Consumers as individuals Consumers as decision makers

1. Consumers as individualsConsumers as decision makers Doc.dr.Ing. Elena Horska

2. An overview of the perceptual process • Stimuli – sights, sounds, smells, tastes, textures • Sensory receptors • Attention • Interpretation • Response • Perception

3. Learning and memory I. • Learning refers to a relatively permanent change in behavior which comes with experience. • Our knowledge about the world is constantly being revised as we are exposed to new stimuli and receive feedback that allows us to modify behavior in other, similar situation. • Concept of learning covers many aspects starting from simple consumer’s association between a stimulus such as a product logo and a response to a complex series of cognitive activities (like explaining others benefits of new product or service). • Behavioral learning theories assume that learning take place as the result of responses to external events. For instance, consumers who are satisfied on a restaurant choice will be more likely to go that restaurant again, especially in case also their children will support such idea.

4. Learning and memory II. • In the context of globalization more and more international companies are looking for opportunities to find business partners in the rapidly growing countries and regions, India, China, Golf Cooperation Council countries and Central Europe including. Tough, this is not always easy because of basic differences between the regions. • These are not only economic and political ones, but also gaps with social, religious and geographic background. Different articulation of targets and wishes, hazy definition of words and one-way reporting in each other’s media causes often an escalation of possible misunderstandings. The environment refers to all the physical and social characteristics of a consumer’s external world, including physical objects (products and stores), spatial relationship (locations of stores and products in stores), and the social behavior of other people (who is around and what they are doing). • The environment can influence consumers´ affective and cognitive responses and their behavior. For instance, consumers respond to a new store by interpreting features of this environment and deciding what behaviors to perform to accomplish their shopping goals

5. Culture National values, attitudes, norms Communicating homogenized standards Subculture Social class Organizations Reference groups Family Media Individual consumers Flows of Influence in the Social Environment

6. Learning and memory – case of India I. • In large countries as India for instance is there is an evident difference among individual subcultures and social classes, supported by geographical dimensions, too. This country, which is with 3.287.590 km² the seventh largest of the world and inhabited by members of many different religious communities developed significant differences in the eating habits. • How did McDonald’s adapt itself to those conditions?Basically a screening of the regions was carried out. Even nowadays McDonald’s is not represented in all federal states of India. Generally there are only restaurants in those cities, which show a higher percentage of Indians with high incomes. McDonald’s has 132 restaurants in India of which 79 are in North & East India (including 33 restaurants in Delhi) and 53 in West & South India (including 23 in Mumbai).

7. Learning and memory – case of India II. • Due to the size of the country, McDonald’s didn’t succeed in neither creating a uniform „Indian McDonald’s“ nor in enforcing a uniform marketing strategy for India. Rather a compromise had to be found by separating the country in two main regions (the West & South zone and the North & East zone) and different federal states. This is also evident with the internet presence of the company at http://www.mcdonaldsindia.com. • There are completely different marketing strategies as well as different products in the two main regions. Whereas the „Chicken Maharaja Mac“ symbolizes an association with India in the West & South zone, in the North & East region it is the „wrap“. It is also striking, that in the North & West region you can find the product prices in the internet presence whereas this is not the case in the West & South zone.

8. Behavioral learning theories • Behavioral learning theories assume that learning takes place as the result of responses to external events. They approach the mind as “black box” and emphasize the observable aspects of behavior. According to such theories consumers respond to brand names, scents, jingles and other marketing stimuli based on the learned connections they have formed over time. Consumers who are complimented on a product choice will be more likely to buy that brand again, while those who get food poisoning at a new restaurant will not be likely to patronize it in the future.

9. Cognitive learning theories • Cognitive learning theories assume that learning is a result of mental processes. In contrast to behavioral theories of learning, cognitive learning theory stresses the importance of internal mental processes. This perspective views people as problem-solvers who actively use information from the world around them to master their environment. Supporters of this viewpoint also stress the role of creativity and insight during the learning process (Solomon et al, 2006). • As a part of learning Peter and Olson (2008) define vicarious learning as a process by which people change their behaviors because they observed the actions of other people and the consequences that occurred. In general, people tend to imitate the behavior of others when they see it leads to positive consequences and to avoid performing the behavior of others when they see that negative consequences occur. Vicarious learning is also called modeling when consumers can observe the model, live modeling, and symbolic modeling in TV commercials or opinions leaders. Learning process is an inevitable part of transferring the consumer habits from one country to another. It occurs in changing of attitudes, values and actions and in case of effective marketing strategy and tactics of multinational companies can lead to desired consumer behavior. • Effective learning process supported with attractive external stimulus can overcome differences in consumption culture internationally. Some analysts see the entire world as moving toward an “Americanized” culture, “McDonalisation,” “Coca-colonization” or “materialism” from a certain point of view. Especially, young consumers are more likely to recognize and adopt new consumer patterns as it is shown in a case McDonald’s in Slovakia. Research results show that young generation of Slovak customers tends to behave as so called “global customer” following some universal rules of purchasing and consumer habits.

10. The example of McDonalds in Middle East is used to mention the tendencies of homogenization, which lead, in the course of standardization and unification, to a fusion of cultures. If the global consumer behaviour and other areas of everyday life are adapting more and more, local traditions are gradually replaced by a unified culture. Especially in the Arabic cultures, with their strong ethical values, it is possible not only to set one’s own conditions to McDonald’s but also to aim interesting interdependencies. McDonald’s Saudi Arabia plays an active role since 1993 in supporting local social and humanitarian entities and brings in old standards and new ideas. In addition, restaurants in Saudi Arabia do not display statues or posters of Ronald McDonald, since the Islamic father prohibits the display of “Idols.” In Saudi-Arabia the regulations of a separated “family room“ and “single room“ as well as the closing hours during the devotions have to be complied with. And since McDonald’s believes in localization, it has introduced new products that appeal to the local tastes of the customers. A good example is the McArabia Chicken, which has so far enjoyed huge success among the customers. Originally this product was developed from Arabic fast food restaurants. But also in Europe the Muslims keep their influence on the range of products, they are not willing to get influenced or accustomed to non-halal products at any cost. Fusion of cultures I.

11. Fusion of cultures II. • Marketing strategy of McDonald´s in India is going to be even a little bit more complex in a subcontinent and multiethnic state like India. Apart from the Moslems, who are represented in all regions with 5-15 % of the population, the religious community of the Hindus forms a significant majority in some areas. This group declines the consumption of any products from cows for religious reasons. From the perspective of the marketing department of McDonald’s therefore the challenge results, that neither cow products nor pork products can be offered. Additionally, most of the Indians consider the products of McDonald’s as too expensive, very often there are more expensive than a whole meal in a typically Indian restaurant. • The main part of the Indian McDonald’s products is based on a vegetarian basis, followed by a high share of fish- and chicken products. There where pork and beef, which is common in Europe and Arabia, can not be replaced by implication, lamb and goat is used. Thereby also typical Indian food is used as an addition to the basic range. McDonald's plans to open another 40 restaurants across India, bringing the total to close to 200, he said in an interview. Last year, the fast-food giant opened about 25 restaurants. The popularity of Chicken McNuggets has helped boost sales since their May introduction in India, he said. The deep-fried chicken pieces have sold so well that some McDonald's stores were running out, he said. "We had to slow down the marketing campaign."

12. Core values and social groups, cultural process • As a part of marketing analysis of cultural content the core values of the society or social group have to be identified. Knowing the core values can help marketers to design a right product for a customer with ability satisfying his/her needs and wants. Long-term impact of globalization of cultures and values can result in changes of core values and lifestyle followed by changes in purchasing and consumer behavior. From this point of view the process of globalization powered by impact of media and publicity can lead to a new market opportunity, especially for globalized products. Peter and Olsen (2008) define the cultural process as transfer of cultural meaning between social and physical environment, products and services and individuals in the society. • There are two ways meaning is transferred in a consumption-oriented society. First, marketing strategies are designed to move cultural meanings from the physical and social environments into products and services in an attempt to make them attractive to consumers. Second, consumers actively seek to acquire these cultural meanings in products to establish a desirable personal identity or self-concept.

13. Standardizing strategy across cultures means several actions .... Adapting strategy toculture means accepting... National values, beliefs Learning process Traditional process of socialization (from older to younger generation Intergeneration socialization (from younger generation to older one) Memory from past learning Marketing communication Role of learning, memory and process of socialization in the degree of marketing mix adaptation