An Analysis of the Fundamentals of Marketing (part 26)

Industrial Buyer Behavior (part A)

by

Charles Lamson

Introduction

In the following series of posts, the key aspects of industrial buyer behavior are introduced. The different types of organizational markets, government, institutional, producer and reseller markets are outlined. The role of the organizational buying center is described and discussed. B2B (business-to-business) marketing is marketing of products to businesses or other organizations for use in production of goods, for use in general business operations (such as office supplies), or for resale to other consumers, such as a wholesaler selling to a retailer. The B-to-B buying process is described first with reference to early models of buyer behavior. This approach is critiqued and then contrasted with more recent views which stress the significance of flexibility, open communications and relationships. Finally B-to-B buyer behavior is compared with consumer buyer behavior.

Types of Organizational Markets

Organizational purchases span a wide realm including everything between that of a power station to paperclips. It makes sense to try to organize the types of purchase decisions made according to the type of organizational market. These may be divided into four types: government, institutional, producer and reseller markets.

Government

Government is a major purchaser in any country, spending billions of dollars across the range of government expenditure, e.g. on health, defense, social security, transport, communications and education. Theoretically the UK and US governments are accountable to the public as government agencies spend public funds to buy the products which they require.

This accountability has resulted in a complex set of buying procedures, which suppliers must conform to if they are to meet with government requirements. usually governments make their purchases through bids. Generally, government cannot protect its industry by limiting bids to national firms but, as within the EU, bidders can come from across the Union. Initially suppliers apply and are vetted to join a list of qualified bidders. Government agencies wishing to purchase equipment send out detailed specifications to qualified bidders and those that feel they are in a position to meet the specifications submit a bid. Usually the government unit accepts the lowest bid. Where the purchase is unusually large or complex, government agencies may use a negotiated contract whereby the agency selects some companies and negotiates with each until a satisfactory outcome has been arranged.

Institutional Markets: Organizations with Non-Business Goals

These include organizations with educational, charitable and other non-business goals. Universities are numbered among this group. An organization wishing to sell to a university must first identify where the buying decision is to be made. This can be difficult, as some large universities employ thousands of staff in hundreds of academic departments. Purchases of computing equipment are a good example. Senior administrators at one university decided to replace the existing variety of computing with a standard system which was approved and chosen by its central computer services and then installed in several departments. At another university central computing services evaluated several types of computer network before approving one and then approved several types of hardware to run on it. Staff within departments were allowed to make its own choice so long as the cost fell within the guidelines set by the university finance department. From this, it should be noted that computer companies dedicate sales staff to particular institutions who familiarize themselves with with the way in which decision making is organized within that institution. In particular, the staff who have the authority to make different decisions and who influence the buying decision in each case are monitored carefully.

Producer Markets, Including Buyers of Raw Materials, Semi-Finished and Finished Items

Producer markets range across the spectrum of industries, including public utilities, mining, forestry, fisheries and construction, transport, retailing and manufacturing. Such purchases include buyers of raw materials and semi-finished items used to produce other products. For example, farmers may require animal feed, a range of machinery from milking machines to tractors, seeds for planting and fertilizer. Supermarkets may form producer markets for some items such as carrier bags, scanning equipment and store maintenance products.

Manufacturers buy raw materials and components in order to manufacture products to satisfy consumer needs. The demand for industrial products derives from that for consumer products and is called derived demand. For example, the demand for denim jeans fell in the UK and the US, it had a major 'knock on' effect for jeans manufacturers. The nature of events 'downstream' in the consumer marketplace results in a chain reaction as effects are experienced by manufacturers and their suppliers who are 'upstream'. For example, in 1998 British Airways shifted its purchasing policy strongly in favor of Airbus for the first time and as a result over 40,000 jobs were lost during the year at Boeing, Airbus's major rival. However, this was only a fraction of the jobs actually lost, as it did not include losses incurred by the thousands of suppliers to Boeing. Another example is that demand for eggs in the UK rose by over 1 million per week as the result of a widely televised cooking show by a famous cook called Delia Smith. Egg producers found it difficult to respond to such a quick change in demand as their hens already were working to capacity to produce eggs for existing markets.

The demand for many industrial, i.e. a price increase or decrease will not alter greatly the demand for the item. The price elasticity of demand is covered in a later post. Price increases that affect only one or two parts of the product will yield only a slightly higher per-unit production cost because many industrial products contain a number of parts. This is considered to be relatively inelastic, as a component accounts for a large percentage of overall cost, which can have a major effect on costs. For example, when engine manufacturers raised the prices of aircraft engines, Boeing was forced to raise the overall price of its planes. 

Manufacturers are often clustered together in locations such as the Ruhr valley in Germany. Since the late 1970s manufacturing has been in decline in the UK although it remains significant in other European countries such as Germany. As global capital has shifted to the Pacific rim and more recently to India, Sri Lanka and Morocco as well as to China. Increased global competition means that costs, quality, throughput (the amount of material or items passing through a system or process)

 and flexibility are major issues for those who wish to supply manufacturers.

Reseller Markets

Reseller markets are composed of those intermediaries between manufacturer and the consumer which are known as wholesalers and retailers. Wholesalers purchase products for direct sale to retailers, other wholesalers, producers and government. On the other hand, retailers purchase products and resell them to final customers. There has been a general decline in wholesaler numbers in the UK over the past thirty years while retailer power has grown substantially.

*SOURCE: FUNDAMENTALS OF MARKETING, 2007, MARILYN A. STONE AND JOHN DRESMOND, PGS. 98-101*

END

An Analysis of the Fundamentals of Marketing (part 25)

Do Men and Women Process Advertisements Differently?

by

Charles Lamson

The levels of processing theory outlined in previous posts has been used to explore the ways in which men and women process advertising stimuli. In the early 1900s there was a belief that men and women differed both in their approach to advertising and in the manner in which they purchased goods. One commonly held view has been that men are more analytical and logical in their approach to information processing whereas women are more subjective among advertising creatives, who targeted women using emotional appeals. More recent research indicates that such stereotypical thinking is some way from the truth. Myers-Levy (1986; Myers-Levy and Maheswaran, 1991) developed the selectivity model to explain the different ways in which men and women process advertising messages. She suggests that men and women differ not because of some subjective/objective divide, but to the extent to which they process information. Generally, the selectivity model suggests that men use heuristics or simple rules of thumb in processing advertising messages. Men tend to process advertisements in a shallow manner by attending to colors and images but do not process them in a way that relates to their deeper meaning or relevance to self. The researcher found that, in contrast to men, women tend to employ comprehensive processing of all information prior to making a judgrment based on an advertising message. This claim is supported by Darley and Smith (1995), who found that, when risk is low, women are equally favorable to objective and subjective claims, and when risk is moderate, that objective claims produce a more favorable response. This finding has important implications for copywriters and advertisement managers who still follow traditional reasoning and highlight the subjective aspect of purchase and use when females are the target market. It suggests that advertisers should be more flexible in choosing writing styles.

Another area for research is the stereotype of whether men are more emotional than women. Fisher and Dube (2005) explored attitudes to advertising, finding that males tend to adjust their emotional display towards what they believe is appropriate or socially desirable expression. The authors link the behavior of males to social approval; in private they can express themselves freely but are much more constrained in the public situation, where they feel they are on show and so must seek to ensure that their emotional expressions fit with the context.

Changing gender orientations are apparent in the development of the 'gay' market in the UK. In a 1995 readership survey conducted by Gay Times, it was found that average income among gays was (US$30,500) a year, while the average gay household brought in (US$84,000. This is considerably more than the typical 'straight' family unit. It must be remembered that while marketers may zero in on the market because of its value to them, the 'gay' market presents a formidable marketing challenge, as it constitutes a diversity not only of gender orientations but also of age, social class and ethnicity.

Attitude

Attitude is an important concept to understand because it divides cognitive from behaviorist explanations of consumer behavior. Behaviorists, such as Foxall, eschew 'within the skin' concepts such as attitude. On the other hand, although the concept of attitude pre-dates Simon's cognitive revolution, cognitive theorists insist that it plays a key role in 'central' processing (Petty et al., 1983). The battle between cognitive and behaviorist explanations, where the former celebrates the importance of attitude and the latter contests it, features in differences about explanations of involvement, of branding and brand loyalty and in the role of advertising.

An attitude is a predisposition to behave towards an attitude object in a consistently favorable or unfavorable way. The notion that attitude is a predisposition to behave is interesting to marketers because, if the situation is right, then a positive attitude towards a product or service should lead to an intention to buy it. Attitudes are considered to be closely linked with self-protection and self-expression. For example, if Jane feels anxious about success then she may well develop positive attitudes towards products that allow her to aspire to it: a fountain pen, designer briefcase, fine restaurants, fashion-brand clothes. Marketers seek to influence personal feelings across a spectrum of products and services, from cars to financial services products to social marketing issues such as drinking and driving. smoking, racism, and domestic abuse.

Attitudes are consistent, but most important they are evaluative, summing up what is believed and felt about attitude objects. The underlying theory is known as expectancy value theory. An'expectancy' is another term for a belief or probabilistic expectation about the future and "value' refers to a feeling or evaluation. This means that when a person has to choose between alternatives which involve the formation of an attitude, she is likely to process these alternatives in a deep manner. She will seek to choose that option which she expects will lead to the most favorable outcomes, i.e. the option with with the highest subjective expected utility (which is the person's subjective judgement of use or value). Consumers do not always seek to maximize subjective judgement of use or value. Consumers do not always seek to maximize subjective value (see Figure 1).

Figure 1 The Theory of Reasoned Action

In the cognitive explanation a key aspect of attitude lies in its ability to predict behavior. As shown in Figure 1, this has grown more complex as the authors have incorporated new elements that improve their predictions. One addition has been the concept of a subjective norm. This was included because it was found that, although a person might personally be in favor of a particular course of action, this was not shared by important people in their peer group and, consequently, the person might not behave as predicted. By including a subjective norm, which measures two aspects: (1) beliefs about other's norms for the behavior, (2) person's motivation to comply with the norm, they found that prediction could be improved. For example, Jane would like to buy a Skoda car because she believes that they are good value and of good quality. However, her friends think that Skodas have a cheap image and are for old people. Consequently, Jane does not buy the Skoda.

Some time later, Azjen (1991) introduced the idea of perceived behavioral control to describe that a person may feel favorable to doing something, and their significant others may also be positive about this, but they may feel lacking in confidence about their ability to do it. For example, Jane's friends think that a Citroen car would be a good choice. She has visited some car dealers and has developed a favorable attitude toward the car. She would like to buy one online because she can save 10 percent and money is critical. However, she lacks the confidence to buy online as she has not done so before. Additionally she has heard that it is not trustworthy. In this respect, the perceived behavioral control is lacking and Jane may not buy online. What factors do you think might encourage Jane to buy online in the future? 

The main objection that behaviorists such as Foxall (2005) have to the above explanation is that these additional variables such as subjective norms and behavioral control are situation variables that are encompassed by the behaviorist explanation.

*SOURCE: FUNDAMENTALS OF MARKETING, 2007, MARILYN A. STONE AND JOHN DRESMOND, PGS. 105-108*

END

An Analysis of the Fundamentals of Marketing (part 24)

Influencing Buyer Behavior

by

Charles Lamson

How can marketers influence consumer behavior? Ehrenberg and Goodhart (2000) describe a simple sequence known as Awareness, Trial and Reinforcement (ATR) in line with the shaping of behavior.

Awareness. In this respect advertising and other communications may be used to build and maintain a high level of brand awareness and to provoke sufficient interest in a proportion of consumers that will lead them to try the product. Advertising may involve vicarious learning by depicting people who look similar to those from the target group enjoying and benefiting from using the product. The idea behind vicarious learning is that it is cost-free to the extent that one can observe and copy the behavior of others if that is seen to be successfully reinforced - or alternatively one can avoid what they do if one observes negative consequences (Bandura, 1972). Advertisers often promote vicarious learning by showing the negative results that arise if people do not use their products and social approval for those who do. Interest in trial may be further enhanced by means of an introductory trial offer coupled to eye-catching signage and a prominent placement position.

Trial. Perhaps the most obvious means of encouraging trial is to ensure that there is a sufficient stock of the brand available to ensure that every customer can find the shape and size that they require. Here close attention should be paid to the setting and in particular towards estimating the extent to which the setting can be controlled or closed.

Reinforcement. As can be seen, in contrast to cognitive learning theory where attitude is an important pre-behavioral state that is predictive of behavior, the radical behaviorist sees no role for a concept which mediates between intention and overt behavior. Choice is not the outcome of internal mental deliberation but is simply a behavior.

Cognitive Information Processing (CIP)

It is considered the cognitive revolution took place in 1956 when Simon developed a computer program called the General Problem Solver. Unlike previous attempts this was not based on the abstract rules of logic but was an effort to simulate human thinking processes; something called 'artficial intelligence' was in the process of being born (Bruner in Miller, 1983).

Simon made much of the distinction between his outlook and that on the theories based on the principal of homo economicus, in particular, the Subjective Expected Utility (SEU) theory as being ill-fitted to an understanding of human decision making, e.g. in dealing with uncertainty one should assume that knowledge about the future values of one or more variables is given in the form of a probability distribution. Simon thought it highly unlikely that this was the way in which humans formulate estimates of an uncertain future. He offered the following example to illustrate his point:

If you were to ask a sales representative to provide an answer to the question 'What do you think your sales will be for the next twelve months? Then the chances are that although the answers may not be reliable, the question will be meaningful to them. If, on the other hand, you asked them the question 'Please estimate the joint probability distribution of sales over the next twelve months', then, as Simon says, 'I have tried this out a couple of times; fortunately my behavior was interrupted as attemptedly humorous rather than insane.'

(Simon, 1957)

Simon introduces his theory suggesting that a house thermostat is confronted with the same problem as a sales manager. He explains this superficially odd connection by saying that for both to perform optimally (according to SEL theory), the latter would have to predict sales correctly, and the former to predict the weather accurately. However, in reality a house thermostat does not attempt to do this. It regulates temperature not by predicting but by relatively prompt corrective action to climatic deviations between the actual temperature and the desired temperature. In the same way, the sales manager who knows what his desired level of sales is can monitor it against actual sales, which knowledge enables him to make good the deficit should one arise. Put another way then both the thermostat and the sales manager formulate the problem as follows:

• What is the initial state, the current position?
• What is the desired state?
• What is the difference between initial state and goal state?
• What alternatives exist for reducing the difference? 
• Which alternative is best?

Finally there is execution, or implementing the best alternative. The above is an example of a rule of thumb or heuristic that Simon argued is prevalent in human problem solving known as means-ends analysis. this requires some explanation. Where Freud conceived of human intention as a vehicle for the transmission of psychic energy, Simon was drawn to its limitations. In perceiving the world, everything around is not perceived but rather selective attention is made to those aspects that are salient, while others are blocked out. When a decision has to be made, precious time is not wasted in considering every possibility, assigning a probability to it., projecting this towards a number of potential future states and selecting the optimum. Indeed this could not be done even if it were desirable because of a lack of the processing capacity; the working memory is limited. Instead, Simon argues, heuristics, or rules of thumb, are used in selecting operators. Frequently, means-end analysis is used heuristically by people faced with complex situations. Means-end analysis works by determining differences between a current state of a problem and a goal state; differences between where we are now and where we want to be - and selecting operators known to be useful in reducing such differences. The basic idea is that people have knowledge about the means (operators) at their disposal for achieving certain ends or goals. For example, on arrival at Heathrow airport and wanting to go to Harrod's store in central London, the goal is to get from Heathrow airport to Harrods. The goal is to transform 'you at Heathrow' to 'you at Harrods'. The first task is to compare the two states and to find the difference between them. The difference is one of location. The means of reducing differences in location are operators such as 'walk', 'go by underground', 'go by taxi' and 'go by bus'. Some operators are not feasible. The individual may be a particularly lazy one who will not walk the sixteen miles involved. It is decided to go by airport coach (bus) because this is the cheapest. The new sub-goal is made to reduce the difference between 'you at Heathrow airport baggage collection' and 'you at the coach stop for Victoria coach station'. When the coach arrives at Victoria the problem is transformed once more, and so on until arrival at Harrods. Means-end analysis is used extensively in managerial decision making.

Marketing and CIP

From the above, cognitive learning theorists view human decision making as a form of problem solving. researchers employ the analogy of a computer to investigate the working of the mind, which is taken to be an information processing unit. In contrast to behaviorists, cognitive theorists seek to understand internal mental states. Consumers are conceived of as being motivated by goals and researchers seek to learn more about the operators that people use in order to seek to move from initial states to goal states. Some salient aspects of the CIP approach are that it is:

• Adaptive. Problem-solving involves a fit between the problem solver and the situation.
• Selective. Perception does not simply mirror the world, it works selectively to organize it.
• Bounded. Processing is limited primarily due to constraints in working memory. Often heuristics are relied upon to make up for lack of processing capacity. Only in the simplest situations will consumers reach a decision in one giant step. It is much more likely that they will use the heuristic of means-end analysis by splitting large problems into more manageable sub-problems. Examples of other heuristics commonly used in marketing contexts are described in the box.

BOX 1

THE USE OF HEURISTICS IN MARKETING Often behavior as consumers is far from optimal, e.g. prospect theorists have found that people are willing to take more risks to avoid losses than to realize gains. Tversky and Kahneman (1974) identified three simple heuristics, or rules of thumb, that lead to predictable errors in many cases allowing the reduction of cognitive effort. Availability The frequency of an event with which it can be summoned as an example from memory. Economically, this is important because the performance of different products has often to be evaluated. The most effective consumers are those who do not place too much weight on recent performance. Representatives Patterns in random sequences are noted, e.g. people often judge probabilities by the degree to which A is representative of B or A resembles B, even when there are major differences between A and B. For example, in 1993 more than half the stock price of Dell computers, amounting to $2.3 billion, was wiped off the company’s balance sheet because the company had been categorized in a group with IBM and Digital Equipment. The latter was faring much worse at the time. Another example is regression to the mean. A group scores high on the test, gaining 80-100 percent. On retest usually the score is much lower. This is not due to any change in the innate intelligence of the group, but do to a certain randomness in performance. Usually, good performance is followed by lesser, and bad performance is followed by better. Often this is not recognized, which has implications for perceived customer service and brand loyalty. Anchoring and adjustment The first choice is an estimate and then the estimate is maintained. For example, on being asked how many countries belong to the UN a person sticks with the number twenty-five, even though this was generated by spinning a wheel. In like manner, a person believes that a discount computer store is more likely to sell computers cheap than a department store, although they may be surprised if they actually check the difference. The view that the best deals are available on the Internet has been discounted.

Although the CIP approach stresses that it is important to understand the fit between the problem solver and the situation, much research focuses on aspects of internal processing and tends to ignore the situational aspect. According to Foxall (2005), it almost entirely ignores the environment in which the behavior takes place. The ideas of selectivity and boundedness focus attention on the problem-solving process. A simple representation of a CIP system is shown in Figure 1.

Figure 1 Simplified Cognitive Information System

The funnel shown in Figure 1 indicates that information processing deals with relatively few stimuli present in the external world. For example, when sitting in class, students are exposed to a number of different sounds, smells and draughts in addition to the visual stimuli. Thankfully, the perceptual process linked to the sensory register directs attention towards those stimuli that are salient and relevant to the situation. Perception is a complex process which ranges from exposure to attention, comprehension and retention of information from the environment. Consider personal exposure to a communication advertising a new product. If perceived to be relevant then this may enter the sensory store, and if it goes no further this may last for micro-seconds. Within that time it may be admitted into working memory, where its visual and auditory components might persist for up to fifteen or twenty seconds. If the information is considered important enough to repeat or rehearse, it may last for around 20 minutes and will have a chance of entering long-term memory. It is clear that only a minority of stimuli such as advertisements will be attended to, comprehended and retained in memory.

Working memory is considered to be similar to computer RAM. The term 'working' implies that the system is active and split into a number of sub-routines whereby a central executive assigns inputs to visual and auditory stores (Baddeley and Hitch, 1974). Working memory capacity is limited to the ability to process five units of information at one time, plus or minus two with an average of four (Cowan, 2001). Manipulation of longer lists is possible by categorization, chunking and by linking new information with existing knowledge. Chunking is the process of grouping several pieces of information and treating them as a single unit - for example 'a', 'c', and 'r' to make 'car' - or by grouping individual numbers into a composite phone number. Novel stimuli must be processed serially, i.e. one at a time. Those stimuli that are important are selected, and precious attention is directed to them in order to figure out those aspects that are relevant. Information that is found to be useful is retained.

Long-term memory contains a huge amount of declarative 'this is' knowledge in addition to procedural or 'how to' knowledge. Declarative knowledge may be gained by learning what a bicycle is and what its components are by reading a book. Procedural knowledge, like learning how to ride a bicycle or to drive a car, is gained initially by slow, incremental and serial action. However, once the novelty has worn off this is routinized. Long-term memory contains episodic memories that reflect on how previous life experiences have been remembered and connect to the sense of who we are and our past. Semantic memories relate to meaning and learning.

Levels of processing. Some authors disagree with the separation of short-term and long-term memory (Cowan, 2005). Craik and Lockhart (1972) suggested that it would be more useful to conceive of different levels of processing where stimuli can be processed at a range of different levels depending on the character of the information. Stimuli can be processed in a shallow manner, e.g. by attending to the colors, or the brightness of a visual stimulus such as an advertisement, but with no processing of meaning. On the other hand, stimuli that are considered to be important because they are relevant to life experience and identity can be subjected to deeper semantic processing. Petty and Cacciopo (1986) adopted a similar line of reasoning in seeking to understand how individuals might process a persuasive advertising message. They suggested two routes to persuasion, central and peripheral, with the differences between being accounted for by contextual and personality factors. Where there was a degree of complexity in choice, and where the perception that a person's identity was important, a person would be likely to elaborate the message by means of conscious information processing. This active processing by the central route involves a sequential process that moves from pre-attention to focal attention, comprehension and elaboration to the reception of information in memory and then further processing to produce attitudes. By contrast, processing by the peripheral route moves straight from pre-attention directly into memory, avoiding costly expenditure of time and effort. The idea of levels of processing is central to the cognitive explanation of involvement.

*SOURCE: FUNDAMENTALS OF MARKETING, 2007, MARILYN A. STONE AND JOHN DRESMOND, PGS. 99-105*

END

An Analysis of the Fundamentals of Marketing (part 23)

Stimulus Control

by

Charles Lamson

The idea of stimulus control relates to the idea that the environment affects an organism after, as well as before, it responds. Stimuli, responses and consequences become linked together so that a situation that is present when a response is reinforced acquires some control over the response. A response reinforced on one occasion is very likely to occur on a very similar occasion. One can use both concepts to explain marketing behavior, e.g. copy-cat brands seek to benefit by mimicking one or more of the characteristics of successful brands. However, when behavior is reinforced only when a particular property is present, that property acquires exclusive control through a process called discrimination (Skinner, 1974). For example, a store logo can act as a discriminative stimulus for pleasant shopping experience and good service - this reinforcer being contingent on entering a shop and speaking to an assistant.

Shaping

Shaping is the gradual forming of behavior using operant conditioning. Behaviorists believe that complex new behaviors do not usually appear spontaneously. More often apparently radical changes in behavior are underscored by a number of small incremental steps. For example, a person may seem to engage in a radical change by switching from store A to store B for his weekly shop. On closer examination it is likely that the person had overheard a conversation about how good store B was, had read something positive about store B in the newspaper and when passing store B had been favorably impressed with its attractive window display. They had then visited the store and browsed without buying anything, although they were impressed by the bright, clean, well lit store, the variety of goods on display, the competitive prices, the reward scheme and the helpful staff. They had done a proportion of shopping there, gaining a high level of reinforcement on each occasion relative to their usual store until the switch was made. In order to get the customer to try the store, marketers had to experiment with different designs, etc., to find out which aspects of the store environment act to maximize feelings of satisfaction and also how to minimize those aspects that detract from this.

Chaining

Chaining explains how secondary reinforcers can be linked with primary reinforcers as part of an extended learning process. For example, a store visit may involve a chain of secondary activities that ultimately lead to the possession of food and other primary reinforcers. This can extend from writing a list to driving to the supermarket, entering the store,  searching for products and selecting items, taking them to the checkout and paying for them. Only the last is obviously is reinforced by receiving the food and other primary reinforcers purchased. Driving, searching and waiting in line are not likely to be reinforcing in that they are not pleasurable in their own right.

Operant model of the Consumer Buying Process

The radical behaviorist model of the consumer buying process developed by Foxall (1996) is shown in Figure 1. It can be seen that the model focuses on external observable factors.

Figure 1 Foxall's Behavioral Perspective Model

Source: Foxall (1996)

The behavioral setting is important for understanding the context in which the behavior takes place. Behavioral settings can range from being almost entirely closed, as in the controlled laboratory experiments, to the relatively open settings found in traditional markets. The setting may refer to the physical environment experienced by the consumer or it may refer to the situational aspect of the decision, e.g. whether the purchase is for oneself or a gift for another. Belk (1975) wrote a most informative paper on the subject of the settings. In his view settings are not simply bounded in time and space but also comprise an action pattern. Different settings require different forms of behavior regardless of who is present: a wedding, a football match; a funeral; a birthday party; a work context. In seeking to explore this notion of the setting further, Belk came up with the following taxonomy:

• Physical: surrounding, geographical and institutional location, decor sounds, aromas, lighting and weather.
• Temporal: time since last purchase, meals, payday, seasons and time vof the day.
• Task definition: Shopping for small item or large. Shopping for self or gift? Eating at home, going to a party.
• Antecedent states: e.g. moods.

Taking each in turn and thinking about it, you can see the setting plays a major role in the purchase process. Managers in modern consumption contexts often seek to close the setting as much as possible in order to encourage consumers to conform to the behavior program that they have devised. In modern supermarkets every aspect of the setting has been subjected to careful scrutiny in seeking to ensure that each shopping visit has the potential to yield as great a return as possible - from the exterior look of the building to the lighting, arrangement of produce, staff appearance and arrangement of checkouts. Have you ever been tempted to barter in a supermarket setting? If no, then why not? Has this got anything to do with the way the setting has been arranged? In relatively open settings the consumer is relatively free to follow her own rules. for example in browsing for luxury goods, one can choose which stores to visit, whether or not to invite staff to help.

As we grow older the world seems to expand around us as we learn about kinds of products, consumption rituals and the various settings in which these are to be found. Often there are interesting interactions between the setting and a person's consumption history. Foxall (1996) cites the rather extreme example about an elderly Dutch lady who visited a hypermarket on her first trip to Utrecht and spent three days in the store before being rescued by the police, because she could not find the exit. She later explained that she had been afraid to ask others how to get out. Foxall responds sympathetically. He does not find her situation funny; store designers often make way-finding difficult. Try to remember what it is like, for example, when a large store relocates its product lines to new locations. Behavior is the outcome of the coincidence of a specific learning history and of the consumption setting. Depending on the nature of the experience, the behavior may yield a mix of hedonic and informational reinforcement unless of course an aversive situation occurs such as that which happened in to the lady in Utrecht.

Foxall combines a variety of settings and of patterns of reinforcement to describe four different kinds of buying behavior.

• Maintenance. In a comparatively open setting this describes the routine food shopping which provides relatively low levels of reinforcement compared with other categories. Foxall 1996) also places hairdressing in this category, as it is a routine purchase of a necessity. It could be argued that this is much more important to people than that, particularly when it goes wrong. In a closed setting this includes restricted behaviors such as completing tax returns or obtaining a passport.
• Accumulation. This describes the state where a consumer obtains high levels of feedback from purchasing but the item itself does not yield a great amount of pleasure. It could be the situation where purchasers are rewarded with tokens or points of some kind. In an open setting this would include collecting behavior where a person is collecting tokens or coupons. In a closed setting this could include air miles.

• Pleasure. This describes activties such as watching television in an open setting, which often provides a high level of enjoyment and relaxation. In a closed setting, this might entail watching a video display while waiting in line or an inflight film.
• Accomplishment. in open settings this will include pre-purchase search and evaluation of goods that confer status and high informational reinforcement. Or again it might include reading literature.

*SOURCE: FUNDAMENTALS OF MARKETING, 2007, MARILYN A. STONE AND JOHN DRESMOND, PGS. 96-99*

                                  

END