Marketing ECA 1

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Question Requirements:

 

1. Please refer to Boost Juice Article for the background of the case study, and the attached word document for the questions.

 

2. Please conduct secondary research to substantiate answers.

 

3. Please use APA style referencing (including in text and end of text referencing)

 

4. Please do not explain an overview of levels and types of Market Segmentation for question 1a, a brief overview will suffice.

 

5. Keep answer to within 300 word limit for question 1a, and 400 word limit for question 1b.

 

ASIAN CASE RESEARCH JOURNAL, VOL. 18, ISSUE 1, 175–197 (2014)

© 2014 by World Scientific Publishing Co. DOI: 10.1142/S0218927514500072

acrj

This case was prepared by Dr. Jane L. Menzies and Professor Stuart C. Orr of Deakin University, Australia, as a basis for classroom dis- cussion rather than to il- lustrate either effective or ineffective handling of an administrative situation.

Please address all correspon- dence to Dr. Jane L. Menzies, Deakin Graduate School of Business, Deakin University, 221 Burwood Hwy, Burwood, VIC 3125, Australia. E-mail: [email protected]

Internationalization of Boost juice to Malaysia

IntroductIon

Janine Allis, the founder and managing director of Boost Juice, sat in her Melbourne-based head office, at Chadstone “The Fashion Capital”1, and pondered the achievements made by Boost Juice in Malaysia. Since 2009, Boost Juice has opened 11 stores, with exciting plans for two more stores in the not too distant future.2 By 2014, a total of 30 stores are planned for opening. She wondered, would the economic fall-out from the European debt crisis have an effect on her Malaysian plans? Was the choice of Master Franchisees the right deci- sion for Boost Juice in Malaysia, and has the process of inter- nationalization for Boost Juice in Malaysia been successful thus far?

Background

Walk into a Boost Juice outlet and you will hear the music pumping, see the staff bopping to the rhythm of making you a fruit juice and you will understand what is meant by the “customer experience” at Boost Juice3; it’s fun, loud and designed to develop a unique relationship with customers.

The Boost Juice Company commenced operations in Adelaide, South Australia, in 2000; established and run by the entrepreneur, Janine Allis, who wanted to bring healthy fruit juices to Australia.4 Allis was aware of the popularity of juice bars across the globe. She had visited many juice bars in

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the United States where the industry was much more devel- oped than in most other countries.5 Allis built the organi- sation up from its modest beginnings in the Melbourne suburbs where she started mixing up some “wicked juice and smoothie blends” in her own garage, she then opened her first retail outlet in Adelaide in 2000.6 In 2004, Janine Allis was awarded Telstra’s Businesswoman of the Year award for her entrepreneurialism.7 Since then, Boost Juice has become an incredible franchising success story and, accordingly, has been awarded a multitude of awards in the Australian business community.8

By 2005, Boost Juice had expanded to 180 retail juice outlets across Australia and its brand awareness had risen to 94%.9 Allis’s success in the Australian market (see Exhibit 1) provided her with much of the motivation to internationalize to other countries and Malaysia. Since 2004, Boost Juice has embarked on an international expansion program and, in 2012, now operates over 240 retail outlets in 15 countries, plus Australia.10 Boost Juice’s turnover was approximately A$135m in 2011.11 In 2007, Boost Juice acquired a majority holding in the Australian Mexican Food chain, Salsa.12 Then, in 2010, Boost Juice sold a majority stake to a US private equity company, The Riverside Company, for A$65m.13 The purpose of this was to raise the much-needed capital to finance Boost Juice’s further international expansion plans. See Figure 1 for Boost Juice’s development timeline.

Boost Juice entered Malaysia in 2009, with its first retail outlet in Suria, Kuala Lumpur (see Exhibit 2). By 2012, it had expanded to 11 retail outlets (mainly located in the Klang Valley, with one in Penang at Gurney Plaza)14. Locational decisions made by Boost Juice are usually based on sound research, foot-traffic, and demographic analysis.15 All Boost Juice outlets in Malaysia have been established in high-end shopping centres. These locations were selected because the

Fig. 1. Boost Juice Company Development Timeline.

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volume of foot-traffic in shopping centres is high, and there is a belief that customers would be willing to pay a premium for juice and other juice products in shopping centres. These are also locations where it is “cool” for young people — a major segment of the juice bar market — to hang out. Boost Juice plans to continue to expand in Malaysia and have 30 outlets operating there by 2014.16 The company’s international expansion is driven by Boost’s global brand strategy; “To become to juice, what Starbucks is to coffee”.17

Industry

The juice bar industry structure in Malaysia is fragmented, incorporating many small single owner/operator businesses. While sophisticated juice bars are becoming more common in Malaysia, especially in shopping malls and new urban areas, Boost Juice must also compete with the local Malaysian road- side drinks and juice stalls that service more than 50% of the market.18 The juice bar industry in Malaysia is in the early stages of development and is characterized by high growth. The two critical influences that apply to the juice bar industry in Malaysia are the economic and socio-cultural forces (Table 1). The economy is performing strongly and there is an increasing need for consumers to be health and weight conscious, thereby driving the consumption of healthy prod- ucts such as fruit juice. These two factors make the juice bar industry in Malaysia attractive.

The juice bar industry is relatively new in Malaysia — juice bars have been popping up over Malaysia since around 2005. Before that, juices tended to be “do it yourself” (DIY), supermarket bought products, or were bought on the side of the road and in hawker centres. Therefore the juice bar industry in Malaysia has a large number of new market entrants. All new entrants, including Boost Juice, have to invest substantially in promoting the juice bar concept to develop the market, especially since juice bars usually charge a premium for their products. In Malaysia, there are a number of branded juice bar competitors for Boost Juice,

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which include “For Fresh People”, “New Zealand Natural”, “Juice Works”, “Juice Bars”, “Bobalicious Smoothies”, “Sharing Planet,” “Desserts Bar” and “Black Canyon”.19 These competi- tors mainly operate in the same locations as Boost Juice — shopping centres, and high-end urban centres. There are a number of unbranded competitors, which include juice stalls on the side of the road or in hawker centres. An analysis of the competitors in Malaysia suggests that Boost Juice has the most brand awareness.

The degree of rivalry between competitors is quite low and Boost Juice benefits from their size, resources and skills in developing the market. The other rivals competing in a similar manner to Boost Juice are comparable in size and economies of scale, being either a small chain of franchises or just a single independent juice bar. The single independent juice bars do not generate the same level of brand awareness as chains such as Boost Juice. The product ranges and basis of competition are similar for all of the juice bars in this segment of the market; they compete by offering quality to a broad

Table 1. PESTEL Analysis of Boost Juice’s International Environment

Macro-environmental

Force

Intensity Reason

Political forces Low Government support is strong for FDI

and business development

Economic forces High Malaysia has a relatively positive

economic situation, with moderate

growth, low interest rates, and optimistic

outlook

Socio-cultural forces High Malaysian consumers are becoming more

health-conscious

Technological forces Low Technology has a limited role to play as

the product is produced to demand and

often customized

Natural environment

forces

Low The industry’s environmental impact is

low so it is easily able to comply with

current expectations

Legal forces Medium Franchisees each require a food retail

licence

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InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 179

 

market. Competitors do not aggressively use pricing strate- gies to attract a greater market share because of the rapidly developing market opportunities. Customers make frequent low-value purchases (possibly buying a juice every day), or when they visit a shopping centre during the weekend.

The threat of market entry is high as barriers (mainly set-up costs) are low. For example, a Boost Juice fran- chise investment costs between A$240,000 and $300,00020 in Australia, with predicted lower costs in markets such as Malaysia, because of lower factor costs. Furthermore, estab- lishment costs would be significantly lower for independent operators. The barriers to exiting the industry are also low, reflecting the low set-up costs. Malaysian government policy is strongly supportive of the entry of either local or foreign new businesses into its markets.21 Economies of scale are less important to juice bars, except in the area of purchasing and transportation of the fruit. The cost of the raw materials is fairly low, compared to the overall operating costs (site rental, power and labour costs), so economies of scale in purchasing and transportation offer only limited benefits. Otherwise, products are highly customized and, therefore, little benefit results from increased economies of scale in the juice bars themselves. There would be slight product differentiation between competitors, as competitors offer different flavours and blends.

Juice bars rely on a regular and dependable supply of fresh fruit and on the local labour force. The tropical climate contributes to the low cost of fruit in Malaysia where both fruit and vegetables are inexpensive and readily available. As the agricultural industry in Malaysia is fairly fragmented and comprises many small growers22, the range of suppliers avail- able to meet the relatively modest demands of a juice bar is extensive.

Customers in this industry are able to switch easily to another juice bar or substitute products such as fruit juices purchased from supermarkets. From a socio-cultural per- spective, however, Malaysians are becoming more health conscious. One of the reasons for this health-consciousness is reflected in a 2006 national Health and Morbidity Survey

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finding that 43% of Malaysian adults are either overweight or obese.23 Health concerns, therefore, are probably significant motivators for many customers of juice bars such as Boost Juice.

There are many alternatives to fresh fruit juice, including packaged fruit juice, milk drinks, soft drink, alcohol and coffee/tea, although fresh juices are more strongly dif- ferentiated from the health perspective. The threat of substi- tutes varies considerably as the preferences of the customers change, whereas other features of the industry change more slowly. Although the threat of substitutes is not as strong, it is difficult to react to because Boost Juice has a considerable investment in their juice bar systems, franchise and assets. There are a number of brands for fruit juices in Malaysia, which are mainly sold in supermarkets or convenience stores. In 2010, the major brands of fruit juices in Malaysia were Malaysia Milk’s well-known Marigold and Peel Fresh Brands, which have 23% of the market share, and F&n Dairies which have 18% of the market with their Sunkist and Fruit Tree Fresh Brands.24

At present, there is only limited competition in the industry, but many new juice bars are being established. It can be expected that competition will continue to increase in the industry in response to demand for juice bars and because of their profitability. In the short term, Boost Juice will need to keep their customers interested through constant product innovation to make their products more attractive than the substitutes, such as soft drinks. To achieve this, Boost Juice will need to expand its marketing and product innovation skills.

As the industry matures and the rivalry with new entrants increases, Boost Juice will have to respond to the actions of its competitors to maintain its market share. These competitors are also likely to develop their marketing and product innovation skills and will, therefore, be directly com- petitive with Boost Juice. It is also likely that, as the market matures, rivalry will move to predominantly price-based competition and profit margins will reduce. This will require Boost Juice to become more cost-efficient and to utilize more of its internal resources to respond to competitor actions.

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InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 181

 

resources

A number of Boost Juice’s strategic resources have enabled them to internationalize successfully. The framework of people, product, marketing and brand characteristics will be utilized to analyse the resources that Boost Juice has available to transfer to its Malaysian operations.

People

Human resources are an important resource for Boost Juice. For example, the founder and director of Boost Juice, Janine Allis, has extensive business experience both in Australia and abroad in Hong Kong. Allis has been successful in interna- tionalizing Boost Juice to many other international locations thus far. The knowledge developed from these experiences has been a useful resource for both the establishment of the Malaysian operations, and for the advice given to Boost Juice Master Franchisees in Malaysia.

Master Franchisees are usually individuals, an organi- zation or partnership that has had previous retail experience operating multiple outlets. A Master Franchisee also needs to commit to an agreed number of retail outlets to be opened in a country over a period of time, referred to as a development schedule.25 The Master Franchisees in Malaysia for Boost Juice are a husband and wife team who had become fans of the famous Australian smoothies and juices when they lived and worked in Melbourne.26 The husband, nick Tiernan, who is English and his wife, Dr. Soraya Rahim Ismail, a Malay- sian national, decided they wanted to bring Boost Juice to Malaysia when on their honeymoon — which is an indication of their enthusiasm for the product! They then successfully applied to become a Master Franchisee.27

The background, experience and knowledge of both nick and Soraya are valuable resources for Boost Juice’s inter- nationalization to Malaysia. nick is highly creative and has been a director in the retail industry. His enthusiasm and ideas are important motivators for Boost Juice’s Malaysian

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operations.28 Both nick and Soraya had worked at Accenture in the United Kingdom (UK) and had been a consultant to multinational organisations across many countries including Europe, Japan, US and Australia.29 Furthermore, Soraya’s valuable understanding of Malaysian culture and informal institutions is critical for the successful management of staff and development of strategies for the Malaysian market.30

Boost Juice also goes out of its way to develop a com- petitive advantage in its juice bar employees. It selects employees on the basis of their customer service skills, moti- vation, and enthusiasm and they refer to those motivated individuals as a Boostie.31 The employees working at Boost Juice need to be able to function well in a team, provide exceptional customer experiences and have fun along the way.32 Given the power of the customer in this industry, having service staff able to provide a positive customer expe- rience is important in attracting back customers who could easily switch to other juice bars or substitute products.

Product

Obviously, having a “good product” is a key requirement for sales in both domestic and international markets. Boost Juice has a healthy, nutritious and good-tasting product range. The range includes fresh fruit juices, crushes and delicious smoothies made with their top secret TD4® (To Die For) low-fat frozen yoghurt.33 Boost Juice also produces and sells complementary snacks and yoghurt at their retail outlets, and has a supermarket range, which is currently stocked in Aus- tralia, but not yet in Malaysia. These products are a healthy alternative to fast food. Table 2 displays the range of Boost Juice products.

Boost Juice has an innovation focus and develops new products and tastes to remain ahead of the competition. The products are the result of a sophisticated development process, which is another of Boost Juice’s competitive advan- tages. A Boost Juice nutritionist assists in the development of all products and everything is at least 98% fat-free and does not contain any artificial flavouring or colours.35 Not only

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internationalization of boost juice to malaysia 183

 

does the product serve as a source of competitive advantage, the customer experience is also influential, as Soraya explains:

“boost is not just another juice bar — the brand is based on the entire Boost Experience, which takes place every time a customer enters a store.”36

therefore, this broader experience is designed to develop a relationship with customers and ensure that they return, as Soraya further elucidates: “It is a combination of a fantastic product, served by positive and energetic people who greet you with a smile and are polite enough to call you by your first name, with a bright and colourful store environment to match”.37 this

table 2. the range of boost juice Products34

Products

Low-Fat Smoothies

Mango Magic

Strawberry Squeeze

All Berry Bang

Passion Mango

Janine’s Favourite

Blueberry Blast

Banana Buzz

Tropical Storm

Super Smoothies

Energy Lift

Green Tea Mango

Mantra

Gym Junkie

Brekkie to go-go

Skinny Smoothies

Mini-Me Mango

Berry Berry Light

Skinny Minnie

Melon

Indulgence

Smoothies

Raspberry Ripe

King William

Chocolate

Juices

Two & Five Juice

Energiser Juice

Wild Berry Juice

Immunity Juice

Create Your Own

Juice

Choose from a variety

of fruits

Crushes

Mango Tango

Crush

Berry Crush

Lemon Crush

Watermelon Crush

Tropical Crush

Boosters

Vita Booster

Immunity Booster

Energiser Booster

Protein Booster

Complementary

Product Banana Bread

Wraps

Yoghurt

Fruit

Muesli Bars

Supermarket Range

Bottled Juice

Frozen Yoghurt

Healthy Snacks

 

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relationship is an important source of competitive advantage for Boost Juice. Therefore, as a result of the development of innovative products and customer service to match, Boost Juice is able to compete successfully in the Malaysian market.

Marketing and Branding

Boost Juice marketing and branding is also a source of competitive advantage. It has made a name for itself with brightly-coloured stores, packaging and advertising; per- ceived to be “cool” and “fun” by young consumers. The company has successfully built a well-recognized brand through public relations exercises, the media including radio and television, and it also has a vibrant and exciting website.38 It also approximately eight campaigns per year in the stores to boost the profile of Boost Juice, attract customers and develop the customer experience. They also have an active Facebook page, with a dedicated Boost Juice Malaysia site where they promote various campaigns, specials and offers. Through social media, Boost Juice aims to connect with its customers and assist in developing the customer experi- ence. Promotions tend be fun, for example, a recent promo- tion has been “the name game”, where Boost offer a “Free Boost” to people with a particular name every weekday for a period of four weeks. Generation Y and X customers are par- ticularly responsive to this type of marketing, branding and promotions. The brand profile is used to Boost Juice’s com- petitive advantage in its marketing activities.39

The development of Boost Juice’s brand in Malaysia has been necessary for it to continue to innovate its product lines. Introducing innovative products such as “All Berry Bang” and “Mango Tango”, “Brekkie to go-go” and “Energy Lift” has provided Boost Juice with a significant portion of its differentiation from its competitors. It would not be possible to introduce these innovations, however, without a highly enthusiastic customer base. The introduction of such unusual products could easily backfire on Boost Juice if the customers were not already expecting and enthused by this type of innovation.

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InternatIonalIzatIon strategy for MalaysIa

Boost Juice took a planned approach to establishing their operations in Malaysia, deciding that it was the “right time to bring Boost to Malaysia”.40 This decision-making process was very consistent with the idea that local conditions in Malaysia must offer an advantage to Boost Juice, and that some of its home country competencies must be available to create a competitive advantage in the local market. Allis considers the relative merits of each potential international market from this perspective as part of Boost Juice’s overall international- ization expansion plans:

“We were delighted to open stores throughout Europe and South America, but Asia in particular holds so much potential for a brand and product like ours, so we’re really looking forward to working with nick and Soraya to make this venture a huge success.”41

The high growth of the juice bar industry in Asian markets offers opportunities to innovative businesses such as Boost Juice. The relative proximity of Malaysia to Australia, and time zone similarities (Kuala Lumpur is only 3,000 km from Darwin and is in the same time zone as Perth), combined with the strong trade relationships between Australia and Malaysia, simplified transferring valuable competencies from Boost Australia to Boost Malaysia.

the Process of franchising

Boost Juice was able to expand rapidly in Malaysia through franchises. Sharing the financial load and risk with fran- chisees enabled Boost Juice to expand more rapidly than would have been possible if it had had to rely purely on its own resources and access to capital. The rapid rate of expansion in a number of countries, including Malaysia, has enabled it to build first-mover advantages, with the result that Boost Juice is now a highly internationalized organisa- tion with little evidence of a home country bias.42 To assist

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in internationalization, Boost Juice works with an experi- enced US-based consultancy firm, which assisted Subway and Gloria Jean’s to enter China.43 Boost Juice operates in Indonesia, Singapore, Malaysia, China, Thailand, Hong Kong, Macau, Kuwait, Chile, Brazil, South Africa, the UK, Estonia, Lithuania, Germany, United Arab Emirates (UAE) and South Korea (Figure 2).44 In 2012, Boost Juice also has plans to open five stores in India, with a total of 30 over the next five years.45 Boost Juice has also aimed to be locally-orientated when internationalizing to different countries, which gives them a better understanding of the local market. For example, choosing Soraya Rahmin Ismail as a Master Franchisee offers Boost Juice two advantages. The first advantage is that because Soraya is a Malaysian national, she understands the Malaysian environment and culture well, and second, having worked and lived in the UK, she also has an international perspective.

Franchising offers Boost Juice an advantage in Malaysia relative to many of the competitors who are not utilising franchising to reduce the amount of capital outlay and risk. Franchising has also been very effective in introducing good quality front-line management, and the development of

Fig. 2. number of Boost Juice Operations across the Globe.

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InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 187

 

greater efficiencies than could be achieved by using central- ized staff management practices typical of company-owned juice bars.

Boost Juice aims to select its Master Franchisees from a variety of backgrounds and industries to ensure franchises are varied by personal and professional interests.46 Master Franchisee selection is based on a number of factors, which include prior significant retail experience, previous owner- ship and operation of a successful businesses, experience in driving teams, and exposure to leasing, supply chain man- agement, marketing, sales, training and operations.47 In addi- tion, they need to also share the values of Boost Juice. Master Franchisees are required to have sufficient financial resources to properly support their franchise — a net worth of US$2 million and liquidity of at least US$1 million.48

Boost provides extensive support to its Master Fran- chisees, including a dedicated International Field Support (IFS) team, on-going access to Boost Juice marketing and promotional material, a training and induction program, an operating system and operations manuals, substantial group buying power, and a long-established supplier network.49 A Master Franchisee has exclusive rights to open an agreed number of Boost Juice retail outlets over an agreed time period in their given market. They also have a number of responsibilities50:

1. They are required to own and operate a number of Boost Juice retail outlets (although they are able to grant sub- franchises to third parties for some outlets).

2. They are required to establish infrastructure to support their franchise network in the chosen country, which includes training, marketing, leasing, design and develop- ment, and supply chain management operations.

Master Franchisees are charged a fee, based on the minimum number of retail outlets to be opened in a given market, which is mutually agreed by Boost Juice and the Master Franchisee.51 There is also an on-going royalty fee that ranges between 4% and 6% of gross monthly turnover for the Master Franchise-owned retail outlets.52 Sub-franchise retail outlets

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also generate an on-going royalty fee, which is shared equally between the Master Franchisee and Boost Juice. In addition, there is an International Marketing Levy, which is 3% of gross monthly turnover for the Master Franchise-owned retail outlets.53 One per cent (1%) of this levy is repatriated to Boost Juice Australia, and the 2% balance is to be spent by the Master Franchisee in increasing the brand awareness of Boost Juice in their local market.54 Average retail outlet establish- ment costs in Australia are A$240,000–300,000, although the costs are lower in Malaysia, reflecting the lower costs of mate- rials and equipment. These costs include the signage, fit-out and equipment.

The General Manager and the Training Manager of each Master Franchisee are required to complete a minimum six-week training program prior to opening their first retail outlet. This ensures that the overall management practices associated with operating the franchise network and indi- vidual retail outlets are transferred from Boost Juice to the Master Franchisee. The majority of this training is con- ducted in Australia, and an International Field Consultant (IFC) assists later on when the first retail outlet is opened.55 On-going support is provided by the IFC, and they are a key point of contact for questions, training, support and opera- tional needs. The IFC also visits the Master Franchisee’s retail outlets twice during the first year of operation. Through the IFC, each Master Franchisee has access to Boost Juice’s cen- tralized support departments, which include finance, fran- chising, marketing, training, design and development, leasing, operations and purchasing.56

Internationalization through franchising has brought many benefits to Boost Juice. It is not exposed to the full risk nor the capital investment required for wholly-owned foreign subsidiaries. In addition, the franchisees provide Boost Juice with local market knowledge and contacts. These features have enabled Boost to internationalize quickly across the world and in countries such as Malaysia, which has allowed it to rapidly establish economies of scale in its operations there.

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InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 189

 

PerforMance

Boost Juice has performed strongly over its 11 years of operation, with an annual turnover of AUD$135m in the 2011 financial year.57 In addition, Boost has been the fastest- growing juice and smoothie bar chain in the Southern Hemisphere, and their achievements have been recognized with a multitude of awards over the years.58 Some notable awards include AMEX Franchisor of the Year in 2005, PWC Franchisor of the Year in 2005, and BRW Fastest-Growing Franchise in 2004.59

a Blended future for Boost juIce

Boost Juice has a relatively aggressive international expansion plan, with The Riverside Group recently purchasing a major stake in the Boost Investment Group, named the Retail zoo (see Figure 3).60 Allis’s vision for the group is to be the next global phenomenon, and it needed the financial backing and expertise of Riverside to do this.

Despite the backing of Riverside, Boost Juice faces a number of threats in the future, which it must learn to deal with. The first of these is the threat of increased local compe- tition in its various markets. For example, Boost Juice’s local marketing efforts and the visual appeal of its retail outlets

Fig. 3. Organisational Chart for Boost Juice.

Boost Investment Group

(Reg. Bus Name:

The Retail Zoo)

Boost Foundation (Charitable)

Salsa (Mexican Restaurant Chain)

Boost Juice

Supermarket product lines

Retail (Franchised) outlets

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has done much to develop the markets in various countries. This leaves the gates open to increasing competition from rivals offering competitive products in a similar manner. The limited reliance of Boost Juice’s subsidiaries on the Austra- lian headquarters makes its operations in other countries easy to imitate. Boost Juice will need to find new ways of coun- tering competition in all of its international markets and in Malaysia. Further, can Boost Juice continue with its fran- chising approach in Malaysia, or will too many franchisees cause it to lose differentiation?

Weak economic conditions as a result of the global financial crisis (GFC) and the European debt crisis in many of its markets are another issue that it must grapple with. For much of its development phase, Boost Juice has relied on the positive economic conditions in its international markets to support the establishment of its franchised subsidiaries. This was a satisfactory approach leading up to the GFC in the years 2008 and 2009, but may not be suitable for today’s envi- ronment, especially if there is another global economic down- turn as a result of the European debt crisis. Will Boost Juice need to find new approaches to continue its global devel- opment? How will it accomplish its global vision if there is another world recession?

references

1. Chadstone is a shopping centre in the south eastern suburbs of Melbourne, Australia. It is claimed to be the largest shopping centee in the southern hemisphere, and it is labeled “The Fashion Capital” as a majority of the stores are fashion based. Chadstone also has office towers where Boost Juice’s head office is located.

2. Boost Juice, 2011a. Boost Juice in Malaysia, retrieved on 08/03/12 at http://www.boostjuicebars.com.my/Default.aspx#/ about-boost/our-history/.

3. Boost Juice, 2011b. About Us, retrieved on 10/05/11 at http:// www.boostjuicebars.com.my/Home-boost-malaysia.html#/ about-boost/our-history/.

4. Ibid. 5. Loc. cit., Boost Juice, 2011b. 6. Loc. cit., Boost Juice, 2011b.

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InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 191

 

7. Telstra Businesswoman Awards, 2004. Janine Allis — Founder and Managing Director of Boost Juice, retrieved on 20/05/11 at http://www.telstrabusinesswomensawards.com/assets/pdf/ winnerbooklets/janine%20allis.pdf.

8. Boost Juice, 2012a. national Awards, retrieved on 22/05/11 at http://www.boostjuice.com.au/national-awards.

9. Loc. cit., Boost Juice, 2011b. 10. Boost Juice, 2011. About Us, retrieved on 08/03/12 on http://

www.boostjuice.com.au/about. 11. Boost Juice, 2012b. Boost Global, accessed on 08/03/12 at http://

www.boostjuice.com.au/boost-global. 12. Smartcompany, 2007. new look Boost Juice ready to expand,

11 September 2007, retrieved on 30/08/11 at http://www. smartcompany.com.au/retail/new-look-boost-juice-ready-to- expand.html.

13. Greenblat, E., 2010. Boost Juice sells majority stake for $65m, The Sydney Morning Herald, retrieved on 14/06/11, at http:// www.smh.com.au/small-business/franchising/boost-juice-sells- majority-stake-for-65m-20100502-u1ez.html.

14. Loc. cit., Boost Juice, 2011a. 15. Boost Juice, 2012c. Investment & FAQ, retrieved on 08/03/12 at

http://www.boostjuice.com.au/investment-faq. 16. Loc. cit., Boost Juice, 2011a. 17. Facebook, 2011. Boost Juice Bars Malaysia, retrieved on 20/05/11

at http://www.facebook.com/boostmalaysia?sk=info. 18. Gan, I., 2011. Personal Communication on 14/05/11. 19. Euromonitor International, 2011. Consumer Food Service

in Malaysia, retrieved on 08/03/12 at http://www. euromonitor.com/consumer-foodservice-in-malaysia/report; Che Wan, R., 2010. Juice Up, Boost Up, retrieved on 15/05/11 at http://thestar.com.my/metro/story.asp?file=/2010/ 2/28/sundaymetro/5749918.

20. Loc. cit., Boost Juice, 2012c. 21. Personal communications with Malaysian small-business

operators, 4/07/11. 22. Economist, 2011. Country Report Malaysia, August 2011. 23. Samy, F. A., 2010. Malaysians getting obese — by eating too heavily at

night, The Star, retrieved on 27/07/11 at http://thestar.com.my/ news/story.asp?file=/2010/4/11/nation/6034589&sec=nation.

24. Euromonitor, 2011. Fruit/Vegetable Juice in Malaysia, http:// www.euromonitor.com/fruit-vegetable-juice-in-malaysia/report, accessed on the 08/03/12.

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25. Boost Juice, 2011c. International Franchising, retrieved on 15/05/11 at http://www.boostjuicebars.com/#/franchising/ international-franchising.

26. Loc. cit., Boost Juice, 2011a. 27. Loc. cit., Boost Juice, 2011b. 28. Loc. cit., Boost Juice, 2011b. 29. Loc. cit., Boost Juice, 2011b. 30. Loc. cit., Boost Juice, 2011b. 31. Boost Juice, 2012d. What’s a Boostie? Retrieved on 08/03/12, at

http://www.boostjuice.com.au/whats-a-boostie. 32. Loc. cit., Boost Juice, 2011c. 33. Loc. cit., Boost Juice, 2011a. 34. Boost Juice, 2012d. Study Kit, retrieved on 08/03/12, at http://

www.boostjuice.com.au/study-kit. 35. Loc. cit., Boost Juice, 2011b. 36. Loc. cit., Boost Juice, 2011b. 37. Loc. cit., Boost Juice, 2011b. 38. Loc. cit., Boost Juice, 2012d. 39. Loc. cit., Boost Juice, 2012d. 40. Loc. cit., Boost Juice, 2011b. 41. Loc. cit., Boost Juice, 2011b. 42. Sammartino, A., 2011. International business and strategy blog:

A juicy tale of international expansion, retrieved on 20/05/11 at http://internationalbs.wordpress.com/2009/01/23/a-juicy-tale- of-international-expansion/.

43. Loc. cit., Boost Juice, 2011c. 44. Loc. cit., Boost Juice, 2011c. 45. Boost Juice, 2012e. Global news: Boost to launch in India

2012, accessed 11/03/12, at http://www.boostjuice.com.au/ global-news-2.

46. Loc. cit., Boost Juice, 2011c. 47. Loc. cit., Boost Juice, 2011c. 48. Loc. cit., Boost Juice, 2011c. 49. Loc. cit., Boost Juice, 2011c. 50. Loc. cit., Boost Juice, 2011c. 51. Loc. cit., Boost Juice, 2011c. 52. Loc. cit., Boost Juice, 2011c. 53. Loc. cit., Boost Juice, 2011c. 54. Loc. cit., Boost Juice, 2011c. 55. Loc. cit., Boost Juice, 2011c. 56. Loc. cit., Boost Juice, 2011c.

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InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 193

 

57. Greenblat, E., 2010. Boost Juice sells majority stake for $65m, The Sydney Morning Herald, retrieved on 14/06/11, at http:// www.smh.com.au/small-business/franchising/boost-juice-sells- majority-stake-for-65m-20100502-u1ez.html.

58. Loc. cit., Boost Juice, 2012d. 59. Loc. cit., Boost Juice, 2011b. 60. Loc. cit., Boost Juice, 2011b. 61. Datamonitor, 2010. Australia Country Analysis Report — In-

Depth PESTLE Insights, Datamonitor. 62. DFAT, 2011. Australia — Economic Factsheet, retrieved on

02/11/2011, at http://www.dfat.gov.au/geo/fs/aust.pdf. 63. DFAT, 2008. Australia in Brief: A stable and competitive

economy, retrieved on 02/11/2011, at http://www.dfat.gov.au/ aib/competitive_economy.html.

64. Austrade, 2011. Austrade, retrieved on 02/11/2011, at http:// www.austrade.gov.au/.

65. Loc. cit., Datamonitor, 2010. 66. Loc. cit., DFAT, 2011. 67. The Australian, 2011. Aussie hits parity with US dollar, retrieved

on 02/11/11, at http://www.theaustralian.com.au/business/ aussie-hits-parity-with-us-dollar/story-e6frg8zx-1225939430116.

68. RTT news, 2011. AUD/USD Slides After Topping 1.10 Level — Westpac, retrieved on 02/11/11, at http://www.rttnews.com/ ArticleView.aspx?Id=1611446.

69. Loc. cit., DFAT, 2011. 70. Loc. cit., Datamonitor, 2010. 71. Datamonitor, 2010. Malaysia Country Analysis Report — In-Depth

PESTLE Insights, Datamonitor. 72. Ibid. 73. Department of Foreign Affairs and Trade, 2011. Malaysia

Country Brief, retrieved on 2/11/11, at http://www.dfat.gov. au/geo/malaysia/malaysia_brief.html.

74. Loc. cit., Datamonitor, 2010. 75. Loc. cit., DFAT, 2011. 76. Loc. cit., Datamonitor, 2010. 77. Loc. cit., Datamonitor, 2010. 78. Loc. cit., DFAT, 2011. 79. Loc. cit., Datamontior, 2010.

 

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Exhibit 1

Country background — Australia

Australia is a developed and stable economy with a Parliamentary democracy.61 Its business sector is primarily export-based, and Aus- tralia has traditionally been labelled “the lucky country” because of its huge deposits of natural resources such as coal, iron ore, gold, and petroleum.62 The Australian government realizes that Australia should not be dependent on natural resources, and heavily pro- motes a “knowledge-based economy” (which reflects Australia’s significant export of education services and education to interna- tional students in Australia).63 Australia has embraced globalization in the past 30 years, as it has a strong export sector and it encour- ages foreign direct investment (FDI) in and outside of Australia. Austrade, the Government’s foreign trade department, actively pro- motes internationalization and supports Australian organisations operating internationally, on a number of levels (i.e., advice, edu- cation, financial assistance, support offices).64 Australia has a small population of 22.4 million and has high GDP per capita ($64,351 in 2011 in real prices).65

Australia has been able to weather the most recent global financial crisis, and currently has a positive economic growth rate, stable and moderate inflation of around 2–3%, low unemployment (6.1%) and its business outlook and confidence is good.66 Australia’s ability to dodge the true effects of the GFC has been attributed to its natural resource export arrangements with China, the fact that the Australian economy maintains good economic fundamentals, and the economic weaknesses associated with the US and European countries. In 2011, the Australian dollar surpassed parity with the US dollar67, and achieved an all-time high, since it was floated in 1983, of A$1.10 against the greenback.68

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InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 195

 

Table 3. Australia’s Economic Characteristics.69

Annual Data 2011

Population 22.4 million

GDP Growth Rate 3%

GDP (Billions US$, Market Exchange Rate) 1,448.2

GDP (Billions US$, PPP) 918.5

GDP per capita (US$, Market Exchange Rate) 64,351

GDP per capita (US$ PPP) 40,86

Inflation 3.00%

Current Account Balance (Millions US$) â’5,529

Unemployment 6.1%

Interest Rates (Cash Rate) 4.50

Table 4. Australia’s Economic Outlook 2012–2014.70

Annual Data 2012 2013 2014

Population (million) 22 22.3 22.5

GDP Growth Rate 3.6% 3.2% 3.0%

GDP (Billions US$, PPP) 545.1 563.1 580.1

GDP per capita (US$ PPP) 24,782 25,295 25,774

Inflation 2.7% 2.9% 2.7%

Unemployment 5.9% 5.9% 6.0%

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Exhibit 2

Country background — Malaysia

Malaysia has had a relatively stable political climate and is ruled by the United Malays national Organisation (UMnO).71 The polit- ical environment is usually described as a democracy, although there are rules that do impinge on free speech and the media.72 The most recently-elected Prime Minister, najib Razak, has set out a number of reforms which are aimed at liberalising the service sector. Malaysia is classified as a high middle-income, export-ori- ented economy, with per capita GDP (in market price) of US$8,235 in 2010. Malaysians have a life expectancy of 74 years.73 Economic growth in Malaysia dropped to 1.4% in 2009; however, the Malay- sian economy has rebounded from the GFC in 2010, supported by a spike in export and import activity with China.74 The Malay- sian government reported a growth rate of 5.5% in 2010.75 In 2010, Malaysia faced a high debt to GDP ratio, which suggests that government spending needs to be reduced otherwise this could severely affect Malaysian business competitiveness.76 Malaysia’s future strategies and targets, stated in its Vision 2020, are to “move up the value chain”, and as a result it has developed attractive FDI policies to attract technology intensive businesses in response. Malaysia’s outlook looks good, with growth expected to average around 5–6% for the next three years.77

 

Source: CIA Factbook, 2011.

Figure 4. Map of Malaysia.

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InTERnATIOnALIzATIOn OF BOOST JUICE TO MALAYSIA 197

 

Table 5. Malaysian Economic Characteristics.78

Annual Data 2011

Population (million) 28.3

GDP Growth Rate 5.5%

GDP (Billions US$, Market Exchange Rate) 247.8

GDP (Billions US$, PPP) 442.0

GDP per capita (US$, Market Exchange Rate) 8,624

GDP per capita (US$ PPP) 15,385

Inflation 2.7%

Current Account Balance (Millions US$) 28,231

Unemployment 3.4%

Interest Rates (Cash Rate) 3.0

Table 6. Malaysian Economic Outlook 2011–2014.79

Annual Data 2012 2013 2014

Population (million) 27.1 27.5 28

GDP Growth Rate (%) 5.6 5.9 6.0

GDP (Billions US$, PPP) 165.0 174.7 185.2

GDP per capita (US$ PPP) 6,096.3 6349.1 6621.9

Inflation 2.3% 2.5% 2.5%

Unemployment 3.3% 3.3% 3.3%

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"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"

Global Brand Marketing

/in /by

Assignment 6.2

 

 

1. Select a brand. Try to do an informal brand value chain analysis. Can you trace how the brand value is created and transferred?  What is the role of the multipliers?

 

 

2. Pick a product category. Can you profile the brand personalities of the leading brands in the category using Aaker’s brand personality inventory? An example of this is automobiles  and I could select a model for each category.

Sincerity (Down-to-earth, honest, wholesome, and cheerful)

Excitement (Daring, spirited, imaginative, and up-to-date)

Competence (Reliable, intelligent, and successful)

Sophistication (Upper class and charming)

Ruggedness (Outdoorsy and tough)

Note: since an automobile was used as an example, do not use it. Thank you.

 

 

3. Daily Deal Email Exercise

–  Select a specific company and provide a brief description. Coupon sites cannot be chosen.

– Is the company currently offering some type of Deal of the Day? If so, discuss current promotions.

-Create a Deal of the Day promotion for five consecutive days (Monday through Friday). Each daily deal has to be unique. Some natural things to consider are product and price but you can be creative. Make sure the deals are realistic for the company chosen.

-Design a message for the email subject line that varies

-Provide the company URL

Please note: this is not a lengthy assignment but much thought needs to go into it. Do not repeat current deals. Set up as follows:

Day 1 Email Message subject line:

Deal of the Day:

Day 2 Email Message subject line:

Deal of the Day:

(Repeat for day three through five)

 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"

Boa Technology Written Assignment Branding, Marketing Plan

/in /by

Boa Technology Assignment

Please answer the two questions below. The answers for both must be completed in two pages or three pages (total), single-spaced, double space between paragraphs.

 

o   What are your recommendations for Garett Graubins’ 2015 U.S. marketing plan?

 

  • Be specific about which market (B2B, B2I, and/or B2I) you recommend and the 2-3 summits (product categories) deserving the most attention. Offer specific ideas about how to approach that market.  [You are expected to provide justification for your recommendation and implementation plan.]

 

  • Whether you recommend building a brand with consumers or not, use two creative idea generation techniques and generate five low-cost, grassroots ideas that would help Boa build a brand in one of its product categories.

 

 

  • o   Five low-cost, grassroots ideas that would help Boa build a brand in one of its product categories.

    08 Fall$

    Boa Technology – Marketing An Ingredient Joe Cannon, Professor of Marketing Colorado State University

    Colorado State University, College of Business, Multimedia Case Series #2014-01

     

     

    ! 2

    $ Boa$Technology:$Marketing$an$Ingredient1$

    Garett’Graubins,’Global’Marketing’Director’for’Boa’Technology’sat’ in’the’Front’Range’Conference’room’at’Boa’Technology'(referred’to’ most’frequently’as’simply’“Boa”).’He’was’preparing’to’meet’with’ his’sevenImember’marketing’team’to’discuss’Boa’s’marketing’ program’for’2015.’In’less’than’a’month’Graubins’would’have’to’pull’

    together’his’ recommendations.’ The’team’would’be’ debating’questions’ around’target’ markets’and’whether’ Boa’needed’to’more’ aggressively’promote’ the’Boa’brand’with’ endIusers.”

    Boa’began’in’the’late’ 1990s’with’an’ entrepreneur’seeking’ a’better’way’to’“lace’

    up”’snowboard’boots’and’hockey’skates.’In’business’for’nearly’15’ years,’Boa’has’grown’quickly’–’having’sold’more’than’70’million’of’ its’reel’and’wire’closure’systems’in’that’time’and’more’than’18’

    1 ‘This’case’was’prepared’by’Joe’Cannon,’Professor’of’Marketing’at’Colorado’State’ University’with’research’assistance’from’Conor’Blanchet.’Cale’Rogers’handled’ multimedia’production.’The’authors’thank’Garett’Graubins,’Mark’Soderberg,’Chuck’ Mason,’and’Ilya’Minkin’for’interviews’that’aided’in’case’development’and’Boa’ Technology’for’sharing’some’of’the’video’content.’The’case’was’developed’as’a’ basis’for’class’discussion,’not’as’an’illustration’of’effective’or’ineffective’ management’and’should’not’be’used’as’a’source’of’primary’data.’Some’data’in’the’ case’has’been’modified’for’reasons’of’confidentiality.’

    million’in’the’last’year.’The’Boa’Closure’System’is’an’ingredient’ used’in’other’products.’Boa’sells’its’closure’systems’to’more’than’ 150’leading’premium’brands’worldwide.’These’brand’partners’are’ mostly’in’various’footwear’categories.’For’example,’Burton,’ FootJoy,’and’Specialized’use’the’Boa’Closure’System’on’select’styles’ of’its’snowboard’boots,’golf’shoes,’and’cycling’shoes,’respectively,’ and’Boa’collaborates’with’these’brand’partners’to’help’each’ integrate’the’Boa’Closure’System’into’these’products’as’a’ replacement’for’shoe’laces,’buckles,’or’Velcro’straps.”

    In’the’U.S.,’almost’all’of’Boa’s’marketing’efforts’focus’on’building’ relationships’with’brand’partners.’Using’a’consultative’selling’ approach,’the’company’s’sales’force’helps’brand’partners’with’ designing’higher’quality’products.’Graubins’wonders’if’it’is’time’to’ build’the’Boa’brand’with’some’consumer’segments.’

    Graubins’and’his’team’have’long’admired’how’some’“ingredient’ brands”’have’built’strong’brand’equity’with’consumers.’Brands’like’ GoreITex'(waterproof’fabric),’Intel'(and’its’iconic’“Intel’Inside”’ campaign’for’computer’chips),’Shimano'(cycling’components),’and’ Nutrasweet'(artificial’sweetener)’are’well’known’by’consumers’II’ even’though’each’is’usually’purchased’as’a’component’in’another’ brand.’Many’consumers’know’and’trust’the’GoreITex’name’II’and’ seek’it’out’when’shopping’for’waterproof’jackets’or’shoes.’When’ buying’a’new’bike,’the’Shimano’name’on’a’derailleur'(used’in’ shifting’gears)’can’be’another’sign’of’quality.’That’kind’of’brand’ equity’helped’these’brands’stave’off’competition’and’offered’ power’in’negotiations’with’partners.’

    ‘

    ‘

    Two$Boa$Closure$System$dials$on$a$Louis$Garneau$cycling$shoe.$

     

     

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    ‘

    Boa’successfully’built’consumer’awareness’for’the’Boa’Closure’ System’among’hikers,’walkers,’and’golfers’in’a’few’select’Asian’ markets.’But’creating’similar’awareness’in’the’United’States’would’ be’expensive’–’and’risky.’Graubins’thought’a’strong’brand’at’the’ consumer’level’might’help’Boa’grow’faster’and’hold’off’ competition.’He’also’wondered’whether’it’might’be’a’better’idea’to’ concentrate’efforts’at’the’retail’level.’In’the’product’categories’ where’Boa’operated,’retailers’are’often’strong’influences’on’ consumer’choice.’Could’Boa’increase’its’training’of’retail’ salespeople’on’its’closure’systems?’Boa’might’develop’better’pointI ofIpurchase’materials’retailers’could’use’to’highlight’Boa’s’benefits.’ Or’was’it’too’soon’for’Boa’to’engage’in’this’type’of’strategy?’ Perhaps’the’best’option’would’be’to’continue’the’efforts’at’the’ brand’partner’and’trade’level.”

    As’Graubins’prepared’for’his’meeting’he’considered’how’the’Boa’ brand’had’evolved’in’the’last’decade,’he’reviewed’market’research,’ and’he’thought’about’how’Boa’s’CEO,’CFO,’and’VP’of’Sales’and’ Marketing’might’think’about’more’aggressively’targeting’ consumers.’He’knew’that’many’were’comfortable’with’the’current’ approach’I’it’was’working’and’the’company’was’growing’fast.’He’

    also’knew’that’some’in’the’company’wouldn’t’want’to’do’anything’ to’take’attention’away’from’potentially’large’emerging’ opportunities’in’the’medical’devices,’safety/utility’footwear,’and’ athletic’shoe’productImarkets.’

    The$“Boa$Lacing$System”$is$Born$$

    After’selling’a’successful’medical’device’company,’entrepreneur’ Gary’Hammerslag’moved’to’Steamboat’Springs,’Colorado’where’he’ enjoyed’snowboarding’and’watching’his’kids’play’hockey.’ Hammerslag’was’a’natural’inventor;’when’he’saw’a’problem’he’ tried’to’solve’it.’He’soon’recognized’that’shoelaces’were’a’poor’ solution’for’tightening’snowboard’boots’and’ice’hockey’skates.’ Laces’didn’t’stay’tight’and’often’came’undone’with’intense’physical’ activity.’ReItying’laces’required’stopping’the’activity’and’taking’off’ gloves’to’complete’the’task.’Problems’were’opportunities’for’ Hammerslag.’His’tinkering’eventually’lead’to’the’Boa’Lacing’System,’ a’novel’combination’of’steel’wire,’eyelets’and’small’reel’than’evenly’ tightens’the’wire’as’the’reel’turns.2’The’video’shows’how’it’works’ today’–’which’is’not’that’different’from’what’Hammerslag’ developed’almost’two’decades’ago.’

    2 ‘“The’Culture’of’Your’Business’Gary’Hammerslag’–’Boa’Technology,”’My#New# Enterprise,’retrieved’November’1,’2014.” https://mynewenterprise.com/bt_hammerslag_culture.php’

     

     

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    ‘ ‘

    Hammerslag’founded’Boa’Technology’in’1998.”By’2001’Vans’and’ K2’snowboard’boots’featured’Boa.’In’2004,’Boa’could’be’found’on’ cycling’shoes’and’a’year’later’golf’shoes.’Boa’grew’from’there’to’ become’a’global’brand’with’sales’almost’evenly’split’among’Asia,’ Europe’and’the’United’States.’In’2011,’as’Boa’moved’into’markets’ beyond’footwear’–’including’medical’equipment’and’helmets’–’it’ changed’the’product’s’name’to’the’Boa’Closure’System.3′

    Boa$Technology$$

    From’humble’beginnings’in’a’oneIroom’office’above’a’liquor’store’ in’Steamboat’Springs,’Colorado,’Boa’Technology’has’grown’to’120′ employees’spread’between’global’headquarters’in’Denver,’ Colorado,’and’additional’offices’in’Japan,’Hong’Kong,’China,’and’ Austria.’Today’there’are’over’43’million’Boa’reels’and’20’million’ BoaIpowered’products’worldwide.”

    3 ‘“Boa’Technology’s’lacing’system’lands’big’investor,’grows’beyond’shoes,”’Denver# Post,#July’10,’2012,’retrieved’November’1,’2014,’ http://www.denverpost.com/business/ci_21039899/boaItechnologysIlacingI systemIlandsIbigIinvestorIgrows”’

    As’a’small’company,’Boa’faces’some’challenges.’Its’fast’growth’ strains’financial’and’human’resources.’With’many’opportunities,’ Boa’has’to’be’selective’in’deciding’where’to’direct’these’resources.’ The’company’has’some’vulnerability’to’competitors’with’deep’ pockets’that’might’try’to’move’into’the’same’markets’with’a’similar’ alternative’closure’system.’While’Boa’found’it’relatively’easy’to’ enter’categories’like’cycling’and’snow’sports’where’its’employees’ are’also’customers’and’they’know’the’categories’well,’they’have’no’ such’advantage’in’new’markets’like’medical’devices’and’ safety/utility’footwear.”

    ‘

    Boa’builds’on’its’strengths.’Most’Boa’Closure’Systems’can’be’found’ on’outdoor’and’athletic’footwear’–’and’Boa’has’attracted’an’active’ and’engaged’workforce.’It’helps’that’Boa’employees’know’and’use’ its’product’–’they’are’riders,’hikers,’runners,’golfers,’and’cyclists.’ Those’same’employees’are’known’for’their’tenacity’and’grit’in’ solving’customer’problems.’Boa’also’enjoys’some’patents’that’help’ protect’its’innovative’products.’The’small’company’has’also’been’ nimble’–’seizing’on’new’opportunities’as’they’arise’–’and’dedicated’ to’producing’a’high’quality’product.’The’company’s’strong’

     

     

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    leadership’team’has’a’wealth’of’experience’in’both’the’sports’and’ technology’markets.”

    Boa#Technology#Leadership#Team##

    Mark’Soderberg’is’Boa’Technology’s’President’and’CEO.’Soderberg’ has’been’with’the’company’since’2002’after’working’for’more’than’ a’dozen’years’in’the’ski’industry.’He’served’as’president’for’10’years’ before’adding’CEO’to’his’title’when’Gary’Hammerslag’stepped’ down’in’2012.’Mark’s’background’is’in’engineering’and’he’uses’Boa’ when’he’mountain’bikes’–’and’also’on’a’medical’brace’when’he’ injures’himself’in’his’favorite’sport'(which’he’did’just’recently).”

    Merle’McCreery’is’Boa’Technology’s’Chief’Financial’Officer.’He’has’ been’with’Boa’for’three’years’after’working’for’many’years’in’high’ tech.’McCreery’is’part’of’the’approval’process’for’the’annual’ marketing’budget’and’he’expects’marketing’proposals’to’show’a’ positive’return.’Merle’wears’Boa’s’when’he’golfs.’

    Boa’s’Vice’President’of’Sales’and’Marketing’is’Chuck’Mason.’He’has’ been’with’the’company’for’more’than’four’years.’He’began’his’ career’as’a’buyer’for’Christy’Sports,’a’regional’retailer’specializing’in’ ski’and’snowboard’equipment.’He’later’worked’in’sales’ management’for’major’snowboard’and’ski’brands’K2’and’Burton.’ Chuck’tightens’Boa’Closure’Systems’before’hiking,’cycling’and’ snowboarding.”

    Garett’Graubins,’Director’of’Global’Marketing,’has’been’with’Boa’ for’6’years.’He’leads’a’team’of’seven’in’the’marketing’department.’ Garett’previously’worked’at’The’Integer’Group'(a’DenverIbased’ad’ agency),’TrailRunner’Magazine,’and’The’North’Face.’Garett’recently’ finished’his’MBA’at’Colorado’State’University.’Garett’dials’in’his’Boa’ before’running’trails'(he’recently’completed’the’Hardrock’100IMile’

    Endurance’Run),’flying’down’mountains’on’his’snowboard,’or’ hopping’on’his’road’bike.”’

    Manufacturing#and#Supply#Chain#

    Boa’outsources’production’of’its’reels’to’a’Chinese’firm’that’ manufactures’to’Boa’s’rigid’specifications.’The’Boa’Closure’System’ comes’in’a’range’of’sizes,’colors,’and’torque/power’levels.’Boa’tries’ to’avoid’making’custom’products’for’each’application,’preferring’to’ find’the’component’in’its’product’line’that’best’meets’a’customer’s’ needs.’Adding’the’Boa’Closure’System’to’a’product’might’cost’from’ $1I$10′(cost’to’the’brand’partner:’the’multiplier’to’the’end’user’ may’be’as’high’as’4x’that’amount)’depending’on’size,’durability,’ torque/power’level,’and’the’length’of’the’wire’lace.’Greater’torque’ is’needed’to’close’snowboard’and’ski’boots’for’example,’as’ compared’to’hiking’shoes.”

    Boa’maintains’a’warehouse’in’Hong’Kong.’The’factories’producing’ Boa’brand’partners’’shoes,’boots,’or’other’products’order’directly’ from’Boa.’Boa’then’ships’the’order’directly’to’that’factory.”

    Competition$and$Competitive$Advantage$

    Boa’faces’competition’with’different’types’of’products’that’also’ perform’the’closure’function.’In’many’product’categories’traditional’ shoelaces,’buckles,’or’Velcro®’might’be’used’for’closure.’The’type’ of’competitor’varies’across’product’categories.’For’example,’many’ snowboard’and’ski’boots’use’buckles,’possibly’supplemented’by’ Velcro®’for’closure.’On’the’other’hand,’hiking’shoes/boots,’golf’ shoes,’and’safety’shoes’most’often’use’laces.”

    As’Boa’s’reel’system’has’gained’in’popularity,’products’from’ competitors’have’emerged.’While’Boa’s’patents’and’its’firstImover’ advantage’have’helped’it’slow’copycat’competition,’the’downside’

     

     

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    of’Boa’s’success’is’the’attention’it’draws’from’competitors.’If’Boa’ continues’its’success,’competitors’will’work’around'(or’ignore)’ Boa’s’intellectual’property’and’patents.’In’the’cycling’market,’ Rocket’7’s’Freelock’includes’a’similar’system’–’although’this’brand’ produces’a’limited’number’of’highIend’custom’shoes.’

    Boa’s’policy’of’only’working’with’premium’brands’has’also’brought’ in’new’competition.’Boa’actively’seeks’premium#brands’that’it’feels’ are’the’best’fit’for’its’premium’closure’system’and’where’Boa’can’ add’the’most’value.’Boa’sometimes’refuses’to’work’with’brands’ that’it’believes’are’not’a’good’fit’for’its’brand’image.’This’happened’ in’South’Korea,’where’ATOP’Closure’Systems'(a’competitor’that’ also’sells’a’dialIbased’closure’system)’out’of’Taiwan’found’a’ beachhead’with’brands’Boa’was’unable’to’work’with.’In’South’ Korea,’more’than’half’of’all’hiking’boots/shoes’are’sold’with’a’BoaI like’dial’closure.’So’almost’every’brand’felt’it’had’to’have’at’least’ some’products’in’its’line’with’this’style’of’closure’system.’Most’ went’to’Boa’first,’but’when’Boa’refused’to’work’with’them,’they’ turned’to’ATOP.’ATOP’s’subsequent’quality’problems’and’Boa’s’ willingness’to’partner’with’brands’it’had’previously’declined’helped’ Boa’regain’most’of’this’market.’But’Boa’remains’concerned’that’ consumers’are’unable’to’distinguish’between’Boa’and’ATOP.’

    ‘ ‘

    Competitive#Advantages#of#the#Boa#Closure#System#

    As’compared’to’these’traditional’closure’systems,’the’Boa’Closure’ System’offers’a’range’of’features’and’benefits’including:’

    • GloveIlike’fit’–’precise’customer’comfort’fit’without’ pressure’points.’

    • MicroIadjustable’–’Boa’s’reels’can’be’finely’tuned’to’ maximize’comfort.’

    • Fast’–’the’easy’on,’easy’off’system’saves’time’–’a’big’ benefit’in’some’categories.”

    • OnItheIfly/oneIhanded’operation’–’With’easy’oneIhanded’ adjustment,’laces’can’be’adjusted’while’still’riding’a’bike’or’ without’removing’gloves’on’the’side’of’a’ski’slope.”

    • Powerful’closure’–’once’the’Boa’Closure’system’is’locked’in’ place,’laces’stay’tight.’

    • Durable’–’using’aircraft’grade’stainless’steel’cables,’Boa’ offers’a’lifetime’warranty’on’its’closures.’

    • Never’comes’untied’–’especially’valued’by’those’in’ competition.’

     

     

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    • Lightweight’and’easy’to’clean’–’Boa’doesn’t’attract’mud’or’ ice,’cutting’weight’for’skiers’or’mountain’bikers.’

    ‘

    Boa’s’main’competitive’disadvantage’is’the’closure’system’s’cost’ compared’to’laces’or’Velcro®.’Depending’on’the’size’and’ torque/power’required’for’closure,’footwear’products’using’one’of’ these’traditional’systems’may’cost’from’$20I$60’less’at’retail’as’ compared’to’a’similar’product’using’a’Boa’Closure’System.4’As’an’ example,’when’adidas’introduced’its’tour360’golf’shoe’in’late’2014,’ the’manufacturers’suggested’retail’price'(MSRP)’was’$180’with’a’ Boa’Closure’System’and’$140’without.5’Sometimes’a’brand’will’use’ the’unique’nature’to’enhance’margins’whereas’some’brands’may’ sacrifice’margin’in’order’to’move’more’product’and’better’establish’

    4 ‘Assume’the’average’Boa’Closure’System’sells’to’the’brand’partner’factory’for’ $3.90’per’unit'(per’dial)’and’provides’Boa’with’a’50%’contribution’margin.’95%’of’ all’systems’involved’two’units'(e.g.,’one’each’on’a’pair’of’shoes).’Larger’systems,’ like’those’used’in’snow’sports,’sell’for’almost’twice’that’amount’and’smaller’ systems’in’shoes’are’about’25%’lower.’Actual’data’disguised’for’confidentiality.” 5 ‘“Adidas’Golf’Introduces’tour360’x’golf’shoes,”’GolfWeek,’October’18,’2014,’ downloaded’on’November’2,’2014’at’ http://golfweek.com/news/2014/oct/18/adidasIgolfIshoesItourI360IxIboaIclosureI systemI/’

    their’position’with’the’Boa’Closure’System.’Many’customers’value’ the’benefits’Boa’s’closure’system’delivers.’Select’online’customer’ reviews’can’be’seen’in’the’case’appendix’Exhibit’1.”

    One’of’Boa’s’competitive’advantages’relative’to’other’reelI’and’dialI based’closure’systems’comes’from’its’strong’relationships’with’ brand’partners’through’collaboration’in’development’and’design.’ Boa’s’systems’are’also’of’higher’quality’and’include’a’lifetime’ warranty.’Boa’also’sells’at’a’10I40%’premium’over’competitive’reel’ systems’like’ATOP,’Freelock,’and’JogDial.”

    Boa’s$“Seven$Summits”$$$

    Boa’s’“Seven’Summits”’are’the’seven’product’categories’that’make’ up’90%’of’Boa’sales.’While’Boa’is’committed’to’climbing’all’of’these’ summits,’each’summit’varies’in’market’potential’and’Boa’s’current’ position’differs’as’well.’There’are’also’major’differences’across’ Boa’s’three’main’global’markets’–’the’U.S.,’Asia,’and’Europe.’Exhibit’ 2’in’the’case’appendix’provides’an’overview’of’the’seven’summits’ and’we’elaborate’below.”

    Snow#Sports#–#Snowboard#and#on’Ski#

    Snow’sports’were’Boa’s’first’market.’Skiing’and’snowboarding’have’ longer’wires’and’place’more’stress’a’closure’system’and’ consequently’rely’on’Boa’s’larger’and’higher’torque’models.’ Convenience,’quick’release,’and’the’ability’to’microIadjust’the’fit’ throughout’the’day’appeals’to’snow’sport’enthusiasts.’Most’major’ snowboard’boot’makers’now’sell’several’models’using’the’Boa’ Closure’System’and’almost’half’of’all’snowboard’boots’now’include’ one.’About’600,000’pairs’of’snowboots’are’sold’in’the’United’States’ annually.”

     

     

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    The’retail’market’for’snowboard’equipment’and’apparel’is’highly’ fragmented’with’many’different’outlets.’The’market’includes’more’ than’1200’different’locations.’It’is’dominated’by’specialty’shops,’ which’in’2012’sold’about’57%’of’all’equipment’and’apparel'(down’ 11%’from’previous’year,’in’dollar’volume).’Online’sellers’account’ for’27%'(up’5%)’with’chain’stores’accounting’for’16%'(down’12%’in’ dollars).6”

    Cycling#

    Cycling’was’another’early’category’for’Boa.’Cyclists’like’the’ability’to’ reach’over’and’singleIhandedly’tighten’their’shoes’on’the’fly.’This’is’ one’of’the’company’s’best’markets’with’a’higher’market’share.’ More’recently’some’manufacturers’have’added’Boa’to’helmets’for’ improved’fit.”While’1.7’million’cycling’shoes’are’sold’annually,’only’ higher’end’shoes’are’a’good’candidate’for’a’Boa’Closure’System.’

    The’cycling’shoe’market’is’highly’fragmented’with’dozens’of’brands.’ The’shoes’are’often’sold’at’retail’bike’shops’II’another’fragmented’ market’dominated’by’independent’specialty’shops.’There’are’about’ 3700’independent’bike’shops,’almost’all’carrying’cycling’shoes,’but’ online’stores’from’Amazon’to’BikeShoes.com,’and’Zappos’also’sell’ the’shoes.’Total’dollar’sales’of’bicycle’shoes’have’shown’modest’ growth’in’recent’years.”

    Golf#

    The’Boa’Closure’System’can’be’found’on’different’styles’of’golf’ shoe’brands,’including’FootJoy,’Adidas,’and’Mizuno.’Golfers’ appreciate’the’precision,’durability,’convenience’and’comfort’the’ system’offers.’In’the’U.S.,’Boa’s’market’penetration’is’still’limited’to’ the’low’single’digits,’percentageIwise’–’but’the’real’size’of’the’ 6 ‘“Snowboard’Equipment’Market’Briefing”’TransWorld#Business,’June’3,’2013;’ http://business.transworld.net/131703/features/snowboardImarketIbriefing/”’

    opportunity’might’be’reflected’in’the’success’Boa’has’seen’in’Asia.’ It’is’estimated’that’more’than’50%’of’all’golf’shoes’sold’in’the’ Japanese’golf’market’in’2015’will’include’a’Boa’Closure’System.7’In’ the’United’States’about’3.4’million’golf’shoes’are’sold’annually.”

    Boa’recently’commissioned’market’research’to’learn’more’about’ the’U.S.’golf’market.’More’than’590’core’golfers'(defined’as’those’ playing’eight’or’more’rounds’per’year)’completed’an’online’survey.’ The’study’found’38%’aided’awareness’of’Boa’Closure’Systems,’ although’among’those’aware’only’13%'(so’5%’of’the’total’sample)’ indicated’they’were’extremely’or’very’familiar’with’Boa.”

    Golf’shoes’are’sold’through’a’wide’range’of’channels;’about’40%’ are’sold’in’offIcourse’specialty’stores'(e.g.,’Golf’Smith,’Golf’Galaxy),’ about’a’quarter’are’sold’online,’and’another’15%’each’through’onI course’channels'(pro’shops’at’golf’courses)’and’sporting’goods’ stores.’Golf’shoes’are’sold’through’an’estimated’9000’outlets’in’the’ U.S.”While’onIcourse’channels’do’not’sell’as’many’shoes,’presence’ in’these’channels’raises’customer’awareness’–’which’may’lead’to’ actual’sales’in’other’channels.”While’FootJoy’has’the’largest’market’ share,’Puma,’Adidas’Golf,’and’Ecco’are’the’shoe’brands’most’ associated’with’innovation,’style’and’performance.”

    Trail#and#Outdoor#

    Hiking’boots’and’lowItop’hiking’shoes’have’grown’in’popularity’–’ for’use’on’the’trail’and’around’the’town.’Hikers’appreciate’the’ durability’and’security’Boa’brings.’The’outdoor’market’is’finding’ nonIfootwear’uses’by’bringing’Boa’to’backpacks’for’waist’and’ lumbar’adjustment’and’hydration’packs'(Boa’adjusts’the’fit’and’can’

    7 ‘”Adidas’Golf’Introduces’tour360’x’golf’shoes,”’GolfWeek,’October’18,’2014,’ downloaded’on’November’2,’2014’at’ http://golfweek.com/news/2014/oct/18/adidasIgolfIshoesItourI360IxIboaIclosureI systemI/’

     

     

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    reduce’water’“slosh”).’South’Korean’customers’particularly’favor’ Boa’–’with’about’half’of’their’hiking’shoes’and’boots’including’a’Boa’ Closure’System.’In’the’United’States’the’market’is’much’larger’ (estimated’at’3.1’million’shoes’and’boots’per’year)’but’market’ penetration’for’Boa’remains’modest'(less’than’1%).”

    Boa’recently’commissioned’a’study’of’the’hiking’market,’surveying’ 825’hikers'(who’reported’hiking’four’or’more’times’per’year).’In’the’ hiking’market,’aided’awareness’of’the’Boa’Closure’System’was’17%’ IIwith’only’12%’of’those’customers’indicating’extremely’or’very’ familiar’with’Boa.’Boa’seemed’to’show’appeal’to’this’market.’ Among’those’exposed’to’the’concept,’75%’of’shoe’buyers’and’85%’ of’boot’buyers’indicated’they’definitely’or’probably’would’try’Boa’ equipped’footwear.’These’numbers’are’well’beyond’the’normative’ range.’The’study’showed’that’Merrell’and’The’North’Face’were’ brands’perceived’as’having’higher’performance,’better’comfort/fit,’ and’more’innovative’and’aligned’well’with’Boa.”

    Hiking’shoes’were’primarily’sold’through’sporting’goods'(29%),’ outdoor’specialty'(25%),’athletic’specialty'(15%),’and’online'(11%)’ stores.’Most’of’the’11,000’shoe’stores’in’the’U.S.’sell’some’form’of’ hiking’shoe’or’boot.’As’compared’to’hiking’shoes,’the’channels’for’ hiking’boots’show’some’differences,’with’more’volume’going’ through’outdoor’specialty'(41%),’then’sporting’goods'(26%),’online’ (9%)’and’athletic’specialty'(8%).’The’hiking’shoe’market’includes’ dozens’of’brands,’but’just’six’have’more’than’5%’market’share’and’ the’leaders’are’well’known’in’athletic’footwear:’Nike'(20%),’Adidas’ (14%),’and’New’Balance'(14%)’are’market’leaders.’Hiking’boots’are’ dominated’by’brands’well’known’in’outdoor’apparel,’led’by’ Timberland'(22%),’Columbia'(13%),’and’The’North’Face'(12%).”

    #

    #

    Utility/Safety#

    Boa’sees’a’huge’opportunity’in’the’utility’and’safety’shoe’market.’ The’market’is’much’larger’overall’as’compared’to’some’of’the’ athletic’markets’–’and’Boa’s’Closure’System’offers’many’endIuser’ benefits.’Simply’getting’shoelaces’off’the’shoe'(and’the’floor)’ makes’it’safer’and’oneIhanded’closing’allows’workers’to’easily’ adjust’fit’–’a’big’benefit’to’workers’who’often’wear’gloves’on’the’ job.’

    The’European’market’is’especially’attractive.’Strict’regulations’ govern’worker’safety’in’Europe.’Many’employers’purchase’the’ shoes’for’employees,’leading’to’less’price’sensitivity.’One’of’the’ larger’makers’of’utility/safety’shoes’in’Europe’is’Bata’Industrials’ (see’video).’The’U.S.’market’still’offers’many’opportunities’–’ particularly’in’the’construction’and’manufacturing’sectors8’–’with’ an’estimated’300’million’pairs’of’utility’and’safety’shoes’sold’ annually.’

    ‘

    8 ‘“Industrial’Protective’Footwear’Market’–’Global’Industry’Analysis,’Size,’Share’ 2013I2019,”’found’at’LinkedIn,’on’November’2,’2014’http://goo.gl/MpKnNF’

     

     

    ! 10

    While’the’U.S.’market’is’not’seen’as’quite’as’attractive’an’ opportunity’as’Europe,’many’of’the’same’benefits’carry’over.’On’ sheer’size’alone’the’utility/safety’market’is’much’larger’than’the’ summits’described’above’and’growth’is’predicted’to’continue.”

    Athletic#Shoes#

    Athletic’shoes,’running’shoes’in’particular,’are’another’large’ potential’market’where’Boa’has’yet’to’gain’a’foothold'(pun’ intended).’The’company’is’building’a’basecamp,’working’with’ specialty’brand’Zoot’Sports,’which’focuses’on’footwear’in’the’ triathlon’niche’and’this’might’be’the’market’segment’where’Boa’ finds’a’beachhead.’The’lightweight’and’fast’Boa’Closure’System’has’ high’value’for’these’customers.’Triathletes’that’must’change’ footwear’midIcompetition’see’benefits’from’Boa’s’quick’on/off’ performance.”’

    Boa’sees’a’huge’opportunity’if’its’closure’system’benefits’of’gloveI like,’precision’fit’and’light’weight’can’be’transferred’to’the’giant’ running’shoe’market.’High’top’basketball’shoes’along’with’football,’ baseball,’and’soccer’cleats’also’offer’big’opportunities.’Across’all’ athletic’shoes,’Boa’estimates’more’than’250’million’shoes’are’sold’ in’the’United’States’each’year.’Most’of’the’nation’s’11,000’shoe’ stores’sell’athletic’shoes,’with’1700’specialty’athletic’shoe’stores.”

    Medical#Devices##

    A’wide’range’of’medical’devices’can’operate’better’with’a’Boa’ Closure’System’than’they’do’with’hookIandIloop'(i.e.’Velcro®).’ Boa’s’microIadjustability,’and’oneIhanded’operation’offer’real’ benefits’on’braces’–’and’this’is’where’Boa’has’made’its’first’inroads.’ This’market’is’also’huge,’with’an’estimated’115’million’braces’and’ adjustment’prosthetics’sold’annually’in’the’United’States.’With’an’ aging’population’this’market’offers’potentially’high’growth.’This’

    market’is’a’bit’more’difficult’to’approach,’as’it’differs’significantly’ from’Boa’s’traditional’markets’and’lies’beyond’its’core’competency.”

    Boa’s’efforts’in’this’category’are’preliminary.’The’opportunity’is’ very’large.’But’uncertainty’around’the’effects’of’the’Affordable’Care’ Act’and’insurance’along’with’Boa’s’inexperience’working’with’this’ type’of’market’have’Boa’proceeding’with’caution’in’the’medical’ device’market.”’

    Selling$an$Ingredient$

    Boa’makes’an’“ingredient”’that’is’added’to’other’products’–’and’ the’total’package’delivers’greater’customer’value.’Exhibit’3’in’the’ case’appendix’provides’a’figure’that’shows’Boa’s’place’in’the’ customer’and’supply’chain.”

    1. Ryder.’The’beginning’of’this’chain’shows’Ryder,’the’Chinese’ manufacturer’that’produces’most’of’Boa’s’Closure’Systems’ which’it’ships’to…”

    2. !’Boa’s’Warehouse.’As’noted’earlier,’Boa’warehouses’ most’of’its’Boa’Closure’Systems’in’Hong’Kong’where’it’ awaits’orders’from…’

    3. !’brand’partner’factories.’The’brand’partner’factories’have’ no’control’over’the’closure’systems’they’use’–’these’are’ contract’manufacturers’that’produce’shoes,’boots,’or’ medical’devices’based’on’specifications’from…’

    4. !’Boa’s’premium’partner’brands.’The’premium’brands’ with’well’known’names’like’FootJoy,’Red’Wing,’adidas,’and’ Specialized’collaborate’with’Boa’on’development’and’ design’of’shoes’that’include’the’Boa’Closure’System.’Boa’s’ premium’partner’brands’almost’exclusively’rely’on…’

    5. !’retail’channels’of’distribution’–’often’specialty’shops’in’ these’categories’–’to’sell’to…’

     

     

    ! 11

    6. !’consumers’–’the’ultimate’purchaser’and’endIuser’of’a’ product’with’a’Boa’Closure’System.”

    Garett’Graubins’believes’that’Boa’has’three’broad’targets’that’ could’be’the’centerpiece’of’his’marketing’strategy’–’brand’partners,’ retailers,’and’consumers.’Currently’Boa’s’efforts’with’each’target’ vary’considerably.”

    ‘

    The#B2B#(BusinessLtoLBusiness)#Strategy#–#Focus#on#Brand#Partners#

    Boa’s’current’strategy’in’almost’all’of’its’productImarkets’focuses’ on’building’and’maintaining’relationships’with’its’more’than’100′ premium’brand’partners.’Boa’carefully’cultivates’longIterm’ partnerships’with’a’select’group’of’brand’partners.’As’a’premium’ ingredient,’Boa’understands’that’its’reputation’is’tied’closely’to’the’ products’it’goes’into’–’so’it’will’not’work’with’every’brand’in’a’ market.’Boa’conducts’market’research’to’find’which’brands’in’a’ category’have’more’innovative’customers,’more’likely’to’try’ something’new’like’the’Boa’Closure’System.”

    Boa’works’closely’with’its’brand’partners’throughout’the’design,’ manufacturing,’and’marketing’process.’The’collaboration’is’ mutually’beneficial,’with’Boa’s’team’assuring’the’highest’quality’ products’and’applications’–’which’results’in’greater’sell’through’ that’benefits’Boa.’This’attention’to’quality’and’responsiveness’to’ warranty’claims’fosters’the’close’relationships.’Boa’s’brand’partners’ see’the’value’in’this’type’of’buyerIseller’relationship.’Doug’ Robinson,’VP’of’Product’Design’and’Development’with’premium’ brand’golf’partner,’FootJoy,’discusses’the’collaborative’partnership’ his’company’enjoys’with’Boa.”

    ‘ In’its’early’years,’Boa’typically’granted’the’first’brand’in’a’new’ product’category’one’year’of’exclusive’rights’in’that’category.’This’ means’that’Boa’would’not’sell’to’other’brands’in’the’category’for’ the’protected’time’period.’The’exclusive’arrangement’rewarded’ and’incentivized’a’brand’for’the’pioneering’work’it’did’to’make’its’ customers’aware’of’the’unique’benefits’of’the’Boa’Closure’System.’ Boa’no’longer’finds’it’necessary’to’grant’exclusive’arrangements.”

    Boa’thought’that’brand’partners’would’continue’to’promote’the’ Boa’Closure’System’–’even’after’exclusive’arrangements’had’ expired.’Boa’figured’it’could’save’marketing’dollars’having’its’brand’ partners’build’the’Boa’name’as’these’partners’touted’the’benefits’ of’the’Boa’Closure’System’on’their’products.’That’worked’well’ when’new’partners’came’on’board’–’when’partners’were’excited’ about’the’benefits’the’new’feature’brought’to’their’shoes’and’ boots.’But’after’a’year’or’two,’brand’partners’typically’promoted’ the’newest’product’features’–’and’the’Boa’closure’became’“old’ news.”’Boa’realized’that’building’the’Boa’brand’was’going’to’need’ to’be’left’to’Boa.’Mark’Soderberg,’CEO’of’Boa’Technology’discusses’ this’in’the’video’below.’Boa’discovered’that’if’it’wanted’to’build’ brand’equity’at’the’consumer’level,’it’was’unlikely’to’get’the’ sustained’support’it’would’take’from’its’brand’partners.”

     

     

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    ‘

    #

    B2I#(BusinessLtoLInfluencer)#Strategy#–#Focusing#on#Retailers#

    In’most’of’major’categories’where’Boa’operates,’retailers,’the’retail’ environment,’and’retail’salespeople’work’with’consumers.’Retail’ salespeople’typically’assist’in’the’purchase’of’athletic’shoes’as’well’ as’with’hiking,’snowboard,’and’ski’boots.’Retail’salespeople’help’ customers’with’decisions’about’styles’and’fit.’Customers’will’usually’ pick’up’a’product’and’see’how’it’works.’Online’stores’have’ mimicked’this’type’of’interaction’with’information,’photos,’and’ often’videos.’Many’final’choices’in’these’categories’are’made’in’a’ store’following’these’kinds’of’interactions.’Retail’can’have’an’ influence’on’consumer’choice’–’and’Boa’could’increase’its’ marketing’at’this’influencer’stage.”

    “Taste’of’Boa”’is’one’program’Boa’has’used’to’influence’the’ influencers.’Boa’s’top’management’team’universally’points’to’Taste’ of’Boa’as’one’of’Boa’s’most’successful’marketing’efforts.’Taste’of’ Boa’allows’nearly’any’lowIcut’shoe’to’be’retrofitted’with’a’Boa’ Closure’System.’The’program’has’been’used’at’the’past’three’

    Outdoor’Retail’tradeshows’–’a’show’that’attracts’media,’industry’ influencers,’potential’brand’partners,’and’retailers’that’sell’Boa’s’ brand’partner’s’products.’Visitors’to’the’tradeshow’can’drop’off’ their’shoes’and’have’their’shoelaces’replaced’with’a’Boa’Closure’ System.’As’Graubins’says,’“Once’people’try’Boa,’they’love’Boa.’This’ retrofit’project’is’designed’to’give’people’a’taste’of’Boa’so’that’they’ can’learn’what’tens’of’millions’of’people’know’already’–’that’Boa’is’ better.”’The’program’is’not’inexpensive’for’Boa.’Taking’Taste’of’Boa’ to’a’trade’show’adds’travel’cost’to’labor’and’parts’–’eventually’ running’$70I90’to’retrofit’a’pair’of’shoes.’Over’the’course’of’a’fourI day’trade’show’Boa’can’retrofit’500’pairs’of’shoes’–’and’has’ demand’for’many’more.’While’costly,’the’program’lets’an’ influencer’try’Boa’on’a’pair’of’shoes’they’already’know’and’like,’and’ it’costs’less’than’offering’a’partner’brand’s’shoes’on’a’ complimentary’basis.’Click’on’the’video’to’hear’Boa’s’Vice’President’ of’Sales’and’Marketing’Chuck’Mason’talk’about’Taste’of’Boa.”

    ‘ ‘ There’are’other’ways’that’Boa’might’educate’the’retail’influencer.’ While’Boa’exhibits'(sets’up’a’booth)’at’a’few’trade’shows’per’year9,’

    9 ‘In’2014,’Boa’was’an’exhibitor’at’the’two’Outdoor’Retailer’shows’and’The’Running’ Event.”

     

     

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    key’marketing’and’senior’management’personnel’typically’attend’a’ dozen’or’more’trade’shows’each’year.”Trade’shows’offer’an’ opportunity’for’Boa’to’connect’and’network’with’current’and’ potential’brand’partners’and’retailers.”

    Boa’might’be’able’to’increase’its’influence’on’consumer’decisions’ through’retail’in’different’ways.’Boa’might’increase’pointIofI purchase’displays’to’demonstrate’the’benefits.’Boa’could’create’ video’“reviews”’that’online’retailers’could’post.’The’company’might’ also’seek’to’educate’retail’salespeople’on’the’benefits’of’the’Boa’ Closure’System’through’training.’Boa’might’offer’a’program’to’ encourage’customers’to’buy’a’BoaIpowered’product’at’a’discount.’ Until’now,’Boa’s’focus’on’retail’has’been’limited,’but’Graubins’ wonders’if’now’is’the’time’to’ramp’up’efforts’at’this’level.”’

    2C#(BusinessLtoLConsumer)#Strategy#–#Building#Ingredient#Brand# Equity#with#Consumers#

    The’last’strategic’option’was’to’invest’in’consumer’branding’–’to’ build’awareness’and’preference’for’the’Boa’Closure’System’at’the’ consumer’level.’Graubins’thought’growth’could’be’accelerated’with’ more’consumer’awareness.’Customers’that’tried’Boa,’liked’Boa’–’a’ lot.’If’Boa’could’speak’directly’to’consumers,’it’could’control’the’ messaging’about’the’benefits’of’the’closure’system.’Boa’was’also’ concerned’about’the’possibility’of’new’entrants’that’could’offer’ similar’style’closure’devices.’If’customers’failed’to’see’differences’ between’closure’systems,’a’price’war’might’break’out’with’brand’ partners’playing’suppliers’off’one’another’for’lower’prices.’ Customer’awareness’of’and’preference’for’Boa’might’help’fend’off’ this’type’of’competition.”

    On’the’other’hand,’Graubins’wondered’if’a’strong’Boa’brand’might’ alienate’its’brand’partners’and’harm’carefully’developed’ collaborative’relationships.’A’brand’partner’does’not’want’to’hear’

    that’customers’are’coming’in’asking’for’“golf’shoes’with’that’Boa’ Closure’System”’instead’of’“those’new’adidas’golf’shoes.”’It’would’ be’prohibitively’expensive’to’build’brand’awareness’across’all’of’ Boa’s’categories’–’but’he’might’be’able’to’build’a’case’in’selected’ product’categories’or’with’specific’target’markets.”

    While’such’efforts’have’not’been’used’in’the’U.S.,’Boa’has’had’ some’success’in’the’Asian’market.’As’noted’earlier,’competition’in’ the’South’Korean’hiking’ shoe/boot’market’ forced’Boa’to’expand’ its’roster’of’partners’ there.’Boa’also’fought’ off’competition’with’a’ print,’public’relations,’ and’social’media’ advertising’campaign’ directed’at’South’ Korean’hikers.’At’the’ same’time,’Boa’also’ increased’its’ investment’in’ supporting’its’South’ Korean’brand’partners’’ marketing’efforts.’A’ sample’of’the’“Dialed’ In”’campaign’is’shown’ here.10”’When’the’ campaign’started’Boa’ had’about’10%’share’of’ the’hiking’market,’but’ after’adding’more’

    10 ‘In’South’Korea’it’is’not’unusual’for’ads’–’like’this’one’–’to’include’both’written’

    English’and’Korean.”

     

     

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    brands’and’building’consumer’preference,’almost’half’of’all’new’ hiking’shoes/boots’are’now’equipped’with’a’Boa’Closure’System.’ Boa’has’also’used’advertising’and’other’consumerIdirected’ promotional’efforts’targeting’the’Japanese’golfer’–’and’about’half’ of’all’golf’shoes’in’Japan’sold’today’are’BoaIpowered.’These’efforts’ have’helped’revive’Boa’s’growth’in’snowboarding’in’Japan’and’ spark’an’opportunity’in’casual’footwear.’Graubins’wondered’if’ similar’results’could’be’achieved’in’the’much’larger’U.S.’market.”

    Influenced’by’Geoffrey’Moore’s’Crossing#the#Chasm,’Graubins’ thought’the’mainstream’U.S.’market’may’not’be’ready’for’new’shoe’ closure’technology.’Crossing’the’Chasm’referred’to’the’diffusion’of’ new’technological’innovations’to’a’broader’market.’Moore’ suggested’that’innovators’and’early’adopters’sought’technology’ and’performance’–’while’latter’adopters’would’buy’a’solution’and’ convenience.’This’suggested’that’categories’most’ripe’for’branding’ might’be’those’further’along’the’product’adoption’curve'(see’ Technology’Adoption’Lifecycle’graphic’below).”

    $

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    If’Graubins’were’to’propose’consumerIdirected’marketing,’he’ would’also’have’to’figure’out’how’to’develop’that’branding.’To’this’ point,’most’of’Boa’s’marketing’communications’have’emphasized’ features’and’benefits.’They’wonder’whether’they’might’be’able’to’ build’an’image’around’the’brand.’Graubins’expands’on’these’ideas’ in’this’video.”

    ‘

    $ Planning$for$2015$’

    Graubins’reviewed’his’options’for’2015.’He’knew’that’that’he’must’ decide’how’to’allocate’his’resources’across’brand’partners'(B2B),’ retailers'(B2I),’and’consumers'(B2C).’In’the’U.S.’market,’marketing’ resources’were’allocated’about’90%’toward’brand’partners’and’ 10%’toward’retailers.’Graubins’pondered’if’this’should’change.’No’ matter’which’direction’he’went,’he’also’knew’he’had’to’decide’ which’categories’would’receive’the’most’attention.’No’matter’the’ allocation’of’resources,’Graubins’needed’to’identify’which’2I3’of’ the’7’summits’would’get’the’lion’s’share’of’resources’in’2015.’An’ even’allocation’across’all’7’would’not’give’any’one’summit’enough’ punch’to’move’them’further’up’the’long’climb.’Garett’also’knew’

    that’Soderberg’and’McCreery’would’expect’financial’justification’for’ any’plan’he’put’forward.”

    The’Boa’headquarters’golden’Lab,’Emma,’nuzzled’at’Graubins’’arm.’ After’patting’Emma’on’the’head,’he’went’through’his’notes’again.’ Graubins’was’eager’to’meet’with’his’team’and’get’their’input’on’ the’budget.’Together’they’would’have’to’prepare’a’set’of’ recommendations’in’time’for’next’month’s’budget’meeting.’

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    Discussion$Questions$$

    For’this’case,’you’have’the’option’of’going’beyond’the’case.’Unlike’other’case’studies,’you’are’welcome’to’add’your’own’ experiences’or’do’online/offline’research’to’enhance’your’recommendations.”

    1. What’is’the’value’of’a’brand’for’a’consumer?’A’manufacturer?’An’ingredient?” 2. Why’would’an’ingredient’want’to’develop’a’consumer’brand?” 3. If’Boa’develops’a’higher’profile’with’consumers,’what’are’the’upsides’for’Boa’s’premium’partner’brands?’What’

    are’the’downsides/risks?’ 4. What’are’your’recommendations’for’Garett’Graubins’’2015’U.S.’marketing’plan?’Be’specific’about’which’market’

    (B2B,’B2I,’and/or’B2I)’you’recommend’and’the’2I3’summits'(product’categories)’deserving’the’most’attention.’ Offer’specific’ideas’about’how’to’approach’that’market.”

    5. Whether’you’recommend’building’a’brand’with’consumers’or’not,’use’two’creative’idea’generation’techniques’ and’generate’five’lowIcost,’grassroots’ideas’that’would’help’Boa’build’a’brand’in’one’of’its’product’categories.”’

    [Note:’questions’4’and’5’must’be’turned’in’as’a’written’assignment’and’completed’in’two’pages’or’less’single’ spaced,’doubleIspace’between’paragraphs.]

     

     

    ! 17

    Appendix$

    Exhibit#1#–#Sample#of#Online#Customer#Reviews#

    Golf’Shoes'(from’Amazon.com)’

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    ‘

    Work’boots'(from’Red’Wing’Shoes’–’redwingshoes.com)’

    ‘

    Continued’on’the’following’page.’

     

     

    ! 18

    ‘

    Cycling’shoes'(from’Specialized.com)’

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    Exhibit#2:#Summary#Data#for#Boa’s#Seven#Summits#

    Summit’ Primary$benefits’ Key$Brand$Partners’

    2015$U.S.$ Market$$$

    ($$millions/$000s$ units$)11′

    Boa’s$U.S.$ market$ share**’

    Market$ Growth$ (2015V20)’ Notes’

    Snowboard’ boots’

    Precision’fit,’one’handed,’ powerful’closure’

    Burton,’K2,’Ride,’Flow,’ DC,’Salomon’

    $60′ (600)’

    43%’ Slow’ Boa’is’wellIknown,’ established’

    Cycling’shoes’ adjust’on’the’fly,’oneI handed,”

    Scott,’Lake,’Specialized’ $125′ (1700)’

    ‘

    14%’ Slow/’ moderate’

    Dialed’closures”becoming’ the’standard’

    Golf’shoes’ microIadjustable,’precise’ and’customizable’fit’

    Footjoy,’Adidas,’Izuna’ $53′ (3400)’

    <1%'(50%’in’ Asia)’

    Slow’ Can’Asian’success’translate’ to’U.S.?’

    Trail’&’ Outdoor’shoes’ &’boots’

    Secure,’microIadjustable,’ precision’fit’

    The’North’Face,’Treksta,’ Viking,’K2’Korea’

    $310′ (3100)’

    <1%’ (~’50%’in’

    South’Korea)’

    Moderate’ Can’South’Korean’success’ translate’to’U.S.?’

    Utility/’Safety’ shoes’

    durable,’setIitIandIforgetI it,’oneI’handed’

    Red’Wing,’Elten,’Bata,’ Sievi’

    $1,500′ (300,000)’

    <1%'(stronger’ in’Europe)’

    Moderate” New’market,’Boa’s’fastest’ growing’segment’by’%’

    Athletic’ footwear’

    MicroIadjustable,’adjust’ on’the’fly’

    Hayabusa,’Zoot,’Topo’ Athletic’

    $49812′ (250,000)’

    <.001%’ Moderate’ No’foothold’

    Medical/’ bracing’and’ adjustment’ prosthetics’

    MicroIadjustable,’ precision’fit’

    DeRoyal,’Exos,’ Futuro/ACE'(3M)’

    $565′ (115,570)’

    <.1%’new’ market’

    Uncertain’ Uncertainty’around’ Affordable’Care’Act,’maze’ of’regulations’and’ reimbursement’policies.”

    ‘ ‘ ‘ ‘ ‘ ‘ ‘

    11 ‘Dollar’estimates’from’internal’and’secondary’sources’and’include’some’informed’estimates.’These’values’should’not’be’used’for’secondary’research.’Dollar’values’are’total’

    market’size,’not’sales’potential’for’Boa.’The’premium’nature’of’Boa’s’product’suggests’that’not’all’of’these’sales’are’candidates’for’the’Boa’Closure’System.”

    12 ‘Dollar’value’from’running’shoes’only,’source:’http://www.runningusa.org/2014IstateIofItheIsportIpartIiiIrunningIindustryIreport;’Boa’estimates’that’more’than’734’million’pairs’

    of’all’athletic’footwear'(including’general’cross’training,’running,’basketball,’soccer,’baseball,’football,’and’more)’are’sold’globally’each’year.”

     

     

     

    ! 20

    Exhibit#3:#Marketing#an#Ingredient#–#Boa’s#Customer#Chain#

    #

 
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Australia • Brazil • Mexico • Singapore • United Kingdom • United States

Consumer Behavior

7th Edition

Wayne D. Hoyer University of Texas, Austin

Deborah J. MacInnis University of Southern California

Rik Pieters Tilburg University

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To my wonderful family, Shirley, David, Stephanie, and Lindsey and to my parents Louis and Doris for their tremendous support

and love. To all of you, I dedicate this book.

Wayne D. Hoyer Austin, Texas

September 2016

To my loving husband, my beautiful children, and my devoted family. You are my life-spring of energy and my center of gravity.

Deborah J. MacInnis Los Angeles, California

September 2016

To Trees who loves me and �omas who knew everything.

Rik Pieters Tilburg

September 2016

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iv

About the Authors

Wayne D. Hoyer Wayne D. Hoyer is the James L. Bayless/William S. Farish Fund Chair for Free Enterprise in the McCombs School of Business at the University of Texas at Austin. He received his Ph.D. in Consumer Psychology from Purdue University in 1980. He also holds an honorary doctorate from the University of Bern in Switzerland and was recently given a Humboldt Research Award in Germany. His major area of study is Consumer Psychology and his research interests include consumer information processing and decision-making, customer relationship management, consumer brand sabotage, and advertising information processing (including miscomprehension, humor, and brand personality). Wayne has published over 100 articles in various publications including the Journal of Consumer Research, Journal of Marketing, Journal of Marketing Research, Journal of Advertising Research, and Journal of Retailing. A 1998 article in the Journal of Marketing Research (with Susan Broniarczyk and Leigh McAlister) won the O’Dell Award in 2003 for having the most impact in the marketing field over that five-year period. In addition to Consumer Behavior, he has co-authored two books on the topic of advertising miscomprehension. He is a current area editor for the Journal of Marketing, a Marketing, a Marketing Senior Editor for the International Journal of Research in Marketing, a former associate editor for the Journal of Consumer Research and serves on eight editorial review boards including the Journal of Marketing Research, Journal of Consumer Research, and Journal of Consumer Psychology. His major areas of teaching include consumer behavior, customer strategy, and marketing communications. He has also taught internationally at the University of Mannheim, the University of Muenster, and the Otto Beisheim School of Management (all in Germany), the University of Bern in Switzerland, the University of Cambridge (UK), and Thammasat University in Thailand. He has also been the Montezemolo Visiting Research Fellow in the Judge School of Business and is a Visiting Fellow of Sidney Sussex College at the University of Cambridge (UK).

Deborah J. MacInnis Debbie MacInnis (Ph.D., University of Pittsburgh 1986) is the Charles L. and Ramona I. Hilliard Professor of Business Administration and Professor of Marketing at the University of Southern California in Los Angeles, CA. She has previously held positions as Chairperson of the Marketing Department, Vice Dean for Research and Strategy and Dean of the Undergraduate Programs at Marshall. Debbie has published papers in the Journal of Consumer Research, Journal of Marketing Research, Journal of Marketing, Journal of Personality and Social Psychology, Psychology and Marketing, and others in the areas of Personality and Social Psychology, Psychology and Marketing, and others in the areas of Personality and Social Psychology, Psychology and Marketing marketing communications, information processing, imagery, emotions, and branding. She has also published two co-edited volumes and a book on branding and consumer-brand relationships. She is former co-editor of the Journal of Consumer Research, and served as an Associate Editor for the Journal of Consumer Research, the Journal of Consumer Psychology, and the Journal of Marketing and has won outstanding reviewer awards from the Journal of Marketing and has won outstanding reviewer awards from the Journal of Marketing these journals. Debbie has served as Conference Co-Chair, Treasurer, and President of the Association for Consumer Research. She has also served as Vice President of Conferences and Research for the Academic Council of the American Marketing Association. She has received major awards for her research, including the Alpha Kappa Psi and Maynard awards, given to the best practice- and theory-based articles, respectively, published in the Journal of Marketing. Debbie’s research has also been named as a finalist for the Practice Prize Competition for contributions to marketing, and the Converse Award for significant

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long-term contributions to marketing. She has been named recipient of the Marshall Teaching Innovation Award, the Dean’s Award for Community, and the Dean’s Award for Research from the Marshall School of Business. She has also received the USC mentoring work for her mentoring of faculty. Her classes have won national awards through the SAA National Advertising Competition. Debbie enjoys travel, reading, and being in nature.

Rik Pieters Rik Pieters is Professor of Marketing at the Tilburg School of Economics and Management (TISEM) of Tilburg University, the Netherlands. He received his Ph.D. in Social Psychology from the University of Leiden in 1989. Rik believes in interdisciplinary work, and that imagination, persistence, and openness to surprise are a person’s biggest assets. He has published over 100 articles in marketing, psychology, economics, and statistics. His work has appeared in Journal of Consumer Psychology, Journal of Consumer Research, Journal of Marketing, Journal of Marketing Research, Marketing Science, Management Science, and International Journal of Research in Marketing. He has published in the Journal of Personality and Social Psychology, Organizational Behavior and Human Decision Processes, European Journal of Social Psychology, Emotion, Psychological Science, and Journal of Economic Literature. Currently, Rik is an Associate Editor of the Journal of Marketing Research. His research concerns attention and memory processes in marketing communication, and the role of emotions in consumer decision-making. He has served as Co-Chair of the Association for Consumer Research annual conference, and has co-organized special conferences on visual marketing, social communication, and service marketing and management. He has taught internationally at Pennsylvania State University; University of Innsbruck, Austria; Koc University, Turkey; and the University of Auckland, New Zealand. He has won best teaching awards at the school and university levels. He has been Strategy Director for National and International clients at the Publicis/FCB advertising agency, Amsterdam office. He bakes bread, rides bikes, plays the bass, and drinks hoppy, fermented barley beverages, all except the first in moderation. In his spare time, he works.

ABOUT THE AUTHORS v

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vi

Part 1 An Introduction to Consumer Behavior 3 1 Understanding Consumer Behavior 4

Appendix Developing Information About Consumer Behavior 28

Part 2 �e Psychological Core 43 2 Motivation, Ability, and Opportunity 44

3 From Exposure to Comprehension 72

4 Memory and Knowledge 100

5 Attitudes Based on High Effort 127

6 Attitudes Based on Low Effort 154

Part 3 �e Process of Making Decisions 179 7 Problem Recognition and Information Search 180

8 Judgment and Decision-Making Based on High Effort 206

9 Judgment and Decision-Making Based on Low Effort 234

10 Post-Decision Processes 258

Part 4 �e Consumer’s Culture 291 11 Social In�uences on Consumer Behavior 292

12 Consumer Diversity 321

13 Household and Social Class In�uences 346

14 Psychographics: Values, Personality, and Lifestyles 373

Part 5 Consumer Behavior Outcomes and Issues 403

15 Innovations: Adoption, Resistance, and Diffusion 404

16 Symbolic Consumer Behavior 429

17 Marketing, Ethics, and Social Responsibility in Today’s Consumer Society 457

Brief Contents

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vii

1-1 Defining Consumer Behavior 5 1-1a Consumer Behavior Involves Goods, Services,

Activities, Experiences, People, and Ideas 5 1-1b Consumer Behavior Involves More than Buying 5 1-1c Consumer Behavior Is a Dynamic Process 7 1-1d Consumer Behavior Can Involve Many People 7 1-1e Consumer Behavior Involves Many Decisions 7 1-1f Consumer Behavior Involves Emotions and Coping 11

1-2 What Affects Consumer Behavior? 11 1-2a The Psychological Core: Internal Consumer Processes 11 1-2b The Process of Making Decisions 12 1-2c The Consumer’s Culture: External Processes 13 1-2d Consumer Behavior Outcomes and Issues 14

1-3 Who Benefits from the Study of Consumer Behavior? 15 1-3a Marketing Managers 15 1-3b Ethicists and Advocacy Groups 15 1-3c Public Policy Makers and Regulators 16

1-3d Academics 16 1-3e Consumers and Society 16

1-4 Making Business Decisions Based on the Marketing Implications of Consumer Behavior 16

1-4a Developing and Implementing Customer-Oriented Strategy 16

1-4b Selecting the Target Market 17 1-4c Developing Products 17 1-4d Positioning 18 1-4e Making Promotion and Marketing Communications

Decisions 18 1-4f Making Pricing Decisions 19 1-4g Making Distribution Decisions 20

Summary 22

Endnotes 22

Consumer Behavior Research Methods 28 Surveys 28 Focus Groups 29 Interviews 30 Storytelling 30 Photography and Pictures 31 Diaries 31 Experiments 31 Field Experiments 32 Conjoint Analysis 32 Observations and Ethnographic Research 32 Purchase Panels 33 Database Marketing and Big Data 33 Netnography 33 Psychophysiological Reactions and Neuroscience 34

Types of Consumer Researchers 34 In-House Marketing Research Departments 34

External Marketing Research Firms 35 Advertising Agencies and Media Planning Firms 36 Syndicated Data Services 36 Retailers 36 Research Foundations and Trade Groups 37 Government 37 Consumer Organizations 37 Academics and Academic Research Centers 37

Ethical Issues in Consumer Research 38 The Positive Aspects of Consumer Research 38 The Negative Aspects of Consumer Research 38

Summary 39

Endnotes 39

Part 1 An Introduction to Consumer BehaviorPart 1 An Introduction to Consumer Behavior 3

Chapter 1 Understanding Consumer Behavior 4

Appendix Developing Information About Consumer Behavior 28

Contents About the Authors iv

Preface xiv

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CONTENTSviii

2-1 Consumer Motivation and Its Effects 45 2-1a High-Effort Behavior 45 2-1b High-Effort Information Processing and

Decision-Making 45 2-1c Felt Involvement 45

2-2 What Determines Motivation? 47 2-2a Personal Relevance 48 2-2b Consistency with Self-Concept 48 2-2c Values 48 2-2d Needs 48 2-2e Goals 52 2-2f Goals and Emotions 55 2-2g Self-Control and Goal Conflict 55 2-2h Perceived Risk 58 2-2i Inconsistency with Attitudes 60

2-3 Consumer Ability: Resources to Act 60 2-3a Financial Resources 61 2-3b Cognitive Resources 61 2-3c Emotional Resources 61 2-3d Physical Resources 61 2-3e Social and Cultural Resources 62 2-3f Education and Age 62

2-4 Consumer Opportunity 63 2-4a Time 63 2-4b Distraction 63 2-4c Complexity, Amount, Repetition, and Control

of Information 63

Summary 65

Endnotes 65

Part 2 �e Psychological CorePart 2 �e Psychological Core 43

Chapter 2 Motivation, Ability, and Opportunity 44

3-1 Exposure and Consumer Behavior 73 3-1a Factors Influencing Exposure 73 3-1b Selective Exposure 73

3-2 Attention and Consumer Behavior 76 3-2a Characteristics of Attention 76 3-2b Focal and Nonfocal Attention 76 3-2c Customer Segments Defined by Attention 80 3-2d Habituation 80

3-3 Perception and Consumer Behavior 80 3-3a Perceiving Through Vision 80 3-3b Perceiving Through Hearing 81

3-3c Perceiving Through Taste 81 3-3d Perceiving Through Smell 81 3-3e Perceiving Through Touch 82 3-3f When Do We Perceive Stimuli? 84 3-3g How Do Consumers Perceive a Stimulus? 86

3-4 Comprehension and Consumer Behavior 87 3-4a Source Identification 87 3-4b Message Comprehension 87 3-4c Consumer Inferences 89

Summary 92

Endnotes 92

Chapter 3 From Exposure to Comprehension 72

4-1 What Is Memory? 102 4-1a Sensory Memory 102 4-1b Working Memory 102 4-1c Long-Term Memory 103 4-1d Explicit Memory, Implicit Memory, and Processing

Fluency 104 4-1e How Memory Is Enhanced 104

4-2 Knowledge Content, Structure, and Flexibility 105

4-2a Knowledge Content: Schemas and Scripts 105 4-2b Knowledge Structure: Categories 111

4-2c Knowledge Flexibility 114 4-2d Why Consumers Differ in Knowledge Content and

Structure 115

4-3 Memory and Retrieval 116 4-3a Retrieval Failures 116 4-3b Retrieval Errors 117 4-3c Enhancing Retrieval 118 4-3d Characteristics of the Stimulus 118

Summary 120

Endnotes 120

Chapter 4 Memory and Knowledge 100

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CONTENTS ix

5-1 What Are Attitudes? 128 5-1a The Importance of Attitudes 128 5-1b The Characteristics of Attitudes 128 5-1c Forming and Changing Attitudes 128

5-2 The Cognitive Foundations of Attitudes 129

5-2a Direct or Imagined Experience 131 5-2b Reasoning by Analogy or Category 131 5-2c Values-Driven Attitudes 131 5-2d Social Identity-Based Attitude

Generation 131 5-2e Analytical Processes of Attitude

Formation 131

5-3 How Cognitively Based Attitudes are Influenced 135 5-3a Communication Source 135 5-3b The Message 137

5-4 The Affective (Emotional) Foundations of Attitudes 139

5-5 How Affectively Based Attitudes Are Influenced 141 5-5a The Source 141 5-5b The Message 142

5-6 Attitude Toward the AD 144

5-7 When Do Attitudes Predict Behavior? 144

Summary 147

Endnotes 147

Chapter 5 Attitudes Based on High Effort 127

6-1 High-Effort Versus Low-Effort Routes to Persuasion 155

6-2 Unconscious Influences on Attitudes When Consumer Effort Is Low 155

6-2a Thin-Slice Judgments 155 6-2b Body Feedback 155

6-3 Cognitive Bases of Attitudes When Consumer Effort Is Low 157

6-4 How Cognitive Attitudes Are Influenced 158 6-4a Communication Source 158 6-4b The Message 158 6-4c Message Context and Repetition 160

6-5 Affective Bases of Attitudes When Consumer Effort Is Low 160

6-5a The Mere Exposure Effect 160 6-5b Classical and Evaluative Conditioning 161 6-5c Attitude Toward the Ad 163 6-5d Mood 164

6-6 How Affective Attitudes Are Influenced 165 6-6a Communication Source 165 6-6b The Message 166

Summary 171

Endnotes 171

Chapter 6 Attitudes Based on Low Effort 154

7-1 Problem Recognition 182 7-1a The Ideal State: Where We Want to Be 182 7-1b The Actual State: Where We Are Now 182

7-2 Internal Search: Searching for Information from Memory 183

7-2a How Much Do We Engage in Internal Search? 183 7-2b What Kind of Information Is Retrieved from Internal

Search? 184 7-2c Is Internal Search Always Accurate? 188

7-3 External Search: Searching for Information from the Environment 189

7-3a Where Can We Search for Information? 189

7-3b How Much Do We Engage in External Search? 192 7-3c What Kind of Information Is Acquired in External

Search? 197 7-3d Is External Search Always Accurate? 198 7-3e How Do We Engage in External Search? 198

Summary 200

Endnotes 200

Part 3 �e Process of Making DecisionsPart 3 �e Process of Making Decisions 179

Chapter 7 Problem Recognition and Information Search 180

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CONTENTSx

8-1 High-Effort Judgment Processes 208 8-1a Judgments of Likelihood and Goodness/

Badness 208 8-1b Mental and Emotional Accounting 209 8-1c Biases in Judgment Processes 209

8-2 High-Effort Decisions and High-Effort Decision-Making Processes 210

8-2a Deciding Which Brands to Consider 211 8-2b Deciding Which Criteria Are Important to the

Choice 212

8-3 Deciding What Brand to Choose: Thought-Based Decisions 214

8-3a Decisions Based on Brands 216 8-3b Decisions Based on Product Attributes 217 8-3c Decisions Based on Gains and

Losses 218

8-4 Deciding What Brand to Choose: High-Effort Feeling-Based Decisions 219

8-4a Appraisals and Feelings 220 8-4b Affective Forecasts and Choices 220 8-4c Imagery 221

8-5 Additional High-Effort Decisions 222 8-5a Decision Delay 222 8-5b Decision-Making When Alternatives Cannot

Be Compared 222

8-6 What Affects High-Effort Decisions? 223 8-6a Consumer Characteristics 223 8-6b Characteristics of the Decision 224 8-6c Group Context 225

Summary 227

Endnotes 228

Chapter 8 Judgment and Decision-Making Based on High Effort 206

9-1 Low-Effort Judgment Processes 236 9-1a The Representativeness Heuristic 236 9-1b The Availability Heuristic 236

9-2 Low-Effort Decision-Making Processes 237 9-2a Unconscious Low-Effort Decision-Making 237 9-2b Conscious Low-Effort Decision-Making 238 9-2c Using Simplifying Strategies When Consumer

Effort Is Low 238

9-3 Learning Choice Tactics 239 9-3a Reinforcement 239 9-3b Punishment 239 9-3c Repeat Purchase 240 9-3d Choice Tactics Depend on the Product 240

9-4 Low-Effort Thought-Based Decision-Making 240 9-4a Performance as a Simplifying Strategy 241

9-4b Habit as a Simplifying Strategy 241 9-4c Brand Loyalty as a Simplifying Strategy 243 9-4d Price as a Simplifying Strategy 245 9-4e Normative Influences as a Simplifying Strategy 247

9-5 Low-Effort Feeling-Based Decision-Making 247 9-5a Feelings as a Simplifying Strategy 247 9-5b Brand Familiarity 248 9-5c Decision-Making Based on Variety-Seeking Needs 249 9-5d Buying on Impulse 250

Summary 252

Endnotes 252

Chapter 9 Judgment and Decision-Making Based on Low Effort 234

10-1 Post-Decision Dissonance and Regret 260 10-1a Dissonance 260 10-1b Regret 260

10-2 Learning from Consumer Experience* 261 10-2a A Model of Learning from Consumer Experience 261 10-2b What Affects Learning? 262

10-3 How Do Consumers Make Satisfaction or Dissatisfaction Judgments? 264

10-3a Satisfaction/Dissatisfaction Based on Thoughts 266 10-3b Satisfaction/Dissatisfaction Based on Feelings 270

10-4 Responses to Dissatisfaction 272 10-4a Complaints 272

10-4b Responding to Service Recovery 274 10-4c Responding by Negative Word of Mouth 274

10-5 Is Customer Satisfaction Enough? 275 10-5a Customer Retention 275 10-5b Product-Harm Crises 275

10-6 Disposition 276 10-6a Disposing of Meaningful Objects 278 10-6b Recycling 279

Summary 282

Endnotes 282

Chapter 10 Post-Decision Processes 258

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CONTENTS xi

11-1 Sources of Influence 294 11-1a Marketing and Nonmarketing Sources 294 11-1b How Do These General Sources Differ? 295 11-1c Opinion Leaders 297

11-2 Reference Groups as Sources of Influence 298 11-2a Types of Reference Groups 298 11-2b Characteristics of Reference Groups 300 11-2c Reference Groups Affect Consumer Socialization 303

11-3 Normative Influence 303 11-3a How Normative Influence Can Affect Consumer

Behavior 304

11-3b What Affects Normative Influence Strength 305

11-4 Informational Influence 309 11-4a Factors Affecting Informational Influence Strength 309 11-4b Descriptive Dimensions of Information 310 11-4c The Pervasive and Persuasive Influence

of Word of Mouth 311

Summary 314

Endnotes 315

Part 4 �e Consumer’s CulturePart 4 �e Consumer’s Culture 291

Chapter 11 Social In�uences on Consumer Behavior 292

12-1 How Age Affects Consumer Behavior 323 12-1a Age Trends in the United States 323 12-1b Teens and Millennials 323 12-1c Generation X 326 12-1d Boomers 326 12-1e Seniors 327

12-2 How Gender and Sexual Orientation Affect Consumer Behavior 329

12-2a Sex Roles 329 12-2b Differences in Acquisition and Consumption

Behaviors 329 12-2c Gender and Sexual Orientation 331

12-3 How Regional Influences Affect Consumer Behavior 331

12-3a Regions Within the United States 332 12-3b Regions Across the World 333

12-4 How Ethnic and Religious Influences Affect Consumer Behavior 334

12-4a Ethnic Groups Within the United States 334 12-4b Ethnic Groups Around the World 338 12-4c The Influence of Religion 339

Summary 340

Endnotes 340

Chapter 12 Consumer Diversity 321

13-1 How the Household Influences Consumer Behavior 348

13-1a Types of Households 348 13-1b Households and Family Life Cycle 348 13-1c Changing Trends in Household

Structure 349

13-2 Roles that Household Members Play 351 13-2a The Roles of Spouses 352 13-2b The Role of Children 353

13-3 Social Class 355 13-3a Types of Social Class Systems 356 13-3b Social Class Influences 356 13-3c How Social Class Is Determined 356 13-3d How Social Class Changes Over Time 359

13-4 How Does Social Class Affect Consumption? 361 13-4a Conspicuous Consumption and Voluntary

Simplicity 361 13-4b Status Symbols and Judging Others 361 13-4c Compensatory Consumption 361 13-4d The Meaning of Money 362

13-5 The Consumption Patterns of Specific Social Classes 363

13-5a The Upper Class 364 13-5b The Middle Class 364 13-5c The Working Class 364 13-5d The Homeless 365

Summary 367

Endnotes 368

Chapter 13 Household and Social Class In�uences 346

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CONTENTSxii

14-1 Values 375 14-1a How Values Can Be Described 375 14-1b The Values That Characterize Western Cultures 376 14-1c Why Values Change 381 14-1d Influences on Values 381 14-1e How Values Can Be Measured 384

14-2 Personality 386 14-2a Research Approaches to Personality 386 14-2b Determining Whether Personality Characteristics

Affect Consumer Behavior 388

14-3 Lifestyles 391 14-3a Lifestyle and Behavior Patterns 391 14-3b Voluntary Simplicity 392

14-4 Psychographics: Combining Values, Personality, And Lifestyles 394

14-4a VALSTM 394 14-4b Other Applied Psychographic Research 394

Summary 396

Endnotes 396

Chapter 14 Psychographics: Values, Personality, and Lifestyles 373

15-1 Innovations 404 15-1a Defining an Innovation 406 15-1b Innovations Characterized by Degree

of Novelty 406 15-1c Innovations Characterized by Benefits

Offered 406 15-1d Innovations Characterized by Breadth 407 15-1e Innovations and Cocreation 407 15-1f The Consequences of Innovations 408

15-2 Resistance Versus Adoption 409 15-2a Whether Consumers Adopt

an Innovation 409 15-2b How Consumers Adopt an Innovation 410 15-2c When Consumers Adopt Innovations 411

15-3 Diffusion 414 15-3a How Offerings Diffuse Through a Market 414 15-3b Factors Affecting the Shape of the Diffusion Curve 414 15-3c How Diffusion Relates to the Product Life Cycle 415

15-4 Influences on Adoption, Resistance, and Diffusion 416 15-4a Characteristics of the Innovation 416 15-4b Uncertainty 418 15-4c Consumer Learning Requirements 418 15-4d Social Relevance 421 15-4e Legitimacy and Adaptability 422 15-4f Characteristics of the Social System 423

Summary 424

Endnotes 425

Part 5 Consumer Behavior Outcomes and IssuesPart 5 Consumer Behavior Outcomes and Issues 403

Chapter 15 Innovations: Adoption, Resistance, and Diffusion 404

16-1 Sources and Functions of Symbolic Meaning 431 16-1a Meaning Derived from Culture 431 16-1b Meaning Derived from the Consumer 432 16-1c The Emblematic Function 432 16-1d The Role Acquisition Function 435 16-1e The Connectedness Function 438 16-1f The Expressiveness Function 438 16-1g Multiple Functions 438 16-1h Symbols and Self-Concept 439

16-2 Special Possessions and Brands 440 16-2a Special Brands 441 16-2b Types of Special Possessions 441 16-2c The Characteristics That Describe Special Possessions 442

16-2d Why Some Products Are Special 443 16-2e Consumer Characteristics Affect What Is Special 443 16-2f Rituals Used with Special Possessions 443 16-2g Disposing of Special Possessions 445

16-3 Sacred Meaning 445

16-4 The Transfer of Symbolic Meaning Through Gift Giving 446

16-4a The Timing of Gifts 447 16-4b Three Stages of Gift Giving 447

Summary 451

Endnotes 451

Chapter 16 Symbolic Consumer Behavior 429

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CONTENTS xiii

17-1 In Search of Balance 459 17-1a Self-interest Versus the Interests of Others 459 17-1b Immediate Versus Long-Term Interests 459 17-1c “Dark Side” Versus “Bright Side” Outcomes 460

17-2 Marketing Ethics, Consumer Ethics, and Deviant Consumer Behavior 460

17-2a Acquisition Controversies 461 17-2b Consumption Controversies 466 17-2c Disposition Controversies 471

17-3 Social Responsibility Issues in Marketing 472 17-3a Environmentally Conscious Behavior and Ethical

Sourcing 472

17-3b Charitable Behavior 474 17-3c Community Involvement 474

17-4 How Can Consumers Resist Marketing Practices? 475

Summary 476

Endnotes 476

Glossary 482

Name/Author Index 491

Product Index 511

Subject Index 515

Chapter 17 Marketing, Ethics, and Social Responsibility in Today’s Consumer Society 457

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At just about every moment of our lives, we engage in some form of consumer behavior. When we look for posts on social media, watch an ad on TV, send a text message to friends about a movie we just saw, brush our teeth, go to a ball game or to a beach party, visit a website, download a new song, or even throw away an old pair of shoes, we are behaving as a consumer. Being a consumer reaches into every part of our lives. Of course, we are much more than just consumers. We are students, teammates, family members, employees, citi- zens, voters, patrons, patients, clients, neighbors, basketball fans, ice-cream lovers, bloggers, inventors, and more. This book is dedicated to our role as consumers.

Given its omnipresence, the study of consumer behav- ior has critical implications for areas such as marketing, public policy, and ethics. It also helps us learn about ourselves—why we buy certain things, why we use them in a certain way, and how we remove them from our lives through practices like throwing them away, selling, re-gifting, and donating them.

In this book we explore the fascinating world of con- sumer behavior, looking at a number of interesting and exciting topics. Some of these are quickly identified with our typical image of consumer behavior. Others may be surprising. We hope you will see why we became stimulated and drawn to this topic from the very moment we had our first consumer behavior course as students. We hope you will also appreciate why we choose to make this field our life’s work, and why we are dedicated to this textbook.

Why the New Edition of This Book? There are a number of consumer behavior books on the market. An important question concerns what this book has to offer and what distinguishes it from other texts. As active researchers in the field of consumer behavior, our overriding goal was to continue providing a treatment of the field that is up to date and cutting edge. There has been an explosion of research on a variety of consumer behavior topics over the last 30 years. Our primary aim was to pro- vide a useful summary of this material for students of mar- keting. However, in drawing on cutting-edge research, we wanted to be careful not to become too “academic.” Instead, our objective is to present cutting-edge topics in a man- ner that is accessible and easy for students to understand, and provides context for how and why consumer behavior insights are applied in real-world marketing.

Specific changes and improvements to the seventh edi- tion of this book include:

▪ Accessible explanations of the latest academic research and classic research from consumer behavior studies, and their practical implications for marketing strategy worldwide.

▪ Global perspective of research and behavioral concepts related to such important contemporary topics as financial management and money decisions, marketing ethics, privacy and transparency, obesity, materialism, self-control and self-regulation, conta- gion, emotions, mobile marketing, social media, and unconscious consumer behavior.

▪ Carefully edited narrative and examples make the content easier for students to process and connect with basic marketing principles as well as personal consumer experiences.

▪ Balanced coverage of marketing controversies and the challenges and opportunities of marketing as a force for social responsibility.

▪ New and updated examples highlight how all kinds of organizations in many nations use insights into consumer behavior to improve their marketing effectiveness and creativity.

▪ New database analysis exercises offer students an opportunity to make marketing decisions based on consumer demographics and behavior styles.

▪ Improved synergistic and digitally accessible supplemental materials allow students the opportunity to participate in self-assessments, polls, and short videos for self-reflection and more; Additional short readings are also available. These materials are both student friendly and extremely helpful for effec- tive learning using the Cengage MindTap platform. A description of the MindTap platform appears later in this preface.

Textbook Features As award-winning teachers, we have tried to translate our instructional abilities and experience into the writing of this text. The following features have been a natural out- growth of these experiences.

Preface

xiv

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Conceptual Model First, we believe that students can learn best when they see the big picture—when they understand what concepts mean, how these concepts are used in business practice, and how these relate to one another. In our opinion, con- sumer behavior is too often presented as a set of discrete topics with little or no relationship to one another. We have therefore developed an overall conceptual model that helps students grasp the big picture and see how the chap- ters and topics are themselves interrelated. Each chapter is linked to other chapters by a specific model that fits within the larger model. Further, the overall model guides the organization of the book. This organizing scheme makes the chapters far more integrative than most other books. Instructors have told us that this conceptual model is a valuable and beneficial aide to student learning.

Practical Orientation, with an Emphasis on Globalization and Social Media Second, we believe that insights into consumer behav- ior are interesting in and of themselves, but also that they should be relevant to managerial practice. The ulti- mate goal of consumer behavior theory and research is to improve the decision-making ability of managers in profit and nonprofit organizations who aim to cater to consumers’ needs, and to help policy makers better pro- tect consumers. Rather than merely translating general psychological or sociological principles and theories to a consumer context, this book is dedicated to understand- ing consumer behavior in order to improve managerial practice. Given our notion that students enjoy seeing how the concepts in consumer behavior can apply to business practice, a second objective of the book was to provide a very practical orientation. We include a wealth of con- temporary real-world examples to illustrate key topics. We also try to broaden students’ horizons by providing a number of international examples. Given the impor- tance of online consumer behavior, the new edition also fully treats the advent and implications of the latest digital developments, social media marketing, and mobile mar- keting applications.

Current and Cutting-Edge Coverage Third, we provide coverage of the field of consumer behav- ior that is as current and up to date as possible (including many of the recent research advances). This includes sev- eral novel chapters that often do not appear in other text- books: “Attitudes Based on Low Effort,” “Judgement and Decision Making Based on Low Effort,” and “Marketing Ethics and Social Responsibility in Today’s Consumer

Society.” These important topics are likely to be of consid- erable interest to students. Instructors have told us how much they appreciate the cutting-edge nature of our book and its ability to keep abreast of the latest research in con- sumer behavior. Students appreciate that this material is delivered in an engaging way that’s also easy to read.

Balanced Treatment of Micro and Macro Topics Fourth, our book tries to provide a balanced perspective on the field of consumer behavior. Specifically, we give treatment to both psychological (micro) consumer behav- ior topics (e.g., attitudes, decision-making) and sociolog- ical (macro) consumer behavior topics (e.g., subculture, gender, social class influences). Also, although we typically teach consumer behavior by starting with the more micro topics and then moving up to more macro topics, we real- ize that some instructors prefer the reverse sequence.

Broad Conceptualization of the Subject Fifth, we present a broad conceptualization of the topic of consumer behavior. While many books focus on what products or services consumers buy, consumer behav- ior scholars have recognized that the topic of consumer behavior is much broader. Specifically, rather than study- ing buying per se, we recognize that consumer behavior includes a set of decisions (what, whether, when, where, set of decisions (what, whether, when, where, set why, how, how often, how much, how long) about acqui- sition (including, but not limited to buying), usage, shar- ing, and disposition decisions. Focusing on more than what products or services consumers buy provides a rich set of theoretical and practical implications for both our understanding of consumer behavior and the practice of marketing.

Finally, we consider the relevance of consumer behav- ior to many constituents, not just marketers. Chapter 1 indicates that consumer behavior is important to mar- keters, public policy makers, ethicists and consumer advocacy groups, and consumers themselves (including students). Some chapters focus exclusively on the impli- cations of consumer behavior for public policy makers, ethicists, and consumer advocacy groups. Other chapters consider these issues as well, though in less detail.

Content and Organization of the Book One can currently identify two main approaches to the study of consumer behavior: One approach focuses on the individual psychological processes that consumers

xvPREFACE

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xvi PREFACE

use to make acquisition, consumption, and disposition decisions. A second approach focuses on group behaviors and the symbolic nature of consumer behavior. This lat- ter orientation draws heavily from such fields as sociol- ogy, culture theory, and anthropology. Both orientations are represented in this book. The current book and overall model have been structured around a “micro to macro” organization based on the way we teach this course and the feedback that we have received from reviewers.

Chapter 1 in Part I, “An Introduction to Consumer Behavior,” presents an introduction to consumer behav- ior. It helps students understand the breadth of the field, and its importance to marketers, advocacy groups, public policy makers, and consumers themselves. This chapter introduces some of the newest research and presents the overall model that guides the organization of the text. An Appendix, which follows Chapter 1, introduces methods by which consumer research is conducted.

Part II, “The Psychological Core,” focuses on the inner psychological processes that affect consumer behavior. We see that the amount of effort consumers put into their acquisition, usage, and disposition behaviors and deci- sions has significant effects on the decisions they make. Chapter 2 describes three critical factors that affect effort: the (1) motivation or desire, (2) ability (knowledge and information), and (3) opportunity to engage in behaviors and make decisions. The key role of emotions is also dis- cussed. In Chapter 3, we then examine how consumers process information in their environments (ads, prices, product features, word-of-mouth communications, etc.). We consider how they come in contact with these stim- uli (exposure), notice them (attention), and perceive them (perception). Chapter 4 continues by discussing how consumers compare new things they encounter in their environment to their existing knowledge, a process called categorization, and how they make sense of or comprehend them on a deeper level. Also, because consumers often must remember the information they have previously stored in order to make decisions, this chapter examines the important topic of consumer memory. In Chapters 5 and 6, we see how attitudes are formed and changed depending on whether the amount of effort consumers devote to forming an attitude is high or low and whether attitudes are cognitively or affectively based.

Whereas Part II examines some of the internal factors that influence consumers’ decisions, a critical domain of consumer behavior involves understanding how consum- ers make acquisition, consumption, and disposition deci- sions. Thus, in Part III, “The Process of Making Decisions,” we examine the sequential steps of the consumer deci- sion-making process. In Chapter 7, we examine the initial steps of this process—problem recognitionsteps of this process—problem recognitionsteps of this process— and information search. Similar to the attitude change processes described earlier, we next examine the consumer decision-making process, both when effort is high (Chapter 8) and when

it is low (Chapter 9). Further, in both chapters we exam- ine these important processes from both a cognitive and an affective perspective. Finally, the process does not end after a decision has been made. In Chapter 10, we see how consumers determine whether they are satisfied or satisfied or satisfied dissat- isfied with their decisions and how they isfied with their decisions and how they isfied learn from choos- ing and consuming products and services.

Part IV, “The Consumer’s Culture,” examines how various aspects of culture affect consumer behavior. First, Chapter 11 considers how, when, and why the specific reference groups (friends, work group, clubs) to which we belong can influence acquisition, usage, and disposition decisions and behaviors. Then, we see how consumer diversity (in terms of age, gender, sexual orientation, region, ethnicity, and religion) can affect consumer behavior in Chapter 12. Chapter 13 then examines how social class and household characteristics influence acquisi- tion, usage, and disposition behaviors. Finally, Chapter 14 examines how external influences affect our personality, lifestyle, and values, as well as consumer behavior.

Finally, Part V, “Consumer Behavior Outcomes,” examines the effects of the numerous influences and decision processes discussed in the previous three sections. Chapter 15 builds on the topics of internal decision-making and group behav- ior by examining how consumers adopt new offerings, and how their adoption decisions affect the spread or diffusion of an offering through a market. Because products and ser- vices often reflect deep-felt and significant meanings (e.g., our favorite song or restaurant), Chapter 16 focuses on the excit- ing topic of symbolic consumer behavior. Finally, Chapter 17 examines marketing, ethics, and social responsibility, including a look at marketing controversies and the use of marketing for constructive purposes.

Pedagogical Advantages Based on our extensive teaching experience, we have incorporated a number of features that should help stu- dents learn about consumer behavior.

Chapter Opening Model Each chapter begins with a conceptual model that shows the organization of the chapter, the topics discussed, and how they relate both to one another and to other chapters. Each model reflects an expanded picture of one or more of the elements presented in the overall conceptual model for the book (described in Chapter 1).

Marketing Implication Sections Numerous Marketing Implications sections are interspersed throughout each chapter. These sections illustrate how various consumer behavior concepts can be applied to the practice

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