product from the

competition via a competitive marketing mix for each segment.

a. develop product positions for each targeted segment

b. develop a competitive marketing mix for each targeted segment

III. Applications of Segmentation and Positioning

1. Segmentation (Market Coverage) Strategies:

a. Undifferentiated marketing (mass marketing, market aggregation)

b. Differentiated marketing (multi-segment marketing)

c. Concentrated marketing (niche marketing)

^. LT Exercise 5: Segmentation Strategies

2. Product and Brand Positioning -

^. Video: Clios 40^th#21 Chevrolet “Walter Mitty”

Audio: 2002 Mercuries #”26 Cliff Bar “Gazelle”

^. Videos: Clios 40^th Pt. 2 #60 Mizuno “Nike vs. Mizuno”; Clios 40^th#24 Salada Tea “Motorcycles”

^. LT Exercise 6: Brand Positioning

3. Benefit Segmentation –

^. Video: Clios 40^th #8 Peposodent Toothpaste “Where The Yellow Went”

^. LT Exercise 7: Benefit Segmentation

Decision Process I: AN OVERVIEW OF CONSUMER DECISION PROCESS BEHAVIOR

(Related Reading: LT Part Two Introduction, Chapter Three Introduction, Chapter Four Introduction, LT Exercises 9, 10, 14, 15, 16, 17, 18, 19, and 20)

I. Nature of Consumer Decision Processes

Stages in The Consumer Decision Process

^. In-Class Presentation (ICP) Team # 8 - LT Exercise 9: Your College Choice Decision

^. ICP Team # 7 - LT Exercise 10: Consumer Decision-making in an On-Line Environment

1 Problem Recognition (Need Recognition, Need Arousal, Need State)

LT Exercise 14: Problem Recognition Question 1: College students’ unsolved problems

^. Videos: 1998 Festivals #40 Child Safety “Funniest Home Videos”; 1998 Festivals #53 Police Hamburg “Park”

Audio: 2005 Mercuries # 21 “Choiceline”

LT Exercise 14: Problem Recognition Question 2: Do marketers create problems?

Clios 40^th #9 Miss Clairol “Does She Or Doesn’t She?”

LT Exercise 14: Problem Recognition Question 3: Ad analysis

2. Information Search (Internal and External Search):

a. Internal search

universal set

awareness set (retrieval set) unawareness set

evoked set (consideration set,) inert set: inept set:

choice set, decision set)

indifference unacceptable

^. Video: Clios 40^th Pt. 2 #48 Pepsi-Cola “Security Camera”

b. External search

1. Amount of search – the economics of information

2. Direction of search - sources of information and relative importance of each

^. LT Exercise 15: Information Search

3. Alternative Evaluation/Attitude Formation

Audio: 2002 Mercuries #34 Southwest Airlines “Nope”; 2003 Mercuries #36 Saturn Corp. “Roomy” (Evaluative criteria)

^. LT Exercise 16: Alternative Evaluation: The Process and Evaluative Criteria

^. Decision (choice) rules:

a. Evaluative:

(1) Attribute-specific processing

(a). Compensatory decision rule (compensatory multiattribute model) – a weighted adding

model

(b) Noncompensatory decision rules: conjunctive, disjunctive, elimination-by-aspects

(sequential elimination), lexicographic

(2) Category-based processing: affect referral (affective choice)

b Nonevaluative: Decision (Choice) heuristics

^. LT Exercise 17: Alternative Evaluation: Decision Models

^. ICP Team # 6 - LT Exercise 18: Alternative Evaluation Using Shopping Bots

4. Choice/Decision/Purchase

^.^. Video: 1998 Festivals #2 Bud Lite “Shopping”

· Choice f (1. attitudes toward brands and resulting purchase intentions, 2. unanticipated circumstances: a. macro- and micro-environment b. personal situational factors—attitudes of others/social influences, antecedent states, purchase environment)