CONSUMER BEHAVIOR MARKETING STRATEGY

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Ninth Edition

CO N S U M E R B E H AV I O R &
MA R K ET I N G S T R AT E G Y
J. Paul Peter Jerry C. Olson

Consumer Behavior
& Marketing
Strategy
Ninth Edition

J. Paul Peter
University of Wisconsin, Madison

Jerry C. Olson
Pennsylvania State University
Olson Zaltman Associates

CONSUMER BEHAVIOR & MARKETING STRATEGY
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Library of Congress Cataloging-in-Publication Data
Peter, J. Paul.
Consumer behavior & marketing strategy / J. Paul Peter, Jerry C. Olson.—9th ed.
p. cm.
Includes index.
ISBN-13: 978-0-07-340476-9 (alk. paper)
ISBN-10: 0-07-340476-4 (alk. paper)
1. Consumer behavior. 2. Marketing. I. Olson, Jerry C. (Jerry Corrie), 1944- II. Title.
III. Title: Consumer behavior and marketing strategy.
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www.mhhe.com

Rose, Angie, and Nick
Becky, Matt, and Seth

About the Authors

iv

J.

J.Paul Peter

Paul Peter is Professor Emeritus and formerly the James R. McManusBascom Professor of Marketing at the University of Wisconsin–Madison.
He was a member of the faculty at Indiana State, Ohio State, and
Washington University before joining the Wisconsin faculty. While at
Ohio State, he was named Outstanding Marketing Professor by the students and he
won the John R. Larson Teaching Award at Wisconsin. He has taught a variety of
courses including Marketing Management, Marketing Strategy, Consumer Behavior,
Marketing Research, and Marketing Theory.
Professor Peter’s research has appeared in the Journal of Marketing, Journal of
Marketing Research, Journal of Consumer Research, Journal of Retailing, and
Academy of Management Journal, among others. His article on construct validity won
the prestigious William O’Dell Award from the Journal of Marketing Research, and
he was a finalist for this award on two other occasions. Recently, he was the recipient

of the Churchill Award for Lifetime Achievement in Marketing Research, given by
the American Marketing Association and the Gaumnitz Distinguished Faculty Award
from the School of Business, University of Wisconsin–Madison. He is author or editor
of over 30 books, including A Preface to Marketing Management, twelfth edition;
Marketing Management: Knowledge and Skills, eighth edition; and Consumer Behavior and Marketing Strategy, ninth edition.
Professor Peter has served on the review boards of the Journal of Marketing,
Journal of Marketing Research, Journal of Consumer Research, and Journal of Business Research; he was measurement editor for JMR and professional publications
editor for the American Marketing Association. He has taught in a variety of executive programs and consulted for several corporations as well as the Federal Trade
Commission.

Jerry C. Olson

erry C. Olson is the Earl P. Strong Executive Education Professor of Marketing at Pennsylvania State University and a founding partner of Olson Zaltman Associates. He joined Penn State in 1971 after receiving his Ph.D. in
consumer psychology from Purdue University. At Penn State, he has taught
Consumer Behavior, Marketing Management, Advertising and Promotion Management, Research Methods, and Marketing Theory.
Professor Olson’s research has been published in the Journal of Consumer
Research, Journal of Marketing Research, Journal of Marketing, Journal of Applied
Psychology, and International Journal of Research in Marketing. He is author or
editor of a number of books, including Consumer Behavior and Marketing Strategy,

J

About the Author

v

Understanding Consumer Behavior, Perceived Quality, and Advertising and Consumer Behavior, as well as several conference proceedings.
Professor Olson has served as President of the Association for Consumer Research,
the major professional organization for consumer researchers. He has served on the
editorial review boards of most of the major journals in the marketing and consumer
behavior field. As partner in Olson Zaltman Associates, Professor Olson is an active
consultant to a number of consumer products companies, helping them develop a
deep understanding of their customers. He also has consulted for the Federal Trade
Commission.
In his spare time, Professor Olson enjoys traveling with his wife, Becky, and skiing,
biking, reading, and making music with his collection of antique banjos.

Preface

W

e are delighted that so many instructors and students have found our
book useful for teaching and learning the fascinating field of consumer
behavior. We appreciate their sentiments that our book does the best
job of integrating consumer behavior into the marketing curriculum.
Since the objective of the book is to give students the knowledge and skills necessary
to perform useful consumer analyses for developing effective marketing strategies,
we are encouraged that the book is accomplishing its objective.
The ninth edition of Consumer Behavior and Marketing Strategy continues to
reflect our belief that the Wheel of Consumer Analysis is a powerful tool not only for
organizing consumer behavior knowledge but also for understanding consumers and
for guiding the development of successful marketing strategies. In fact, it has been
used by marketing consultants and practitioners to do so. The four major parts of the
Wheel of Consumer Analysis are consumer affect and cognition, consumer behavior,
consumer environment, and marketing strategy. Each of these components is the
topic of one of the four major sections of this book.
After Section One, which provides an overview of the model,
Section Two discusses affect and cognition, which refers to how consumers think and feel about various things, such as products and brands.
Section Three discusses consumer behavior, which refers to the
physical actions of consumers, such as purchasing products and brands.

Section Four discusses the consumer environment, which is everything external to consumers that influences how they think, feel, and
act, such as advertisements or price information. Section Five discusses
marketing strategies by which marketing stimuli, such as products,
packages, advertisements, sales promotions, stores, Web sites, and price
information, are placed in consumer environments to influence consumers’
affect, cognition, and behavior.

Text Pedagogy

This book contains a variety of pedagogical aids to enhance student learning and
facilitate the application of consumer behavior concepts to marketing practice:
•

vi

Introductory scenarios. Each chapter begins with an interesting example that discusses a real-world situation involving some aspect of consumer behavior. Then each
chapter ends with a “Back To . . .” section that summarizes how the chapter material
relates to the opening example. This clearly shows students how the chapter concepts
are relevant to marketing strategy decisions. This feature has been very successful in
generating student interest and increasing understanding of the chapter material.

Preface

•

•

•

•

•

•

•

vii

Examples. Reviewers have applauded the inclusion of many examples of marketing

strategies used by actual companies. These examples demonstrate how marketers use
consumer behavior concepts. Also, they increase student interest in the material.
Consumer Insights. Each chapter contains longer examples called Consumer
Insights that show the relevance of consumer behavior concepts and give students
real-life examples of marketing strategies. All Consumer Insights are referenced in
the text but are self-contained for individual study.
Key terms and concepts. We include a list of key terms and concepts and the page
on which they are discussed at the end of each chapter to facilitate study of the material. These terms and concepts are also boldfaced within the chapter text.
Marketing Strategy in Action. Each chapter concludes with a case that focuses
on consumer analysis issues facing real companies. These short cases help to integrate consumer behavior information into the marketing strategy development
process. The discussion questions accompanying the cases can be used for written
assignments or to stimulate in-class discussion.
Review and discussion questions. Each chapter contains a series of review and
discussion questions that emphasize the understanding and application of chapter
material to strategic marketing issues. These can be used for written assignments,
in-class discussions, essay exam questions, or student self-study.
Notes. Notes for the most current and useful references and additional sources of
information are provided at the end of the book. These sources illustrate and
expand on topics in each chapter of the text.
Glossary. The text contains a glossary of key consumer behavior terms. Many of

these definitions were previously prepared by the authors for the American
Marketing Association’s Dictionary of Marketing Terms.

Many of the introductory scenarios, Marketing Strategy in Action cases, and
Consumer Insight examples are new to this edition or are updated as appropriate.
While the previous ones were praised by instructors and students for the insights they
provided, the new features are intended to better capture consumer behavior and
marketing strategy issues in today’s global economy.

Instructional Aids

The following instructor support materials are available through the Online Learning
Center at www.mhhe.com/peter9e.
•

•

•

Instructor’s Manual. This manual is widely recognized as one of the best ever
developed for any marketing or consumer behavior text. It contains a variety of
useful information and suggestions for teaching each chapter in the text as well as
examples not included in the text. It includes mini-lectures, projects, in-class exercises, notes for the Marketing Strategy in Action cases, and notes for the discussion
questions. It is an excellent resource for increasing student interest in and learning
of consumer behavior.
Test Bank. The revised Test Bank consists of over 1,000 multiple-choice, true/
false, and essay questions. Answers, page references, and degree of difficulty for
the questions are included. The Test Bank has been thoroughly reviewed to ensure
a reliable, high-quality test item set.
PowerPoint Presentation. PowerPoint presentation slides of exhibits from the
text and from other sources enhance lectures and discussions.

For students, the Online Learing Center offers self-grading quizzes and chapter
review materials.

viii

Preface

Acknowledgments We are indebted to the many people who contributed to the development of the current and previous editions of this book. First, we thank our professors, colleagues,
and students for their contribution to our education. Second, we thank the many consumer behavior researchers whose work is reflected in the pages of this text and the
companies whose strategies are used as examples of consumer analysis and marketing
strategy development. Third, we thank Laura Hurst Spell, Managing Developmental
Editor, and Lori Bradshaw, Developmental Editor, for their encouragement, constructive criticism, and patience throughout the preparation of this edition. Fourth,
we thank Jessica Ames, Andy James, Kristen James, and James Forr from Olson Zaltman Associates for their assistance. Finally, we thank the following reviewers of this
text for the time, effort, and insights they offered.

Reviewers for This and Previous Editions
Dr. Ronald J. Adams
University of North Florida

Ellen Day
University of Georgia

Dr. Paul J. Albanese
Kent State University

Aimee Drolet
Anderson School at UCLA

M. Wayne Alexander
Moorhead State University

Professor Sunil Erevelles
University of California

Dr. Mark G. Anderson
University of Kentucky

Mike Etzel
University of Notre Dame

Walter Nord
University of South
Florida

Dr. Subir Bandyopadhyay
McGill University

Andrew M. Forman
Hofstra University

Professor Kathy O’Malley
University of Idaho

Delores Barsellotti
California State Polytechnic
University–Pomona

Bill Gaidis
Marquette University

Stephanie Oneteo
University of Wyoming

Meryl Gardner
New York University

Betty J. Parker
University of Missouri

Peter L. Gillett
University of Central
Florida

William S. Piper
The University of Southern
Mississippi–Gulf Park

Dr. Ronald Goldsmith
Florida State University

Dr. Akshay R. Rao
University of Minnesota

Audrey Guskey
Duquesne University

Maria Sannella
Boston College

Tom Boyd
Miami University

Kenneth A. Heischmidt
Southeast Missouri State
University

David W. Schumann
University of Tennessee

Lily Buchwitz
San Jose State University

Robert M. Isotalo
Lakehead University

Ray Burke
University of Pennsylvania

Dr. Ann T. Kuzma
Mankato State University

James Cagley
The University of Tulsa

Steven Lysonski
Marquette University

Louis M. Capella
Mississippi State University

Deborah Mitchell
Temple University

Auleen Carson
University of New
Brunswick (Canada)

Dr. Lois A. Mohr
Georgia State University

W. Barry Barrett
University of Wisconsin–
Milwaukee
Mickey Belch
San Diego State University
Russell Belk
University of Utah
Dr. Lauren Block
New York University

Dr. James Munch
University of Texas–
Arlington
David Nasser
George State University

Richard A. Spreng
Michigan State University
Shirley M. Stretch
California State University,
Los Angeles
Cathie H. Tinney
University of Texas of the
Permian Basin
Gail Tom
California State University
J. Dennis White
Florida State University

Preface

Dr. David B. Whitlark
Brigham Young University

Tommy E. Whittler
University of Kentucky

ix

Arch Woodside
Tulane University

In addition to the reviewers named above, we also found feedback from individual
users of the first eight editions—both instructors and students—to be useful for improving the ninth edition. We continue to value your comments and suggestions for
the continuous improvement of this work.
J. Paul Peter
jppeter@bus.wisc.edu
Jerry C. Olson
jco@psu.edu

Contents in Brief
Section 1
A Perspective on Consumer Behavior

1

1 Introduction to Consumer Behavior and Marketing
Strategy 2
2 A Framework for Consumer Analysis

19

Section 4
The Environment and Marketing Strategy
11 Introduction to the Environment

14 Reference Groups and Family

Section 2
Affect and Cognition and Marketing
Strategy 35
3 Introduction to Affect and Cognition

36

334

Section 5
Consumer Analysis and Marketing
Strategy 361

17 Consumer Behavior and Promotion Strategy

405

18 Consumer Behavior and Pricing Strategy 439
158

Section 3
Behavior and Marketing Strategy

19 Consumer Behavior, Electronic Commerce, and
Channel Strategy 461
Notes 491

189

8 Introduction to Behavior 190

10 Influencing Consumer Behaviors

Glossary
Credits

9 Conditioning and Learning Processes

x

308

16 Consumer Behavior and Product Strategy 385

99

6 Attitudes and Intentions 126
7 Consumer Decision Making

276

15 Market Segmentation and Product Positioning 362

4 Consumers’ Product Knowledge and
Involvement 66
5 Attention and Comprehension

252

12 Cultural and Cross-Cultural Influences
13 Subculture and Social Class

251

231

211

521
533

Names Index

534

Subject Index

540

Contents
Section 1

A Perspective on Consumer Behavior
1

1

Introduction to Consumer Behavior
and Marketing Strategy 2
Online Shopping–2009 2
What Is Consumer Behavior? 5
Consumer Behavior Is Dynamic 5
Consumer Behavior Involves Interactions 7
Consumer Behavior Involves Exchanges 9
Approaches to Consumer Behavior Research 9
Uses of Consumer Behavior Research 10
Consumer Behavior’s Role in Marketing Strategy 12
Back To Online Shopping 14
Marketing Strategy in Action Toyota—2008 17

2

A Framework for Consumer Analysis

19

Buying a Home Security System 19
Three Elements for Consumer Analysis 20
Consumer Affect and Cognition 21
Consumer Behavior 22
Consumer Environment 22
Relationships among Affect and Cognition, Behavior,
and the Environment 23
Marketing Strategy 25
Levels of Consumer Analysis 26
Societies 27
Industries 28
Market Segments 28
Individual Consumers 29
Back To Buying a Home Security System 29
Marketing Strategy in Action Starbucks—2008

32

xi

xii

Contents

Section 2

Affect and Cognition and Marketing Strategy
3

35

Introduction to Affect and Cognition 36
“Everyday” Affect and Cognition: Greg Macklin Goes Shopping 36
Components of the Wheel of Consumer Analysis 37
Environment 37
Behavior 38
Marketing Strategies 38
Affect and Cognition 39
Affect and Cognition as Psychological Responses 39
Types or Levels of Affective Responses 40
The Affective System 40
What Is Cognition? 41
Relationship between Affect and Cognition 43
Marketing Implications 45
Using Metaphors to Communicate Affective and Cognitive Meaning
Cognitive Processes in Consumer Decision Making 47
A Model of Consumer Decision Making 48
Additional Characteristics of the Cognitive System 50
Marketing Implications 52
Knowledge Stored in Memory 52
Types of Knowledge 52
Structures of Knowledge 55
Types of Knowledge Structures 56
Marketing Implications 57
Cognitive Learning 57
Back To Greg Macklin Goes Shopping 61
Marketing Strategy in Action Barnes & Noble 64

4

Consumers’ Product Knowledge and Involvement 66
How Gillette Knows about Shaving 66
Levels of Product Knowledge 68
Consumers’ Product Knowledge 70
Products as Bundles of Attributes 70
Products as Bundles of Benefits 72
Products as Value Satisfiers 74
Means–End Chains of Product Knowledge 77
Examples of Means–End Chains 78
Identifying Consumers’ Means–End Chains 80
Marketing Implications 81
Digging for Deeper Consumer Understanding 82
The ZMET Approach to Consumer Knowledge 82
The ZMET Interview 83
Marketing Implications 84
Involvement 84
Focus of Involvement 85
The Means–End Basis for Involvement 86
Factors Influencing Involvement 86

46

Contents

Marketing Implications 90
Understanding the Key Reasons for Purchase 90
Understanding the Consumer–Product Relationship
Influencing Intrinsic Self-Relevance 92
Influencing Situational Self-Relevance 94
Back To Gillette 94
Marketing Strategy in Action Nike 97

5

Attention and Comprehension

91

99

The Power of Advertising 99
Exposure to Information 102
Selective Exposure to Information 104
Marketing Implications 105
Attention Processes 107
Variations in Attention 107
Factors Influencing Attention 109
Marketing Implications 110
Comprehension 113
Variations in Comprehension 113
Inferences during Comprehension 115
Factors Influencing Comprehension 117
Marketing Implications 118
Back To The Power of Advertising 121
Marketing Strategy in Action Exposure, Attention, and
Comprehension on the Internet 124

6

Attitudes and Intentions 126
The Gap 126
What Is an Attitude? 128
Attitudes toward What? 130
Marketing Implications 130
Attitudes toward Objects 134
Salient Beliefs 134
The Multiattribute Attitude Model 136
Marketing Implications 140
Attitude-Change Strategies 141
Attitudes toward Behavior 143
The Theory of Reasoned Action 145
Marketing Implications 149
Intentions and Behaviors 150
Back To The Gap 152
Marketing Strategy in Action Coca-Cola 155

7

Consumer Decision Making

158

Buying a Used Car 158
Decision Making as Problem Solving

163

xiii

xiv

Contents

Elements of Problem Solving 165
Problem Representation 165
Integration Processes 170
Decision Plans 172
Problem-Solving Processes in Purchase Decisions 174
Influences on Consumers’ Problem-Solving Activities 175
Effects of End Goals 175
Effects of Goal Hierarchies 176
Effects of Involvement and Knowledge 176
Environmental Effects 178
Implications for Marketing Strategy 180
Back To Buying a Used Car 183
Marketing Strategy in Action Hallmark Cards 186

Section 3

Behavior and Marketing Strategy 189
8 Introduction to Behavior

190

Lands’ End Inlet Store 190
What Is Overt Consumer Behavior? 191
The Importance of Overt Consumer Behavior 192
A Model of Overt Consumer Behavior 193
Information Contact 195
Funds Access 198
Store Contact 200
Product Contact 201
Transaction 203
Consumption and Disposition 203
Communication 204
Marketing Implications 205
Back To Lands’ End Inlet Store 206
Marketing Strategy in Action Peapod Online Grocery—2008

9 Conditioning and Learning Processes

211

Lottery Games: Powerball and Mega Millions 211
Classical Conditioning 212
Consumer Research on Classical Conditioning 215
Marketing Implications 215
Operant Conditioning 216
Reinforcement Schedules 217
Shaping 219
Discriminative Stimuli 220
Marketing Implications 220
Vicarious Learning 221
Uses of Vicarious Learning in Marketing Strategy 222
Factors Influencing Modeling Effectiveness 224
Marketing lmplications 226

209

Contents

Back To Lottery Games: Powerball and Mega Millions 227
Marketing Strategy in Action Rollerblade In-line Skates

10 Influencing Consumer Behaviors

230

231

What Were These Marketers Trying to Do? 231
Consumer Behavior Influence Strategies 232
Sales Promotion 234
Purchase Probability 237
Purchase Quantity 238
Purchase Timing 238
Purchase Location 239
Effectiveness of Sales Promotions 240
Social Marketing 240
Increasing Desired Behaviors 241
Decreasing Undesired Behaviors 241
A Strategic Model for Influencing Consumer Behaviors 241
Measure Current Levels of Consumer Affect, Cognition, and Behavior 242
Analyze Consumers and Markets 244
Select and Implement Influence Strategy 246
Measure Strategic Effects 246
Evaluate for Performance Improvement 247
Marketing Implications 247
Back To What Were These Marketers Trying to Do? 248
Marketing Strategy in Action Cub Foods—2008 250

Section 4

The Environment and Marketing Strategy
11 Introduction to the Environment

251

252

Megaresorts in Las Vegas 252
The Environment 254
Aspects of the Environment 255
The Social Environment 255
The Physical Environment 259
Marketing Implications 260
Situations 260
Analyzing Situations 261
Generic Consumer Situations 262
Marketing Implications 270
Back To Megaresorts in Las Vegas 271
Marketing Strategy in Action America’s Movie Theaters

12 Cultural and Cross-Cultural Influences
McDonald’s . . . All Around the World
What Is Culture? 278

276

276

274

xv

xvi

Contents

The Content of Culture 279
Measuring the Content of Culture 280
The Core Values of American Culture 281
Changing Values in America 281
Culture as a Process 285
Moving Cultural Meanings into Products 286
Cultural Meanings in Products 288
Moving Cultural Meanings from Products into Consumers
Cultural Meanings in Consumers 292
Moving Meanings to the Cultural Environment 293
Marketing Implications 294
Helping Consumers Obtain Cultural Meanings 296
Cross-Cultural Influences 296
Cross-Cultural Differences 297
Developing International Marketing Strategies 299
Marketing Implications: The European Union 302
Back To McDonald’s . . . All Around the World 304
Marketing Strategy in Action Sony 306

13 Subculture and Social Class

308

Mountain Dew 308
Subcultures 310
Analyzing Subcultures 310
Geographic Subcultures 312
Age Subcultures 315
Ethnic Subcultures 319
Gender as a Subculture 323
Income as a Subculture 324
Acculturation Processes 324
Social Class 326
Social Class versus Income 328
Back To Mountain Dew 329
Marketing Strategy in Action Abercrombie & Fitch

14 Reference Groups and Family

289

332

334

Chuck E. Cheese 334
Reference Groups 336
Analyzing Reference Groups 337
Types of Reference Group Influence 337
Reference Group Influence on Products and Brands 339
Reference Groups and Marketing Strategy 340
Family 341
Family Decision Making 343
Consumer Socialization 347
Factors Influencing American Families 347
Demographic Changes in Household Composition 350
Family Life Cycle 351
Back To Chuck E. Cheese 356
Marketing Strategy in Action The Saturn Family 359

Contents

Section 5

Consumer Analysis and Marketing Strategy 361
15 Market Segmentation and Product Positioning

362

H2—Oh!—Positioning the Hummer H2 362
Analyze Consumer–Product Relationships 365
Investigate Segmentation Bases 366
Benefit Segmentation 367
Psychographic Segmentation 367
Person/Situation Segmentation 372
Geodemographic Segmentation 374
Develop Product Positioning 374
Positioning by Attribute 376
Positioning by Use or Application 376
Positioning by Product User 377
Positioning by Product Class 377
Positioning by Competitors 377
Positioning Maps 378
Select Segmentation Strategy 379
Design Marketing Mix Strategy 380
Back To Positioning the Hummer H2 380
Marketing Strategy in Action Hershey North America

16 Consumer Behavior and Product Strategy

385

Timberland 385
Product Affect and Cognition 387
Satisfaction/Dissatisfaction 387
Product Behavior 388
Product Contact 389
Brand Loyalty/Variety Seeking 389
The Product Environment 392
Product Attributes 392
Packaging 393
Product Strategy 395
Characteristics of Consumers 396
Characteristics of Products 397
Back To Timberland 400
Marketing Strategy in Action Harley-Davidson, Inc.

17 Consumer Behavior and Promotion Strategy
Winning Promotions 405
Types of Promotion 408
Advertising 408
Sales Promotions 408
Personal Selling 409
Publicity 411
The Promotion Mix 412

383

405

403

xvii

xviii

Contents

A Communication Perspective 412
The Communication Process 413
Goals of Promotion Communications 415
The Promotion Environment 418
Promotion Clutter 418
Level of Competition 419
Promotion Affect and Cognition 420
Attitude toward the Ad 421
The Persuasion Process 421
Promotion Behaviors 423
Information Contact 423
Word-of-Mouth Communication 425
Managing Promotion Strategies 425
Analyze Consumer–Product Relationships 425
Determine Promotion Objectives and Budget 427
Design and Implement a Promotion Strategy 428
Evaluate Effects of the Promotion Strategy 432
Back To Winning Promotions 435
Marketing Strategy in Action The Cereal Wars 437

18 Consumer Behavior and Pricing Strategy

439

Vinnie Bombatz 439
Conceptual Issues in Pricing 441
Money 442
Time 443
Cognitive Activity 443
Behavior Effort 445
Value 446
Price Affect and Cognition 446
Price Perceptions and Attitudes 447
Price Behavior 449
Funds Access 449
Transactions 450
Price Environment 450
Pricing Strategy 450
Analyze Consumer–Product Relationships 451
Analyze the Environmental Situation 454
Determine the Role of Price in Marketing Strategy 455
Estimate Relevant Production and Marketing Costs 455
Set Pricing Objectives 455
Develop Pricing Strategy and Set Prices 456
Back To Vinnie Bombatz 458
Marketing Strategy in Action American Girl Brands 460

19 Consumer Behavior, Electronic Commerce, and Channel Strategy
IBM 461
Store-Related Affect and Cognition
Store Image 464
Store Atmosphere 464

463

461

Contents

Store-Related Behavior 466
Store Contact 466
Store Loyalty 467
Store Environment 467
Store Location 467
Store Layout 469
In-Store Stimuli 471
Nonstore Consumer Behavior 474
Catalog and Direct Mail Purchases 474
Vending Machine Purchases 475
Television Home Shopping 475
Direct Sales Purchases 476
Electronic Exchanges 476
A Comparison of Consumer Purchase Modes 476
Electronic Commerce 478
Consumer Strategies for Electronic and Store Exchanges 478
Consumer Electronic Exchanges and Multichannel Marketing 481
Channel Strategy 481
Commodity 484
Conditions 484
Competition 484
Costs 484
Coverage 485
Competence 485
Control 485
Characteristics of Intermediaries 485
Back To IBM 486
Marketing Strategy in Action Amazon.com 488
Notes

491

Glossary
Credits

521
533

Name Index

534

Subject Index 540

xix

A Perspective on
Consumer Behavior
1

Introduction to Consumer Behavior and Marketing Strategy

2 A Framework for Consumer Analysis

Be

Marketing
Strategy

Co

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chapter

1
Introduction to Consumer Behavior
and Marketing Strategy
Online Shopping–2009

M

arketing to consumers via the

overhyped as a marketing tool, it is now firmly

Internet has many advantages for

established as a critical element of overall mar-

marketers. It allows products and

keting strategy.

services to be offered 24 hours a day, 7 days a
week, 365 days a year; it allows products and

that it reaches only a small segment of the pop-

services to be offered globally in an efficient

ulation. However, research shows that Internet

manner; it is cost efficient in that it saves the

shoppers reflected similar gender ratios and

need for stores, paper catalogs, and salespeo-

income levels as the population as a whole in

ple; it provides a means for developing

the United States. ACNielsen research found

one-on-one relationships with consumers and establishing consumer
databases for conducting online

more than 143 million U.S. households to be
active home Internet users. The 11 countries
tracked by Nielsen total over 315 million

research. Online Business-

households. More than 40 million households

to-Consumer marketing re-

in Japan were active Internet users, along with

quires marketers to

32 million in Germany and 23 million in the

understand consumers and

United Kingdom. Thus, Internet marketers

deliver the products and services consumers want and need,
just as traditional marketing does.
In 2009, marketers proved their ability

2

One major criticism of online marketing is

would seem to be able to reach a broad market,
if they use appropriate strategies to do so.
A second major criticism of online marketing is that consumers shop on the Web to

to serve consumers online, and Internet sales

collect information about products and ser-

to consumers continue to grow faster than any

vices but do not buy. Analysts thought that

other form of retailing. Although the e-com-

consumers preferred to shop in person at

merce shakeout in the early 2000s led many

stores and did not want to risk giving hackers

analysts to declare that the Internet was

access to credit card or personal information

Chapter One Introduction to Consumer Behavior and Marketing Strategy

sent online. However, recent research found

3

Others use the Web for the vast selection

that two-thirds of shoppers with Internet

of products and services available. If you are

access actually made a purchase online. Appar-

looking for unusual plants and landscaping,

ently, improved security on the Web has as-

including miniature Alpine plants from

suaged the fears of many online shoppers.

Oregon or 40 varieties of cacti grown from

So what do consumers buy online? Ac-

seedlings collected from the Grand Canyon,

cording to a recent study, travel-related pur-

contact John Shelley’s Garden Center &

chases, including airline tickets, topped the

Nursery in Winterstown, Pennsylvania, at

list. In addition, several studies have shown

www.gdnctr.com. Looking for high-end

that books, CD/DVD/video products, com-

mountain bike components and accessories,

puter software, apparel and accessories,

the kind you can’t find in local shops? If so,

and specialty gift items like flowers account

contact Aardvark Cycles in Provo, Utah, at

for a significant portion of Web-based pur-

www.aardvarkcycles.com. If you want to

chases. Computer hardware, entertainment-

bid on collectibles, such as an early 60s Bar-

related services, and housewares also are

bie or a Lionel train set from the 1950s, con-

large categories.

tact eBay at www.ebay.com.

Sources: Anick Jesdanun, “Internet Not Key in Buying Choices,” Wisconsin State Journal, May 19,
2008, p.1A+; Enid Burns, “Active Home Web Use by Country, January 2006,” clickz.com, March 13,
2006; Enid Burns, “Retail Sales Grew in 2005,” clickz.com, January 5, 2006; Timothy J. Mullaney,
Heather Green, Michael Arndt, Robert D. Hof, and Linda Hilelstein, “The E-Biz Surprise,” BusinessWeek, May 12, 2003, pp. 60–68; Ken Cimino, “Reports Paint Profile of an Internet Shopper,” EcommerceTimes.com, July 13, 2001; www.acnielsen.com. Screen capture reprinted by permission of
John Shelley’s Garden & Nursery Center, Inc. Microsoft Internet Explorer® screen shot reprinted
with permission from Microsoft Corporation.

4

Section One A Perspective on Consumer Behavior

H

ow can consumer behavior research help Internet marketers increase their
chances of success? Marketers have long argued that the marketing
concept is the appropriate philosophy for conducting business. Simply
stated, the marketing concept suggests an organization should satisfy consumer needs and wants to make profits. To implement the marketing concept, organizations must understand their customers and stay close to them to provide products
and services that consumers will purchase and use appropriately.
For many years, the marketing concept was not fully understood or implemented properly by U.S. firms. Often, even firms that accepted the marketing
concept in principle did not recognize that the marketing concept required the
organization to change its existing practices dramatically. In general, these firms
viewed implementing the marketing concept as a marketing task rather than
something in which the entire organization had to be involved. Although these
companies conducted marketing and consumer research, this research was seldom used as the basis for designing not just the marketing strategy but also the
entire organizational strategy.
Today many of the most successful companies in the world have become so by
designing the entire organization to serve consumers and stay close to them. These
companies are committed to developing quality products and services and selling
them at a price that gives consumers high value. In these companies, the marketing department, as well as design, engineering, production, human resources,
finance, and other departments, focus on doing their jobs in ways that enhance the
value of products to consumers. Some firms have found they can actually increase
product quality and reduce costs at the same time, and they encourage employees
throughout the company to seek ways to do so. Other firms first determine what
consumers want and how much they are willing to pay for a product and then
design, produce, and market the best-quality product they can for the price consumers are willing to pay.
Companies are making changes to serve consumers better for three major reasons.
First, the dramatic success of Japanese companies, such as Toyota and Sony, that
focus on providing consumers with value-laden products has spurred other companies to follow suit. In previous years, many U.S. companies could sell almost anything
they were able to produce. Consumers accepted the level of quality of goods and
services produced by U.S. companies as being as good as could be expected. However, as American consumers discovered the superior quality and lower prices of
many Japanese products, they began to realize that many American products offered
inferior value and shifted to purchasing foreign-made goods. Several U.S. companies
had to redesign their organizations to serve consumers in order to survive and compete not only in the United States but also in world markets. Many have done so and
are now world leaders in their industries, while others have failed to do so and are no
longer strong competitors in their industries.
The second major reason for the shift to focusing on consumers is the dramatic increase in the quality of consumer and marketing research. In the past, companies often
did not have detailed information on the actual purchasers and users of their products.
Although they conducted research to investigate new product concepts and to try to
understand consumers, often this research was not continuous and did not identify the
firm’s actual customers. Today computer technology and scanners and other data
sources have enabled companies to know personally who their customers are and the
effects on those consumers of marketing strategy and changes in strategy. Both manufacturers and retailers can now carefully track consumer reactions to new products and

Chapter One Introduction to Consumer Behavior and Marketing Strategy

5

services and evaluate marketing strategies better than ever before. Thus, companies are
now better able to actually implement the marketing concept. Consumer Insight 1.1
offers several examples of newer methods for researching consumers.
A third reason for the increased emphasis on consumers is the development of the
Internet as a marketing tool. In the past, consumers received most of their information about products and services from traditional print and media advertising and
shopped primarily in brick-and-mortar stores. While this is still the case for many purchases, marketers have recognized the potential for e-marketing to completely change
the way consumers shop and purchase. This change could be a threat to traditional
manufacturers and retailers unless they adapt their marketing strategies to include
electronic commerce. This change is an opportunity for small companies and entrepreneurs, since the startup costs of marketing products and services are greatly
reduced compared with traditional marketing methods. In either case, knowledge of
consumers’ shopping and purchasing patterns is needed to develop a successful
e-marketing strategy, thus increasing the importance of consumer behavior research.
Savvy marketers know that the Internet can be used to communicate vast amounts of
information about products and product lines to consumers, to actually sell products
and services directly to consumers, and to market to global consumers who could not
be reached cost-effectively by traditional marketing methods. Finally, savvy marketers have also recognized that the Internet can be used to conduct marketing research
studies and collect other useful information about consumers that can be used to
develop effective marketing strategies.
In sum, many successful companies have recognized the importance of consumers and have sophisticated approaches and detailed data from which to develop
organizational and marketing strategies. All of this should convince you that the
consumer behavior course you are about to take is an important part of your business education. In the remainder of this chapter, we will discuss the nature of consumer behavior and the parties involved in studying and analyzing it. We will also
investigate some relationships between consumer behavior and marketing strategy
and the value of this course for a successful career. Although this text focuses on
consumer behavior and marketing strategy, it should not be forgotten that employees in every business function should be involved in serving consumers. Consumer
Insight 1.2 discusses a method used by retailers to understand consumer shopping
patterns.

What Is Consumer The American Marketing Association defines consumer behavior as “the dynamic
by which human
Behavior? interaction of affect and cognition, behavior, and the environment
1

beings conduct the exchange aspects of their lives.” In other words, consumer
behavior involves the thoughts and feelings people experience and the actions they
perform in consumption processes. It also includes all the things in the environment
that influence these thoughts, feelings, and actions. These include comments from
other consumers, advertisements, price information, packaging, product appearance,
blogs, and many others. It is important to recognize from this definition that consumer behavior is dynamic, involves interactions, and involves exchanges.

Consumer Behavior Is Dynamic
Consumer behavior is dynamic because the thinking, feelings, and actions of individual consumers, targeted consumer groups, and society at large are constantly

6

Section One A Perspective on Consumer Behavior

Consumer Insight 1.1
Digging Deeper into Consumers’
Minds and Lives

M

arket researchers use a variety of techniques to
learn about consumers. For example, focus groups,
surveys, experiments, and scanner data studies have
long helped marketers develop more effective strategies.
However, a recent trend in market research is to dig
deeper into consumers’ minds and lives using a variety
of anthropological techniques to better understand the
deeper meaning of products and brands. Catherine
DeThorne, ad agency Leo Burnett’s director of planning,
calls these techniques “getting in under the radar.” Below
is a sample of some of the types of research companies
are doing.
• Just as Kimberly-Clark Corporation was about to
launch a line of Huggies baby lotions and bath products, it saw sales slip for its Huggies baby wipes.
Since traditional focus group research could not come
up with a reason for the decline in sales, the company tried a new approach. It decided to get consumers to wear a pair of glasses with a camera mounted
on them so researchers could see product usage
through the consumers’ eyes. It didn’t take long to
see the problem: Although consumers said that they
changed babies on beds, the truth was that they
change them on beds, on floors, and on top of washing machines in awkward positions. The consumers
were struggling with wipe containers and lotions that
required two hands since one hand had to hold the
child. The company redesigned the wipe package
with a push-button one-handed dispenser and
designed the lotion and shampoo bottles so they
could easily be used with one hand.

• As Mary Flimin chops onions for risotto late one afternoon, a pair of video cameras and two market
researchers stationed in a corner are recording her
every move. Meg Armstrong and Joel Johnson, who
represent a cookware company, want to see how a
gourmet like Flimin cooks and what she likes. Hours
later, Armstrong and Johnson review their observations. Even though Flimin said she often makes cakes
and bakes with fresh fruit, Armstrong notes that “her
baking dishes are stashed in the boondocks, so she
doesn’t bake much.” This insight could not be captured by typical methods that rely on consumers to
tell researchers what they do.
• Thomson Electronics hired E-lab to perform a study
to find out how consumers mix listening to music with
their daily lives. E-lab did a “beeper” study in which
participants were instructed to write down what they
were doing when they were paged. Participants
recorded where they were; what music, if any, was
playing; who picked it; and their mood. Researchers
also tailed people around their homes, noting where
they kept their stereos and how their music collections were organized. The company was trying to find
out how often people sit down to enjoy a CD as
opposed to using it for background music. This information would help Thomson Electronics in its newproduct decisions.
• Procter & Gamble developed a program to help its
employees better understand consumer behavior. In
one part of the program, employees lived with consumers for several days in their homes, ate meals
with the family, and went on shopping trips with them.

changing. For example, the Internet has changed the way people search for information about products and services. The fact that consumers and their environments are
constantly changing highlights the importance of ongoing consumer research and
analysis by marketers to keep abreast of important trends.
The dynamic nature of consumer behavior makes development of marketing strategies an exciting yet difficult task. Strategies that work at one time or in one market
may fail miserably at other times or in other markets. Because product life cycles are
shorter than ever before, many companies have to innovate constantly to create superior value for customers and stay profitable. This involves creation of new products,
new versions of existing products, new brands, and new strategies for them. For
example, Mercedes-Benz developed a more complete line of vehicles, including a

Chapter One Introduction to Consumer Behavior and Marketing Strategy

7

ucts they do even if the consumers themselves could
not articulate the reasons.
• Before a Miramax movie opens in theaters, the previews are usually screened by groups of movie-goers
around the country observed by psychiatrist Russ
Ferstandig. As people watch the previews and answer
Ferstandig’s questions, he watches their body language. Based on what he hears and sees, he may
recommend that the Disney unit change previews to
make them more compelling to audiences. He might
suggest a short pause to let people catch up with a
message or change the wording in a preview, such
as taking out the word comedy in describing the
movie An Ideal Husband.
• At Norman Thomas High School in Manhattan, Inez
Cintron, 14, chats exuberantly with her girlfriends
between classes. The topics: singer Lauryn Hill and
Old Navy clothes. Tru Pettigrew, a 30-year-old researcher for a company called Triple Dot, leans close.
The trend hunter dropped by the public high school to
glean intelligence for Eastpak. He listens to the girls
mix Spanish phrases into their English chatter—
something new to Pettigrew that may result in Eastpak ads with “Spanglish.” Pettigrew also is interested
to hear that the teens, who preferred rival Jansport’s
packs, buy as many as eight backpacks to mix with
their wardrobes. “That’s a key piece of information,”
he says later.

In another part, the P&G employees worked behind
the counter in small shops to get insights into why
shoppers buy or do not buy a product, how the shopkeeper stacks shelves, and what kind of business
propositions are appealing. This program helped
employees understand why consumers buy the prod-

Not everyone is cheering these modern market research
methods. “It’s kind of pathetic that people are willing to
be subjects in order to help marketers get inside a certain group’s head and sell, sell, sell,” says Michael
Jacobson of the Center for Science in the Public Interest. However, respondents are often paid—at least $100
by E-lab—for participating and are free to choose
whether or not they want to be in the study.

Source: A. G. Lafley and Ram Charan, “The Consumer Is Boss,” Fortune, March 17, 2008, pp. 120–126. David Kiley, “Shoot the
Focus Group,” BusinessWeek, November 14, 2005, pp. 120–121; Melanie Wells, “New Ways to Get Into Our Heads,” USA Today,
March 2, 1999, pp. B1, B2. Copyright March 2, 1999. Reprinted with permission.

sport utility vehicle, the ML 350, to try to reach more consumers. Garmin offers a
complete line of automotive GPS receivers to meet the needs of different consumer
groups with different price-range preferences.

Consumer Behavior Involves Interactions
Consumer behavior involves interactions among people’s thinking, feelings, and actions,
and the environment. Thus marketers need to understand what products and brands
mean to consumers, what consumers must do to purchase and use them, and what
influences shopping, purchase, and consumption. The more marketers know about how
these interactions influence individual consumers, target markets of similar consumers,

8

Section One A Perspective on Consumer Behavior

Consumer Insight 1.2
Snooping on Shoppers to
Increase Sales

H

undreds of companies nationwide are turning to electronic and infrared surveillance equipment to snoop
on shoppers in their stores. Some even conduct old-fashioned stakeouts, complete with walkie-talkies, from catwalks in the stores. These companies are not trying to
spot shoplifters. Rather, they are learning about shoppers’
traffic patterns to change consumer buying habits.

Take Bashas’s Markets, Inc., in Chandler, Arizona.
A study showed that only 18 percent of the grocery
store’s customers ever went down the aisle with greeting
cards, which are high-profit items. So George Fiscus,
the store layout manager, moved the section, sandwiching it between the floral department and an aisle with
peanut butter, jelly, and health foods that regularly drew
62 percent of the store’s traffic. Nestled in their new
home, the greeting cards showed a second-quarter
sales jump of 40 percent.
Tracking consumers’ every move is giving marketers
both revealing statistical detail and new insights. The
research efforts have also turned up some surprises:
• By peering from the catwalks at 1,600 shoppers,
researchers for Marsh Supermarkets unearthed a
troubling trend: People heavily shopped the periphery
of the store—the produce, dairy, and meat sections—
but frequently cir