1 MODEL OF CONSUMER BEHAVIOR

In earlier times, marketers could understand consumers well through the daily experience of
selling to them. But as firms and markets have grown in size, many marketing decision makers
have lost direct contact with their customers. Most marketers have had to turn to consumer
research. They are spending more money than ever to study consumers, trying to learn more
about consumer behavior. The company that really understands how consumers will respond to
different product features, prices, and advertising appeals has a great advantage over its
competitors. Therefore, companies and academics have heavily researched the relationship
between marketing stimuli and consumers response. PERSONAL CHRACTERISTICS
AFFECTING CONSUMER BEHAVIOR

Consumer purchases are strongly influenced by cultural, social, personal, and psychological
characteristics. Cultural Factors:
Cultural factors exert the broadest and deepest influence on consumer behavior. The marketer
needs to understand the roles played by the buyer’s culture, subculture, and social class. Culture
is the most basic cause of a person’s wants and behavior. Growing up in a society, a child learns
basic values, perceptions, wants, and behaviors from the family and other important institutions.
Subculture - each culture contains smaller subcultures, or groups of people with shared value
systems based on common life experiences and situations. Nalionality groups such as the Irish,
Polish, Italians, and Hispanics are found within larger communities and have distinct ethnic tastes
and interests. Racial groups such as the blacks and Asians have distinct culture styles and
attitudes. Many of these subcultures make up important market segments, and marketers often
disign products and marketing programs tailored to the needs of these segments.
Social class - almost every society has some form of social class structure. Social classes are
relatively permanent and ordered divisions in a society whose members share similar values,
interests, and behaviors. Social class is not determined by a single factor such as income but is
measured as a combination of occupation, income, education, wealth, and other variables.
Marketers are interested in social class because people within a given social class tend to exhibit
similar behavior, including buying behavior.

Social classes show distinct product and brand preferences in such areas as clothing, home
furnishings, leisure activity, and automobiles.
Social Factors:
A consumer’s behavior is also influenced by social factors, such as the consumer’s small groups,
family, and social roles and status. Because these social factors can strongly affect consumer
responses, companies must take them into account when designing their marketing strategies.
Groups - a person’s behavior is influenced by many small groups. Groups which have a direct
influence and to which a person belongs are called membership groups. References groups are
groups that serve as direct or indirect points of comparison or reference in the forming of a
person’s attitudes or behavior. Marketers try to identify the reference groups of their target
markets.
The importance of group influence varies across products and brands, but it tends to be strongest
for conspicuous purchases.
Family - family members can strongly influence buyer behavior. We can distinguish between two
families in the buyer’s life. The buyer’s parents make up the family of orientation. From parents a
person acquires an orientation toward religion, politics, and economics and a sense of personal
ambition, self-worth, and love.
The family of procreation-the buyer’s spouse and children-exert a more direct influence on
everyday buying behavior. The family is the most important consumerbuying organization in
society, and it has been researched extensively. Marketers are interested in the roles and relative
influence of the husband, wife, and children on the purchase of a large variety of products and
services.
Roles and Status - a person belongs to many groups-family, clubs, organizations. The person’s
position in each group can be defined in terms of both role and status. A role consists of the
activities people are expected to perform according to the persons around them. Each role carries
a status reflecting the general esteem given to it by society. Personal Factors:
A buyer’s decisions are also influenced by personal characteristics such as the buyer’s age and
life-cycle stage, occupation, economic situation, life style, and personality and self-concept.
Age and Life-Cycle State - people change the goods and services they buy over their lifetimes.
Buying is also shaped by the stage of the family life cycle-the stages through which families might
pass as they mature over time. Marketers often define their target markets in terms of life-cycle
stage and develop appropriate products and marketing plans.
Occupation - a person’s occupation affects the goods and services bought. Marketers try to
identify the occupational groups that have an above-average interest in their products and
services.

A company can even specialize in making products needed by a given occupational group.
Economic Situation - a person’s economic situation will greatly affect product choice. Marketers of
income-sensitive goods closely watch trends in personal income, savings, and interest rates. If
economic indicators point to a recession, marketers can take steps to redesign, reposition, and
reprice their products.
Life Style - people coming from the same subculture, social class, and even occupation may have
quite different life styles. Life style is a person’s pattern of living as expressed in his or her
activities, interests, and opinions. Life style captures something more than the person’s social
class or personality. The life-style concept, when used carefully, can help the marketer gain an
understanding of changing consumer values and how they affect buying behavior.
Personality and Self-Concept - each person’s distinct personality will influence his or her buying
behavior. Personality refers to the unique psychological characteristics that lead to relatively
consistent and lasting responses to one’s own environment. Many marketers use a concept
related to personality-a person’s self-concept. Psychological Factors:
A person’s buying choices are also influenced by four major psychological factors - motivation,
perception, learning, and beliefs and attitudes. Motivation - a person has many needs at any
given time. Some needs are biological, arising from states of tension such as hunger, thirst, or
discomfort. Other needs are psychological, arising from the need for recognition, esteem, or
belonging. Most of these needs will not be strong enough to motivate the person to act at a given
point in time. A need becomes a motive when it aroused to a sufficient lever of intensity. A motive
is a need that is sufficiently pressing to direct the person to seek satisfaction. Motivation
researchers collect in-depth information from small samples of consumers to uncover the deeper
motives for their product choices.
Perception - a motivated person is ready to act. How the person acts is influenced by his or her
perception of the situation. Two people with the same motivation and in the same situation may
act quite differently because they perceive the situation differently. Perception is the process by
which people select, organize, and interpret information to form a meaningful picture of the world.
People can form different perceptions of the same stimulus because of three perceptual
processes: selective exposure, selective distortion, and selective retention. Learning - when
people act, they learn.

Learning describes changes in an individual’s behavior arising from experience. The practical
significance of learning theory of marketers is that they can build demand for a product by
associating it with strong drives, using motivating cues, and to the same drives as competitors
and providing similar cues because buyers are more likely to transfer loyalty to similar brands
then to dissimilar ones. Or it may design its brand to appeal to a different set of drives and offer
strong cue inducements to switch (discrimination). Beliefs and Attitudes - through acting and
learning, people acquire their beliefs and attitudes. These in turn influence their buying behavior.
A belief is a descriptive thought that a person has about something. Marketers are interested in
the beliefs that people formulate about specific products and services. If some of the beliefs are
wrong and prevent purchase, the marketer will want to launch a campaign to correct them.
People have attitudes regarding religion, politics, clothes, music, food, and almost everything
else. An attitude describes a person’s relatively consistent evaluations, feelings, and tendencies
toward an object or idea. Attidudes put people into a frame of mind of liking or disliking things,
moving toward or away from them.
What is Consumer Buying Behavior?
Definition of Buying Behavior:
Buying Behavior is the decision processes and acts of people involved in buying and using
products.

Need to understand:

* why consumers make the purchases that they make?

* what factors influence consumer purchases?
* the changing factors in our society.

Consumer Buying Behavior refers to the buying behavior of the ultimate consumer. A firm needs
to analyze buying behavior for:

* Buyers reactions to a firms marketing strategy has a great impact on the firms success.
* The marketing concept stresses that a firm should create a Marketing Mix (MM) that satisfies
(gives utility to) customers, therefore need to analyze the what, where, when and how consumers
buy.
* Marketers can better predict how consumers will respond to marketing strategies.

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Stages of the Consumer Buying Process
Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual purchasing
is only one stage of the process. Not all decision processes lead to a purchase. All consumer
decisions do not always include all 6 stages, determined by the degree of complexity...discussed
next.

The 6 stages are:

1. Problem Recognition(awareness of need)--difference between the desired state and the

actual condition. Deficit in assortment of products. Hunger--Food. Hunger stimulates your need to
eat.
Can be stimulated by the marketer through product information--did not know you were
deficient? I.E., see a commercial for a new pair of shoes, stimulates your recognition that you
need a new pair of shoes.
2. Information search--
* Internal search, memory.
* External search if you need more information. Friends and relatives (word of mouth).
Marketer dominated sources; comparison shopping; public sources etc.
A successful information search leaves a buyer with possible alternatives, the evoked set.

Hungry, want to go out and eat, evoked set is

* chinese food
* indian food
* burger king
* klondike kates etc
3. Evaluation of Alternatives--need to establish criteria for evaluation, features the buyer wants
or does not want. Rank/weight alternatives or resume search. May decide that you want to eat
something spicy, indian gets highest rank etc.
If not satisfied with your choice then return to the search phase. Can you think of another
restaurant? Look in the yellow pages etc. Information from different sources may be treated
differently. Marketers try to influence by "framing" alternatives.
4. Purchase decision--Choose buying alternative, includes product, package, store, method of
purchase etc.
5. Purchase--May differ from decision, time lapse between 4 & 5, product availability.
 6. Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance,
have you made the right decision. This can be reduced by warranties, after sales communication
etc.
After eating an indian meal, may think that really you wanted a chinese meal instead.

Handout...Pillsbury 1-800#s
1-800 #s gives the consumer a way of communicating with the marketer after purchase. This
helps reduce cognitive dissonance when a marketer can answer any concerns of a new
consumer.
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Types of Consumer Buying Behavior
Types of consumer buying behavior are determined by:

* Level of Involvement in purchase decision. Importance and intensity of interest in a product in

a particular situation.
* Buyers level of involvement determines why he/she is motivated to seek information about a
certain products and brands but virtually ignores others.

High involvement purchases--Honda Motorbike, high priced goods, products visible to others, and
the higher the risk the higher the involvement. Types of risk:

* Personal risk
* Social risk
* Economic risk

The four type of consumer buying behavior are:

* Routine Response/Programmed Behavior--buying low involvement frequently purchased low

cost items; need very little search and decision effort; purchased almost automatically. Examples
include soft drinks, snack foods, milk etc.
* Limited Decision Making--buying product occasionally. When you need to obtain information
about unfamiliar brand in a familiar product category, perhaps. Requires a moderate amount of
time for information gathering. Examples include Clothes--know product class but not the brand.
* Extensive Decision Making/Complex high involvement, unfamiliar, expensive and/or
infrequently bought products. High degree of economic/performance/psychological risk.
Examples include cars, homes, computers, education. Spend alot of time seeking information and
deciding.
Information from the companies MM; friends and relatives, store personnel etc. Go through all
six stages of the buying process.
* Impulse buying, no conscious planning.

The purchase of the same product does not always elicit the same Buying Behavior. Product can
shift from one category to the next.
For example:
Going out for dinner for one person may be extensive decision making (for someone that does
not go out often at all), but limited decision making for someone else. The reason for the dinner,
whether it is an anniversary celebration, or a meal with a couple of friends will also determine the
extent of the decision making.

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Categories that Effect the Consumer Buying Decision Process
A consumer, making a purchase decision will be affected by the following three factors:

1. Personal
2. Psychological
3. Social
The marketer must be aware of these factors in order to develop an appropriate MM for its target
market.
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Personal
Unique to a particular person. Demographic Factors. Sex, Race, Age etc.
Who in the family is responsible for the decision making.
Young people purchase things for different reasons than older people.
Handout...From choices to checkout...
Highlights the differences between male and female shoppers in the supermarket.

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Psychological factors
Psychological factors include:

*
Motives--
A motive is an internal energizing force that orients a person's activities toward satisfying a
need or achieving a goal.
Actions are effected by a set of motives, not just one. If marketers can identify motives then
they can better develop a marketing mix.
MASLOW hierarchy of needs!!
o Physiological
o Safety
o Love and Belonging
o Esteem
o Self Actualization
Need to determine what level of the hierarchy the consumers are at to determine what
motivates their purchases.

Handout...Nutrament Debunked...
Nutrament, a product marketed by Bristol-Myers Squibb originally was targeted at consumers
that needed to receive additional energy from their drinks after exercise etc., a fitness drink. It
was therefore targeted at consumers whose needs were for either love and Belonging or esteem.
The product was not selling well, and was almost terminated. Upon extensive research it was
determined that the product did sell well in inner-city convenience stores. It was determined that
the consumers for the product were actually drug addicts who couldn't not digest a regular meal.
They would purchase Nutrament as a substitute for a meal. Their motivation to purchase was
completely different to the motivation that B-MS had originally thought. These consumers were at
the Physiological level of the hierarchy. BM-S therefore had to redesign its MM to better meet the
needs of this target market.
Motives often operate at a subconscious level therefore are difficult to measure.
*
Perception--

What do you see?? Perception is the process of selecting, organizing and interpreting
information inputs to produce meaning. IE we chose what info we pay attention to, organize it and
interpret it.
Information inputs are the sensations received through sight, taste, hearing, smell and touch.

Selective Exposure-select inputs to be exposed to our awareness. More likely if it is linked to

an event, satisfies current needs, intensity of input changes (sharp price drop).

Selective Distortion-Changing/twisting current received information, inconsistent with beliefs.

Advertisers that use comparative advertisements (pitching one product against another), have
to be very careful that consumers do not distort the facts and perceive that the advertisement was
for the competitor. A current example...MCI and AT&T...do you ever get confused?

Selective Retention-Remember inputs that support beliefs, forgets those that don't.
Average supermarket shopper is exposed to 17,000 products in a shopping visit lasting 30
minutes-60% of purchases are unplanned. Exposed to 1,500 advertisement per day. Can't be
expected to be aware of all these inputs, and certainly will not retain many.

Interpreting information is based on what is already familiar, on knowledge that is stored in

the memory.

SUMMARY

Markets must be understood before marketing strategies can be developed. The consumer
market buys goods and services for personal consumption. Consumers vary tremendously in
age, income, education, tastes and other factors. Marketers must understand how consumers
transform marketing and other inputs into buying responses. Consumer behavior is influenced by
the buyer’s charakteristics and by the buyer’s decision process. Buyer charakteristics include four
major factors: cultural, social, personal, and psychological. A person’s buying behavior is the
result of the complex interplay of all these cultural, social, personal, and psychological factors.
Many of these factors cannot be controlled by marketers, but they are useful in identifying and
understanding the consumers that marketers are trying to influence.

2 Social and Economic Problems

As a rule, a country's socio-economic situation goes through a series of ups and downs
throughout its history. And Canada is no exception: it has undergone many periods of economic
instability, some of which have led to conflicts that had an impact on society. From this
perspective, we will examine two conflicts: the Winnipeg Strike and the "On to Ottawa" Trek.

Purchase Budget

3 A Purchase Order Request or [purchase requisition], is a request sent internally within a

company to obtain purchased goods and services, including stock. The request is a document
which tells the purchasing department or manager exactly what items and services are
requested, the quantity, source and associated costs.

A Purchase Requisition Form (PRF) is type of form that is filled out prior to purchasing goods in
order to have in place a form of authorisation. Purchase request forms are often used in smaller
business who do not have a computer-based system. However, many computer (included web-
based solution) systems are available on the market that can facililate the capture of purchase
request information. Purchase order requests can also be passed to the purchasing department
via a Management Information System (MIS).

A PRF may contain budget and purchase values in order to make the individual aware of the
annual and remaining budget before a purchase is made. Such a system is there to guarantee
that goods and services are purchased with the consent of the line manager and that a sufficient
budget is available.

4 Foreign exchange market

The foreign exchange market (currency, forex, or FX) trades currencies. It lets banks and other
institutions easily buy and sell currencies. [1]

The purpose of the foreign exchange market is to help international trade and investment. A
foreign exchange market helps businesses convert one currency to another. For example, it
permits a U.S. business to import European goods and pay Euros, even though the business's
income is in U.S. dollars.

In a typical foreign exchange transaction a party purchases a quantity of one currency by paying
a quantity of another currency. The modern foreign exchange market started forming during the
1970s when countries gradually switched to floating exchange rates from the previous exchange
rate regime, which remained fixed as per the Bretton Woods system.
The foreign exchange market is unique because of

* its trading volumes,

* the extreme liquidity of the market,
* its geographical dispersion,
* its long trading hours: 24 hours a day except on weekends (from 22:00 UTC on Sunday
until 22:00 UTC Friday),
* the variety of factors that affect exchange rates.
* the low margins of profit compared with other markets of fixed income (but profits can be
high due to very large trading volumes)
* the use of leverage

Difficulties $ foriegn situation

Social Credit
and Foreign Trade
français

(An article of Louis Even, first published in the March 15, 1944 issue of the Vers
Demain Journal.)

A question, an answer
It is not uncommon to hear the following objection to Social Credit: “But how will
foreign trade be carried out with Social Credit money? How will this money be
accepted abroad?”
A very simple answer: “The nature of Social Credit money would be exactly the
same as the nature of today's money. The same form and the same kind of metal
or paper, the same bookkeeping, and the same transferring of debits and
credits.”
Then the question falls apart. However, a few notions on foreign trade will show
that, under a Social Credit system, foreign trade would meet with much less
friction than under the present system, even if the Social Credit system would
exist only on one side of the border.

Imports and exports

Foreign trade consists of commercial trade going beyond the country's borders.
To purchase coffee from Brazil, oranges from Florida or California, silk from
Japan, cotton from the United States, wine from France, cutlery from England, is,
for the Canadians, to import goods. It is foreign trade. Imports are goods that
come from abroad.
To sell Canadian paper to New York, Canadian wheat to Europe, nickel to
Germany, aluminum to Japan, fish to Italy, bacon to England, is for Canada to
export goods. It is still foreign trade. Exports are goods that are sent abroad.
Foreign trade is a sound activity. It is completely within the providential order.
God gave all of the earth to man. He put on earth all that is needed for the
material needs of the whole of humanity. But He did not put all of these things
into each small corner of the globe.
Certain nations easily produce certain goods in plenty; others produce other
things better and plentifully. Therefore it is profitable for men of different countries
to trade their surpluses among themselves.

Products cross the borders

In foreign trade, goods go from one country to another, in both directions, just as,
within our country, goods from towns go to the countryside, and goods from the
countryside go to towns.
At the grocery store in your town or village, you can see, grouped together, the
products from towns and the products from the countryside.
But, at the same grocer's, you can also find things that come neither from our
countryside nor our towns. You will find rice from China, tea from Sri Lanka,
coffee from Brazil, bananas from the West Indies, books from France, and still
other things, from almost every country in the world. They are there, it seems, as
naturally as are the potatoes from the neighbouring farm.
If you were to visit foreign countries, you would, of course, also find there
Canadian products. You would eat Canadian bacon in London; find flour from
Alberta in France's bakeries, fish from the Gaspe Peninsula on Rome's tables,
paper from the Province of Quebec in New York's large printing establishments.

Money does not cross the borders

But would you find as easily Chinese, Japanese, Turkish, French, Italian
currency, or other kinds, in Canada's wallets and tills? Goods go across borders,
but money does not go across borders as goods do. This demonstrates
immediately that money has nothing to do with foreign taste. It is the products,
wherever they may be, which have to do with consumers' tastes. One buys
Chinese rice if one likes it, green tea from Japan if one likes it; but one does not
spend one minute worrying if the Chinese yuan or the Japanese yen is made of
gold, silver, paper, rubber, figures, or hieroglyphics.
The product is universal; but money is essentially an internal thing. A country's
 monetary reform has nothing to do with tastes, ideas, or the other countries'
governments.

Goods paid for with goods

So money does not cross the borders like goods do; and, in foreign trade, goods
are paid for with other goods or services. If they are not paid for immediately,
there is debt on one side, claim on the other, as when a storekeeper sells on
credit.
Obviously, when a Canadian orders a rice cargo from China, he does not ship a
wheat cargo in payment. He goes to his bank and pays in Canadian currency, in
dollars. The banker delivers a credit instrument that the Chinese merchant will
exchange in his country for Chinese currency.
But another Chinese merchant will buy a wheat cargo from another Canadian,
and will go to his own bank to effect his payment in Chinese currency. The bank
will send a bill of exchange to the Canadian who exported the wheat, and the
Canadian will be paid at home in Canadian dollars.
It is eventually the wheat cargo shipped by one company that paid for the rice
cargo imported by another company.

The difficulties with foreign trade

The exchanging of the bills of exchange is done in banks or brokerage houses,
and the preponderance of these bills of exchange, on one side or the other,
determines what one calls the foreign exchange rate.
But trade between countries has nothing to do with the substance that the money
is made of in either country.
Do you think that the German who sells his merchandise to us, and who is paid
at home in German marks, wonders if one pays for it here in paper money, or
metal disks, or with a simple cheque drawn on a bank or a credit union? There is
not the least difficulty in this regard.
The difficulties with foreign trade come, above all, from two things: 1. The
countries want to export more than they import; 2. The value of each country's
monetary unit is unstable in relation to itself.

The first difficulty is smoothed away

A country, Canada for example, will want to exports goods for 2 billion dollars;
but it will try, through tariff barriers or otherwise, to limit its imports to $1.5 billion.
It wants to send abroad $500 million more in goods than it receives. Not out of
charity: it requests payment. But it is reluctant to accept goods in payment,
because it wants its citizens to stay very busy, to have work that gives them
wages to buy the goods that are left.
The Social Crediters have, for a long time, understood and denounced this policy
as being as absurd as it is unnatural. But as long as one continues to link the
right to goods to wages, as long as one does not want to complement this right
by dividends to raise it to the level of offered production, one will continue to look
abroad for purchasing power which is lacking to the country's consumers; one
will continue selling abroad goods that the citizens need but cannot pay for. With
more exports than imports, one reduces the amount of goods in front of the
amount of money, instead of agreeing to increase the amount of money in front
of the products.
Thus one respects the rule that wants no other source of purchasing power than
the personal contribution to production. Since all countries, until now, have held
to this rule, all have tried to export to others more than they have imported from
them. Hence are formed the economic frictions that are harmful to foreign trade
and that lead to political frictions, with the tragic outcome of which we are aware.
Social Credit, by putting all the money needed into the country to buy all of the
country's production, makes this crazy fury disappear. A Social Credit country is
ready to export its surplus, and in return requests the same surplus quantity from
others. The population of a Social Credit country has money to buy what is
coming in with the money that would have bought what is going out. And a
foreign country is happy to find this interaction with the Social Credit country.
Social Credit therefore makes the first cause of friction disappear in foreign trade,
at least in the country that adopts the Social Credit system; trade between this
country and all others is immediately facilitated and favoured.

The second difficulty is smoothed away

The second cause of friction in trade is the instability of the purchasing value of
money in one's own country.
With foreign trade, a certain time elapses between the order and the payment of
the received merchandise. The price is agreed upon and the drafts are drawn up
at the same time as the order. For example, a French businessman sells me
Parisian goods for a value of 8,000 francs. I accept a draft that will make me pay
him, in six months' time, let us say 200-Canadian dollars (the foreign exchange
rate at the time of purchase).
If, in six months' time, the restriction of money has caused the dollar value to go
up, I will deprive myself of as much purchasing power in paying $200 in six
months' time as if I had paid $250 immediately, at the time of purchase. It is an
injustice that exporters and importers always risk facing, with continual inflations
and deflations of the system.
Social Credit, by always maintaining the money supply at the level of the
production volume, would maintain a much better stability in the value of the
Social Credit country's monetary unit.
 Foreign tradesmen would know what the Canadian Social Credit dollar would
signify in six months or a year's time: It would still have the same value as at the
time of sale or purchase.
Trade with a Social Credit nation would therefore be sought. Those who say that
Social Credit would be harmful to foreign trade say the exact opposite of what is
actually true. It is either because they are unaware of what Social Credit is, or
because they are unaware of what foreign trade is.