Chapter 6
Consumer Behavior
The Consumer Decision Process (5 Steps)
Consumer behavior — the process by which consumers decide to purchase, use, and dispose of goods and services. Understanding this process helps marketers influence each stage.
- Need Recognition — consumer perceives a gap between actual state and desired state
- Information Search — searching for ways to satisfy the need
- Alternative Evaluation — comparing options using criteria
- Purchase Decision — choosing and buying
- Postpurchase — evaluating satisfaction after buying
Exam trap: The process does NOT always start with a marketing stimulus. Need recognition can be triggered internally (hunger) or externally (ad). The exam tests whether you can identify WHICH step a scenario describes.
Step 1: Need Recognition
Functional Needs
Performance-based — the product solves a practical problem (umbrella keeps you dry, tires grip the road)
Psychological Needs
Emotional/personal gratification — desire for status, self-expression, belonging (luxury watch, designer handbag)
Key: Many purchases satisfy BOTH functional and psychological needs simultaneously. A Tesla satisfies the functional need for transportation AND the psychological need for status/environmental identity.
Step 2: Information Search
Internal vs. External Search
Internal Search
Scanning your own memory and past experiences first (you recall liking Crest toothpaste last time)
External Search
Seeking info from outside sources when internal search is insufficient (Google reviews, asking friends, visiting stores)
Factors Affecting Search
- Perceived benefit vs. cost of search — if the benefit of more info outweighs the effort, consumers search more
- Locus of control — Internal LOC = "my research determines outcome" (search more). External LOC = "fate/luck determines outcome" (search less)
- Actual/perceived risk — higher risk = more search (buying a house vs. buying gum)
- Product experience — more experience = less search needed
Exam trap: Internal LOC consumers search MORE because they believe their own effort affects outcomes. External LOC consumers search LESS. Don't confuse these.
Step 3: Alternative Evaluation
Key Concepts
- Evaluative criteria — attributes the consumer considers important (price, quality, style, brand)
- Determinant attributes — the attributes that ACTUALLY differ between brands and drive the final choice (if all phones have cameras, camera quality is NOT determinant unless they differ meaningfully)
- Consumer decision rules — the method used to compare alternatives
Decision Rules
Compensatory
Consumer weighs ALL attributes — a weakness in one area can be COMPENSATED by strength in another. "This car gets bad gas mileage but the safety rating is excellent, so I'll buy it."
Noncompensatory
Consumer sets minimum cutoffs — if a product fails ANY cutoff, it is ELIMINATED regardless of strengths elsewhere. "I won't pay over $30,000 no matter how good the car is."
Exam trap: Determinant attributes ≠ evaluative criteria. ALL attributes you consider are evaluative criteria. Determinant attributes are only the ones that actually DIFFER between options and drive the decision. The exam will describe a scenario where several criteria are identical — the one that differs is determinant.
Step 4: Purchase Decision
Even after choosing, the purchase can be influenced by:
- Store atmosphere & shopping experience
- Salesperson interaction
- In-store promotions or point-of-purchase displays
- Unplanned substitutions (desired brand out of stock)
Step 5: Postpurchase Behavior
| Outcome | What Happens | Marketing Impact |
|---|
| Satisfaction | Performance meets or exceeds expectations | Repeat purchase, positive WOM, brand loyalty |
| Dissatisfaction | Performance falls below expectations | Returns, complaints, negative WOM (spreads faster than positive) |
| Cognitive dissonance | Buyer's remorse — doubt after a major purchase | Marketers reduce it with follow-up emails, reassurance, warranties |
Cognitive dissonance — the uncomfortable feeling that comes from questioning whether you made the right choice. Common after expensive or high-involvement purchases. Marketers combat it with post-purchase communication (thank-you emails, satisfaction surveys).
Negative WOM is powerful. Dissatisfied customers tell MORE people than satisfied ones. One viral negative review can do more damage than dozens of positive reviews can help.
Psychological Factors Influencing Consumer Behavior
Motives (Maslow's Hierarchy Applied to Marketing)
- Physiological — food, water, shelter (grocery stores, basic clothing)
- Safety — security, protection (insurance, home security systems, Volvo)
- Love/Belonging — friendship, connection (social media, greeting cards, dating apps)
- Esteem — status, recognition (luxury brands, country club memberships)
- Self-Actualization — reaching full potential (educational courses, adventure travel)
Exam trap: Marketers appeal to the LOWEST unfulfilled need. A homeless person isn't motivated by a Rolex ad (esteem) — they need shelter (physiological/safety).
Attitudes (ABC Model)
| Component | Meaning | Example |
|---|
| Affective | What you FEEL about the product | "I love Nike — it makes me feel athletic" |
| Behavioral | What you DO (action/intention) | "I buy Nike every time" |
| Cognitive | What you THINK/BELIEVE about the product | "Nike makes durable shoes" |
ABC = Affect, Behavior, Cognition. Marketers try to change attitudes by targeting one or more components. Changing cognition (beliefs via informational ads) can shift affect and behavior.
Perception
- Selective exposure — consumers choose which media/messages to expose themselves to (skip ads, change channels)
- Selective attention — consumers only notice messages relevant to their needs (hungry people notice food ads more)
- Selective comprehension — consumers interpret messages to fit existing beliefs (brand loyalists see ads differently)
- Selective retention — consumers remember only what reinforces their beliefs (forget negative info about favorite brand)
Learning
Changes in behavior based on experience. Marketers influence learning through repetition (ads), reinforcement (rewards programs), and brand associations (celebrity endorsements).
Lifestyle (VALS Framework)
VALS (Values and Lifestyles) — segments consumers by psychological traits and resources. Two key dimensions: primary motivation (ideals, achievement, self-expression) and resources (high vs. low). Innovators (top) have the most resources; Survivors (bottom) have the fewest.
Social Factors
- Family — most important social influence. Roles shift by product category (children influence cereal; adults influence cars)
- Reference groups — groups that influence attitudes/behavior. Can be aspirational (want to belong), associative (currently belong), or dissociative (want to distance from)
- Culture — shared beliefs, values, customs of a group. Includes subcultures (regional, ethnic, age-based)
Situational Factors
- Purchase situation — reason for purchase (gift vs. self-use changes criteria)
- Shopping situation — store environment, crowding, music, layout, salespeople
- Temporal state — time of day, season, urgency, mood. Hungry shoppers buy more impulse items
Types of Buying Decisions
| Type | Involvement | Effort | Example |
|---|
| Extended problem solving | HIGH | Extensive research, all 5 steps fully used | Buying a house, car, college choice |
| Limited problem solving | MODERATE | Some search and evaluation | Choosing a restaurant, new jeans brand |
| Habitual decision making | LOW | Little/no search — buy same brand routinely | Weekly groceries, same toothpaste brand |
| Impulse buying | LOW-MODERATE | Unplanned, triggered by stimulus in the moment | Candy at checkout, flash sale item |
Exam trap: Habitual ≠ impulse. Habitual = you always buy the SAME brand without thinking. Impulse = you buy something you did NOT plan to buy at all. The former is routine; the latter is spontaneous.
Involvement
High Involvement
Expensive, risky, or personally important → extended problem solving, careful evaluation, more cognitive dissonance after purchase (car, laptop, college)
Low Involvement
Inexpensive, low risk, routine → habitual or impulse decisions, minimal search (paper towels, gum)
Chapter 7
Business-to-Business (B2B) Marketing
B2B vs. B2C Differences
| Factor | B2B | B2C |
|---|
| Number of customers | Fewer, larger accounts | Many individual consumers |
| Order size | Much larger ($$$) | Smaller individual purchases |
| Decision makers | Multiple people (buying center) | Individual or family |
| Decision process | Formal, longer, more rational | Informal, faster, more emotional |
| Demand | Derived from consumer demand | Direct consumer demand |
| Relationships | Long-term, relationship-focused | Often transactional |
| Buyers | Professional/trained buyers | Average consumers |
Key distinction: B2B buyers are driven by organizational needs and ROI. B2C buyers are driven more by personal needs and emotions.
B2B Markets
- Manufacturers/Producers — buy raw materials/components to make finished goods
- Resellers — buy finished goods to resell (wholesalers, retailers)
- Institutions — hospitals, schools, nonprofits — buy to support operations
- Government — largest single B2B buyer; strict procurement rules, competitive bidding
The B2B Buying Process
- Need recognition — identify a need (e.g., factory needs new equipment)
- Product specification — define technical requirements
- RFP (Request for Proposals) — invite vendors to bid
- Proposal analysis & supplier selection — evaluate bids, choose vendor
- Order specification — finalize order details (quantity, delivery, payment)
- Vendor/Performance assessment — evaluate supplier performance after delivery
Exam trap: The B2B process has MORE steps than B2C and is more formal. An RFP (Request for Proposals) is unique to B2B — consumers don't send RFPs to stores.
The Buying Center
Buying center — the group of people within an organization who participate in the buying decision. Not a formal department — it's an informal, cross-functional group that forms around a specific purchase.
| Role | Function | Example |
|---|
| Initiator | First recognizes the need | Machine operator notices equipment breaking down |
| Influencer | Provides input, opinions, or technical expertise | Engineer recommends specific equipment specs |
| Decider | Makes the final purchase decision | VP of Operations approves the purchase |
| Buyer | Handles the actual purchasing transaction | Procurement officer negotiates terms and places the order |
| User | Will actually use the product | Factory workers who will operate the new equipment |
| Gatekeeper | Controls information flow to/from the buying center | Administrative assistant who screens vendor calls |
Exam trap: One person can fill MULTIPLE roles. The decider is NOT always the most senior person — sometimes a technical influencer effectively makes the decision. The gatekeeper doesn't decide, but controls who gets access.
Buying Situations
| Situation | Description | Effort | Example |
|---|
| New buy | First-time purchase; no prior experience | Most effort — full buying process, all roles active | Company buys its first fleet of delivery trucks |
| Modified rebuy | Repurchase with some changes (new specs, price, vendor) | Moderate effort — some evaluation | Reordering office supplies but switching to a cheaper vendor |
| Straight rebuy | Routine repurchase of same product from same vendor | Least effort — automatic/habitual | Monthly reorder of printer paper from the usual supplier |
Pattern: New buy = full process. Modified rebuy = partial. Straight rebuy = automatic. This mirrors consumer behavior: extended problem solving → limited → habitual.
B2B Demand Characteristics
- Derived demand — B2B demand comes from consumer demand for finished goods. If nobody buys cars, nobody buys car tires from suppliers
- Inelastic demand — price changes have little effect on B2B demand in the short run (a 10% increase in steel price doesn't change how much steel Ford needs)
- Fluctuating demand — small changes in consumer demand cause LARGE swings in B2B demand (accelerator effect)
- Joint demand — demand for one B2B product depends on another (you can't sell car doors without car frames)
Exam trap: Derived demand is the most-tested concept. If the exam describes declining consumer demand causing a supplier to lose orders — that's derived demand, not a supply problem.
Organizational Culture & Buying
| Culture | How Decisions Are Made |
|---|
| Autocratic | One person (boss) decides alone |
| Democratic | Majority vote among the buying center |
| Consultative | Leader seeks input but makes the final call |
| Consensus | Everyone must agree before proceeding |
Chapter 8
Global Marketing
Why Go Global?
- Access to larger markets and new customers
- Diversify risk across different economies
- Lower production costs (cheaper labor/materials)
- Exploit core competencies in new markets
- Respond to competitors who are going global
Assessing Global Markets: PESTEL Analysis
PESTEL — a framework for analyzing the macro-environment of a foreign market. Each factor can create opportunities OR threats.
| Factor | What It Covers | Example |
|---|
| Political | Government stability, trade policies, tariffs, sanctions, political risk | A coup disrupts supply chains; tariffs make imports expensive |
| Economic | GDP, income levels, inflation, unemployment, exchange rates | High GDP/capita = more purchasing power; recession = weaker demand |
| Sociocultural | Language, values, customs, demographics, social norms, religion | Colors/symbols mean different things in different cultures (white = mourning in some Asian cultures) |
| Technological | Internet access, infrastructure, innovation, digital adoption | Low smartphone penetration limits mobile marketing strategy |
| Environmental | Climate, sustainability regulations, natural disasters, green expectations | EU's strict environmental packaging rules increase costs |
| Legal | Laws, regulations, IP protection, product safety, labor laws | Weak IP laws = risk of counterfeiting; strict advertising regulations |
Exam trap: PESTEL tests you on classification. Tariffs = Political (government trade policy), NOT Economic. Exchange rates = Economic. Consumer customs/values = Sociocultural. IP laws = Legal, not Political.
Market Entry Strategies (Least to Most Risk/Control)
| Strategy | Description | Risk | Control | Investment |
|---|
| Exporting | Producing domestically, selling abroad | Lowest | Lowest | Lowest |
| Franchising | Licensing the right to use your brand/system to a local operator | Low | Low-Moderate | Low |
| Strategic Alliance / Joint Venture | Partnering with a local company; JV = shared ownership entity | Moderate | Shared | Moderate |
| Direct Investment | Building/buying your own facilities in the foreign country | Highest | Highest | Highest |
Risk-Control tradeoff: More risk = more control = more investment. Exporting has the least risk but the least control. Direct investment gives full control but requires the most capital and carries the most risk.
Exam trap: A strategic alliance is a collaborative arrangement WITHOUT shared equity. A joint venture creates a new entity with SHARED ownership. Don't treat them as identical.
GLOCAL Strategy
Glocal = "Think globally, act locally." Companies maintain a consistent global brand identity while adapting the marketing mix (product, pricing, promotion, placement) to local tastes, customs, and regulations.
Example: McDonald's has the same golden arches worldwide but serves McSpicy Paneer in India, Teriyaki Burgers in Japan, and beer in Germany.
Global Strategy
Standardize everything across all markets. Lower cost, consistent brand. Risk: ignoring local preferences.
Local Strategy
Customize everything for each market. Better fit, higher cost. Risk: losing brand consistency.
Glocal is the middle ground — standardize where possible (brand, core product), adapt where necessary (flavors, language, cultural references).
Trade Organizations & Agreements
| Organization | What It Does | Members |
|---|
| WTO (World Trade Organization) | Sets global trade rules, resolves disputes, reduces barriers | 164 member nations |
| EU (European Union) | Economic/political union with single market, free movement, common currency (euro) | 27 European nations |
| USMCA (US-Mexico-Canada Agreement) | Free trade between the US, Mexico, and Canada (replaced NAFTA) | 3 North American nations |
| ASEAN | Promotes economic growth and cooperation in Southeast Asia | 10 Southeast Asian nations |
| Mercosur | South American trade bloc promoting free trade | Brazil, Argentina, Uruguay, Paraguay |
| CAFTA | Free trade between the US and Central American countries + Dominican Republic | US + 6 Central American/Caribbean nations |
Exam trap: USMCA REPLACED NAFTA. Don't pick NAFTA on the exam — it's the old agreement. Also, the EU uses the euro, but not ALL EU members use it (e.g., Poland, Sweden).
Infrastructure
Infrastructure = a country's basic facilities (transportation, communications, energy, education, healthcare). It determines whether a market can support your business.
- Poor roads = difficulty distributing physical products
- Low internet penetration = e-commerce is limited
- Unreliable electricity = can't run manufacturing plants
- Weak education system = difficulty finding skilled workers
Developed vs. developing nations: Advanced infrastructure (US, Japan, Germany) supports complex supply chains. Developing nations may offer low-cost labor but present infrastructure challenges.
Exchange Rates
Strong Dollar
US dollar buys more foreign currency. Imports cheaper (good for US buyers). Exports more expensive abroad (bad for US sellers selling overseas).
Weak Dollar
US dollar buys less foreign currency. Imports more expensive (bad for US buyers). Exports cheaper abroad (good for US sellers selling overseas).
Exam trap: A strong dollar HURTS US exporters because American products become more expensive for foreign buyers. A weak dollar HELPS US exporters because American products become cheaper abroad. This is counterintuitive — "strong" sounds good but isn't always.
Trade Balance
Trade Surplus
Exports > Imports. Country sells more than it buys. Generally seen as positive (money flows IN).
Trade Deficit
Imports > Exports. Country buys more than it sells. Money flows OUT. The US consistently runs a trade deficit.
Ethics in Global Marketing
- Child labor — using children in factories (legal in some nations, always ethically questionable)
- Labor conditions — sweatshops, unsafe factories, low wages
- Environmental exploitation — dumping pollution in countries with weak environmental laws
- Bribery & corruption — US companies are bound by the Foreign Corrupt Practices Act (FCPA) which prohibits bribing foreign officials
- Cultural sensitivity — avoiding offensive marketing in other cultures
Offshoring, Reshoring, & Nearshoring
| Term | Definition | Example |
|---|
| Offshoring | Moving production/operations to a foreign country for lower costs | US company moves manufacturing to Vietnam |
| Reshoring | Bringing production BACK to the home country | Company moves manufacturing from China back to the US |
| Nearshoring | Moving production to a nearby country (closer than offshoring, cheaper than reshoring) | US company moves production from China to Mexico |
Why reshore? Quality control, shorter supply chains, "Made in USA" appeal, avoiding tariffs, supply-chain disruptions (learned from COVID-19).