Chapter 15

1. Consumer Behavior,Eighth EditionSCHIFFMAN & KANUK Chapter 15 The Consumer’s Decision-Making Process

2. Opinion Leadership The process by which one person (the opinion leader) informally influences the consumption actions or attitudes of others who may be opinion seekers or opinion recipients.

3. What is Opinion Leadership? Opinion Leader Opinion Receiver Opinion Seeker

4. Examples of Opinion Leadership • During a coffee break, a co-worker talks about the movie he saw last night and recommends seeing it. • A person shows a friend photographs of his recent Australian Outback vacation and the friend suggests that using a polarizing filter might produce better pictures.

5. Special Issues • Opinion leaders are four times more likely to be asked about political issues, three times more likely to be asked about computers or investments, and twice as likely to be asked about restaurants • Information seekers seek a “strong-tie” source when they know little about a topic, and “weak-tie” sources when they have some knowledge

6. Chat Rooms and Opinion Leadership

7. Reasons for the Effectiveness of Opinion Leadership • Credibility • Positive and Negative Product Information • Information and Advice • Opinion Leadership Is Category-Specific • Opinion Leadership Is a Two-way Street

8. Viral Marketing • Buzz Marketing • Wildfire Marketing • Avalanche Marketing These terms describe any strategy that encourages individuals to pass on a marketing message to others; The marriage of email and word-of-mouth communication

9. Yahoo’s Buzz Index

10. Figure 15.1 Factors Leading to Negative Word-of-Mouth Behavior + Individual Factors + Attitudinal Factors Negative WOM Likelihood of Repurchase + Product Involvement - Situational Factors +

11. Figure 15.2 Word-of-Mouth in Action % of respondents that used a referral to make one of these purchases over the past year

12. Motivations Behind Opinion Leadership • The Needs of Opinion Leaders • The Needs of Opinion Receivers • Purchase Pals • Surrogate Buyers versus Opinion Leaders

13. The Needs of Opinion Leaders • Self involvement • Social involvement • Product involvement • Message involvement

14. The Needs of Opinion Receivers • New-product or new usage information • Reduction of perceived risk • Reduction of search time • Receiving the approval of the opinion leader

15. OPINION LEADERS OPINION RECEIVERS • SELF-IMPROVEMENT MOTIVATIONS • Reduce post-purchase uncertainty or dissonance • Gain attention or status • Assert superiority and expertise • Feel like an adventurer • Reduce the risk of making a purchase commitment • Reduce search time • PRODUCT-INVOLVEMENT MOTIVATIONS • Express satisfaction or dissatisfaction with a product or service • Learn what products are new in the marketplace • Learn how to use or consume a product Table 15.3 A Comparison of Motivations (Excerpts)

16. Table 15.4 Key Differences Between Opinion Leaders and Surrogate Buyers OPINION LEADER 1. Informal relationship with end-users 2. Information exchange occurs in the context of a casual interaction 3. Homophilous (to a certain extent) to end-users 4. Does not get paid for advice 5. Usually socially more active than end-users 6. Accountability limited regarding the outcome of advice 7. As accountability limited, rigor in search and screening of alternatives low 8. Likely to have used the product personally 9. More than one can be consulted before making a final decision 10. Same person can be an opinion leader for a variety of related product categories

17. Table 15.4 Key Differences SURROGATE BUYER 1. Formal relationship; occupation-related status 2. Information exchange in the form of formal instructions/advice 3. Heterophilus to end users (that is, is the source of power) 4. Usually hired, therefore gets paid 5. Not necessarily socially more active than end-users 6. High level of accountability 7. Search and screening of alternatives more rigorous 8. May not have used the product for personal consumption 9. Second opinion taken on rare occasions 10. Usually specializes for a specific product/service category

18. Measurement of Opinion Leadership • Self-Designating Method • Sociometric Method • Key Informant Method • Objective Method

19. OPINION LEADERSHIP MEASUREMENT METHOD DESCRIPTION OF METHOD SAMPLE QUESTIONS ASKED SELF-DESIGNATING METHOD Each respondent is asked a series of questions to determine the degree to which he or she perceives himself or herself to be an opinion leader. “Do you influence other people in their selection of products?” SOCIOMETRIC METHOD Members of a social system are asked to identify to whom they give advice and to whom they go for advice. “Whom do you ask?”“Who asks you for info about that product category?” Table 15.5 Measuring Opinion Leadership

20. OPINION LEADERSHIP MEASUREMENT METHOD DESCRIPTION OF METHOD SAMPLE QUESTIONS ASKED KEY INFORMANT METHOD Carefully selected key informants in a social system are asked to designate opinion leaders. “Who are the most influential people in the group?” OBJECTIVE METHOD Artificially places individuals in a position to act as opinion leaders and measures results of their efforts. “Have you tried the product? Table 15.5 continued

21. Table 15.6 Profile of Opinion Leaders GENERALIZED ATTRIBUTES ACROSS PRODUCT CATEGORIES CATEGORY-SPECIFIC ATTRIBUTES Innovativeness Willingness to talk Self-confidence Gregariousness Cognitive differentiation Interest Knowledge Special-interest media exposure Same age Same social status Social exposure outside group

22. Market Maven Individuals whose influence stems from a general knowledge or market expertise that leads to an early awareness of new products and services.

23. The Interpersonal Flow of Communication • Two-Step Flow • A communication model that portrays opinion leaders as direct receivers of information from mass media sources who, in turn, interpret and transmit this information. • Multistep Flow • A revision of the traditional two-step theory that shows multiple communication flows

24. Figure 15.4 Two-Step Flow of Communication Theory Step 1 Step 2 Mass Media Opinion Leaders Opinion Receivers (the masses)

25. Figure 15.5 Multistep Flow of Communication Theory Step 2 Mass Media Opinion Leaders Opinion Receivers/ Seekers Step 1a Step 3 Step 1b Information Receivers

26. Issues In Opinion Leadership and Marketing Strategy • Programs Designed to Stimulate Opinion Leadership • Advertisements Stimulating Opinion Leadership • Word of Mouth May Be Uncontrollable • Creation of Opinion Leaders

28. Diffusion Process The process by which the acceptance of an innovation is spread by communication to members of social system over a period of time.

29. Adoption Process The stages through which an individual consumer passes in arriving at a decision to try (or not to try), to continue using (or discontinue using) a new product.

30. Elements of the Diffusion Process • The Innovation • The Channels of Communication • The Social System • Time

31. Defining Innovations • Firm-oriented definitions • Product-oriented definitions • Market-oriented definitions • Consumer-oriented definitions

32. Product-Oriented Definitions Continuous Innovation Dynamically Continuous Innovation Discontinuous Innovation

33. Figure 15.6 Continuous Innovation

34. Discontinuous Innovations Dynamically Continuous Innovations Continuous Innovations Telephone answering machines Call forwarding Call waiting Caller ID Banking by telephone Call-prompting systems Hold button Line-in-use indicator Redial button Auto dialing feature Touch-tone service 800 Numbers 900 Numbers Telephone Ability to send/receive email Incorporate PDA functions Calendar/Phonebook Voice-activated dialing Switch from analog to digital Include camera Ringer styles Play games Cell Phone Fax modem Mobile fax machines Home office systems (combined fax, copier, computer printer) Plain paper fax Speed dial buttons Delayed send Copy function Paper cutter Fax Machine Figure 15.7 Telephone Innovations

35. Product Characteristics That Influence Diffusion • Relative Advantage • Compatibility • Complexity • Trialability • Observability

36. Figure 15.8 Ad Stressing Ease of Use and Convenience

37. Table 15.7 Characteristics That Influence Diffusion CHARACTERISTICS EXAMPLES Relative Advantage Air travel over train travel, cordless phones over corded telephones Compatibility Gillette MACH3 over disposable razors, digital telephone answering machines over machines using tape Complexity Electric shavers, instant puddings

38. Table 15.7 continued CHARACTERISTICS EXAMPLES Trialability Trial size jars and bottles of new products, free trials of software, free samples, cents-off coupons Observability Clothing, such as a new Tommy Hilfiger jacket, a car, wristwatches, eyeglasses

39. Time and Diffusion • Purchase Time • Adopter Categories • Rate of Adoption See Table 15.8 Time Line for Selecting a New Automobile

40. Adopter Categories A sequence of categories that describes how early (or late) a consumer adopts a new product in relation to other adopters.

41. Figure 15.9 Adopter Categories Laggards 16% Early Adopters 13.5% Late Majority 34% Early Majority 34% Innovators 2.5% Percentage of Adopters by Category Sequence

42. Innovators: Description • 2.5% of population • Venturesome • Very eager to try new ideas • Acceptable if risk is daring • More cosmopolite social relationships • Communicates with other innovators

43. Early Adopters: Description • 13.5% of population • Respected • More integrated into the local social system • The persons to check with before adopting a new idea • Category contains greatest number of opinion leaders • Are role models

44. Early Majority: Description • 34% of population • Deliberate • Adopt new ideas just prior to the average time • Seldom hold leadership positions • Deliberate for some time before adopting

45. Late Majority: Description • 34% of population • Skeptical • Adopt new ideas just after the average time • Adopting may be both an economic necessity and a reaction to peer pressures • Innovations approached cautiously

46. Laggards: Description • 16% of population • Traditional • The last people to adopt an innovation • Most “localite” in outlook • Oriented to the past • Suspicious of the new

47. NAME OF STAGE WHAT HAPPENS DURING THIS STAGE EXAMPLE Awareness Consumer is first exposed to the product innovation. Janet sees an ad for a new MP3 player in the magazine she is reading. Interest Consumer is interested in the product and searches for additional information. Janet reads about the MP3 player on the manufacturer’s Web site and then goes to an electronics store near her apartment and has a salesperson show her a unit. Evaluation Consumer decides whether or not to believe that this product or service will satisfy the need--a kind of “mental trial.” After talking to a knowledgeable friend, Janet decides that this MP3 player will allow her to easily download the MP3 files that she has on her computer. She also feels that the unit’s size is small enough to easily fit into her beltpack. Table 15.11 Stages in Adoption Process

48. NAME OF STAGE WHAT HAPPENS DURING THIS STAGE EXAMPLE Trial Consumer uses the product on a limited basis Since an MP3 player cannot be “tried” like a small tube of toothpaste, Janet buys the MP3 player online from Amazon.com, which offers a 30-day full refund policy. Adoption (Rejection) If trial is favorable, consumer decides to use the product on a full, rather than a limited basis--if unfavorable, the consumer decides to reject it. Janet finds that the MP3 player is easy to use and that the sound quality is excellent. She keeps the MP3 player. Table 15.11 Stages in Adoption Process

49. Rejection Discontinuation or Rejection Evaluation Pre-existing problem or Need Adoption or Rejection Awareness Interest Evaluation Trial Adoption or Rejection Postadoption or Postpurchase Evaluation Discontinuation Figure 15.11 An Enhanced Adoption Process Model

50. Figure 15.12 The Relative Importance of Different Types of Information Sources in the Adoption Process High Personal and interpersonal sources Importance Impersonal mass-media sources Low Trial Interest Adoption Awareness Evaluation