Judgment & Choice

- After problem recognition

comes internal search: the process of recalling stored information from memoryConsideration (or evoked set): The subset of top-of-mind brands evaluated when making a choice- Consideration set is very important for marketers because it affects what brands consumers are choosing among and hence whom the marketer is competing against.- Creating a consideration set: how small is the number of options on your list compared to the number of solutions to your problem

- If your brand isn’t 1 of 4 on consideration set, your nothing. “If you’re not first, you’re last!”- If you’re offering a solution that creates value for the consumer, there is still hope even if your not in the consideration set need to communicate that value!- Brands can fall into an inept set or an inert setInert set: are options toward which consumers are indifferentInept set: Options that are unacceptable when making a decision (consumers don’t include these into their evoked consideration set)

- A good brand can look even better when an inferior brand is added to the consideration set. This attraction effect occurs because the inferior brands increase the attractiveness of the dominant brand, making the decision easier

- Sometimes a higher priced option can make a lower priced option look like a better deal, as is the case with the kindle products (Amazon offers higher priced kindles to make their least expensive one seem more attractive)

Choice Based on Evaluations- Evaluation each alternative, choose alternative with most favorable evaluation- How do these evaluations get formed?- - Once you’re in consideration set, what will make you in evoked (the one that is chosen)?- - Overarching perspective: the way consumers make choices is dependent on both (1) individual

factors, and (2) market factors. UP to the marketing manager to understand what the process is that consumers go through.

- How do these evaluations get formed?

Expos

ure

Attenti

on

Compr

ehensi

on

Attitud

e

Format

ion

Memo

ry

Creating a Consideration Set

All AlternativesInert Set

IndifferentInept Set

Unaccept. OptionsEvoked Set

Consideration SetInternal SearchExternal Search

Salient AlternativesRetrieval Set

X

- You can either:o Retrieve Evaluations

Direct experiences Secondhand information

o Construct New Evaluation if: No prior evaluation Low confidence Changes have taken place (it ‘s been so long) Old evaluation has been forgotten (things changed, no longer trust old)

Constructing New Evaluations- Cognitive decision making model: the process by which consumers combine items of information

about attributes to reach a decision- Category-based = our attitude towards some category (based on schemas) will influence our

evaluations.o Transfer of attitude

Toward the category (i.e. imported beers) Toward the brand (i.e. Corona, Belgium beers etc.)

o Country of Origin effects Germany cars Switzerland watches, chocolates Colombia coffee Idea that entire country makes better product “x”

- Feelings-Based- Affective decision-making model: The process by which consumers base their decisions on

feelings and emotions.- Feelings-based

o Mood/emotions attitudeo Pick the one that makes you “feel” bettero Garbage disposal – inclined to buy the better-looking one even though won’t ever see it

- Attribute-Based (Piecemeal)- Attitude is based on attributes and beliefs- Only salient (attribute that is “top of mind” or more important) attributes- Only attributes on which options differ- Attributes can be invented by companies

o i.e. freshness dates on Pepsi cans- Attribute processing occurs when consumers compare across brands one attribute at a time, such

as comparing each brand on price. - Although most consumers prefer attribute processing because it is easier than brand processing,

they cannot always find information available in a manner that facilitates it. Examples of multi-attribute models

Simple Additive

Weighted Additive

n

iibAttitude

1

n

iiiwbAttitude

1

bi = belief that the product has attribute iwi = importance weight of attribute in = number of salient attributes

There are two types of cognitive models (the processes by which consumers combine information about attributes to reach a decision in a rational, systematic manner): (1) compensatory vs. non compensatory, and (2) brand versus attribute

Compensatory vs. Non-compensatory Decision Rules:Compensatory decision rules (compensatory model): consumers evaluate how good each of the attributes of the brands in their consideration set it (they make judgments about goodness and badness) and weight them in terms of how important the attributes are. The brand that has the best overall score (the sum of importance x goodness of attribute) wins.- Weak performance on one dimension can be offset by strong performance on other dimension. It

is a mental cost-benefit analysis model in which negative features can be compensated for by positive ones.

- I,e, beer not good, but really cheap! Honda kind of pricy, but good on everything else!Non-compensatory decision rules (non-compensatory model): consumers use negative information to evaluate brands and immediately eliminate from the consideration set those that are inadequate on any one or more important attributes.- Non-compensatory models require less cognitive effort because consumers set up cutoff levels for

each attribute and reject any brand with attribute rankings below the cutoff.- Weak performance on one dimension cannot be offset by strong performances on other

dimensions.- If you choose a car based on non compensatory, you simply choose based on one attribute (i.e.

the Toyota is cheaper, that is the one I will get)When choice is based on non-compensatory decision rules, can use the following:- Lexicographic Strategy (LS) (Attribute-based) : Selection strategy. A non-compensatory model

that compares brands by attributes, one at a time in order of importance.o Compare on most important dimension (she buys the Ford b/c is has the lowest price,

doesn’t even look at other dimensions)o If tie, compare on 2nd most important dimension (if same price, go to size)

- Elimination by Aspect (EBA) (Attribute-based) : similar to the lexicographic model but adds the notion of acceptable cutoffs.

o Don’t choose by best, eliminate by worst. Eliminate any car that is below “good” on the attribute

o First order attributes in terms of importance and then compare options on the most important attribute. Those options below the cutoff are eliminated, and the consumer continues to process until only one option remains.

o This model is not as strict as the lexicographic- Might use non compensatory analysis to get consideration set, then engage in more deep

compensatory methods.- 2 key takeaways of consideration set:

o One brand winso Most consideration sets small relative to number of solutions

- 2 categories for why not in consideration set:o They don’t create value, oro They fail to communicate it

Many times the decision process proceeds in two stages:

Choices Based on Heuristics:- Heuristic = Simplified Decision Strategy. Heuristics are simple rules of thumb that are easy to

invoke and require little thought.o Usually reasonable decisionso But: Bad decision in specific situationso Trade off effort & accuracy

- Examples:o Non-compensatory ruleso Cues or Signals: price, promotion, brand name, packaging, coutry-of-origin, # of featureso Feelings-as-informationo Consumers who make decisions based on feelings tend to be more satisfied afterward than

those who make decisions based on product attributes. Moreover, emotions can also help thought-based decision making since emotions can help consumers gather their thoughts and make judgments more quickly.

Session 10a: Errors and Biases: Behavioral Decision Theory- How they ought to choose vs. how they actually chooseContext Effects example/ Reference Points : - Can’t know if your grade is good until you know the average- Context matters: How much are you willing to pay for a beer at the beach on a hot day? Depends

on run down grocery store vs. night nice resorts. - Resort activates higher reference prices than the grocery storeChoice Set Effects: The Decoy Effect: have an option that no one would choose because it makes other options look better

Brand A Brand B Brand C

First Consideration Set

Non-compensatory Methods

Reduced consideration set

Compensatory Method

Choice

Shock Absorption Good Excellent Very GoodGears 15 10 9

- Adding an asymmetrically dominated alternative increases the choice share of the dominating option

- Bike C makes Bike A & B look better, just a decoy, no none would ever actually buy it.Brand A Brand B Brand C

Weight 2 pounds 3 pounds 4 poundsScreen Size 13 inch 14 inch 15 inch

- Consumers tend to prefer a comprise alternative rather than an extreme option (extremeness aversion)

- Brand C creates the extreme version; so then they see the benefit of the middle ones.- *Only works for compensatory decision making processMental Accounting Effects: we don’t think about money the same way an economist does- Money you work for meant for checking, savings, basic costs- Money that comes unexpectedly tend to be spend for frivolouslyProspect Theory: Loss Aversion:- 50% chance of losing $900, otherwise win $1,000- If you have $100,000, then: 50% you end up with $101,000 and 50% $99,100

o When thought of like this (not using zero as a reference point), it masks the loss- Loss function is steeper than the gains function. Negatives more motivating than positives (think

about questions you get right/wrong on an exam)Default options:- Consumers anchor on the default option- Higher defaults (loaded options) yield higher prices and more options added- Option may not be considered if initial price is too highPlanned obsolescence:- Apple: warranty expires right when battery life decreases- Have to get new chord if want iphone 5- Companies plan obsolescence:

o G.E. creates light bulb that is unnecessarily frail, burns out faster than need too Put date on Pepsi even though doesn’t go bad

Post-Purchase Processes: Consumption and EvaluationConsumption Behavior:2 types of satisfaction:- Transaction-specific = post-choice evaluative judgment of a specific purchase occasion- Cumulative = overall evaluation based on the total purchase and consumption experience with a

good or service over timeo Cumulative is more valuable (goes from beginning of problem recognition all the way to

using the product). The overall is important, but so is how it went along the wayKey benefits of high customer satisfaction:- Customer retention

o Customer retention = the process of keeping customers by building long-term relationships

o A customer retention strategy attempts to build customer commitment and loyalty by continually paying close attention to all aspects of customer interaction, especially after-sales services.

o Insulation from competitive efforts- Customer margin

o Basically profit brought in per customero Reduced price elasticities; less complaints and legal actions

- Customer acquisitiono Increased positive word of mouth and decreased negative word of moutho Negative word of mouth is really bad – spreads fast and tends to be highly persuasive and

very vivid (therefore easily remembered) and because consumers place great emphasis on it when making decisions

o More effective advertising through customer satisfaction claimsCustomer Satisfaction: A puzzle? - There is a disconnect between what CEO’s think regarding quality improvement and what

consumers think.- Consumers don’t see an improvement in quality, but CEO’s do: this is because consumers expect

more with rapidly changing technology!

Customer Satisfaction: DeterminantsSatisfaction Depends on Expectations- Expectancy disconfirmation model: Satisfaction depends on:

o Perceived Quality (aka performance) – Expectation

-

Exposu

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Memor

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Expectations

Performance

Disconfirmation

Satisfacttion

Dissatisfaction

Feelings

The Disconfirmation Paradigm: Use the example of a new Steve Carell movie, the consumer enter the situation with expectations (“Steve Carell movies are entertaining”). Once she sees the movie, she can evaluate it (performance). If she finds it more entertaining than she expected, positive disconfirmation has occurred, and she will be satisfied. If the movie is less entertaining than she expected, negative disconfirmation and dissatisfaction will result. Expectations (the likelihood of seeing the movie as entertaining), performance (whether the movie actually was good), and feelings (positive or negative emotions experienced during viewing) will also affect satisfaction/dissatisfaction (independent of disconfirmation).

Positive

Negative

- Expectation: Belief about how a product/service will perform- Performance: The measurement of whether the product/service actually fulfills consumers’

needs. - Disconfirmation: The existence of a discrepancy between expectations and performance

o Positive disconfirmation : better than expected performanceo Negative disconfirmation : performance is lower than expected dissatisfactiono Simple confirmation : as good as expected

- Underpromise & Overdeliver : Always a good strategy?o Not necessarily, sometimes can set expectations too low!o Generally, brands over-promiseo Generally contrast, but sometimes want to set expectations low, then deliver high

Perceived Quality can depend on Expectations:- When product experiences are ambiguous they can be influenced by expectations; Because

consumers cannot disprove the info by experience the product, they see the product as being consistent with their prior expectations:

o Premium vs. regular gasolineo Taste of beer & wineo Smell of perfumeo Bottled water

Customer Satisfaction: ConsequencesResponses to Dissatisfaction: they all have different impacts:

- Take No Action- Voice Response

o Complain to Firmo Voicers are likely to complain directly to the firm

- Private Responseo Complain to friends, boycott firmo Irates are angry customers who are most likely to engage in negative word of mouth, stop

buying patronage, and complain to the provider but not to a third party such as the media or government.

- Public Responseo Blog; Twitter; Youtubeo Humorous complaints: youtube song about how awful United Airways it – 13 million

views When first came out, United stock dropped 10% for a little

- Third-Party Responseo File official complaint, take legal actiono Activists engage heavily in all types of complaining, including to a third party.

If problem is addressed, consumers may even be more satisfied than if the problem did not exist.

SESSION 11A: HAPPINESSAn economic view of how to maximize happiness: No correlation between life satisfaction and Real GDP per capita. Graph shows for Japan…even though GDP shot up, life satisfaction remained.- Happiness is really about well-being because happiness is too narrow a term- Happiness research really about positive emotion

- A lot of evidence that $ helps, but not as much as people think it does:o Graph shows for Japan: even though GDP shot up, average life satisfaction remained the

sameMoney matters to a point:- More wealthy countries, on average, happier than poor countries:

o HOWEVER, not linearo Being poor, unhealthy, poverty stricken will make you unhappyo But once you meet basic survival needs, other things seem to matter besides money to

make a person happyo Money matters not to achieve great wealth but to avoid sever poverty.o At times, money may even make you less happy

Hedonic Adaptation: Idea that it is good at first, then gets boring (used to it), then you seek pleasure for getting the next, new one. - Impact bias: people don’t anticipate hedonic adaption because of:

o Focalism: pay too much attention to central event and overlook context. Getting a new car makes you happy, owning a new car has less of an affect Same thing happens with negative changes

o Immune neglect: Underestimate tendency to rationalize or make sense of event. People can’t make positive outcome out of losing loved ones.

- We are not as good at adapting to things that are variable (esp. negative and variable):o i.e. chronic back pain, unpredictable noise, back pain,…

- Getting married makes you happy, being married doesn’t. It doesn’t necessarily make you unhappy though.

- Married people aren’t happy because they are married- Marriage provides other benefits to well being.- Widowhood: people tend to be happier after their spouse dies- *Adaptation is both working for you and against you when it comes to well being.Social Comparisons (comparing yourself to others):- Works against you- With money, people tend to chose to make less money (when comparing themselves with others

who make less money)- This is not the same with time…people would chose to have more time when compared with

others.o This says two things:

We value time more than money what causes you more unhappiness? A lack of money or a lack of time? Time…time predicts happiness more than money does.

Money matters, up until a point. What can money do for you? Can it buy you time?

Don’t just try to be happy, try to flourish!- No recipe for happiness, it is an individual pursuit- PERMA model:

o Positive Emotion (going to comedy shows, do fun things etc.)o Engagement (challenging yourself in some way that puts you into FLOW)o Relationships (having good, quality, healthy relationships)o Meaning (being involved with something bigger than yourself – i.e. parenting)

o Achievement (striving for something to do something great) Ideally have them all but negatively correlated in some ways:

Sacrifice some for well-being; parents sacrifice some happiness for the higher meaning of parenting. FLOW: rock climbing is challenging and contributes to your well-being but is not necessarily enjoyable)

Takeaways:- Depending on your path to well-being, you have certain problems and goals along the way. This

has to do with goal-based decision making:o Not all about the peanut butter, but about making their kids happyo Think about it when it comes to creating and communication value: pick out target

markets based on PERMA: what are they pursuing?- There is no one way to seek out happiness, but don’t just follow expectations!

SOCIAL INFLUENCE :

Organizational/Group Decision Making:- Involve more than one person- 1 person’s purchase & use activities affect others

The Consumer Decision Process

Problem Recognition

Consumption &

Evaluation

PurchaseJudgment & Choice

Search

Disposition

CultureDemographicsPsychographicsSocial

Influence

- Peel financial resources- Rules and policies govern expenditures- Concern that process of decision making go smoothly- AccountabilitySix Decision Roles:In group decision making, individuals may play many different roles (sometimes more than one). The six common roles are:- Initiator – recognizes there is a problem; brings up need/idea- Gatekeeper – conducts information search; controls what info enters group and the flow of

information- Influencer – discusses values, what they want. Person who tries to influence the outcome of the

decision. Could be consumer or IT expert- Decider – has extra importance when it comes to sales; they close the deal, they make the final

decision- Buyer – person who makes the actual purchase order- User – person who uses product/service

o One person can fulfill multiple roles, or each role can be fulfilled by different peopleMere presence of other people leads people to buy more expensive products.- battery example: with more people in the isle, people bought the more expensive batteries that

had brand equityAtmospherics (environment also matters):- Stores that provide a cart or basket sell more than those who don’t. The bigger the better.- Consumers tend to move quickly through stores. Adding mirrors slow them down (vanity).- Stores leave a few items “out of place” to encourage people to touch the merchandise.- But brushing – isles too narrow, people brush against others’ butt while trying to get through, the

person gets uncomfortable and leaves- Need wider isles – need good environment- Noodles – have menu before lines starts so people so feel rushed and like they are causing a line. Social Influences on Persuasion (Cialdini):- Reciprocation: give what you want to receive

o “You’ll do for me, I’ll do for you”o This is a cross-cultural normo Charitieso Free samples at food court, free estimate, free anything is reciprocatingo Marketers can take advantage of this (i.e. send personalized mailing stamps asking for

money)o Door in the face: ask ridiculous question they will obviously say no to, then follow with

basic concession offering = more likely they will say yes. - Consistency: people fulfill active, public and voluntary commitments

o People wish to appear consistent to others Foot in the door experiments: A technique designed by getting an individual to

agree first to a small favor, then to a larger one, and then to an even larger one. I..e randomly assigned homes to small request (like have people drive

safely in neighborhood, will you put sticker on your car?) Most said yes. Then went to ALL homes and asked if they would put a big sign in their

yard to promote the same cause. People who said yes to sticker, or were offered, were more likely to say yes to the sign.

Undersupplied toys parents want furbies for their kids, furbies sell out till Christmas, parents buy different toy for their kid. Furby comes back before Christmas, parent buys Furby and still has other toy = kids get 2 toys, store gets 2x$

Zappos – They offer employees $1000 to quit. If you turn down the offer to work at Zappos, you really want to work there = good customer service, motivated employees.

o Effective commitments need to be: Active Public Voluntary

- Social Validation: People follow the lead of similar otherso Persuasion can be extremely effective if it comes from peers:

Why sitcoms and other comedy shows use real people (canned) laughtero Consumer online ratings: Amazon recognized the importance of social proofo Testimonials

Hotel – don’t just say reuse towels, make it about all the other people doing it. 75% of people who stay in this room reuse towels – make it relevant.

“One billion served and counting”- Liking: People like those who like them

o Wine friends though similarity (common interests, etc.) or praise: Tupperware parties – becomes hard to say no to your friends Purse parties and sex toy parties “More willing to purchase a policy from a salesperson who was akin to them in

age, religion politics or even smoking-habitsEstablish similarity “We live where you live” - Allstate

- Authority: People defer to expertso Experts provide shortcuts to decisions requiring specialized informationo Expertise needs to be noticed:

People dress in uniforms, put diploma on the wall – they want you to know they are experts

- Scarcity: People want more of what they can have less ofo Items are seen more valuable as they become less available:

Zara makes less; Lululemon only displays a few pairs “Limited time only” Groupon: “1000 people bought it” = social proof and scarcity (only a few days to

buy it) Urban rack of “Last chance to buy” Limited editions

Why do these principles work?- Because they are oftentimes adaptive:

o Liking – people who like you are typically to be trustedo Reciprocity – social normo Consistency – desirable personality trait; save mental energy

o Social proof – when a lot of people are doing something it is usually the right thing to doo Authority – experts typically know moreo Scarcity – scarce things are often valuable

Guest Speaker – White Girl Salsa:- Started making salsa, all her friends loved it; would bring it to parties and it would never make it

until the end.- Hard to duplicate her fresh salsa into a jar and into the market- Launched at Farmers Markets to get feedback about taste, name, hotness etc.

o Sold 4,000 jars of salsa in 4 months- At end of Farmers Market season, she emailed Whole Foods inquiry found out easier than

she thought; she got approved.- Went store by store and asked them to carry her salsa- She went around and did demo herself; Whole Foods appreciated self-starting, hardworking etc.

Salsa was requested at 5 more Whole Foods- Borrowed $100k from Whole Foods, appreciated it and grew business w/ Whole Foods

o Signed 9 year contract to only sell at Whole Foods- Other markets started asking for salsa, she had to say no.- King Soopers wanted it for less, she said no, they ended up still buying it at her price- Grew a lot in Rocky Mountain Region- Continued to grow business 550 grocery stores in about 12 states- Partnered up with great manufacturers to get there- Outsourcing vs. hiring her own team- She sold into a new retailer July 1st

- Most expensive salsa in markets – this is because branding and the fact that tomatillos are 2x as expensive as tomatoes

- Take-Aways:o Huge part of success is because of a focus on building relationshipso Took the time to do demos herself in ALL areas she could

Individual Influences on the Consumer Decision Process: CULTURE:- Immediately noticeable differences are things like dress, food etc. - The more important, underlying differences (values, ethics, morals etc.) are the ones we have to

research.Why marketers care about culture:- Lemonade; interpreted different in different cultures- Top vs. front loading washerBlunders (stupid or careless mistake) in initial marketing:- Hallmark – failed in France (they prefer to write their own cards)- Coke failed in Spain (not big enough refrigerators)- Pop Tarts failed in England (don’t have toasters and don’t like sweetness)What is Culture?- LEARNED set of shared meanings, rituals, norms, and traditions that are shared among members

of an organization or societyo Culture is transferred through socialization (you learn from the society/culture you are in)

- Country, company, groups, era, region…- Power is in its pervasiveness (spreading throughout) – taken for granted

The Consumer Decision ProcessProblem Recognition

Consumption &

Evaluation

PurchaseJudgment & Choice

Search

Disposition

Culture

DemographicsPsychographics

Social Influen

ce

The iceberg model of culture:-- We fixate on the visible, easily

measured things.-- The things that really matter

are not easily observable when it comes to creating and communicating value.

Take-away: culture and marketing strategy:- Don’t forget about STP

o Segmentationo Targetingo Positioning

- Cultural differences in taste and preference determine how “broad” your marketing strategy can be:

Transfer of Culture:

Socialization

Experiences

Organizations & InstitutionsFamilyInternalization

of Norms

Current Cultural Values

MediaPeers

Future Cultural Values

Events

visible part(doing)

hidden part(thinking)

music, cars,clothing,

language, food, art, games, …

beliefs, norms, roles,

values, personality

styles, …

- Market aggregation (considered as a whole)- Homogenous market* Lower costs

- Market segmentation- (Heterogeneous market)* Higher revenue

o Small heterogeneity (not diverse, little variance): broad target markets and standardized product

o Large heterogeneity (very diverse, a lot of variance): narrow target markets and customized products

Individual Influences on the Consumer Decision Process: DEMOGRAPHICS & PSYCHOGRAPHICS:Mini Lesson: Individual differences in adoption:- Innovators: independent, intrinsically motivated- Early adopters: opinion leaders, role models- Early majority: think carefully before adopting- Late majority: risk averse, adopt under peer pressure- Laggards: suspicious, anti-innovation

S-T-P Dilemma:

- Do you mass market or specialize?o Mass market – provide one thing; keeps costs low; serves purpose, but all products are

very similar.o The problem: we live in a very diverse world!o The market has trained people to not accept a good enough and okay solution because

businesses have gotten so good at specializing!o Trying to please everyone leads to failure!o With market segmentation, you can get customization, luckily consumers are willing to

pay for it!S-T-P Process:

S-T-P

Assumptions:

Segmentation1. Identify segmentation variables and segment the marketAsk: what dimensions will you divide the market by?

2. Develop profiles of resulting segments

Targeting3. Evaluation the attractiveness of each segmentAttractiveness; ask: how well can you solve their problems? Can you reach them? Are there enough of them?

4. Select the target segment(s)

Positioning5. Identify possible positioning concepts for each target segmentCompetition-based position?

6. Select, develop, signal and maintain the chosen positioning conceptWho is our competition? What is their point of parity? RTB? How will ours better?

segmentation – dimensions background

characteristicsmarkethistoryobservable

unobservable

demographicgeograph

ic

psychographi

c

product

usage

benefits

wanted

decision process

1) It is possible to identify and isolate groups of individuals (segments) w/in the total market who demand different kinds of product characteristics and/or react differently to the marketing mix

2) Marketer is willing to select “target segments” whose needs s/he can best fulfill, and concentrate efforts on reaching and persuading primarily this portion of the total market

3) If more than on target segment is desirable, the marketer is willing to design different marketing strategies and tactics for each segment

- Identify your target market, then come up with your marketing mix (the 4 p’s), informed by your target market

- Can identify more than one target market and create two different marketing mixes.o If you have the resources and the commitment, you can target more than one market.

However, you do take the risk of consumers recognizing this.- Example: the 4 seasons simultaneously targets vacationers and business travelers

o Have to recognize how these customers’ wants differ and match your messagesS-T-P Strategies: the three C’s (company, consumer, competition) determine which you can do!- Mass marketing: not so common anymore- Single target segment: select one of the segments as the firm’s target market- Multiple target segments: choose two or more segments and offer different marketing mix for

each segment

Segmentation- based on background characteristics:- Change in needs can arise from demographics, psychographics or geographicsDemographic: Age, gender, income, education, race, marital status,…- With women:- Women staying single longer- Women’s income are going up

o I.e women’s’ tool set they found an attractive market segment. Women want tools!- A target can be attractive because there is less competition - Change in needs depending on demographicsGeographic: Region (zip code, country..), climate, population density (urban, suburban, rural..)- Spicier Campbell’s soup in the southPsychographic: Personality, interests, values, lifestyle…- Barbara K toolbox: one might love it, another might be very disappointed/offended

Old way: - Based on background characteristics

who the consumer is)- Demographic, geographic, and

psychographic

New way (b/c big data & mapping): - Based on market history (what the

consumer has done)- Product usage, benefits wanted,

decision process

- Cheetos realized there is a loyal set of adults who think of eating Cheetos as “I know I shouldn’t be eating them, but I like it”; indulgent thinking

o Most brands aren’t as bold/risk-taking – Cheetos took risk by making new commercial for older people

Personality traits – the big 5- Consumers score chronically high or low on 5 traits:

o Extraversiono Agreeablenesso Conscientiousnesso Neuroticismo Openness

- Together, these traits constitute your personality- They only explain about 5-10% of the variance in people’s behavior. Same issue with

generational stereotypesVALS (Values, Attitudes, and Lifestyles System):- Model that segments US adults into either distinct types – or mindsets – using a specific set of

psychological traits and key demographics that drive consumer behavior:o Two critical concepts for understanding consumers: primary motivation and resources

Segmentation – based on market history:- Product usage:

o Frequency (light-medium-heavy), occasion…o Fast food – a small group of people provide most of their saleso Wine sellers recognize there are heavy drinkers and people who don’t really drink that

much wine (wine subscriptions)

- Product benefit:o Needs products must fill (job be done), expectations of product performance, satisfaction

measures, etc.- Decision process:

o Shopping patterns, media use, information search, price sensitivity…