rUnit_3_Reading
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rUnit_3_Reading

Course: BU HRM, Spring 2010

School: Kaplan University

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5 OBJECTIVES 1 Describe the level of involvement and types of consumer problemsolving processes. 2 Recognize the stages of the consumer buying decision process. 3 Explain how situational influences may affect the consumer buying decision process. 4 Understand the psychological influences that may affect the consumer buying decision process. 5 Be familiar with the social influences that affect the consumer buying...

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Describe 5 OBJECTIVES 1 the level of involvement and types of consumer problemsolving processes. 2 Recognize the stages of the consumer buying decision process. 3 Explain how situational influences may affect the consumer buying decision process. 4 Understand the psychological influences that may affect the consumer buying decision process. 5 Be familiar with the social influences that affect the consumer buying decision process. Consumer Buying Behavior ho buys a car without checking under the hood or kicking the tires? Since 1997, millions of people have bought cars through the AutoTrader.com website (www.autotrader.com) without leaving their computer keyboards. At any one time, the site features classified ads for more than 2.5 million cars, both new and used, offered by 40,000 dealers and 250,000 individuals across the United States. Buyers and sellers make contact through the site to negotiate the final terms for purchases. Buyers pay no fee to browse or buy, which encourages visitors to surf the site often. When AutoTrader first opened its online business, few people had ever bought or sold a vehicle on the Internet. Therefore, the company's initial challenge was to change the habits of dealers and consumers who were accustomed to using newspaper classified advertising for used-car transactions. Instead of charging dealers for every listing, as newspapers did, AutoTrader set a flat monthly fee for posting any number of descriptions and photos. The next step was to educate AutoTrader's primary target market, 25- to 49-yearold men, about buying and selling cars online. The company did this by running informative television commercials showing how to use its site step by step. The result: the number of visitors surged to more than 5.5 million every month. Also, for the past few years, AutoTrader has sponsored television's Monday Night Football to reach this target market throughout the late summer and fall. During the two days following a Monday Night Football game, AutoTrader's website consistently increases by 10 percent, and the company sends auto dealers 12 percent more sales leads than it does during other periods. At one time, AutoTrader cooperated with eBay, the world's largest auction site, to allow consumers to search for cars on either site. However, after monitoring buyer behavior, AutoTrader ended the agreement and set up its own vehicle auctions in direct competition with eBay. "We did a lot of research and studied very closely the behavior of auction-style users on our site," says Chip Perry, AutoTrader's CEO. He acknowledges that eBay is the "current major player in an extremely small niche segment of the car business," but he sees plenty of room for AutoTrader in this fastgrowing segment. As AutoTrader's annual vehicle sales accelerate past $135 million, Perry has observed new behavior patterns emerging. "Online car shopping and selling has made it pos- Buying Cars with a Click at AutoTrader.com W 74 Consumer Buying Behavior CHAPTER 5 75 sible for people to be a little more cavalier about buying and selling cars," he says. "People are much more willing to buy and sell on a regular basis as opposed to feeling like they're stuck with a car."1 buying behavior The decision processes and acts of people involved in buying and using products consumer buying behavior Buying behavior of people who purchase products for personal or household use and not for business purposes Marketers at successful organizations like AutoTrader go to great efforts to understand their customers' needs and gain a better grasp of customers' buying behavior. A firm's ability to establish and maintain satisfying customer relationships requires an understanding of buying behavior. Buying behavior is the decision processes and acts of people involved in buying and using products. Consumer buying behavior refers to the buying behavior of ultimate consumers, those who purchase products for personal or household use and not for business purposes. Marketers attempt to understand buying behavior for several reasons. First, buyers' reactions to a firm's marketing strategy have a great impact on the firm's success. Second, as indicated in Chapter 1, the marketing concept stresses that a firm should create a marketing mix that satisfies customers. To find out what satisfies buyers, marketers must examine the main influences on what, where, when, and how consumers buy. Third, by gaining a better understanding of the factors that affect buying behavior, marketers are in a better position to predict how consumers will respond to marketing strategies. In this chapter, we first examine how the customer's level of involvement affects the type of problem solving employed and discuss the types of consumer problemsolving processes. Then we analyze the major stages of the consumer buying decision process, beginning with problem recognition, information search, and evaluation of alternatives and proceeding through purchase and postpurchase evaluation. Next, we examine situational influences that affect purchasing decisions: surroundings, time, purchase reason, and buyer's mood and condition. We go on to consider psychological influences on purchasing decisions: perception, motives, learning, attitudes, personality and self-concept, and lifestyles. We conclude with a discussion of social influences that affect buying behavior: roles, family, reference groups and opinion leaders, social classes, and culture and subcultures. Level of Involvement and Consumer Problem-Solving Processes Consumers generally try to acquire and maintain an assortment of products that satisfy their current and future needs. To do so, consumers engage in problem solving. When purchasing products such as food, clothing, shelter, medical care, education, recreation, and transportation, people engage in different types of problem-solving processes. The amount of effort, both mental and physical, that buyers expend in solving problems varies considerably. A major determinant of the type of problemsolving process employed depends on the customer's level of involvement, the degree of interest in a product and the importance the individual places on this product. High-involvement products tend to be those visible to others (such as clothing, furniture, or automobiles) and which are expensive. Expensive bicycles, for example, are usually high-involvement products. High-importance issues, such as health care, are associated with high levels of involvement. Low-involvement products tend to be those which are less expensive and have less associated social risk, such as many grocery items. When a person's interest in a product category is ongoing and long term, it is referred to as enduring involvement. In contrast, situational involvement is temporary and dynamic, and results from a particular set of circumstances. Involvement level, as well as other factors, affects a person's selection of one of three types of level of involvement An individual's intensity of interest in a product and the importance of the product for that person 76 CHAPTER 5 Consumer Buying Behavior routinized response behavior A type of consumer problemsolving process used when buying frequently purchased, low-cost items that require very little search-and-decision effort limited problem solving A type of consumer problemsolving process that buyers use when purchasing products occasionally or when they need information about an unfamiliar brand in a familiar product category extended problem solving A type of consumer problemsolving process employed when purchasing unfamiliar, expensive, or infrequently bought products Levels of Involvement Buying decisions about numerous grocery products, such as olives, are associated with low levels of involvement. Buying decisions regarding recreational equipment, such as kayaks, are associated with high levels of involvement. consumer problem solving: routinized response behavior, limited problem solving, or extended problem solving. A consumer uses routinized response behavior when buying frequently purchased, low-cost items needing very little search-and-decision effort. When buying such items, a consumer may prefer a particular brand but is familiar with several brands in the product class and views more than one as being acceptable. Typically, low-involvement products are bought through routinized response behavior, that is, almost automatically. For example, most buyers spend little time or effort selecting a soft drink or a brand of cereal. Buyers engage in limited problem solving when buying products occasionally or when they need to obtain information about an unfamiliar brand in a familiar product category. This type of problem solving requires a moderate amount of time for information gathering and deliberation. For example, if Procter & Gamble introduces an improved Tide laundry detergent, buyers will seek additional information about the new product, perhaps by asking a friend who has used it or watching a commercial about it, before making a trial purchase. The most complex type of problem solving, extended problem solving, occurs when purchasing unfamiliar, expensive, or infrequently bought products--for Consumer Buying Behavior CHAPTER 5 77 impulse buying An unplanned buying behavior resulting from a powerful urge to buy something immediately instance, a car, home, or college education. The buyer uses many criteria to evaluate alternative brands or choices and spends much time seeking information and deciding on the purchase. Extended problem solving is frequently used for purchasing high-involvement products. Purchase of a particular product does not always elicit the same type of problemsolving process. In some instances, we engage in extended problem solving the first time we buy a certain product but find that limited problem solving suffices when we buy it again. If a routinely purchased, formerly satisfying brand no longer satisfies us, we may use limited or extended problem solving to switch to a new brand. Thus, if we notice that the brand of pain reliever we normally buy is not working, we may seek out a different brand through limited problem solving. Most consumers occasionally make purchases solely on impulse, and not on the basis of any of these three problem-solving processes. Impulse buying involves no conscious planning but results from a powerful urge to buy something immediately. Consumer Buying Decision Process consumer buying decision process A five-stage purchase decision process that includes problem recognition, information search, evaluation of alternatives, purchase, and postpurchase evaluation Figure 5.1 Consumer Buying Decision Process and Possible Influences on the Process The consumer buying decision process, shown in Figure 5.1, includes five stages: problem recognition, information search, evaluation of alternatives, purchase, and postpurchase evaluation. Before we examine each stage, consider these important points. First, the act of purchasing is only one stage in the process and usually not the first stage. Second, even though we indicate that a purchase occurs, not all decision processes lead to a purchase. Individuals may end the process at any stage. Finally, not all consumer decisions include all five stages. People engaged in extended problem solving usually go through all stages of this decision process, whereas those engaged in limited problem solving and routinized response behavior may omit some stages. Possible influences on the decision process Situational influences Physical surroundings Social surroundings Time Purchase reason Buyer's mood and condition Psychological influences Perception Motives Learning Attitudes Personality and self-concept Lifestyles Social influences Roles Family Reference groups and opinion leaders Social classes Culture and subcultures Consumer buying decision process Problem recognition Information search Evaluation of alternatives Postpurchase evaluation Purchase 78 CHAPTER 5 Consumer Buying Behavior Problem Recognition The maker of Carbona cleaning products employs advertising to encourage problem recognition that certain stains are difficult to remove and that its products will remove them. Problem Recognition Problem recognition occurs when a buyer becomes aware of a difference between a desired state and an actual condition. Consider a student who owns a nonprogrammable calculator and learns she needs a programmable one for her math course. She recognizes that a difference exists between the desired state--having a programmable calculator--and her actual condition. She therefore decides to buy a new calculator. The speed of consumer problem recognition can be quite rapid or rather slow. Sometimes a person has a problem or need but is unaware of it. Marketers use sales personnel, advertising, and packaging to help trigger recognition of such needs or problems. For example, a university bookstore may advertise programmable calculators in the school newspaper at the beginning of the term. Students who see the advertisement may recognize that they need these calculators for their course work. Information Search After recognizing the problem or need, a buyer (if continuing the decision process) searches for product information that will help resolve the problem or satisfy the need. For example, the above-mentioned student, after recognizing the need for a programmable calculator, may search for information about different types and brands of calculators. She acquires information over time from her surroundings. However, the information's impact depends on how she interprets it. An information search has two aspects. In an internal search, buyers search their memories for information about products that might solve the problem. If they cannot retrieve enough information from memory to make a decision, they seek additional information from outside sources in an external search. The external search may focus on communication with friends or relatives, comparison of available brands and prices, marketer-dominated sources, and/or public sources. For example, a recent survey indicates that the Internet is the most preferred information source of car shoppers in online households, especially for pricing information.2 An individual's personal contacts--friends, relatives, associates--often are influential sources of information because the person trusts and respects them. Utilizing marketerdominated sources of information, such as salespeople, advertising, package labeling, and in-store demonstrations and displays, typically requires little effort on the consumer's part. Buyers also obtain information from public sources--for instance, government reports, news presentations, publications such as Consumer Reports, and internal search An information search in which buyers search their memories for information about products that might solve their problem external search An information search in which buyers seek information from outside sources Consumer Buying Behavior CHAPTER 5 79 reports from product-testing organizations. Consumers frequently view information from public sources as highly credible because of its factual and unbiased nature. Repetition, a technique well known to advertisers, increases consumers' learning of information. When seeing or hearing an advertising message for the first time, recipients may not grasp all its important details, but learn more details as the message is repeated. Evaluation of Alternatives A successful information search yields a group of brands that a buyer views as possible alternatives. This group of brands is sometimes called a consideration set (also called an evoked set). For example, a consideration set of calculators might include those made by Texas Instruments, Hewlett-Packard, Sharp, and Casio. To assess the products in a consideration set, the buyer uses evaluative criteria, which are objective (such as an EPA mileage rating) and subjective (such as style) characteristics that are important to the buyer. For example, one calculator buyer may want a rechargeable unit with a large display and large buttons, whereas another may have no size preferences but dislikes rechargeable calculators. The buyer also assigns a certain level of importance to each criterion; some features and characteristics carry more weight than others. Using the criteria, the buyer rates and eventually ranks brands in the consideration set. The evaluation stage may yield no brand the buyer is willing to purchase. In that case, a further information search may be necessary. Marketers may influence consumers' evaluations by framing the alternatives, that is, by describing the alternatives and their attributes in a certain manner. Framing can make a characteristic seem more important to a consumer and facilitate its recall from memory. For example, by stressing a car's superior comfort and safety features over those of a competitor's, an automaker can direct consumers' attention toward these points of superiority. Framing probably influences the decision processes of inexperienced buyers more than those of experienced ones. Framing Product Attributes Hoover helps frame product attributes by highlighting product features such as vacuuming power, twin chambers, no bags, HEPA filtration, and powered brushing action. Purchase In the purchase stage, the consumer chooses the product to be bought. Selection is based on the outcome of the evaluation stage and on other dimensions. Product availability may influence which brand is purchased. For example, if a consumer wants a black pair of Nikes and cannot find them in her size, she might buy a black pair of Reeboks. During this stage, buyers also pick the seller from whom they will buy the product. The choice of seller may affect final product selection--and so may the terms of sale, which, if negotiable, are determined at this stage. Other issues, such as price, delivery, warranties, maintenance agreements, installation, and credit arrangements, are also settled. Finally, the actual purchase takes place during this stage, unless the consumer decides to terminate the buying decision process. consideration set A group of brands that a buyer views as alternatives for possible purchase evaluative criteria Objective and subjective characteristics that are important to a buyer 80 CHAPTER 5 Consumer Buying Behavior Postpurchase Evaluation After the purchase, the buyer begins evaluating the product to ascertain if its actual performance meets expected levels. Many criteria used in evaluating alternatives are applied again during postpurchase evaluation. The outcome of this stage is either satisfaction or dissatisfaction, which influences whether the consumer complains, communicates with other possible buyers, and repurchases the product. Shortly after purchase of an expensive product, evaluation may result in cognitive dissonance, doubts in the buyer's mind about whether purchasing the product was the right decision. For example, after buying a pair of $169 inline skates, a person may feel guilty about the purchase or wonder whether she purchased the right brand and quality. Cognitive dissonance is most likely to arise when a person has recently bought an expensive, high-involvement product that lacks some of the desirable features of competing brands. A buyer experiencing cognitive dissonance may attempt to return the product or seek positive information about it to justify choosing it. Marketers sometimes attempt to reduce cognitive dissonance by having salespeople contact recent purchasers to make sure they are satisfied with their new purchases. As Figure 5.1 shows, three major categories of influences are believed to affect the consumer buying decision process: situational, psychological, and social. In the remainder of this chapter, we focus on these influences. Although we discuss each major influence separately, their effects on the consumer decision process are interrelated. cognitive dissonance A buyer's doubts shortly after a purchase about whether the decision was the right one Situational Influences on the Buying Decision Process situational influences Influences resulting from circumstances, time, and location that affect the consumer buying decision process Situational influences result from circumstances, time, and location that affect the consumer buying decision process. For example, buying an automobile tire after noticing while washing your car that the tire is badly worn is a different experience from buying a tire right after a blowout on the highway derails your vacation. Situational factors can influence the buyer during any stage of the consumer buying decision process and may cause the individual to shorten, lengthen, or terminate the process. Situational factors can be classified into five categories: physical surroundings, social surroundings, time perspective, reason for purchase, and the buyer's momentary mood and condition.3 Physical surroundings include location, store atmosphere, aromas, sounds, lighting, weather, and other factors in the physical environment in which the decision process occurs. Numerous restaurant chains, such as Olive Garden and Chili's, invest heavily in facilities, often building from the ground up, to provide special surroundings that enhance customers' dining experiences. Clearly, in some settings, dimensions, such as weather, traffic sounds, and odors, are beyond the marketers' control. Yet they must try to make customers more comfortable. General climatic conditions, for example, may influence a customer's decision to buy a specific type of vehicle (such as an SUV) and certain accessories (such as four-wheel drive). Current weather conditions, depending on whether they are favorable or unfavorable, may either encourage or discourage consumers to go shopping and to seek out specific products. Social surroundings include characteristics and interactions of others, such as friends, relatives, salespeople, and other customers, who are present when a purchase decision is being made. Buyers may feel pressured to behave in a certain way because they are in public places such as restaurants, stores, or sports arenas. Thoughts about who will be around when the product is used or consumed is also a dimension of the Consumer Buying Behavior CHAPTER 5 81 social setting. An overcrowded store or an argument between a customer and a salesperson may cause consumers to stop shopping or even leave the store. The time dimension, such as the amount of time required to become knowledgeable about a product, to search for it, and to buy it, also influences the buying decision process in several ways. For instance, to make an informed decision at their own convenience, more men than ever are buying diamond engagement rings online. A high-end Internet jeweler like Blue Nile features interactive tools on its website to help men educate themselves about diamonds and then select a unique combination from its large inventory of diamonds and settings.4 Time plays a major role because the buyer considers the possible frequency of product use, the length of time required to use the product, and the length of the overall product life. Other time dimensions that influence purchases include time of day, day of the week or month, seasons, and holidays. The amount of time pressure a consumer is under affects how much time is devoted to purchase decisions. A customer under severe time constraints is likely either to make quick purchase decisions or to delay them. The purchase reason raises the questions of what exactly the product purchase should accomplish and for whom. Generally, consumers purchase an item for their own use, for household use, or as a gift. For example, people who are buying a gift may buy a different product than if they were purchasing the product for themselves. If you own a Cross pen, for example, it is unlikely that you bought it for yourself. The buyer's momentary moods (such as anger, anxiety, contentment) or momentary conditions (fatigue, illness, being flush with cash) may have a bearing on the consumer buying decision process. These moods or conditions immediately precede the current situation and are not chronic. Any of these moods or conditions can affect a person's ability and desire to search for information, receive information, or seek and evaluate alternatives. They can also significantly influence a consumer's postpurchase evaluation. Psychological Influences on the Buying Decision Process psychological influences Factors that partly determine people's general behavior, thus influencing their behavior as consumers Psychological influences partly determine people's general behavior and thus influence their behavior as consumers. Primary psychological influences on consumer behavior are perception, motives, learning, attitudes, personality and self-concept, and lifestyles. Even though these psychological factors operate internally, they are very much affected by social forces outside the individual. Perception perception The process of selecting, organizing, and interpreting information inputs to produce meaning information inputs Sensations received through the sense organs selective exposure The process of selecting inputs to be exposed to our awareness while ignoring others Different people perceive the same thing at the same time in different ways. When you first look at Figure 5.2, do you see fish or birds? Similarly, an individual at different times may perceive the same item in a number of ways. Perception is the process of selecting, organizing, and interpreting information inputs to produce meaning. Information inputs are sensations received through sight, taste, hearing, smell, and touch. When we hear an advertisement, see a friend, smell polluted air or water, or touch a product, we receive information inputs. As the definition indicates, perception is a three-step process. Although we receive numerous pieces of information at once, only a few reach our awareness. We select some inputs and ignore others because we do not have the ability to be conscious of all inputs at one time. This phenomenon is sometimes called selective exposure because an individual selects which inputs will reach awareness. If you are 82 CHAPTER 5 Consumer Buying Behavior selective distortion An individual's changing or twisting of information when it is inconsistent with personal feelings or beliefs selective retention Remembering information inputs that support personal feelings and beliefs and forgetting inputs that do not concentrating on this paragraph, you probably are not aware that cars outside are making noise, that the room light is on, or that you are touching this page. Even though you receive these inputs, they do not reach your awareness until they are pointed out. An individual's current set of needs affects selective exposure. Information inputs that relate to one's strongest needs at a given time are more likely to be selected to reach awareness. It is not by random chance that many fast-food commercials are aired near mealtimes. Customers are more likely to tune in to these advertisements at these times. The selective nature of perception may result not only in selective exposure but also in two other conditions: selective distortion and selective retention. Selective distortion is changing or twisting currently received information; it occurs when a person receives information inconsistent with personal feelings or beliefs. For example, on seeing an advertisement promoting a disliked brand, a viewer may distort the information to make it more consistent with prior views. This distortion substantially lessens the effect of the advertisement on the individual. In selective retention, a person remembers information inputs that support personal feelings and beliefs and forgets inputs that do not. After hearing a sales presentation and leaving a store, a customer may forget many selling points if they contradict personal beliefs. The second step in the process of perception is perceptual organization. Information inputs that reach awareness are not received in an organized form. To produce meaning, an individual must mentally organize and integrate new information with what is already stored in memory. People use several methods to organize. One method, called closure, occurs when a person mentally fills in missing elements in a pattern or statement. In an attempt to draw attention to its brand, an advertiser will capitalize on closure by using incomplete images, sounds, or statements in its advertisements. Interpretation, the third step in the perceptual process, is the assignment of meaning to what has been organized. A person bases interpretation on what he or she expects or what is familiar. For this reason, a manufacturer that changes a product or its package faces a major problem. When people are looking for the old, familiar product or package, they may not recognize the new one. Unless a product or package change is accompanied by a promotional program that makes people aware of the change, an organization may suffer a sales decline. Motives motive An internal energizing force that directs a person's behavior toward satisfying needs or achieving goals Maslow's hierarchy of needs The five levels of needs that humans seek to satisfy, from most to least important A motive is an internal energizing force that orients a person's activities toward satisfying needs or achieving goals. Buyers' actions are affected by a set of motives rather than by just one motive. At a single point in time, some of a person's motives are stronger than others. For example, a person's motives for having a cup of coffee are much stronger right after waking up than just before going to bed. Motives also affect the direction and intensity of behavior. Some motives may help an individual achieve his or her goals, whereas others create barriers to goal achievement. Abraham Maslow, an American psychologist, conceived a theory of motivation based on a hierarchy of needs. According to Maslow, humans seek to satisfy five levels of needs, from most important to least important, as shown in Figure 5.3. This sequence is known as Maslow's hierarchy of needs. Once needs at one level are met, humans seek to fulfill needs at the next level up in the hierarchy. At the most basic level are physiological needs, requirements for survival such as food, water, sex, clothing, and shelter, which people try to satisfy first. Food and beverage marketers often appeal to physiological needs. At the next level are safety needs, which include secu- Consumer Buying Behavior CHAPTER 5 83 rity and freedom from physical and emotional pain and suffering. Next are social needs, the human requirements for love and affection and a sense of belonging. Ads for cosmetics and other beauty products, jewelry, and even cars often suggest that purchasing these products will bring love. At the level of esteem needs, people require respect and recognition from others as well as self-esteem, a sense of their own worth. Owning a Lexus automobile, having a beauty makeover, or flying first class can satisfy esteem needs. At the top of the hierarchy are self-actualization needs. These refer to people's need to grow and develop and to become all they are capable of becoming. In its recruiting advertisements, the U.S. Army told potential enlistees to "be all that you can be in the Army." Motives that influence where a person purchases products on a regular basis are patronage motives Motives called patronage motives. A buyer may shop at a specific store because of patronage that influence where a person motives such as price, service, location, product variety, or friendliness of salespeople. purchases products on a regular To capitalize on patronage motives, marketers try to determine why regular cusbasis tomers patronize a particular store and to emphasize these characteristics in the store's marketing mix. Learning learning Changes in an individual's thought processes and behavior caused by information and experience Learning refers to changes in a person's thought processes and behavior caused by information and experience. Consequences of behavior strongly influence the learning process. Behaviors that result in satisfying consequences tend to be repeated. For example, a consumer who buys a Snickers candy bar and enjoys the taste is more likely to buy a Snickers again. In fact, the individual will probably continue to purchase that brand until it no longer provides satisfaction. When effects of the behavior are no longer satisfying, the person may switch brands or stop eating candy bars altogether. When making purchasing decisions, buyers process information. Individuals have differing abilities to process information. The type of information inexperienced buyers use may differ from the type used by experienced shoppers familiar with the product and purchase situation. Thus, two potential purchasers of an antique desk may use different types of information in making their purchase decisions. The inexperienced buyer may judge the desk's value by price, whereas the more experienced buyer may seek information about the manufacturer, period, and place of origin to judge the desk's quality and value. Consumers lacking experience may seek information from others when making a purchase and even take along an informed "purchase pal." More experienced buyers have greater self-confidence and more knowledge Self-actualization needs Esteem needs Social needs Figure 5.3 Maslow's Hierarchy of Needs Maslow believed that people seek to fulfill five categories of needs. Safety needs Physiological needs 84 CHAPTER 5 Consumer Buying Behavior about the product and can recognize which product features are reliable cues to product quality. For example, Safeway decided to launch its Safeway.com online grocery shopping service in Portland, Oregon, and Vancouver, Washington, because consumers in those two cities were already familiar with the operation and offerings of Web-based grocery stores. As a result, these consumers had the experience and knowledge and thus were more likely to understand and use Safeway.com.5 Marketers help customers learn about their products by helping them gain experience with them. Free samples, sometimes coupled with coupons, can successfully encourage trial and reduce purchase risk. For example, because some consumers may be wary of exotic menu items, restaurants sometimes offer free samples. In-store demonstrations foster knowledge of product uses. Test drives give potential new-car purchasers some experience with the automobile's features. Consumers also learn by experiencing products indirectly through information from salespeople, advertisements, friends, and relatives. Through sales personnel and advertisements, marketers offer information before (and sometimes after) purchases to influence what consumers learn and to create more favorable attitudes toward the product. Attitudes attitude An individual's enduring evaluation of, feelings about, and behavioral tendencies toward an object or idea An attitude is an individual's enduring evaluation of, feelings about, and behavioral tendencies toward an object or idea. The objects toward which we have attitudes may be tangible or intangible, living or nonliving. For example, we have attitudes toward sex, religion, politics, and music, just as we do toward cars, football, and breakfast cereals. Although attitudes can change, they tend to remain stable and do not vary from moment to moment. However, all of a person's attitudes do not have equal impact at any one time; some are stronger than others. Individuals acquire attitudes through experience and interaction with other people. An attitude consists of three major components: cognitive, affective, and behavioral. The cognitive component is the person's knowledge and information about the object or idea. The affective component comprises feelings and emotions toward the object or idea. The behavioral component manifests itself in the person's actions regarding the object or idea. Changes in one of these components may or may not alter the other components. Thus, a consumer may become more knowledgeable about a specific brand without changing Melissa and Mallory Gollick the affective or behavioral components of his or her attitude toward that brand. THEIR BUSINESSES: MelMaps and Consumer attitudes toward a company Jungle Beans and its products greatly influence success FOUNDED AT AGES: 7 and 9 or failure of the firm's marketing strategy. When consumers have strong negative attiSUCCESS: Loyal customers tudes toward one or more aspects of a firm's marketing practices, they may not elissa and Mallory Gollick of Denver, Colorado, share more in only stop using its products, but also urge common than your average siblings: they both became entrerelatives and friends to do likewise. preneurs by the ripe age of 9. Melissa, now 18, is the founder and Because attitudes play such an imporoperator of MelMaps, a computer graphics firm specializing in locatant part in determining consumer behavtion, vicinity, site, and floor maps. Over the past 9 years, she has ior, marketers should measure consumer established a loyal clientele of local real estate agents and bankers. attitudes toward prices, package designs, Her younger sister Mallory, who is now 16, owns and operates Junbrand names, advertisements, salespeople, gle Beans, a company that sells gourmet Costa Rican coffee beans repair services, store locations, features of a to the tune of 40 kilos (88 pounds) a week. existing or proposed products, and social responsibility efforts. Several methods help M Consumer Buying Behavior CHAPTER 5 85 attitude scale Means of measuring consumer attitudes by gauging the intensity of individuals' reactions to adjectives, phrases, or sentences about an object marketers gauge these attitudes. One of the simplest ways is to question people directly. Press Ganey Associates, in South Bend, Indiana, researches patient opinions about their hospitalization, one of the factors being hospital food. Marion General Hospital in Marion, Indiana, found satisfaction with its food service ranked in the 40th percentile. To help increase its score, the hospital consulted with a Fort Wayne hospital whose food service ranked in the 90th percentile. Instituting several ideas from the consultation, Marion General's score rose to the 70th percentile and eventually reached a rating in the 90s.6 Marketers also evaluate attitudes through attitude scales. An attitude scale usually consists of a series of adjectives, phrases, or sentences about an object. Respondents indicate the intensity of their feelings toward the object by reacting to the adjectives, phrases, or sentences in a certain way. For example, a marketer measuring people's attitudes toward shopping might ask respondents to indicate the extent to which they agree or disagree with a number of statements, such as "Shopping is more fun than watching television." When marketers determine that a significant number of consumers have negative attitudes toward an aspect of a marketing mix, they may try to change those attitudes to make them more favorable. This task is generally lengthy, expensive, and difficult, and may require extensive promotional efforts. For example, the California Prune Growers, an organization of prune producers, has tried to use advertising to change consumers' attitudes toward prunes by presenting them as a nutritious snack high in potassium and fiber. To alter consumers' responses so that more of them buy a given brand, a firm might launch an information-focused campaign to change the cognitive component of a consumer's attitude or a persuasive (emotional) campaign to influence the affective component. Distributing free samples might help change the behavioral component. Both business and nonbusiness organizations try to change people's attitudes about many issues, from health and safety to prices and product features. Personality and Self-Concept personality A set of internal traits and distinct behavioral tendencies that result in consistent patterns of behavior Personality is a set of internal traits and distinct behavioral tendencies that result in consistent patterns of behavior in certain situations. An individual's personality arises from hereditary characteristics and personal experiences that make the person unique. Personalities typically are described as having one or more characteristics such as compulsiveness, ambition, gregariousness, dogmatism, authoritarianism, introversion, extroversion, and competitiveness. Marketing researchers look Attempting to Change Attitudes A number of organizations attempt to convince smokers to quit smoking and to inform them about the effects of secondhand smoke. 86 CHAPTER 5 Consumer Buying Behavior self-concept Perception or view of oneself for relationships between such characteristics and buying behavior. Even though a few links between several personality traits and buyer behavior have been determined, results of many studies have been inconclusive. The weak association between personality and buying behavior may be the result of unreliable measures rather than a lack of a relationship. Some marketers are convinced that consumers' personalities do influence types and brands of products purchased. For example, the type of clothing, jewelry, or automobile a person buys may reflect one or more personality characteristics. At times marketers aim advertising at certain types of personalities. For example, ads for certain cigarette brands are directed toward specific personality types. Marketers focus on positively valued personality characteristics, such as security consciousness, sociability, independence, or competitiveness, rather than on negatively valued ones like insensitivity or timidity. A person's self-concept is closely linked to personality. Self-concept (sometimes called self-image) is a person's view or perception of him- or herself. Individuals develop and alter their self-concepts based on an interaction of psychological and social dimensions. Research shows that a buyer purchases products that reflect and enhance the self-concept and that purchase decisions are important to the development and maintenance of a stable self-concept. Consumers' self-concepts may influence whether they buy a product in a specific product category and may affect brand selection as well as where they buy. For example, home improvement retailer Lowe's is targeting women--who make 90 percent of household decisions about home decor and home improvement--using self-concept as the basis of its advertising message. "Only Lowe's has everything and everyone to help your house tell the story about who you really are," says the company's advertising tag line.7 Lifestyles lifestyle An individual's pattern of living expressed through activities, interests, and opinions A lifestyle is an individual's pattern of living expressed through activities, interests, and opinions. Lifestyle patterns include the ways people spend time, the extent of their interaction with others, and their general outlook on life and living. People partially determine their own lifestyles, but the pattern is also affected by personality, as well as by demographic factors such as age, education, income, and social class. Lifestyles are measured through a lengthy series of questions. Lifestyles have a strong impact on many aspects of the consumer buying decision process, from problem recognition to postpurchase evaluation. Lifestyles influence consumers' product needs, brand preferences, types of media used, and how and where they shop. Self-Concept This Adidas advertisement is designed to appeal to individuals whose self-concept includes being strong and persevering. Consumer Buying Behavior CHAPTER 5 87 Social Influences on the Buying Decision Process social influences The forces other people exert on one's buying behavior Forces that other people exert on buying behavior are called social influences. As Figure 5.1 shows, they are grouped into five major areas: roles, family, reference groups and opinion leaders, social classes, and culture and subcultures. Roles role Actions and activities that a person in a particular position is supposed to perform based on expectations of the individual and surrounding persons All of us occupy positions within groups, organizations, and institutions. Associated with each position is a role, a set of actions and activities a person in a particular position is supposed to perform based on expectations of both the individual and surrounding persons. Because people occupy numerous positions, they have many roles. For example, a man may perform the roles of son, husband, father, employee or employer, church member, civic organization member, and student in an evening college class. Thus, multiple sets of expectations are placed on each person's behavior. An individual's roles influence both general behavior and buying behavior. The demands of a person's many roles may be diverse and even inconsistent. Consider the various types of clothes that you buy and wear depending on whether you are going to class, to work, to a party, to church or synagogue, or to an aerobics class. You and others involved in these settings have expectations about what is acceptable clothing for these events. Thus, the expectations of those around us affect our purchases of clothing and many other products. Family Influences consumer socialization The process through which a person acquires the knowledge and skills to function as a consumer Family influences have a very direct impact on the consumer buying decision process. Parents (and other household adults) teach children how to cope with various problems, including those dealing with purchase decisions. Consumer socialization is the process through which a person acquires the knowledge and skills to function as a consumer. Often children gain this knowledge and set of skills by observing parents and older siblings in purchase situations, as well as through their own purchase experiences. Children observe brand preferences and buying practices in their families and, as adults, maintain some of these brand preferences and buying practices as they establish households and raise their own families. Buying decisions made by a family are a combination of group and individual decision making. Although female roles continue to change, women still make buying decisions related to many household items, including health-care products, laundry supplies, paper products, and foods. Spouses participate jointly in the purchase of several products, especially durable goods. Due to changes in men's roles, a significant proportion of men are the primary grocery shoppers. Children make many purchase decisions and influence numerous household purchase decisions. Knowing that children wield considerable influence over food brand preferences, H. J. Heinz targeted them a few years ago with EZ Squirt ketchup in a squeeze bottle designed for small hands to grasp and in a rainbow of colors such as green, purple, blue, teal, pink, and orange.8 Also, many advertising messages are targeted at teens. For example, Britney Spears speaks for Pepsi, Brandy for Covergirl, Jennifer Love Hewitt for Neutrogena, and Jessica Biel for L'Oreal.9 The extent to which adult family members take part in family decision making varies among families and product categories. Traditionally family decision making 88 CHAPTER 5 Consumer Buying Behavior Role Influences Some organizations, such as KPMG, recognize the existence of multiple role influences and express sensitivity toward them. reference group Any group that positively or negatively affects a person's values, attitudes, or behavior processes have been grouped into four categories: autonomic, husband-dominant, wife-dominant, and syncratic. Autonomic decision making means that an equal number of decisions are made by each adult household member. In husband-dominant or wife-dominant decision making, the husband or the wife, respectively, makes most of the family decisions. Syncratic decision making means most decisions concerning purchases are made jointly by both partners. The type of family decision making employed depends on the composition of the family as well as the values and attitudes of family members. When two or more family members participate in a purchase, their roles may dictate that each is responsible for performing certain purchase-related tasks, such as initiating the idea, gathering information, determining if the product is affordable, deciding whether to buy the product, or selecting the specific brand. The specific purchase tasks performed depend on the types of products being considered, the kind of family purchase decision process typically employed, and the amount of influence children have in the decision process. Thus, different family members may play different roles in the family buying process. To develop a marketing mix that meets the needs of target market members precisely, marketers must know not only who does the actual buying but also which other family members perform purchase-related tasks. The family life cycle stage affects individual and joint needs of family members. (Family life cycle stages are discussed in Chapter 7.) For example, consider how the car needs of recently married twenty-somethings differ from those of the same couple when they are forty-somethings with a 13-year-old daughter and a 17-year-old son. Family life cycle changes can affect which family members are involved in purchase decisions and the types of products purchased. Reference Groups and Opinion Leaders A reference group is any group that positively or negatively affects a person's values, attitudes, or behavior. Reference groups can be large or small. Most people have several reference groups, such as families, work-related groups, fraternities or sororities, civic clubs, professional organizations, or church-related groups. In general, there are three major types of reference groups: membership, aspirational, and disassociative. A membership reference group is one to which an individual actually belongs; the individual identifies with group members strongly enough to take on the values, attitudes, and behaviors of people in that group. An aspirational reference group is a group to which one aspires to belong; one desires to be like those group members. A group that a person does not wish to be associated with is a disassociative reference group; the individual does not want to take on the values, attitudes, and behavior of group members. A reference group may serve as an individual's point of comparison and source of information. A customer's behavior may change to be more in line with actions and beliefs of group members. For example, a person might stop buying one brand of shirts and switch to another based on reference group members' advice. An individ- Consumer Buying Behavior CHAPTER 5 89 opinion leader A reference group member who provides information about a specific sphere that interests reference group participants ual may also seek information from the reference group about other factors regarding a prospective purchase, such as where to buy a certain product. The extent to which a reference group affects a purchase decision depends on the product's conspicuousness and on the individual's susceptibility to reference group influence. Generally, the more conspicuous a product, the more likely that the purchase decision will be influenced by reference groups. A product's conspicuousness is determined by whether others can see it and whether it can attract attention. Reference groups can affect whether a person does or does not buy a product at all, buys a type of product within a product category, or buys a specific brand. A marketer sometimes tries to use reference group influence in advertisements by suggesting that people in a specific group buy a product and are highly satisfied with it. In most reference groups, one or more members stand out as opinion leaders. An opinion leader provides information about a specific sphere that interests reference group participants who seek information. Opinion leaders are viewed by other group members as being well informed about a particular area and as easily accessible. An opinion leader is not the foremost authority on all issues. Because such individuals know they are opinion leaders, however, they feel a responsibility to remain informed about their sphere of interest and thus seek out advertisements, manufacturers' brochures, salespeople, and other sources of information. An opinion leader is likely to be most influential when consumers have high product involvement but low product knowledge, when they share the opinion leader's values and attitudes, and when the product details are numerous or complicated. Social Classes social class An open group of individuals with similar social rank In all societies, people rank others into higher or lower positions of respect. This ranking results in social classes. A social class is an open group of individuals with similar social rank. A class is referred to as "open" because people can move into and out of it. Criteria for grouping people into classes vary from one society to another. In the United States, we take into account many factors, including occupation, education, income, wealth, race, ethnic group, and possessions. A person who is ranking someone does not necessarily apply all of a society's criteria. Sometimes, too, the role of income in social class determination tends to be overemphasized. Although income does help determine social class, the other factors also play a role. Within social classes, both incomes and spending habits differ significantly among members. Analyses of social class in the United States commonly divide people into three to seven categories. Social scientist Richard P. Coleman suggests that, for purposes of consumer analysis, the population be divided into the four major status groups shown in Table 5.1. However, he cautions marketers that considerable diversity exists in people's life situations within each status group. To some degree, individuals within social classes develop and assume common behavioral patterns. They may have similar attitudes, values, language patterns, and possessions. Social class influences many aspects of people's lives. For example, it affects their chances of having children and their children's chances of surviving infancy. It influences their childhood training, choice of religion, selection of occupation, and leisure time activities. Because social class has a bearing on so many aspects of a person's life, it also affects buying decisions. Social class influences people's spending, saving, and credit practices. It determines to some extent the type, quality, and quantity of products a person buys and uses. For example, it affects purchases of clothing, foods, financial and health-care services, travel, recreation, entertainment, and home furnishings. Social class also affects an individual's shopping patterns and types of stores patronized. In some instances, marketers attempt to focus on certain social classes through store location 90 CHAPTER 5 Consumer Buying Behavior Table 5.1 Class (% of Population) Social Class Behavioral Traits and Purchasing Characteristics Behavioral Traits Income varies among the groups, but goals are the same; various lifestyles: preppy, conventional, intellectual, etc; neighborhood and prestigious schooling important. Often in management; considered white collar; prize good schools; desire an attractive home in a nice, well-maintained neighborhood; often emulate the upper class; enjoy travel and physical activity; often very involved in children's school and sports activities. Emphasis on family, especially for economic and emotional supports (e.g., job opportunity tips, help in times of trouble); blue collar; earn good incomes; enjoy mechanical items and recreational activities; enjoy leisure time after working hard. Often unemployed due to situations beyond their control (e.g., layoffs, company takeover); can include individuals on welfare and homeless individuals; often have strong religious beliefs; may be forced to live in less desirable neighborhoods; in spite of their problems, often good-hearted toward others; enjoy everyday activities when possible. Buying Characteristics Prize quality merchandise; favor prestigious brands; products purchased must reflect good taste; invest in art; spend money on travel, theater, books, tennis, golf, and swimming clubs. Like fashionable items; consult experts via books, articles, etc., before purchasing; spend for experiences they consider worthwhile for their children (e.g., ski trips, college education); tour packages, weekend trips; attractive home furnishings. Buy vehicles and equipment related to recreation, camping, and selected sports; strong sense of value; shop for best bargains at off price and discount stores; purchase automotive equipment for making repairs; enjoy local travel, recreational parks. Most products purchased are for survival; ability to convert good discards into usable items. Upper (14%); includes upper-upper, lowerupper, upper-middle Middle (32%) Working (38%) Lower (16%) Source: Adapted from Richard P. Coleman, "The Continuing Significance of Social Class to Marketing," Journal of Consumer Research, December 1983, pp. 265280. Reprinted by permission of the publisher, The University of Chicago Press, and reprinted by permission of The McGraw-Hill Companies from J. Paul Peter and Jerry C. Olson, Consumer Behavior Marketing Strategy Perspective, p. 433. Copyright 1987. and interior design, product design and features, pricing strategies, personal sales efforts, and advertising. Culture and Subcultures culture The values, knowledge, beliefs, customs, objects, and concepts of a society Culture is the accumulation of values, knowledge, beliefs, customs, objects, and concepts that a society uses to cope with its environment and passes on to future generations. Examples of objects are foods, furniture, buildings, clothing, and tools. Concepts include education, welfare, and laws. Culture also includes core values and the degree of acceptability of a wide range of behaviors in a specific society. For example, in our culture, customers as well as businesspeople are expected to behave ethically. Culture influences buying behavior because it permeates our daily lives. Our culture determines what we wear and eat and where we reside and travel. Society's interest in the healthfulness of food affects food companies' approaches to developing and Consumer Buying Behavior CHAPTER 5 91 subculture A group of individuals whose characteristic values and behavior patterns are similar and differ from those of the surrounding culture promoting their products. Culture also influences how we buy and use products and our satisfaction from them. When U.S. marketers sell products in other countries, they realize the tremendous impact those cultures have on product purchases and use. Global marketers find that people in other regions of the world have different attitudes, values, and needs, which call for different methods of doing business as well as different types of marketing mixes. Some international marketers fail because they do not or cannot adjust to cultural differences. A culture consists of various subcultures. Subcultures are groups of individuals whose characteristic values and behavior patterns are similar and differ from those of the surrounding culture. Subcultural boundaries are usually based on geographic designations and demographic characteristics, such as age, religion, race, and ethnicity. Our culture is marked by several different subcultures, among them West Coast, gay, Asian American, and college students. Within subcultures, greater similarities E-MARKETING AND TECHNOLOGY MARKETING "COOL" BEFORE THE FRENZY FIZZLES Marketers that target teenagers and young adults know that the quest for cool drives much of the buying done by these segments. However, products based on the newest trend or the latest pop culture development can go from frenzy to fizzle quickly and without warning. This is why many companies hire trend consultants or specialized researchers to help them spot the new, new thing before it becomes the old, old thing. Often what teenagers think is cool is heavily influenced by media. "Each season, teens get more fashionable," says Erin Conroy of Brown Shoe, a fashion shoe company. "They are tuned in to MTV and Hollywood and follow celebrities and other trend-setters rather than setting the trends." Yet media coverage contributes to the speedy death of trends as well as to their birth. Almost immediately after a celebrity wears a new style, the word spreads through the Internet, television, magazines, and newspapers. Teens want what's cool right now, not what was cool yesterday. Long-time trend analyst Irma Zandl stresses the importance of timing: being the first to introduce a product in the hope of making it trendy is just as risky as being the last to market. Moreover, teen tastes influence what preteens and young adults will buy. As other groups start to buy what teens in the vanguard are buying, trendy products become mainstream and much less appealing to the superhip. This is the signal for companies to put once-cool items on sale and gear up for the next trend. Firms that cater to trendy teens cannot afford the luxury of waiting months for items to be manufactured and shipped from the Far East or other distant sources because the window of opportunity closes much sooner these days. When teens want a cool product, they want it now. Price is a secondary consideration. Keeping up with cool also means keeping advertising up to date. Andrew Keller, creative director at ad agency CP B, says that "advertising is disposable" and yet, he adds, "the faster we react to fads, the faster they'll go away." The bottom line for marketers is that the quest for cool never ends. Now more than ever, companies need to know their customers and look carefully for clues to the next cool thing.b 92 CHAPTER 5 Consumer Buying Behavior exist in people's attitudes, values, and actions than within the broader culture. Relative to other subcultures, individuals in one subculture may have stronger preferences for specific types of clothing, furniture, or foods. It is important to understand that a person can be a member of more than one subculture and that the behavioral patterns and values attributed to specific subcultures do not necessarily apply to all group members. The percentage of the U.S. population comprising ethnic and racial subcultures is expected to grow. By 2050, about one-half of the people of the United States will be members of racial and ethnic minorities. The Bureau of the Census reports that the three largest and fastest-growing ethnic U.S. subcultures are African Americans, Hispanics, and Asians. The population growth of these subcultures interests marketers. To target these groups more precisely, marketers are striving to become increasingly sensitive to and knowledgeable about their differences. Businesses recognize that to succeed, their marketing strategies will have to take into account the values, needs, interests, shopping patterns, and buying habits of various subcultures. G African American Subculture. In the United States, the African American subculture represents 12 percent of the population.10 Like all subcultures, African American consumers possess distinct buying patterns. For example, African American consumers spend more money on telephone service, shoes, children's apparel, groceries, and housing than do white consumers.11 Conversely, African Americans tend to spend much less on health insurance, health care, entertainment, education, alcoholic beverages, and eating out.12 Recently, Procter & Gamble began an initiative to increase marketing aimed at the African American community.13 By including African American actors in their ads, the company believes it can encourage a positive response to its products, increasing sales among African American consumers, while still maintaining ties with white consumers.14 For example, if an African American family is featured in an ad, the white consumers will see a heartwarming bond between family members. The African American viewers will note the inclusion of their race and feel a stronger connection to the product.15 Other corporations are reaching out to the African American community by celebrating Black History Month. Chrysler Group, partnering with DaimlerChrysler African American Network, organized an assortment of festivities to commemorate Black History Month. Exhibits, concerts, and guest speakers helped increase awareness about the African American community and its vital contributions to presentday society.16 Hawaiian Punch also supports Black History Month with a national contest inviting schoolchildren to learn about historical African American figures.17 In 2002, McDonald's launched 365Black, a program that celebrates Black History all year round. The following year, they introduced 365Black Awards. At these annual awards, modern-day African Americans are honored for their outstanding achievements. Hispanics represent 13 percent of the U.S. population.18 Because of the group's growth and purchasing power, understanding the Hispanic subculture is critical to marketers. In general, Hispanics have strong family values, concern for product quality, and strong brand loyalty.19 Studies reveal that the majority of Hispanic consumers not only are brand loyal, but also will pay more for a wellknown brand.20 Like African American consumers, Hispanics spend more on groceries, telephone services, and children's apparel and shoes. But they also spend more on small appliances and housewares.21 White consumers, especially between the ages of 12 and 34, continue to be influenced by minority cultures, especially in areas such as fashion, entertainment, dining, sports, and music.22 Thanks to this increasing appeal, advertisers have made a beneG Hispanic Subculture. Consumer Buying Behavior CHAPTER 5 93 Subcultures Based on Age Marketers sometimes aim marketing mixes at age-based subcultures. ficial discovery. They can target both white and Hispanic consumers by hiring famous Hispanic people to appear in their ad campaigns.23 Pepsi put Latina pop star Shakira in its ads. Bell South hired actress Daisy Fuentes to appear in a telephone company commercial discussing the importance of friends and family.24 The ad was aired both in English and Spanish. This is crucial since 61 percent of bilingual households are Spanish speaking.25 When considering the buying behavior of Hispanics, marketers must keep in mind that this subculture is really composed of nearly two dozen nationalities, including Cuban, Mexican, Puerto Rican, Caribbean, Spanish, and Dominican. Each has its own history and unique culture that affect consumer preferences and buying behavior. To attract this powerful marketers subculture, are taking Hispanic values and preferences into account when developing products and creating advertising and promotions. Kmart focuses major marketing efforts on Hispanics, and it expects Hispanics to emerge as its number one core shoppers by 2020.26 The company launched a monthly Spanish magazine and a Sunday advertising circular. Kmart has roughly one-third of its stores in urban markets.27 The term Asian American includes people from more than 15 ethnic groups, including Filipinos, Chinese, Japanese, Asian Indians, Koreans, and Vietnamese. Asian Americans are the fastest-growing U.S. subculture. They also have the most money, the best education, and the largest percentage of professionals and managers of all U.S. minorities.28 The individual language, religion, and value system of each group influences its members' purchasing decisions. Some traits of this subculture, however, carry across ethnic divisions, including an emphasis on hard work, strong family ties, and a high value placed on education.29 Retailers with a large population of Chinese shoppers have begun to capitalize on this group's celebration of the Lunar New Year. For example, during this period in the Los Angeles area, supermarkets stock traditional Chinese holiday foods and items used in the celebration, such as candles, greeting cards, and party goods. The McDonald's website features a link about the Chinese New Year and traditional ways of celebrating the important holiday. The website also features an extensive assortment of facts about different Asian cultures and the holidays they celebrate. Catering to the tastes of Asians living in the United States, Maria's Bakery (based in Hong Kong), Ten Ren (based in Taiwan), and Woo Lae Oak (based in South Korea) have opened restaurants in Washington, D.C., and other areas. With a few menu changes, they are also successfully introducing their foods to other U.S. customers.30 G Asian American Subculture. "Everything Consumer" Consumerworld.org offers a variety of free information to those interested in consumer buying behavior. Articles and other resources make this an interesting and helpful site for marketers. See www. consumerworld.org. 94 CHAPTER 5 Consumer Buying Behavior CUSTOMER RELATIONSHIP MANAGEMENT CELEBRATE THE SIMILARITIES AND DIFFERENCES OF SUBCULTURES One nation, many subcultures--and many marketing possibilities. PepsiCo, McDonald's, and Allstate are among the growing number of U.S. companies that market to members of subcultures by celebrating both the similarities and differences. PepsiCo's director of multicultural marketing emphasizes that "the multicultural mind-set is more about your interests, like music, than whether you're African American or Latino." PepsiCo uses music as a way to appeal to what it calls "the multicultural heart." Pepsi commercials featuring Shakira and Beyonc Knowles cross cultural boundaries and link the brand with two of the music world's hottest stars. The company has created specific products for particular subcultures, such as Gatorade Xtremo geared to Hispanic tastes. However, it often promotes Pepsi beverages and Doritos snacks in one campaign, adjusting the tone and the product mix for different subcultures. As an example, its advertisements for Hispanic audiences create a fiesta-like atmosphere, whereas its ads for African American audiences highlight barbecueflavored snacks. Fast-food marketer McDonald's is known for its promotional efforts targeting individual subcultures, including the urban youth subculture. "Today's younger generation is far more aware of diversity," notes one of McDonald's ad agency executives. Therefore, he says, companies should "offer a multicultural connection in order to be relevant, with people from different ethnic backgrounds having fun and playing together." In one commercial for the Big Mac sandwich, a diverse group of actors sang hip-hop music in English and Spanish. Big Mac sales rose more than 30 percent during the six weeks this commercial aired on the ABC, CBS, NBC, Univision, Telemundo, and Black Entertainment Television networks. As another example, consider how Allstate adapted its "You're in good hands with Allstate" insurance slogan for the Chinese American market. The company's advertising agency developed dozens of versions in Chinese dialects to find wording that made sense while retaining the slogan's emotional appeal. After months of research, Allstate launched an ad campaign using a new slogan that translated as "turn over to our hands, relax, and be free of worry." The result: awareness of the Allstate brand among Chinese Americans doubled in markets where the campaign ran for six months.c The Importance of Marketing Research marketing research The systematic design, collection, interpretation, and reporting of information to help marketers solve specific marketing problems or take advantage of marketing opportunities Marketing research is the systematic design, collection, interpretation, and reporting of information to help marketers solve specific marketing problems or take advantage of marketing opportunities. As the word research implies, it is a process for gathering information not currently available to decision makers. The purpose of marketing research is to inform an organization about customers' needs and desires, marketing opportunities for particular goods and services, and changing attitudes and purchase patterns of customers. Market information increases marketers' ability to respond to customer needs, which leads to improved organizational performance.2 Detecting shifts in buyers' behaviors and attitudes helps companies stay in touch with the everchanging marketplace. Fast-food marketers, for example, would be very interested to know that young men ages 18 to 24 average 20 trips a month to fast-food establishments, compared with about 15 trips a month for all fast-food diners. The billions that Consumer Buying Behavior CHAPTER 5 95 The Value of Marketing Research Luth Research provides its clients with insights into market intelligence to help them better understand their target markets. consumers spend dining out represent a tremendous opportunity for those companies willing to invest the resources to understand this market.32 Strategic planning requires marketing research to facilitate the process of assessing such opportunities or threats. All sorts of organizations use marketing research to help them develop marketing mixes to match the needs of customers. Marketing research can help a firm better understand market opportunities, ascertain the potential for success for new products, and determine the feasibility of a particular marketing strategy. JCPenney, for example, conducted extensive research to learn more about a core segment of shoppers who weren't being adequately reached by department stores: middle-income mothers between the ages of 35 and 54. The research involved asking 900 women about their casual clothes preferences. Later the firm conducted in-depth interviews with 30 women about their clothing needs, feelings about fashion, and their shopping experiences. The research helped the company recognize that this "missing middle" segment of shoppers was frustrated with the choices and quality of clothing available in their price range and stressed out by the experience of shopping for clothes for themselves. Armed with this information, Penney launched two new lines of moderately priced, quality casual women's clothing, including one by designer Nicole Miller.33 A study by SPSS Inc. found that the most common reasons for conducting marketing research surveys included determining satisfaction (43 percent), product development (29 percent), branding (23 percent), segmentation (18 percent), business markets (11 percent), and awareness, trend tracking, and concept testing (18 percent).34 The real value of marketing research is measured by improvements in a marketer's ability to make decisions. Marketers should treat information in the same manner as they use other resources, and they must weigh the costs of obtaining information against the benefits derived. Information should be judged worthwhile if it results in marketing activities that better satisfy the firm's target customers, lead to increased sales and profits, or help the firm achieve some other goal. 96 CHAPTER 5 Consumer Buying Behavior C H A P T E R R E V I E W Explain how situational influences may affect the consumer buying decision process. Situational influences are external circumstances or conditions existing when a consumer makes a purchase decision. Situational influences include surroundings, time, reason for purchase, and the buyer's mood and condition. Understand the psychological influences that may affect the consumer buying decision process. Psychological influences partly determine people's general behavior, thus influencing their behavior as consumers. The primary psychological influences on consumer behavior are perception, motives, learning, attitudes, personality and self-concept, and lifestyles. Perception is the process of selecting, organizing, and interpreting information inputs (sensations received through sight, taste, hearing, smell, and touch) to produce meaning. The three steps in the perceptual process are selection, organization, and interpretation. An individual has numerous perceptions of packages, products, brands, and organizations, all of which affect the buying decision process. A motive is an internal energizing force that orients a person's activities Social influences are forces that other people exert on is the process through which a person acquires the knowledge and skills to function as a consumer. The consumer socialization process is partially accomplished through family influences. A reference group is any group that positively or negatively affects a person's values, attitudes, or behavior. The three major types of reference groups are membership, aspirational, and disassociative. In most reference groups, one or more members stand out as opinion leaders by furnishing requested information to reference group participants. A social class is an open group of individuals with similar social rank. Social class influences people's spending, saving, and credit practices. Culture is the accumulation of values, knowledge, beliefs, customs, objects, and concepts that a society uses to cope with its environment and passes on to future generations. A culture is made up of subcultures. A subculture is a group of individuals whose characteristics, values, and behavior patterns are similar and differ from those of the surrounding culture. U.S. marketers focus on three major ethnic subcultures: African American, Hispanic, and Asian American. Describe the level of involvement and types of consumer problem-solving processes. An individual's level of involvement--the importance and intensity of his or her interest in a product in a particular situation--affects the type of problemsolving processes used. Enduring involvement is an ongoing interest in a product class because of personal relevance, whereas situational involvement is a temporary interest stemming from the particular circumstance or environment in which buyers find themselves. There are three kinds of consumer problem solving: routinized response behavior, limited problem solving, and extended problem solving. Consumers rely on routinized response behavior when buying frequently purchased, low-cost items requiring little search-and-decision effort. Limited problem solving is used for products purchased occasionally or when buyers need to acquire information about an unfamiliar brand in a familiar product category. Consumers engage in extended problem solving when purchasing an unfamiliar, expensive, or infrequently bought product. Recognize the stages of the consumer buying decision process. The consumer buying decision process includes five stages: problem recognition, information search, evaluation of alternatives, purchase, and postpurchase evaluation. Not all decision processes culminate in a purchase, nor do all consumer decisions include all five stages. Problem recognition occurs when buyers become aware of a difference between a desired state and an actual condition. After recognizing the problem or need, buyers search for information about products to help resolve the problem or satisfy a need. A successful search yields a group of brands, called a consideration set, that a buyer views as possible alternatives. To evaluate the product in the consideration set, the buyer establishes certain criteria by which to compare, rate, and rank different products. Marketers can influence consumers' evaluation by framing alternatives. In the purchase stage, consumers select products or brands on the basis of results from the evaluation stage and on other dimensions. Buyers also choose the seller from whom they will buy the product. After the purchase, buyers evaluate the product to determine if its actual performance meets expected levels. Consumer Buying Behavior CHAPTER 5 97 Please visit the student website at www.prideferrell.com for ACE Self-Test questions that will help you prepare for exams. K E Y C O N C E P T S internal search external search consideration set evaluative criteria cognitive dissonance situational influences psychological influences perception information inputs selective exposure selective distortion selective retention motive Maslow's hierarchy of needs patronage motives learning attitude attitude scale personality self-concept lifestyle social influences role consumer socialization reference group opinion leader social class culture subculture buying behavior consumer buying behavior level of involvement routinized response behavior limited problem solving extended problem solving impulse buying consumer buying decision process 6 OBJECTIVES 1 Define marketing research and understand its importance. 2 Describe the basic steps in conducting market research. 3 Explore the fundamental methods of gathering data for marketing research. Marketing Research and Information Systems he fast-food industry has long concentrated on getting customers in and out as quickly as possible. McDonald's, however, has uncovered information that customers might be interested in a more relaxing interior environment where they can hang out for a while. Facing competition from relaxing environment specialists such as Starbucks, McDonald's developed a McCafe coffee shop concept in Chicago, but it never took off. McDonald's continued to tinker with the concept, opening a Starbucksstyle coffee bar McCafe restaurant inside a Mountain View McDonald's in Raleigh, North Carolina. A West Coast location followed in Palo Alto, California. If the concept catches on, McDonald's plans to roll out McCafes all over the country. Already, 500 McCafes are doing well outside the United States, particularly in New Zealand and Australia. Research at McDonald's suggests that the McCafe concept will appeal to the "veto vote," the person in a group of diners who typically vetoes McDonald's because there is nothing on its regular menu that appeals to that person. Research also indicates that high-end coffee consumers have different expectations from those of the average McDonald's customer. Thus McCafe's barristas are separate from McDonald's regular counter workers; they dress differently, and they are trained to educate the average cheeseburger-buyer who might be intimidated by ordering a cappuccino. Because not all McCafe franchise owners have previously worked for the company, there is a new policy to give McDonald's owner-operators the freedom to define their dcor, style, and offerings according to the local environment and customer base. Ideas other than McCafe are surfacing, such as a diner home-style food environment. McDonald's is trying a lot of different things and gathering information to make the most of the good ideas. The best information is coming from franchisees who engage in change and provide information about successes. One interesting statistic is that overhauls that change the look of a restaurant 100 percent are almost guaranteed to increase sales by one-third. McDonald's Responds to Changing Customer Desires T 98 Marketing Research and Information Systems CHAPTER 6 99 Change and innovation has been a part of McDonald's business plan for decades. With public concern about the healthfulness of fast food and the ever-increasing demand for fast-paced meals, there is a need for change in the fast-food industry. Part of the change for McDonald's is to integrate its ownership of Boston Market restaurants with McDonald's restaurants by testing Boston Market dinner items inside McDonald's restaurants. Bringing Boston Market into McDonald's could create more of a diner environment and greatly expand the food menu. McDonald's has to be careful that it maintains a strong marketing information system that can gain consumer reaction to its innovative plans.1 The marketing research conducted by McDonald's illustrates that implementing the marketing concept requires that marketers obtain information about the characteristics, needs, and desires of target market customers. When used effectively, such information facilitates customer relationship management by helping marketers focus their efforts on meeting and even anticipating the needs of their customers. Marketing research and information systems that can provide practical and objective information to help firms develop and implement marketing strategies therefore are essential to effective marketing. In this chapter, we focus on how marketers gather information needed to make marketing decisions. First, we define marketing research and examine the individual steps of the marketing research process, including various methods of collecting data. Next, we look at how technology aids in collecting, organizing, and interpreting marketing research data. Finally, we consider ethical and international issues in marketing research. The Marketing Research Process To maintain the control needed to obtain accurate information, marketers approach marketing research as a process with logical steps: (1) locating and defining issues or problems, (2) designing the research project, (3) collecting data, (4) interpreting research findings, and (5) reporting research findings (Figure 6.1). These steps should be viewed as an overall approach to conducting research rather than as a rigid set of rules to be followed in each project. In planning research projects, marketers must consider each step carefully and determine how they can best adapt them to resolve the particular issues at hand. Locating and Defining Research Issues or Problems The first step in launching a research study is issue or problem definition, which focuses on uncovering the nature and boundaries of a situation or question related to marketing strategy or implementation. The first sign of a problem is typically a departure from some normal function, such as failure to attain objectives. If a corporation's objective is a 12 percent sales increase and the current marketing strategy resulted in a 6 percent increase, this discrepancy should be analyzed to help guide future marketing strategies. Declining sales, increasing expenses, and decreasing profits also signal problems. Armed with this knowledge, a firm could define a problem as finding a 100 CHAPTER 6 Marketing Research and Information Systems 1 Locating and defining issues or problems 2 Designing the research project 3 Collecting data 4 Interpreting research findings 5 Reporting research findings Figure 6.1 The Five Steps of the Marketing Research Process Perhaps one of the best-known pollsters and research firms, the Gallup Organization has been conducting public opinion surveys and providing other management consulting services since 1935. The company is frequently asked to survey the public about political issues--especially during election campaigns--as well as business and economic issues, social issues, and lifestyle topics. To view the company's latest survey results, visit www.gallup.com/. way to adjust for biases stemming from existing customers when gathering data or to develop methods for gathering information to help find new customers. Conversely, when an organization experiences a dramatic rise in sales or some other positive event, it may conduct marketing research to discover the reasons and maximize the opportunities stemming from them. Marketing research often focuses on identifying and defining market opportunities or changes in the environment. When a firm discovers a market opportunity, it may need to conduct research to understand the situation more precisely so it can craft an appropriate marketing strategy. That is exactly what Dunkin' Donuts is doing to remain competitive against Krispy Kreme and Starbucks as well as McDonald's, which recently entered the espresso-drink market. A survey of Dunkin' Donuts customers revealed that they welcomed menu changes such as iced beverages, espresso drinks, and scrambled eggs and cheese on a bagel. The firm's research also suggested that it should continue its strategy of targeting workday on-the-go customers and not take on Starbucks directly.3 The company can use this information to focus its efforts on specific target markets and refine its marketing strategy appropriately. To pin down the specific boundaries of a problem or an issue through research, marketers must define the nature and scope of the situation in a way that requires probing beneath the superficial symptoms. The interaction between the marketing manager and the marketing researcher should yield a clear definition of the research need. Researchers and decision makers should remain in the issue or problem definition stage until they have determined precisely what they want from marketing research and how they will use it. Deciding how to refine a broad, indefinite issue or problem into a precise, researchable statement is a prerequisite for the next step in the research process. Designing the Research Project Once the problem or issue has been defined, the next step is research design, an overall plan for obtaining the information needed to address it. This step requires formulating a hypothesis and determining what type of research is most appropriate for testing the hypothesis to ensure the results are reliable and valid. The objective statement of a marketing research project should include hypotheses based on both previous research and expected research findings. A hypothesis is an informed guess or assumption about a certain problem or set of circumstances. It is based on all the insight and knowledge available about the problem or circumstances from previous research studies and other sources. As information is gathered, a researcher can test the hypothesis. For example, a food marketer like H. J. Heinz might propose the hypothesis that children today have considerable influence on their families' buying decisions regarding ketchup and other grocery products. A marketing researcher would then gather data, perhaps through surveys of children and their parents, and draw conclusions about whether the hypothesis is correct. Sometimes several hypotheses are developed during an actual research project; the hypotheses that are accepted or rejected become the study's chief conclusions. G Developing a Hypothesis. research design An overall plan for obtaining the information needed to address a research problem or issue hypothesis An informed guess or assumption about a certain problem or set of circumstances Marketing Research and Information Systems CHAPTER 6 101 exploratory research Research conducted to gather more information about a problem or to make a tentative hypothesis more specific descriptive research Research conducted to clarify the characteristics of certain phenomena and thus solve a particular problem causal research Research in which it is assumed that a particular variable X causes a variable Y The hypothesis being tested determines whether an exploratory, descriptive, or causal approach will be used to gather data. When marketers need more information about a problem or want to make a tentative hypothesis more specific, they may conduct exploratory research. For instance, they may review the information in the firm's own records or examine publicly available data. Questioning knowledgeable people inside and outside the organization may yield new insights into the problem. Information about industry trends or demographics may also be an excellent source for exploratory research. For example, finding data indicating that inner-city household incomes grew by 20 percent to $35,000 a year between 1990 and 2000 while the national median household income grew by just 14 percent could be useful to consider in marketing plans to serve specific market segments.4 If marketers need to understand the characteristics of certain phenomena to solve a particular problem, descriptive research can aid them. Such studies may range from general surveys of customers' education, occupation, or age to specifics on how often teenagers eat at fast-food restaurants after school or how often customers buy new pairs of athletic shoes. For example, if Nike and Reebok want to target more young women, they might ask 15- to 35-year-old females how often they work out, how frequently they wear athletic shoes for casual use, and how many pairs of athletic shoes they buy in a year. Such descriptive research can be used to develop specific marketing strategies for the athletic-shoe market. Descriptive studies generally demand much prior knowledge and assume the issue or problem is clearly defined. Some descriptive studies require statistical analysis and predictive tools. The marketer's major task is to choose adequate methods for collecting and measuring data. Hypotheses about causal relationships call for a more complex approach than a descriptive study. In causal research, it is assumed that a particular variable X causes a variable Y. Marketers must plan the research so that the data collected determine whether X influences Y. To do so, marketers must try to hold constant all variables except X and Y. For example, to determine whether new carpeting, pet-friendly policies, or outside storage increases the number of rentals in an apartment complex, researchers need to keep all variables constant except one of these three variables in a specific time period. G Research Reliability and Validity. In designing research, marketing researchers must ensure that research techniques are both reliable and valid. A research technique has reliability if it produces almost identical results in repeated trials. But a reliable technique is not necessarily valid. To have validity, the research method must measure what it is supposed to measure, not something else. For example, although a group of customers may express the same level of satisfaction based on a rating scale, the individuals may not exhibit the same repurchase behavior because of different personal characteristics. This result might cause the researcher to question the validity of the satisfaction scale if the purpose of rating satisfaction was to estimate potential repurchase behavior.5 A study to measure the effect of advertising on sales would be valid if advertising could be isolated from other factors or variables that affect sales. The study would be reliable if replications of it produced the same results. G Types of Research. reliability A condition existing when a research technique produces almost identical results in repeated trials validity A condition existing when a research method measures what it is supposed to measure Collecting Data The next step in the marketing research process is collecting data to help prove (or disprove) the research hypothesis. The research design must specify what types of data to collect and how they will be collected. 102 CHAPTER 6 Marketing Research and Information Systems Primary Data Collection CfMC Research Software assists companies in personal interviewing and Internet surveys. primary data Data observed and recorded or collected directly from respondents secondary data Data compiled both inside and outside the organization for some purpose other than the current investigation G Types of Data. Marketing researchers have two types of data at their disposal. Primary data are observed and recorded or collected directly from respondents. This type of data must be gathered by observing phenomena or surveying people of interest. Secondary data are compiled both inside and outside the organization for some purpose other than the current investigation. Secondary data include general reports supplied to an enterprise by various data services and internal and online databases. Such reports might concern market share, retail inventory levels, and customers' buying behavior. Secondary data are commonly available in private or public reports or have been collected and stored by the organization itself. Due to the opportunity to obtain data via the Internet, more than half of all marketing research now comes from secondary sources. G Sources of Secondary Data. Marketers often begin the data collection phase of the marketing research process by gathering secondary data. They may use available reports and other information from both internal and external sources to study a marketing problem. Internal sources of secondary data can contribute tremendously to research. An organization's own database may contain information about past marketing activities, such as sales records and research reports, which can be used to test hypotheses and pinpoint problems. From sales reports, for example, a firm may be able to determine not only which product sold best at certain times of the year but also which colors and sizes customers preferred. Such information may have been gathered for management or financial purposes.6 Table 6.1 lists some commonly available internal company information that may be useful for marketing research purposes. Accounting records are also an excellent source of data but, strangely enough, are often overlooked. The large volume of data an accounting department collects does Marketing Research and Information Systems CHAPTER 6 103 Table 6.1 Internal Sources of Secondary Data Sales data, which may be broken down by geographical area, product type, or even type of customer Accounting information, such as costs, prices, and profits, by product category Competitive information gathered by the sales force Source: "Internal Secondary Market Research," Lycos Small Business, http://business.lycos.com/cch/ guidebook.html?lpv=1&docNumber=PO3_3020, February 6, 2002. not automatically flow to other departments. As a result, detailed information about costs, sales, customer accounts, or profits by product category may not be easily accessible to the marketing area. This condition develops particularly in organizations that do not store marketing information on a systematic basis. External sources of secondary data include periodicals, government publications, unpublished sources, and online databases. Periodicals such as Business Week, The Wall Street Journal, Sales & Marketing Management, Marketing Research, and Industrial Marketing publish general information that can help marketers define problems and develop hypotheses. Survey of Buying Power, an annual supplement to Sales & Marketing Management, contains sales data for major industries on a county-bycounty basis. Many marketers also consult federal government publications such as the Statistical Abstract of the United States, the Census of Business, the Census of Agriculture, and the Census of Population; some of these government publications are available through online information services or the Internet. Although the government still conducts its primary census every ten years, it now surveys 250,000 households every month, providing decision makers with a more up-to-date demographic picture of the nation's population every year. Such data helps Target executives make merchandising and marketing decisions as well as identify promising locations for new Target stores.7 In addition, companies may subscribe to services, such as ACNielsen or Information Resources, Inc., that track retail sales and other information. IRI, for example, tracks consumer purchases using in-store, scanner-based technology. Marketers can purchase information from IRI about a product category, such as frozen orange juice, as secondary data.8 Small businesses may be unable to afford such services, but they can still find a wealth of information through industry publications and trade associations.9 Table 6.2 summarizes the major external sources of secondary data, excluding syndicated services. G Methods of Collecting Primary Data. The collection of primary data is a more lengthy, expensive, and complex process than the collection of secondary data. To gather primary data, researchers use sampling procedures, survey methods, observation, and experimentation. These efforts can be handled in-house by the firm's own research department or contracted to a private research firm such as ACNielsen, Information Resources, Inc., IMS International, and Quality Controlled Services. population All the elements, units, or individuals of interest to researchers for a specific study Sampling. Because the time and resources available for research are limited, it is almost impossible to investigate all the members of a target market or other population. A population, or "universe," includes all the elements, units, or individuals of interest to researchers for a specific study. For a Gallup poll designed to predict the results of a presidential election, all registered voters in the United States would constitute the population. By systematically choosing a limited number of units--a 104 CHAPTER 6 Marketing Research and Information Systems E-MARKETING AND TECHNOLOGY TAKING A LOOK-LOOK AT YOUTH TRENDS Look-Look.com is an online, real-time service that provides accurate and reliable information, research, news, trends, and photos about global trendsetting youths ages 14 to 30. With youth spending estimated at $140 billion annually and growing, many companies are willing to pay an annual subscription fee of about $20,000 for access to this valuable data. Look-Look pays more than 20,000 handpicked, prescreened young people from all over the world to e-mail information about their styles, trends, opinions, and ideas. These trendsetting young people are forward thinkers, innovative, and influential to their peers. Although trendsetters account for only about 20 percent of the youth population, they influence the other 80 percent. LookLook also has 20 photographers who travel the globe capturing youth trends in photos. Look-Look clients have instant access to online surveys and polls and the results. They also can key in research questions and instantly reach a worldwide focus group 24 hours a day. Clients include an apparel company, video game manufacturers, a cosmetics company, beverage firms, and movie studios. Look-Look delivers fast, accurate, and timely information through the Internet and the company's own intranet and database. Look-Look co-presidents DeeDee Gordon and Sharon Lee believe that full understanding of the youth culture requires a constant dialog with youth--not just once- or twice-a-year focus groups or market research. Look-Look provides information on the latest fashion, entertainment, technology, activities, eating and drinking habits, health and beauty trends, youth mindsets, and City Guide suggestions (the best shops, hangouts, and restaurants in selected cities). The "living research" provided by LookLook means they never stop listening and observing and that their information is alive and always moving. Whether it's cropped cherry red hair, skintight leather hip-huggers, tattoos, or body piercing, Look-Look knows what the youth market likes, and for a fee, they'll help youth marketers stay on top of the latest trends.a Table 6.2 External Sources of Secondary Data Trade associations (e.g., American Marketing Association) Industry publications and databases (e.g., Inbound Logistics, Sales & Marketing Management) Government databases (e.g., Census Bureau, Department of Commerce) Sales, volume, and brand market share measurement systems (e.g., ACNielsen Company, Information Resources, Inc.) Source: "External Secondary Market Research," Lycos Small Business, http://business.lycos.com/cch/ guidebook.html?lpv=1&docNumber=PO3_3011, February 6, 2002. Marketing Research and Information Systems CHAPTER 6 105 sample A limited number of units chosen to represent the characteristics of the population sampling The process of selecting representative units from a total population probability sampling A sampling technique in which every element in the population being studied has a known chance of being selected for study random sampling A type of probability sampling in which all units in a population have an equal chance of appearing in a sample stratified sampling A type of probability sampling in which the population is divided into groups according to a common attribute and a random sample is then chosen within each group nonprobability sampling A sampling technique in which there is no way to calculate the likelihood that a specific element of the population being studied will be chosen quota sampling A nonprobability sampling technique in which researchers divide the population into groups and then arbitrarily choose participants from each group sample--to represent the characteristics of a total population, researchers can project the reactions of a total market or market segment. Sampling in marketing research, therefore, is the process of selecting representative units from a total population. Sampling techniques allow marketers to predict buying behavior fairly accurately on the basis of the responses from a representative portion of the population of interest. Most types of marketing research employ sampling techniques. There are two basic types of sampling: probability sampling and nonprobability sampling. With probability sampling, every element in the population being studied has a known chance of being selected for study. Random sampling is a kind of probability sampling. When marketers employ random sampling, all the units in a population have an equal chance of appearing in the sample. The various events that can occur have an equal or known chance of taking place. For example, a specific card in a regulation deck should have a 1/52 probability of being drawn at any one time. Sample units are ordinarily chosen by selecting from a table of random numbers statistically generated so that each digit, 0 through 9, will have an equal probability of occurring in each position in the sequence. The sequentially numbered elements of a population are sampled randomly by selecting the units whose numbers appear in the table of random numbers. Another kind of probability sampling is stratified sampling, in which the population of interest is divided into groups according to a common attribute and a random sample is then chosen within each group. The stratified sample may reduce some of the error that could occur in a simple random sample. By ensuring that each major group or segment of the population receives its proportionate share of sample units, investigators avoid including too many or too few sample units from each group. Samples are usually stratified when researchers believe there may be variations among different types of respondents. For example, many political opinion surveys are stratified by gender, race, age, and/or geographic location. The second type of sampling, nonprobability sampling, is more subjective than probability sampling because there is no way to calculate the likelihood that a specific element of the population being studied will be chosen. Quota sampling, for example, is highly judgmental because the final choice of participants is left to the researchers. In quota sampling, researchers divide the population into groups and then arbitrarily choose participants from each group. A study of people who wear eyeglasses, for example, may be conducted by interviewing equal numbers of men and women who wear eyeglasses. In quota sampling, there are some controls--usually limited to two or three variables, such as age, gender, or race--over the selection of participants. The controls attempt to ensure that representative categories of respondents are interviewed. Because quota samples are not probability samples, not everyone has an equal chance of being selected, and sampling error therefore cannot be measured statistically. Quota samples are used most often in exploratory studies, when hypotheses are being developed. Often a small quota sample will not be projected to the total population, although the findings may provide valuable insights into a problem. Quota samples are useful when people with some common characteristic are found and questioned about the topic of interest. A probability sample used to study people allergic to cats would be highly inefficient. Survey Methods. Marketing researchers often employ sampling to collect primary data through mail, telephone, online, or personal interview surveys. The results of such surveys are used to describe and analyze buying behavior. Selection of a survey method depends on the nature of the problem or issue; the data needed to test the hypothesis; and the resources, such as funding and personnel, available to the 106 CHAPTER 6 Marketing Research and Information Systems researcher. Marketers may employ more than one survey method depending on the goals of the research. The SPSS Inc. survey of American Marketing Association members found that 43.8 percent use telephone surveys; 39.3 percent, web-based surveys; 36.8 percent, focus groups; 19 percent, mail surveys; 11.8 percent, e-mail surveys; and 9.6 percent, in-person interviews.10 Table 6.3 summarizes and compares the advantages of the various survey methods. Gathering information through surveys is becoming increasingly difficult because fewer people are willing to participate. Many people believe responding to surveys takes up too much scarce personal time, especially as surveys become longer and more detailed. Others have concerns about how much information marketers are gathering and whether their privacy is being invaded. The unethical use of selling techniques disguised as marketing surveys has also led to decreased cooperation. These factors contribute to nonresponse rates for any type of survey. Most researchers consider nonresponse the greatest threat to valid survey research.11 Table 6.3 Comparison of the Four Basic Survey Methods Mail Surveys Telephone Surveys Avoids interviewers' travel expenses; less expensive than inhome interviews. Online Surveys The least expensive method if there is an adequate response rate. Personal Interview Surveys The most expensive survey method; shopping mall and focus group interviews have lower costs than in-home interviews. Most flexible method; respondents can react to visual materials; demographic data are more accurate; indepth probes are possible. Interviewers' personal characteristics or inability to maintain objectivity may result in bias. Not-at-homes are a problem, which may be overcome by focus-group and shopping mall interviewing. Economy Potentially lower in cost per interview than telephone or personal surveys if there is an adequate response rate. Inflexible; questionnaire must be short and easy for respondents to complete. Flexibility Flexible because interviewers can ask probing questions but observations are impossible. Less flexible; survey must be easy for online users to receive and return; short, dichotomous, or multiple-choice questions work best. Interviewer bias is eliminated, but e-mail address on the return eliminates anonymity. Sample limited to respondents with computer access; the available e-mail address list may not be a representative sample for some purposes. Interviewer Bias Interviewer bias is eliminated; questionnaires can be returned anonymously. Obtaining a complete mailing list is difficult; nonresponse is a major disadvantage. Some anonymity; may be hard to develop trust in respondents. Sampling and Respondents' Cooperation Sample limited to respondents with telephones; devices that screen calls, busy signals, and refusals are a problem. Marketing Research and Information Systems CHAPTER 6 107 Marketing Decision Support Directions Research provides a library of product testing research on over 3,800 products across 50 categories. mail survey A research method in which respondents answer a questionnaire sent through the mail telephone survey A research method in which respondents' answers to a questionnaire are recorded by interviewers on the phone online survey A research method in which respondents answer a questionnaire via e-mail or on a website In a mail survey, questionnaires are sent to respondents, who are encouraged to complete and return them. Mail surveys are used most often when the individuals in the sample are spread over a wide area and funds for the survey are limited. A mail survey is potentially the least expensive survey method as long as the response rate is high enough to produce reliable results. The main disadvantages of this method are the possibilities of a low response rate and of misleading results if respondents differ significantly from the population being sampled. Research has found that providing a monetary incentive to respond to a mail survey has a significant impact on response rates for both consumer and business samples. However, such incentives may reduce the cost effectiveness of this survey method.11 In a telephone survey, an interviewer records respondents' answers to a questionnaire over a phone line. A telephone survey has some advantages over a mail survey. The rate of response is higher because it takes less effort to answer the telephone and talk than to fill out and return a questionnaire. If there are enough interviewers, a telephone survey can be conducted very quickly. Thus, political candidates or organizations seeking an immediate reaction to an event may choose this method. In addition, a telephone survey permits interviewers to gain rapport with respondents and ask probing questions. However, only a small proportion of the population likes to participate in telephone surveys. Just one-third of Americans are willing to participate in telephone interviews, down from two-thirds 20 years ago.13 This poor image can significantly limit participation and distort representation in a telephone survey. Moreover, telephone surveys are limited to oral communication; visual aids or observation cannot be included. Many households are excluded from telephone directories by choice (unlisted numbers) or because the residents moved after the directory was published. Potential respondents often use telephone answering machines, voice mail, or caller ID to screen or block calls. Moreover, an increasing number of younger Americans have given up their fixed phone lines in favor of wireless phones.14 These issues have serious implications for the use of telephone samples in conducting surveys. Online surveys are evolving as an alternative to telephone surveys. In an online survey, questionnaires can be transmitted to respondents who have agreed to be contacted and have provided their e-mail addresses. More firms are using their websites to conduct surveys. Online surveys can also make use of online communities--such as chat rooms, web-based forums, and newsgroups--to identify trends in interests and consumption patterns. Movies, consumer electronics, food, and computers are popular topics in many online communities.15 Indeed, by "listening in" on these ongoing conversations, marketers may be able to identify new product opportunities 108 CHAPTER 6 Marketing Research and Information Systems Online Surveys Western Wats provides quick and accurate data collection solutions with online surveys. personal interview survey A research method in which participants respond to survey questions face to face in-home (door-to-door) interview A personal interview that takes place in the respondent's home focus-group interview A research method involving observation of group interaction when members are exposed to an idea or a concept and consumer needs. Moreover, this type of online data can be gathered at little incremental cost compared to alternative data sources.16 Evolving technology and the interactive nature of the Internet allow for considerable flexibility in designing questionnaires for online surveys. Given the growing number of households that have computers with Internet access, marketing research is likely to rely heavily on online surveys in the future. Indeed, experts predict that Internet-based marketing research will account for about 50 percent, or around $3 billion, of marketing research spending in 2005 compared to just 2 percent of marketing research revenues in 1998.17 Furthermore, as negative attitudes toward telephone surveys render that technique less representative and more expensive, the integration of e-mail, fax, and voice-mail functions into one computer-based system provides a promising alternative for survey research. E-mail surveys have especially strong potential within organizations whose employees are networked and for associations that publish members' e-mail addresses. College students in particular are often willing to provide their e-mail address and other personal information in exchange for incentives such as T-shirts and other giveaways.18 However, there are some ethical issues to consider when using e-mail for marketing research, such as "spam" (unsolicited e-mail) and privacy. In a personal interview survey, participants respond to questions face to face. Various audiovisual aids--pictures, products, diagrams, or prerecorded advertising copy--can be incorporated in a personal interview. Rapport gained through direct interaction usually permits more in-depth interviewing, including probes, follow-up questions, or psychological tests. In addition, because personal interviews can be longer, they may yield more information. Finally, respondents can be selected more carefully, and reasons for nonresponse can be explored. One such research technique is the in-home (door-to-door) interview. The inhome interview offers a clear advantage when thoroughness of self-disclosure and elimination of group influence are important. In an in-depth interview of 45 to 90 minutes, respondents can be probed to reveal their real motivations, feelings, behaviors, and aspirations. The object of a focus-group interview is to observe group interaction when members are exposed to an idea or a concept. The state of Nebraska used focus groups as part of its effort to develop a formal marketing campaign. Among other things, focus groups suggested the state promote its history and natural beauty.19 Often these interviews are conducted informally, without a structured questionnaire, in small groups of 8 to 12 people. They allow customer attitudes, behavior, lifestyles, needs, and desires to be explored in a flexible and creative manner. Questions are open-ended Marketing Research and Information Systems CHAPTER 6 109 and stimulate respondents to answer in their own words. Researchers can ask probing questions to clarify something they do THE BUSINESS: Ecko Unlimited not fully understand or something unexpected and interesting that may help FOUNDED: 1993 explain buying behavior. For example, Ford SUCCESS: $400 million/year Motor Company may use focus groups to revenues determine whether to change its advertising to emphasize a vehicle's safety features wenty years after his birth, a graffiti artist named Marc Milecofsky rather than its style and performance. It started a clothing line with six hand-painted T-shirt designs. The may be necessary to use separate focus line: Ecko Unlimited. The line took off when rapper Chuck D and groups for each major market segment director Spike Lee were seen in Ecko's shirts. Now, with annual revstudied--men, women, and age groups-- enue in the neighborhood of $400 million a year, Ecko Unlimited has and experts recommend the use of at least become one of the hottest urban apparel firms on the market. Ecko two focus groups per segment in case one stays up to date on what consumers want by hanging out and talkgroup is unusually idiosyncratic.20 Focus ing with people in social hot spots and focuses on point-of-sale groups have been found to be especially instead of mass-media advertising in order to connect with the conuseful to set new product prices.21 sumer. Ecko now offers a variety of lines and products that include Still another option is the telephone gloves, hats, watches, outerwear, underwear, and shoes.b depth interview, which combines the traditional focus group's ability to probe with the confidentiality provided by telephone surveys. This type of interview is most appropriate for qualitative research projects telephone depth interview among a small targeted group that is difficult to bring together for a traditional focus An interview that combines the group because of members' profession, location, or lifestyle. Respondents can choose traditional focus group's ability the time and day for the interview. Although this method is difficult to implement, it to probe with the confidentiality can yield revealing information from respondents who otherwise would be unwilling provided by telephone surveys to participate in marketing research.22 The nature of personal interviews has changed. In the past, most personal interviews, which were based on random sampling or prearranged appointments, were conducted in the respondent's home. Today most personal interviews are conducted outside the home. Shopping mall intercept interviews involve interviewing a pershopping mall intercept centage of individuals passing by certain "intercept" points in a mall. Like any faceinterview A research method to-face interviewing method, mall intercept interviewing has many advantages. The that involves interviewing a interviewer is in a position to recognize and react to respondents' nonverbal indicapercentage of persons passing tions of confusion. Respondents can be shown product prototypes, videotapes of by "intercept" points in a mall commercials, and the like, and asked for their reactions. The mall environment lets the researcher deal with complex situations. For example, in taste tests, researchers know that all the respondents are reacting to the same product, which can be prepared and monitored from the mall test kitchen. In addition to the ability to conduct tests requiring bulky equipment, lower cost and greater control make shopping mall intercept interviews popular. Marc Ecko T Questionnaire Construction. A carefully constructed questionnaire is essential to the success of any survey. Questions must be clear, easy to understand, and directed toward a specific objective; that is, they must be designed to elicit information that meets the study's data requirements. Researchers need to define the objective before trying to develop a questionnaire because the objective determines the substance of the questions and the amount of detail. A common mistake in constructing questionnaires is to ask questions that interest the researchers but do not yield information useful in deciding whether to accept or reject a hypothesis. Finally, the most important rule in composing questions is to maintain impartiality. 110 CHAPTER 6 Marketing Research and Information Systems The questions are usually of three kinds: open-ended, dichotomous, and multiple-choice. Open-Ended Question What is your general opinion about broadband Internet access? Dichotomous Question Do you presently have broadband access at home, work, or school? Yes ______ No _______ Multiple-Choice Question What age group are you in? Under 20 _____ 2035 _____ 36 and over _____ Researchers must be very careful about questions that a respondent might consider too personal or that might require an admission of activities that other people are likely to condemn. Questions of this type should be worded to make them less offensive. Observation Methods. In using observation methods, researchers record individuals' overt behavior, taking note of physical conditions and events. Direct contact with them is avoided; instead, their actions are examined and noted systematically. For instance, researchers might use observation methods to answer the question "How long does the average McDonald's restaurant customer have to wait in line before being served?" Observation may include the use of ethnographic techniques, such as watching customers interact with a product in a real-world environment. Bissell, Inc., employed ethnographic techniques when it observed how a very small sample of consumers used its Steam Gun, a hot-water-based cleaning appliance, in the home. Based on this research, the company made several changes to the product, including its name, before launching the Steam N Clean.23 Observation may also be combined with interviews. For example, during a personal interview, the condition of a respondent's home or other possessions may be observed and recorded. The interviewer can also directly observe and confirm demographic information such as race, approximate age, and sex. Data gathered through observation can sometimes be biased if the person is aware of the observation process. However, an observer can be placed in a natural market environment, such as a grocery store, without biasing or influencing shoppers' actions. If the presence of a human observer is likely to bias the outcome or if human sensory abilities are inadequate, mechanical means may be used to record behavior. Mechanical observation devices include cameras, recorders, counting machines, scanners, and equipment that records physiological changes. The electronic scanners used in supermarkets are very useful in marketing research. They provide accurate data on sales and customers' purchase patterns, and marketing researchers may obtain such data from the supermarkets. Observation is straightforward and avoids a central problem of survey methods: motivating respondents to state their true feelings or opinions. However, observation tends to be descriptive. When it is the only method of data collection, it may not provide insights into causal relationships. Another drawback is that analyses based on observation are subject to the biases of the observer or the limitations of the mechanical device. Marketing Research and Information Systems CHAPTER 6 111 experiment A research method that attempts to maintain certain variables while measuring the effects of experimental variables Experimentation. Another method for gathering primary data is experimentation. In an experiment, marketing researchers attempt to maintain certain variables while measuring the effects of experimental variables. Experimentation requires that an independent variable (one not influenced by or dependent on other variables) be manipulated and the resulting changes in a dependent variable (one contingent on, or restricted to, one value or set of values assumed by the independent variable) be measured. PepsiCo, for example, used experimentation to test the taste, color, and packaging of its new Mountain Dew Code Red soft drink on a sample from its target market.24 Experimentation is used primarily in marketing research to improve hypothesis testing. Interpreting Research Findings After collecting data to test their hypotheses, marketers need to interpret the research findings. Interpretation of the data is easier if marketers carefully plan their data analysis methods early in the research process. They should also allow for continual evaluation of the data during the entire collection period. They can then gain valuable insight into areas that should be probed during the formal interpretation. The first step in drawing conclusions from most research is to display the data in table format. If marketers intend to apply the results to individual categories of the things or people being studied, cross-tabulation may be quite useful, especially in tabulating joint occurrences. For example, using the two variables gender and purchase rates of automobile tires, a cross-tabulation could show how men and women differ in purchasing automobile tires. After the data are tabulated, they must be analyzed. Statistical interpretation focuses on what is typical or what deviates from the average. It indicates how widely responses vary and how they are distributed in relation to the variable being measured. When marketers interpret statistics, they must take into account estimates of expected error or deviation from the true values of the population. The analysis of data may lead researchers to accept or reject the hypothesis being studied. statistical interpretation Analysis of what is typical or what deviates from the average Reporting Research Findings The final step in the marketing research process is to report the research findings. Before preparing the report, the marketer must take a clear, objective look at the findings to see how well the gathered facts answer the research question or support or negate the initial hypotheses. In most cases, it is extremely unlikely that the study can provide everything needed to answer the research question. Thus, the researcher must point out the deficiencies, along with the reasons for them, in the report. Interpreting Research Findings Decision Analyst assists companies in interpreting research to develop new products, services, ads, and promotions. 112 CHAPTER 6 Marketing Research and Information Systems The report of research results is usually a formal, written document. Researchers must allow time for the writing task when they plan and schedule the project. Because the report is a means of communicating with the decision makers who will use the research findings, researchers need to determine beforehand how much detail and supporting data to include. They should keep in mind that corporate executives prefer reports that are short, clear, and simply expressed. Researchers often give their summary and recommendations first, especially if decision makers do not have time to study how the results were obtained. A technical report allows its users to analyze data and interpret recommendations because it describes the research methods and procedures and the most important data gathered. Thus, researchers must recognize the needs and expectations of the report user and adapt to them. C H A P T E R R E V I E W two steps in the research process. Statistical interpretation focuses on what is typical or what deviates from the average. After interpreting the research findings, the researchers must prepare a report on the findings that the decision makers can understand and use. Explore the fundamental methods of gathering data for marketing research. For the third step in the marketing research process, two types of data are available. Primary data are observed and recorded or collected directly from subjects; secondary data are compiled inside or outside the organization for some purpose other than the current investigation. Secondary data may be collected from an organization's database and other internal sources, or from periodicals, government publications, and unpublished sources. Methods for collecting primary data include sampling, surveys, observation, and experimentation. Sampling involves selecting representative units from a total population. In probability sampling, every element in the population being studied has a known chance of being selected for study. Nonprobability sampling is more subjective because there is no way to calculate the likelihood that a specific element of the population being studied will be chosen. Marketing researchers employ sampling to collect primary data through surveys by mail, telephone, or the Internet or through personal or group interviews. A carefully constructed questionnaire is essential to the success of any survey. In using observation methods, researchers record respondents' overt behavior and take note of physical conditions and events, but avoid direct contact with respondents. In an experiment, marketing researchers attempt to maintain certain variables while measuring the effects of experimental variables. Define marketing research and understand its importance. Marketing research is the systematic design, collection, interpretation, and reporting of information to help marketers solve specific marketing problems or take advantage of marketing opportunities. Marketing research and information systems that furnish practical, unbiased information help firms avoid the assumptions and misunderstandings that could lead to poor marketing performance. The value of marketing research is measured by improvements in a marketer's ability to make decisions. Describe the basic steps in conducting market research. To maintain the control needed to obtain accurate information, marketers approach marketing research as a process with logical steps: (1) defining and locating issues or problems, (2) designing the research project, (3) collecting data, (4) interpreting research findings, and (5) reporting research findings. The first step, issue or problem definition, focuses on uncovering the nature and boundaries of a situation or question related to marketing strategy or implementation. The second step involves designing a research project to obtain needed information, formulating a hypothesis, and determining what type of research to employ that will test the hypothesis so that the results are reliable and valid. The type of hypothesis being tested dictates whether exploratory, descriptive, or causal studies will be used. Research is considered reliable if it produces almost identical results in successive repeated trials; it is valid if it measures what it is supposed to measure and not something else. The third step is the data-gathering phase. To apply research data to decision making, marketers must interpret and report their findings properly--the final Marketing Research and Information Systems CHAPTER 6 113 Please visit the student website at www.prideferrell.com for ACE Self-Test questions that will help you prepare for exams. K E Y C O N C E P T S secondary data population sample sampling probability sampling random sampling stratified sampling nonprobability sampling quota sampling mail survey telephone survey online survey personal interview survey in-home (door-to-door) interview focus-group interview telephone depth interview shopping mall intercept interview experiment marketing research research design hypothesis exploratory research descriptive research causal research reliability validity primary data

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Kaplan University - BU - HRM
Target Markets: Segmentation and Evaluationo many target markets, so many marketing mixes. The cable television network Nickelodeon-Nick for short-is seeking to satisfy a number of tough target markets. Tots want fun, engaging programs such as Blue's Clu
Kaplan University - BU204 - MACROECONO
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Kaplan University - BU204 - MACROECONO
> Income and ExpenditureB E A PAT R I O T A N D S P E N D11What you will learn in this chapter:AClinton.FTER THE TERRORIST ATTACKS ONin recession, mainly because of a 14% drop in real investment spending. A plunge in consumer spending would have gr
Kaplan University - BU204 - MACROECONO
> Fiscal PolicyA BRIDGE TO PROSPERITY?1 2slumps, though on a smaller scale. Indeed, many countries attempt to manage aggregate demand by using discretionary fiscal policy. Governments also adjust taxes in an attempt to manage aggregate demand. They may
Kaplan University - BU204 - MACROECONO
> Money, Banking, and the FederalReserve SystemA WA G G O N - WAY T H R O U G H T H E A I RTfangled money.HEBIRTHOFECONOMICSASAwhile freeing up that gold and silver for other uses. Using paper money instead of gold and silver coins, he said, wa
Kaplan University - BU204 - MACROECONO
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Kaplan University - BU204 - MACROECONO
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Kaplan University - BU204 - MACROECONO
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Kaplan University - BU204 - MACROECONO
> The Making of ModernMacroeconomicsPURGE THE ROTTENNESS?17What you will learn in this chapter:"A2001 recession.GGRESSIVE MONETARY POL-Yet today's consensus about monetary policy didn't always exist. There was a time when many economists opposed a
Kaplan University - BU204 - MACROECONO
chapter1 8What you will learn in this chapter:> InternationalTradeROSES ONA R O S E B Y A N Y O T H E R N AT I O NGIVINGYOURBELOVEDimports of South American roses as a threat to U.S. jobs. Up to now this book has analyzed the economy as if it w
Kaplan University - BU204 - MACROECONO
chapter1 9What you will learn in this chapter:> Open-Economy MacroeconomicsEURO DILEMMASTO JOIN OR NOT TO JOIN, THAT ISPart of the answer is national pride: if Britain gave up the pound, it would also have to give up currency that bears the portrai
Kaplan University - BU204 - MACROECONO
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Kaplan University - BU204 - MACROECONO
Macroeconomics Unit 12.)Genny Howard AssignmentDescribe some of the opportunity costs when you decide to do the following: a.) Attend college instead of taking a job. The opportunity cost of attending college instead of taking a job is what you would p
Kaplan University - BU204 - MACROECONO
HOW TO DRAW GRAPHS AND DIAGRAMS Some problems will require that you draw graphs this quarter. Before you begin to panic rightfully, here are some suggestions (not listed in order of preferences) .1) You can draw them by hand. Scan the drawings that you w
Kaplan University - BU204 - MACROECONO
Lindsay Mitchell BU204-07 May 3, 2010 Unit 1 Project P2. Describe some of the opportunity costs when you decide to do the following:A. Attend college instead of taking a job:A loss of potential current income, loss of experience that could lead to incom
Kaplan University - BU204 - MACROECONO
Lindsay Mitchell BU204-07 May 3, 2010 Unit 2 Project P1. Atlantis is a small, isolated island in the South Atlantic. The inhabitants grow potatoes and catch fresh fish. The accompanying table shows the maximum annual output combinations of potatoes and fi
Kaplan University - BU204 - MACROECONO
Kaplan University - BU204 - MACROECONO
Macroeconomics Final Exam J. F. Garcia 1. A balanced budget occurs when: a. the national debt is reduced to zero dollars b. a budget deficit during one year is matched by a budget surplus in the next year c transfer payments equal tax receipts d. governme
Kaplan University - BU204 - MACROECONO
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Kaplan University - BU204 - MACROECONO
A model is a simplified representation of a real situation that is used to better understand real-life situations. The other things equal assumption means that all other relevant factors remain unchanged. The production possibility frontier illustrates th
Kaplan University - AC300 - 02-AU
00980_02_ch01_p0001-0035.qxd11/17/084:14 PMPage 1P A R TFinancial Reporting:Concepts, Financial Statements, and Related DisclosuresChapter 1The Environment of Financial Reporting1Chapter 2Financial Reporting: Its Conceptual FrameworkChapter 3
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00980_03_ch02_p0036-0073.qxd11/17/084:50 PMPage 36C H A P T E R2Financial Reporting: Its Conceptual FrameworkImage Source/Getty ImagesAfter reading this chapter, you will be able to: 1 Explain the FASB conceptual framework.OBJECTIVES2 Understand
Kaplan University - AC300 - 02-AU
W. Alabama - ACTG - internatio
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King Saud University - COMPUTER S - CSC212
Data Structures: IntroductionCSC2121Data Types & Data Structures Applications/programs read data, store data temporarily, process it and finally output results. What is data? Numbers, Characters, etc.Application/ Program DataData2Data Types & Data
King Saud University - COMPUTER S - CSC212
Data StructuresCSC2121Fundamental ConceptsSome fundamental concepts that you should know: Dynamic memory allocation. Recursion. Performance analysis.2Performance Analysis There are problems and algorithms to solve them. Problems and problem instan
King Saud University - COMPUTER S - CSC212
Data StructuresADT List1ADT ListElements StructureDomain User of an ADT must only know thisOperationsSpecification Representation Implementation2Implementer must know all these.ADT List: SpecificationElements: The elements are of type <Type>. T
King Saud University - COMPUTER S - CSC212
Stacks, Queues & DequesCSC2121Stacks & Queues Stack: Last In First Out (LIFO). Used in procedure calls, to compute arithmetic expressions etc. Queue: First In First Out (FIFO). Used in operating systems, simulations etc. Priority Queues: Highest p
King Saud University - COMPUTER S - CSC212
General Trees & Binary TreesCSC2121Trees Previous data structures (e.g. lists, stacks, queues) have a linear structure. Linear structures represent one-to-one relation between data elements. Trees have a nested or a hierarchical structure. Hierarchica
King Saud University - COMPUTER S - CSC212
Binary Search Trees (BSTs)1Binary Search Trees (BSTs) Consider the search operation FindKey (): find an element of a particular key value in a binary tree. This operation takes O(n) time in a binary tree. In a binary tree of 106 nodes 106 steps require
King Saud University - COMPUTER S - CSC212
AVL Trees1AVL Trees Consider a situation when data elements are inserted in a BST in sorted order: 1, 2, 3, . 1 BST becomes a 2 degenerate tree. Search operation 3 FindKey takes O(n), n which is as inefficient as in a list.2AVL Trees It is possible
King Saud University - COMPUTER S - CSC212
B-Trees1B-trees: Why? Best tree discussed so far AVL Tree: Important operation Findkey() can be implemented in O(log n) time. AVL Tree has problems for large data the size of the AVL tree increases and may not fit in the system's main memory. the heig
King Saud University - COMPUTER S - CSC212
Heaps & Priority Queues A heap is a binary tree. A heap is best implemented in sequential representation (using an array). Two important uses of heaps are: (i) efficient implementation of priority queues (ii) sorting - Heapsort.1A Heap103020Any no
King Saud University - COMPUTER S - CSC212
Hashing Techniques1Hashing Techniques Several ADTs for storing and retrieving data were discussed Linear Lists, Binary Trees, BSTs, AVL Trees. An important operation Findkey() has a time complexity: O(n) in Lists, O(n) in Binary Trees, O(log n) in BSTs
King Saud University - CS - CSC212
Data Structures for JavaWilliam H. Ford William R. ToppChapter 3 Designing ClassesBret Ford 2005, Prentice Hall 2005 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved. The Java InterfaceAn interface is a pure abstract classlike st
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417
University of Michigan - MATH - MATH 417