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Consumer Behavior

MKT 344

Table of Contents

Course Description .......................................................... ........... ........... .................................. 2

Course Outcomes..................................................................................... .................................. 2
Materials of Instruction ........................................................................... .................................. 2
Suggested Grading Criteria ..................................................................... .................................. 3
Possible Main Projects............................................................................. .................................. 4
Assignments to be Completed Prior to Class One ............................. .................................. 9
Class One................................................................................................... .................................. 10
Class Two .................................................................................................. .................................. 12
Class Three ................................................................................................ .................................. 14
Class Four .................................................................................................. .................................. 16
Class Five ................................................................................................... .................................. 17
Class Six ..................................................................................................... .................................. 18
Attachments .............................................................................................. .................................. 19
Consumer Behavior
MKT 344


This course examines the actions of consumers and explores the reasons why consumers behave the
way they do with regard to their buying decisions. Thus, the course is part marketing and part
psychology. Consumer background characteristics and behavioral processes are discussed.


Principles of Marketing (BA 240)


Upon successful completion of this course, students will be able to:

1. Explain the relationship between marketing strategy and consumer behavior.
2. Summarize consumer background characteristics which make consumers “who they
3. Understand behavioral processes used by consumers in the purchase process.
4. Think both critically and creatively in order to conduct in class exercises and a consumer
behavior project.
5. Communicate effectively through both their written skills in class projects and their oral
skills in class participation and project presentations.
6. Understand how consumer behavior is interrelated with other business functions.


Required Text:

Schiffman, Leon G. and Leslie Lazar Kanuk (2007), Consumer Behavior, 9th edition, Upper Saddle
River, New Jersey: Prentice Hall.


The grading criteria is the prerogative of the facilitator, who may present an alternative grading
procedure, in writing, the first night of class, as circumstance and experience dictate (for example,
the addition of assignments, extra credit options, different weights for the assignments, etc.).
Changes to the suggested grading criteria will be announced in CLASS ONE; otherwise, the criteria
presented in this module will be followed.

Task Points

Assessment (Mid-term and Final) 200

Main Project 200
Project Presentation 100
Subculture Exercise 100
Class Participation 100
Chapter 3 Exercise 50
Chapter 6 and 7 Exercise 50
Total Points 800


This course consists of five four-hour workshops. This highly accelerated pace requires students to
take a great deal of responsibility for their own learning outcomes. While in class, students are
expected to actively participate in discussion and group activities. Outside of class, students should
expect a minimum of 15 to 20 hours per week of study, homework assignments, and/or group

The intent of the assigned text readings is to provide students with analytical and conceptual skills,
rather than merely mechanical application skills.

Written Assignments

An important component of this course is the completion of written assignments. The assignments,
of varying types, may be both in-class and out-of-class. Expectations, scheduling, and kinds of
assignments will be discussed in CLASS ONE.


Following is an explanation of 2 possible main projects. The facilitator will determine the main
project required for the course. The main projects consist of both written reports/proposals and
oral presentations. The specific expectations for your oral presentation will be discussed in
WORKSHOP ONE by the facilitator.

Project Outline

Products are not created in a vacuum - they are themselves a "product" of their culture. Your task
will be to prepare a cultural biography of a product of your choice. Just like a good biography of a
person, this task requires more than simply describing when the subject was born or died. A cultural
biography means developing an understanding of the cultural forces that contributed to the success
or failure of the product.

Topic selection: Your first task is to select a topic that excites you. For the purposes of this
assignment we will define a "product" very widely; virtually anything that has arisen from popular
culture is fair game.

Example Topics Include:

A product: Examples: Ford Escape, C/K One, Frisbee

A retailer: Examples: The Gap, Hard Rock Café, Disney World
An Event: Examples: Woodstock (old or new), Kentucky State Fair
A celebrity: Examples: Madonna, Elvis, Michael Jordan, a band
A style: Examples: body piercing, hip-hop, styles of furniture

If possible you should choose a topic that allows you to locate adequate background information.
Preferably, you should be able to locate one or more people who have experienced the topic.

In completing the project, you must determine the specific details from corresponding
chapters to include in your analysis. This may also include information from previous
marketing courses (most likely Principles of Marketing).

Project Outline

This Project should be Typed and Double Spaced

Part 1
Background and Historical Overview

1. How did the product come into being?

2. Who was responsible for its development?
3. What was going on in the world at that time that facilitated or impeded its introduction?

Marketing Issues

1. To whom is the product targeted?

2. Who actually uses the product?
3. How is the product regarded by non-consumers?
4. What is the primary competition?
5. How is the product marketed?
6. How successful is the marketing campaign - why?

Part 2

Consumer Behavior Issues

1. What meaning does the product have to consumers?

2. How (if at all) has the meaning of this product changed over time?
3. What underlying needs does the product satisfy (or try to satisfy)? What are the manifest
and latent motives for using the product?
4. How do self-concept theories relate to the use of this product?
5. Which attitude function(s) are used to market this product? How are they used?
6. Which types of reference groups are influential in purchasing this product? What is the
extent of that influence?
7. Does social class affect the consumption of this product? Why or why not?
8. Provide a detailed discussion of the Decision Making Process for this product?
9. If currently on the market, how will this product be regarded in 10 years?

(Adapted from Hawkins, Del I., Roger J. Best, and Kenneth A. Coney (1998), Consumer Behavior: Building
Marketing Strategy, McGraw-Hill: Boston, MA.

A list of the key questions that can guide the development of marketing strategy from a consumer
behavior perspective is provided below. It does not guarantee a successful strategy, but does
provide a checklist to minimize the chance of overlooking a critical behavioral dimension.


The firm you select may be either product or service oriented. The guide is designed to help you
through this project. You may gather the necessary information through interviews with managers
or marketing managers at your target firm, through secondary research, or through surveying
customers or potential customers.


An oral presentation of your findings and recommendations will be given in Workshop 5. A formal
paper will either be completely due in Workshop 5 or due in sections throughout the class (this is
the option of the facilitator), which details the process of the audit, the findings, conclusions, and

Market Segmentation

A. External Influences

1. Are there cultures or subcultures whose value system is particularly consistent (or
inconsistent) with the consumption of our product?
2. Is our product appropriate for male or female consumption?
3. Do ethnic, social, regional, or religious subcultures have different consumption
patterns relevant to our product?
4. Do various demographic groups (age, gender, urban/suburban/rural, occupation,
income, education) differ in their consumption of our product?
5. Is our product particularly appropriate for consumer with relatively high or low
incomes compared to other in their occupational group?
6. Can our product be appropriate for specific roles, such as students or professionals?
7. Do groups in different stages of the household life cycle have different consumption
patterns for our product? Who in the household is involved in the purchase

B. Internal Influences

1. Can our product satisfy different needs or motives in different people? What needs
are involved? What characterizes individuals with differing motives?
2. Is our product uniquely suited for particular personality types? Self-concepts?
3. Is our product appropriate for one or more distinct lifestyles?
4. Do different groups have different attitudes about an ideal version of our product?

Customer Satisfaction And Commitment

A. What factors lead to satisfaction with our product?

B. What factors could cause customer commitment to our brand or firm?

Pricing Strategy

A. External Influences

1. Does the segment hold any values relating to any aspect of pricing, such as the use of
credit or “conspicuous consumption”?
2. Is it necessary to lower price to obtain a sufficient relative advantage to ensure
diffusion? Will temporary price reductions induce product trial?
3. Who in the household evaluates the price of the product?

B. Internal Influences

1. Will price be perceived as an indicator of status?

2. Is price an important aspect of the segment’s attitude toward the brands in the
product category?
3. What is the segment’s perception of a fair or reasonable price for this product?

Distribution Strategy

A. External Influences

1. Do the male and female members of the segments have differing requirements of the
distribution system? Do working couples, single individuals, or single parents within
the segment have unique needs relating to product distribution?
2. Is the product complex such that a high-service channel is required to ensure its

B. Internal Influences

1. What outlets are in the segment’s evoked set? Will consumers in this segment seek
information in this type of outlet?
2. Which evaluative criteria does this segment use to evaluate outlets?
3. Is the outlet selected before, after, or simultaneously with the product/brand? To what
extent are product decisions made in the retail outlet?
4. Will the selected outlets be perceived in a manner that enhances the desired product
5. What type of distribution system is consistent with the lifestyle(s) of each segment?
6. What attitudes does each segment hold with respect to the various distribution

Promotion Strategy

A. External Factors

1. What values does the segment hold that can be used in our communications? Which
should be avoided?
2. How, if at all, can we use reference groups in our advertisements?
3. Who in the household should receive what types of information concerning our

B. Internal Factors

1. Have we structured our promotional campaign such that each segment will be
exposed to it, attend to it, and interpret it in the manner we desire?
2. Do our messages relate to the purchase motives held by the segment? Do they help
reduce motivational conflict if necessary?
3. Are we considering the emotional implications of the ad and/or the use of our
4. Is the lifestyle portrayed in our advertisements consistent with the desired lifestyle of
the selected segments?

C. Decision Process Influences

1. Will problem recognition occur naturally, or must it be activated by advertising?

2. After problem recognition, will the segment seek out information on the
product/brand, or will we need to intervene in the purchase decision process? If
they do seek information, what sources do they use?
3. How much and what types of information are acquired at the point of purchase?
4. Have we given sufficient information to ensure proper product use?
5. Are the expectations generated by our promotional campaign consistent with the
product’s performance?

Product Strategy

A. External Influences

Is the product designed appropriately for all members of the target market under
consideration, including males, females, and various age groups?

B. Internal Influences

1. Will the product be perceived in a manner consistent with the desired image?
2. Will the product satisfy the key purchase motives of the segment?
3. Is the product consistent with the segment’s attitude toward an ideal product?


1. Carefully read this course module, concentrating on the Course and Learning Outcomes
listed at the beginning of the module.

2. READ Chapters 1, 3, and 4 in text. BE PREPARED TO DISCUSS AND APPLY THE


3. COMPLETE Chapter 3 Exercise #5 Page 78.

4. COMPLETE Chapter 4 Exercise #3 Page 112.


Upon successful completion of CLASS ONE, students should be able to do the following:

1. Provide a course overview - goals, content, resources, expectations, and methods of


2. Analyze the nature of consumer behavior, in general terms.

3. Describe the concept of market segmentation.

4. Compare, contrast and apply the bases for segmentation.

5. Identify what drives consumer motivation.


1. Introduction of facilitator and students.

2. Explanation of course requirements, expectations, learning outcomes, and methods of


3. Introduction to the history of consumer behavior and consumer behavior, in general.

4. Lecture/class discussion of market segmentation.

5. Lecture/class discussion of the bases for segmenting markets.

6. Discuss Preassignment exercise.

7. Lecture/class discussion of motivation and needs.

8. In class group work - Read and discuss case in Attachment A or choose chapter

9. Formation of project teams and group meetings to discuss and finalize topics for the main


1. READ Chapters 5, 6, and 7

2. COMPLETE Chapter 6 and 7 Exercise. This should be typed and double spaced.
Please select 2 competing consumer packaged goods (the products must be brought to
class). In a paper discuss the following questions:
1.How would you describe the positioning of each product.
2.How were the concepts of figure and ground and grouping incorporated into the package
3. Identify where you think the marketer’s knowledge of stimulus generalization or stimulus
discrimination was incorporated into the package design.
4. Overall, would you say the package is effective or ineffective? Why or why not?

3. CONTINUE WORKING on projects and/or assignments given by facilitator.


Upon successful completion of CLASS TWO, students should be able to do the following:

1. Understand the concept of personality and consumer behavior.

2. Compare and contrast the various theories of personality.

3. Examine perception and consumer behavior.

4. Describe and apply the dynamics of perception.

5. Examine learning and consumer behavior.

6. Compare and contrast the various behavioral learning theories with the various cognitive
learning theories.


1. Lecture/class discussion of personality and consumer behavior.

2. Lecture/class discussion of the various theories of personality.

3. In-class group work - Read and discuss case in Attachment B or chapter exercises/cases.

4. Lecture/class discussion of perception and consumer behavior.

5. Lecture/class discussion of the dynamics of perception.

6. Present Chapter 6 and 7 exercise.

7. In-class Magazine Exercise (option).

Have each student/student group find and discuss both a good and a bad example of the use
of each of the following stimulus factors in advertisements in a magazine:
a. figure and ground
b. color (here, you can also go back to personality and color from Ch. 5)
c. grouping

The facilitator can either bring in magazines or have students bring in magazines from home.

8. Lecture/class discussion of learning and consumer behavior.

9. Lecture/class discussion of behavioral learning theories and cognitive learning theories.

10. In class group work - Read and discuss case in Attachment C or chapter exercises/cases.


1. READ Chapters 8, 10, and 11

2. PREPARE for Mid-Term Assessment exercise (test, case study, or paper) as assigned by
3. PREPARE to turn in a portion of the main project as assigned by the facilitator.



Upon successful completion of CLASS THREE, students should be able to:

ƒ Examine the concept of attitudes and consumer behavior.

ƒ Compare and contrast the structural models of attitudes.

ƒ Investigate reference groups and their affect on consumer behavior.

ƒ Examine social class and consumer behavior.


1. Mid-Term Assessment of learning (option).

2. Lecture/class discussion of attitudes and consumer behavior.

3. Lecture/class discussion of the structural models of attitudes.

4. In class Exercise - Chapter 8 Discussion Question #3 or chapter exercises/cases.

5. Lecture/class discussion of reference groups.

6. In Class Exercise on Reference Group Influence.

1. What reference groups would be relevant to the decision to purchase the products
listed below?
2. How important are reference groups to the purchase of these products?
3. Would their influence also affect the brand that is chosen?

a) soft drinks
b) a child’s bedroom furniture
c) casual clothes

7. Lecture/class discussion of social class.

8. In Class Exercise - Chapter 11 Discussion Question #8 or other chapter exercises/cases.

9. Assign subcultures to individuals or groups for the Subculture Exercise due in Workshop
Four. These subcultures can include Hispanic, Religious, African American, Asian
American, Children, Generation Y, Generation X, Baby Boomers, Older Consumers, and

Subculture Exercise (Due in CLASS FOUR)

For your assigned subculture, you should research the following topics (you can use
information from the book, but you should also use other secondary resources to complete
your subculture description):

ƒ Characteristics of the market (should include updated demographic information such as

size of the market, income, spending power, etc.)
ƒ Marketplace behavior characteristics (how is the consumer behavior of this subculture
different than other subcultures - you should provide specific examples such as purchase
preferences, purchase habits, etc.)
ƒ Specific marketing issues related to the subculture [how is marketing to this subculture
different than marketing (regarding the 4 P's of marketing) to other subcultures]

ƒ Information should be cited and a reference page should be provided.

ƒ This assignment should be typed and double spaced.


1. READ Chapters 12, 13, 14 and 15.

2. PREPARE subculture exercise.
3. CONTINUE WORKING on Project and/or assignments given by facilitator.


Upon completion of CLASS FOUR, students should be able to:

1. Investigate the influence of culture on consumer behavior.

2. Evaluate subcultures and consumer behavior.

3. Examine consumer influence and the diffusion of innovations.

4. Discuss the global implications of consumer behavior.

5. Understand the detailed decision making process.


1. Lecture/class discussion of culture and consumer behavior.

2. In class group work - Read and discuss case in Attachment D or other chapter


3. Lecture/class discussion of subcultures and consumer behavior.

4. Have each individual/group discuss their assigned subculture from the Subculture Exercise.

5. Lecture/class discussion of consumer influence and the diffusion of innovations.

6. In class group work - Read and discuss case in Attachment E or other chapter


7. Lecture/class discussion of international consumer behavior.

8. Lecture/class discussion of the decision making process.


1. PREPARE for Final Assessment of Learning, as assigned by facilitator (option).

2. PREPARE for Oral Presentations.
3. COMPLETE Written Main Project.



Upon successful completion of CLASS FIVE, students should be able to do the following:

Experience the opportunity of delivering a professional presentation in an educational and

supportive atmosphere.


Oral presentation of main project.


1. Final Assessment of Learning

2. Class Evaluations

Chapter 4 Case

Volkswagen: Backward and Forward at the Same Time

Nostalgia is the longing for another period; a turning away from times of pain, confusion
and doubt. At the end of the twentieth century, U.S. consumers are embracing nostalgia as if there
were no tomorrow and some concerned about the millenium believe there might not be a
tomorrow! As divorce rates remain high and job security declines, is it any wonder that Americans
of all ages long for the past.
Seizing the moment, marketers have brought back dead brands and reinvigorated moribund
ones. Burma Shave signs are re-lining the highways; Charlie the Tuna may yet find good taste in the
twentieth century; Coke has its hourglass figure back and Volkswagen has brought back the
Beetle—the quintessential car beloved by flower children. Nothing reminds us of the 1960s like the
beetle and the daisy, so it’s not surprising that VW has used an ad where a daisy appears on the TV
screen with new Beetles on each petal.
Consumer response to the New Beetle has been wildly enthusiastic. Buyers pressed their
noses against the dealer’s windows to get a glimpse of it before it went on sale and waiting lists at
most dealerships in the country exceeded three months within a week of the car’s introduction.
Incredible stories of Beetlemania circulated in the media. One woman in Ohio followed a
transporter loaded with Beetles all the way to a dealer in Livonia, Michigan and refused to leave until
she was allowed to buy one. Wally Leach of Gray, Tennessee bought one at the standard price as a
gift for his 16-year-old son. Two days later someone offered him $27,000 for the car and another
would-be buyer offered $23,000. When Wally told him no, the buyer responded “Can I give you
When introduced in March, 1998, VW sold 2,365 New Beetle and 4,870 in April. Since then
the New Beetle has fueled surging sales for all VW products as buyers snap up Passats, Jettas and
Audis as well. VW sales increased by 59% in 1998 to over 202,000 vehicles in November 1998. Not
bad for a carmaker that almost withdrew from the U.S. market six years ago when sales dropped to
50,000 vehicles.
Helping to sustain the sales momentum for the New Beetle is limited supply. The are made
only in Puebla, Mexico in a plant that only produced 107,090 units in 1998 of which 55,842 landed
in the United States. Although plant capacity will be increased to 160,000 in 1999, there is still likely
to be a backlog of demand for these cars.
What’s so fascinating about the Beetle? “The brand has a unique magnificent history of
being this trusted friend—more than a car, and people have such affection for it, even people that
had bad experiences with the Rabbit,” says John Slaven, a former VW ad executive. “No other car
brand in this country has that ‘magic’”, he says while noting that no other car marketer can boast
that one of its models starred in Walt Disney movies (The Love Bug and Herbie Rides Again).
Who would buy a New Beetle? People who are iconoclastic, unique, confident and unafraid
of being the center of attention reports an Adweek study. Given the attention that the new Beetles
get when one drives them, buyers have to be unafraid of attention. As Marcia Ruff, journalist,
reports, “This is not a car you can drive anonymously. Everyone smiles and waves. Wherever you
stop, people want a closer look. It was amazing - and eventually a little wearisome - to discover how
many people have a Beetle story to tell.” Another writer has stated that the New Beetle is a thumb
of the nose at Middle America, a defiance of convention. Could there be shades of hippie rebellion

Without a doubt the New Beetle builds on its past image and the memories it brings, but this
is not just a cleaned up 60s bug. While the silhouette is much the same, it actually has more in
common with a Golf under its skin than the old Beetles. It has twin airbags, air conditioning, six-
speaker stereo, a CD player, remote central locking system and alarm. Options include anti-lock
brakes, alloy wheels, leather interior and heated front seats. The old Beetle’s famous air-cooled
rearmounted engine has been replaced by a choice of front-mounted two-liter 115bhp petrol or 1.9-
litre 90bhp turbo-diesel engine. In a nod to the past, it does have a flower vase on the dashboard.
Unlike its predecessor, the New Beetle offers loads of headroom and legroom in the front seats
although only small children will enjoy the ride in the back seat.
One reason buyers are attracted to the New Beetle is its safety. It got rave reviews from the
US Insurance Institute for Highway Safety which gave it their highest rating for a variety of test
crashes. It was the only one of sixteen small cars to be labeled a “best pick” for among other
reasons, having airbags that actually deployed automatically during test crashes. Quite a turnaround
for the car that Ralph Nader once told the U.S. Senate: “It is hard to find a more dangerous car.”
Style has something to do with the Beetle’s appeal. In a sea of lookalike cars, its half moon
shape, rounded corners and oversized oval headlights stand out. It’s just different. Despite its
heritage, the New Beetle is one of the most evocative designs of this century. It has a fresh, cute
appeal—it looks like it’s smiling. Recalling the lady bug era, one owner in Arizona painted twenty
black dots on her shiny, new red Beetle. How can we not smile in return? Just looking at it makes
one feel good.
And VW has capitalized on those wonderful old ads with such a wry sense of humor. One
showed a Beetle next to a house with the caption “It makes your house look big.” Modern ads for
the Beetle use such slogans as “Less Flower. More Power”; “Hug it? Drive it? Hug it? Drive it?”;
“Comes with wonderful new features. Like Heat.”; “Is it possible to go backward and forward at
the same time?” or “If you sold your soul in the ‘80s, here’s your chance to buy it back.” Humor
and joy seem to be constant themes in reviews of the New Beetle and its ads.
Maybe in the end, it’s just all about youth. Perhaps baby boomers like the New Beetle
because it reminds them of their youth and helps them leap backwards to youth and bond with their
children. As Greg Stern of Santa Monica says “In 1967, my Dad got me a VW. I loved it…I’m
getting the New Beetle as a surprise for my daughter…” And Jeff LaPlant, sales manager of VW of
Santa Monica says, “I’ve never seen a car that had such a wide range of interest, from 16 year-olds to
65 year olds.” The New Beetle—the intergenerational car for the new millenium.

1. What kind of needs might buyers for the New Beetle have? Innate? Acquired?
2. What might purchase of a Beetle indicate about a boomer’s perception of him/herself?
3. What are rational motives for purchasing a Beetle? Emotional motives? Which are stronger?
4. In the case, how was frustration over inability to buy a New Beetle expressed?
5. In Maslow’s hierarchy, the New Beetle arouses what category of needs?


Profile of the Porsche Buyer

It was Mr. Wenderlin Wiedeking's first day on his new job as chairman of Porsche. In the last six
years sales dropped from 53,000 units in 1986 to around 12,000 units in 1993. In these dismal 6
years, the company had lost over $200 million. He knew the challenges that faced him. His first
concern was cost. Porsche has always been expensive. Another challenge was knowing the type of
person who buys a Porsche or who would like to be a Porsche owner.
For the profile of the car buyer, he asked Mr. Richard Ford, Porsche's VP of sales and marketing for
the U.S., to commission a study that would reveal that profile. Mr. Ford hired a consulting firm of
anthropologists to find out who Porsche owners are. A few months after, a report indicated that the
typical owner is a 40-something male college graduate earning over $200,000 a year. The report
further categorized owners into 5 personality types as follows:

Top Guns represent 27% of owners. These individuals are driven and ambitious. What matters to
them is power and control as well as strong desire to be noticed.

Elitists represent 24% of owners. To them, a car is just a car, no matter how expensive. They do
not feel that the car is an extension of the owner's personality.

Proud Patrons represent 23% of owners. Ownership is an end in itself. Their car is a trophy earned
for hard work.

Bon Vivants represent 17% of owners. They are worldly jet setters and thrill seekers. The car is a
means of heightening the excitement in their busy lives.

Fantasists represent 9% of owners. The car is an escape. Feeling a little guilty about owning a
Porsche, they avoid impressing others with the fact that they own one.

Mr. Ford thought of its possible implications to car design and promotion. Concerning the first
area, he wondered if it would be desirable to produce a different car model to fit the psychographic
profile of each segment. Concerning promotion, he realized ad appeal have to take into
consideration both what motivates buyers and what turns them off.


1. Think of advertising appeals that would effectively promote the Porsche to each of the 5
personality types listed in the report.
2. Assume Mr. Ford were to decide that producing 5 separate Porsche models to fit the
personality types listed in the report would be a workable strategy. Would you concur? Why
or why not?
3. In addition to the 2 specific areas Mr. Ford was concerned about when he glanced over the
report (advertising appeals and car models), what are the ramifications of this personality
report to Porsche with regard to other areas of the marketing mix such as pricing,
distribution, and media selection?

Lee Dungarees: Not Momma’s Jeans Anymore!
Baby boomers made Levi’s the nation’s jeans and Nikes the nation’s athletic shoes; today,
Generation Y is toppling both of those venerable brands in favor of Mudd, Paris Blues and Vans.
Reinforcing the risk of not connecting to a generation, Levis’ market share has plummeted while
that of another old-line, but plucky brand, Lee, is improving due to bonding with Generation Y.

Known for decades as the misses brand of jeans (translate that to mean broad beam), Lee
was dismissed by teens. As sales stalled in the early nineties, management realized that it had to take
action. The tactic—segment the market and re-position it—wasn’t revolutionary, but the re-
positioning effort—especially advertising, was.

Realizing that consumers form many of their brand preferences in their teens, marketers at
Lee began by studying Generation Y. Born between 1979 and 1994, this generation is over 60
million youth (second only to Baby Boomers in size), has tremendous spending power ($141 billion
in 1998) and is markedly different from its predecessors. It’s a racially diverse group as one in three
is not Caucasian; one in four lives in a single-parent household; three in four have working mothers
and they’ve been tapping away at computers since kindergarten, if not before. Bombarded with
advertising since birth, they are tired of ads that build image through slogans, feelings and celebrities.
They appreciate humor, irony and just the truth which led advertisers such as Sprite to use the
tagline “Image is nothing. Obey your thirst.” or the slogan “Just show me the jeans” for J.C.
Penny’s Arizona brand.

It takes different media to reach this group. While earlier generations watched the passive
medium of television, Generation Y uses the internet—a much more active medium--to find
information and communicate. And teens like to shop in specialty stores. They have launched the
success of brands such as Old Navy and supported the sales growth of Abercrombie & Fitch.

Psychographically, they are very optimistic about the future. Raised in good times, their
future looks very bright with an abundance of opportunities and jobs. Thanks to all the shopping
they’ve done, they are practical, street-smart and look for value; care about traditional values such as
stability, friends and family; are self-aware and earnest and crave emotional fulfillment..

How does a firm founded in 1889 catch up to this market? They begin with research by
testing old ads, icons and words from their archives. The findings? Teens connected to the word
dungarees, and liked the “hard-working,” “authentic” reputation of Lee along with the slogan “Can’t
bust ‘em” and the old walking men logo (showing several working men walking along together).
Most surprisingly, they liked Buddy Lee—a surreal doll from the 1920s.

Based on their marketing research, Lee went to work on the four Ps of marketing. Product:
They developed sub-brands for segments in the teen market. Lee Pipes sell to 10-to-14 year olds
who are into extreme fashion with an attitude and Lee Dungarees, a classic workwear-themed
collection is aimed at 17-to-22 year olds who value durability. Price: They have reduced price in
amounts ranging from $1 to $4. When those reductions are translated into retail prices, they are
much lower. Promotion: They have re-introduced Buddy Lee; used the term dungarees in naming

their new sub-brand and re-introduced the slogan “Can’t Bust ‘em” and the Walking-man logo from
the early twentieth century. Teens translate the slogan to “Can’t Bust me” and seem to affiliate with
the honest authenticity of a working man’s brand.

The ad mystery is determining who Buddy Lee is. A soft-bodied doll with a plastic head and
molded hair, he has become the embodiment of the authentic, youthful, unstoppable spirit that Lee
is built upon. In the 1920s, he wore overalls and was displayed in store windows. Over the years,
he wore 17 different outfits, but the most popular was the cowboy where Buddy sported cowboy
pants, plaid shirt, belt, bandanna, cowboy hat and lariat. He represents Lee’s return to its working
man roots.

Lee’s advertising agency, Fallon McElligott, developed an elaborate model of how 17-to-22
years find things to be cool. The agency folks believe that things first pop up on the fringe; then
they’re adopted by the leading-edge group, then the in-crowd and finally by mainstream youth. To
reproduce this effect with Buddy Lee, Fallon plastered posters of Buddy Lee—unidentified and
unbranded—in 15 key markets with a small notation, MOA#2. Locals speculated that Buddy Lee
was a new band! Then the agency produced three minute “bio-pics” of Buddy as hero with no
product mentions to air on graveyard cable, 2 AM slots on Comedy Central, adjacent to South Park
repeats and on E! with unidentified tune-in ads running in local alternative weeklies and music ‘zines
where MOA#2 was defined as Man of Action #2. The goal was to hook the trendy kids who watch
late-night TV by allowing them to discover Buddy Lee for themselves.

Next Lee took an on-site sponsorship at the ESPN Extreme Games and aired movie-trailer-
like teaser ads presenting “Buddy Lee, Man of Action”. Now speculation centered on Buddy Lee
being in the movies. Later, a series of Buddy Lee action-movie parodies hawked Lee Dungarees and
highlighted the jeans’ indestructibility. In one of these, our hero, Buddy, tries to rescue a little girl’s
kitty in the midst of a tornado. But the girl finds that kitty’s all right because it’s in the house.
Buddy Lee isn’t. He’s smushed--impaled on a tree outside, but his Lee Dungarees are still fine!

When the campaign hit prime time TV, Fallon passed over mainstream favorites like Beverly
Hills 90210 and Melrose Place for Buffy the Vampire Slayer, Dawson’s Creek and Felicity. On
cable, they used late-night placements and in magazines, they concentrated on fashion and music
titles like Details, Jane and Spin.

Lee became a lot cooler very fast. According to the agency’s tracking study, perceptions that
the brand was becoming more popular and was “cool to wear” jumped 10 percentage points from
25 to 35 percent and their sell-in of the Dungarees line was four times higher than anticipated.
Most importantly, Lee gained 3 percent in market share in a flat year while Levi’s dropped just as
many percentage points.

What does the future hold? Lee will be back at the X Games and ESPN.com; in print in the
likes of Jane, Rolling Stone, Details, Vibe, Teen People, Mademoiselle, and Entertainment; in TV
spots; but the big surprise is cinema where Lee expects to air ads in 32,000 theatres in four months.
The company argues that cinema is the place to be because consumers aged 12-29 buy 48% of
movie tickets. While in the theater the audience is captive and ad recall of cinema advertising is five
times that of TV (70% vs. 15%). Furthermore, ads can be longer which better accommodates the
Buddy Lee action spots. The question is whether captive audiences are captivated by cinema
advertising or irritated by ads that delay the movie.

Questions for Discussion
1. What are the cues that Lee used in promoting its new Dungarees?
2. Lee Dungarees and Lee Pipes are sub-brands of the Lee family brand. Explain how stimulus
generalization and discrimination can be used to explain consumer’s understanding of the
relationship between the Lee brand and its sub-brands. Does placing the name, Lee, on each of
the new sub-brands have positive or negative effects?
3. What type of learning theory does the Buddy Lee advertising strategy used by Fallon McElligott
exemplify? Classical conditioning? Instrumental Conditioning? Cognitive Learning Theory?
Explain your answer using the terms associated with the theory.
4. Is the message of the Buddy Lee ad (authenticity, etc.) appropriate for the Generation Y
audience? Why or why not?
5. Are jeans likely to be a high or low involvement purchase for teens? How does this relate to
advertising for the product?
6. In terms of involvement and information processing, is cinema a good medium for Lee to use?
Why or why not? Describe the type of ads that they should use.
7. One P, Place, is not covered in the case. Lee Dungarees are frequently found in mass
merchandisers such as Sears, department stores such as Hechts and discounters such as Kohls.
Are these appropriate outlets given the image that Lee is trying to promote?


Barbie: Cultural Icon, New Age Guru or Blonde Bimbo?

She’s 56 years old, but hasn’t aged a day; her hair hasn’t turned gray; she hasn’t gained a
pound; and she’s been number one nearly all her life. It’s Barbie, of course. Introduced in 1959 as a
teenager, Barbie turned 40 in 1999. Throughout her life, she’s enraged feminists and mothers and
warmed the hearts of millions of little girls. No matter how her revile her, she bounces back.
Initially, just a blonde teenager, Barbie has moved with the times to become a career woman, a
sportsman, an international sensation and an American icon—a true piece of American culture.
From incarnation, Barbie has been the center of controversy. Recognizing that mothers
wouldn’t like this Teutonic sex doll, the famous motivational researcher, Dr. Ernest Dichter
suggested that Barbie be introduced as a “teenage model” to encourage concern with proper
appearance. Thus, from the start, Barbie’s function was to teach young girls to be concerned with
their weight, their hair, their clothes and their face—just the fuel the controversy needed.
Part of the problem stems from the fact that she is all out of proportion. If she were a real
woman, she would be seven feet tall, have a 40” bust, a 22” waist, 36” hips and five foot long legs,
and she would be anorexic. Accepted as the U.S. version of beauty, Barbie reminds all the short,
brown-haired, brown-eyed girls with tubbier figures that they are not beautiful. Hence, generations
of young girls have struggled to be more Barbie-like. The result, critics say, is anorexia, bulimia, and
a devastated self image. In some ways, this argument does not seem farfetched. Observe all of the
Hollywood starlets and models with size 2 figures and flowing blonde manes. Few were born that
way. Instead, they have dieted, dyed their hair, worn colored contacts, used liposuction and surgical
implants to achieve a Barbie-like figure.
Labeled a blonde bimbo by her critics, Barbie also teaches young girls to become shallow
and superficial, concerned about fashion and appearance rather than learning to deal with real world
issues or developing their minds, talents and abilities. The endless parade of Barbie clothes and
Barbies whose hair one can style and whose face can be made up endlessly seem to support these
arguments. Worse even, Barbie encourages acquisition. She has truckloads of clothes and all sorts
of belongings (homes, campers, tents, swimming pools, etc.).
Another side of Barbie is that she has been a great success -- the number one selling toy for
Mattel, Inc. most of her life. All the various add-ons from Ken through clothes, cars and homes to
Strawberry Shortcake have simply been good marketing—brand and line extensions that contribute
greatly to Mattel’s bottom line. Using lifestyle marketing, Mattel has added real products for girls—
sunglasses, casual and sports attire so that they can actually dress like Barbie!
Her defenders -- frequently little girls who played with Barbie dolls -- point out that she is a
great tool for stimulating the imagination. They can make their Barbie doll do and be anything they
want to be – the clothes and shoes and tiny sunglasses aren’t necessary. Indeed, advertising for
Barbie’s fortieth birthday in 1999 picked up on this theme. “I am unstoppable,” a little girl in the ad
says…”I am wise…I am curious. We’re going to rule the World!” chorus a group of little girls.
They close with “Together we can do anything. Be anything. Be anything…” From queen of the
superficial, Barbie has become a new age inner healer who teaches little girls that they can do and be
anything. No longer a destroyer of little girl’s self images, Barbie has become the teacher for the
millennia that we can do and be what we want to be.

The new Barbie dolls tend to support this “do-anything, be-anything” image. Barbie has
become an athlete hawked by the likes of Tara Lipinski, Rebecca Lobo, Mia Hamm and Jeff Burton
(…Jeff Burton?). Yep, Barbie can ice-skate, play basketball, soccer and drive in NASCAR. Once
the ponytailed blonde cheerleader, Barbie has moved from spectator to player. Of NASCAR Barbie,
Jeff Burton says “In all honesty, it’s pretty neat to have an American icon like Barbie in NASCAR
racing.” NASCAR Busch Grand National driver Patty Moise echoes Burton’s comments.
“NASCAR has enabled me to fulfill a lifelong dream to compete in racing…I hope NASCAR Barbie
will inspire more young women to go after their dreams.” In sports, Barbie is supposed to convey a
message of strength, independence and even beauty in an unforced way. The acceptance of Major
League Baseball, WNBA and NASCAR Barbie also reflects changes in culture that being an athlete
is something little girls can strive for and parental approval of those girls playing competitive sports.
It’s not all glamorous careers for Barbie. She has also been a teacher, engineer, pet doctor,
dentist, lifeguard and president—even a paleontologist (someone who studies life forms from a
former geologic period). And the current Barbie web site allows girls to help “detective Barbie”
solve the mystery at the carnival over and over with different clues. Thus, Barbie is also a good role
model for everyday occupations for little girls and she may become better with Mattel’s acquisition
of Learning Co. a maker of childrens’ software and games including the popular Carmen San Diego.
Through computer programs, Barbie can teach girls to spell, do math and develop stronger
reasoning skills.
Barbie has also gone international. Barbie is sold around the world in the original blonde-
haired, blue-eyed version along with international Barbie such as Kenyan Barbie, Polynesian Barbie,
spring time in Tokyo Barbie (has black hair), etc. Not all cultures have responded positively to her.
In Egypt and other middle eastern countries, Barbie is not only likely to be banned (due to makeup,
short skirts, no underwear and lack of a veil) but even replaced by dolls that these countries’
governments have helped develop such as the Laila doll from Abla Ibrahiem of the Arab League.
“Barbie wears a bikini and drinks champagne,” says Abla. “We need to prevent our children from
feeling torn between their Arab traditions and the lifestyle that Barbie represents.” “It is hard to
explain to the kid just who that man (Ken) is in Barbie’s life,” complains a Cairo television producer
and mother of a seven year old girl.
Barbie has also clashed with cultures closer at home. Puerto Rican Barbie may be liked in
Puerto Rico, but Puerto Ricans in New York object to her. They claim that her colonial garb
misrepresents Puerto Ricans and the history of Puerto Rico on her box is not entirely accurate.

Questions for Discussion

1. How does Barbie represent cultural beliefs, values and customs? Explain your answer.
2. What kind of cultural learning is involved with playing Barbies?
3. How is/could Barbie be used in learning cultural rituals?
4. What American core values can be associated with Barbie?
5. Some critics would maintain that the introduction of Barbies in different nationalities leads to
the Americanization of cultures. What kind of cultural learning is involved for Barbie to teach
young people new cultural values? Is this Americanization likely to occur? Why or why not?
6. Is Barbie a good or poor role model for girls? Do Major League Barbie, teacher Barbie,
paleontologist Barbie or NASCAR Barbie teach girls self-esteem and confidence? Why or why


Kodak: Creating Digital Moments

“It’s an easy way to show your prints. It’s one thing to receive a written e-mail from home.
It’s much more powerful to see family and friends right on your computer screen,” says Phil Austin,
system specialist for the Navy Exchange Service Command in Virginia Beach. Phil was one of the
first to see the benefits of joining Kodak’s network of processing labs that turn conventional film
into computer-digitized images for computer use.
Such comments are music in the ears of Rory R. Gumina, Kodak’s director of marketing for
digital imaging services, and Carl Gustin, Jr., Senior Vice President at Eastman Kodak. Since Kodak
made the decision in the early 1990s to enter the digital imaging business in a big way, Kodak
management led by then-CEO George Fisher has been roundly criticized.
For a long time, it looked as through the critics were right. The diversion of funds from the
traditional photography business to digital imaging came just at the time that Fuji began aggressively
distributing and cutting price on film in the U.S.. Without marketing funds (that had gone to digital
imaging), Kodak’s market share in film dropped by 10%. To improve the bottom line, Fisher
slashed 7,600 jobs and reduced costs by $350 million which boosted operating profit margins to
18.5%. But even as these measures shored up the balance sheet, the digital business was drowning
in red ink and it got worse. In 1998, digital sales declined 5% and Kodak lost another $64 million.
Why is Kodak willing to make sacrifices for digital imaging? The answer is simple. They
think it’s the future for photography. According to Carl Gustin there have been three major
developments in photography. The first was silver halide photography; the second color
photography and the third digital imaging. The first made it possible for ordinary folk to take
pictures; the second gave them color pictures and the third enables them to “remake their pictures,
access them and make it easy to display them, recompose them, share them and communicate them
around the world,” according to Fisher.
Digital imaging relies on computer technology and the ability to record pictures on disk for
use on PCs and upload to the Internet. When Kodak first entered digital imaging for the consumer
market, they introduced digital cameras with price ranges of $800 to several thousand dollars.
Although the investment in the camera was significant, purchasers would save over the lifetime of
the camera because they could use computer disks and store their pictures on their hard drives,
foregoing the cost of film and processing. And they could use the disks over and over and over.
Even as Kodak brought the price of digital cameras down to the $300 and $400 mark, they found
that consumers weren’t buying, and the red ink continued to flow.
Thinking that CDs might be the answer, Kodak introduced the Photo CD which required
that consumers purchase a $400 machine to read the disks. Another flop. Then, they shifted to
FlashPixCD which cost about $25 per unit, but which took several days to process but the
consumer couldn’t manipulate the images. Still another flop.
Finally, Kodak realized that you just can’t teach old picture-taking dogs major new tricks.
They realized that they were asking consumers to change the way they take and develop pictures in
order to get digital images useful for computer manipulation. Suppose it were possible for
consumers to engage in their usual behavior (same camera, same film, same trip to the retailer to be
processed), but their pictures were returned in digital format? It wouldn’t be true digital imaging,
but it would still allow them to upload their pictures and, like Debbie Dey, send them around the
world via e-mail.

Because it’s a hybrid process, Kodak calls it digitization which means taking traditional film
and digitizing it. To obtain it, all consumers have to do is ask for Picture CD when they take their
film in for processing. The extra cost is approximately $9 per roll, but the consumer gets a CD
which contains all the necessary software to manipulate their pictures in addition to their prints.
To produce Picture CD, Kodak teamed with Adobe which developed the software for the
CD. Once loaded in the CD-ROM drive, easy-to-follow instructions guide people through the CD’s
options using a magazine format. A pop-up window delivers the consumer’s entire roll of pictures
in a slideshow format. The table of contents includes basic functions, more advanced functions and
“Other Cool Stuff”.
What can you do with Picture CD? In Basic Functions, you can rotate images, add
names/captions and sharpen the color. You can e-mail pictures as attachments to friends, family,
even husbands on the other side of the world. You can create a slideshow by choosing specific
pictures for presentation, customizing the timing and selecting from a variety of slide transitions.
You can pint simple or multiple pictures in different sizes and make your pictures into wallpaper for
your computer monitor. Finally, you can upload your pictures to the Internet—hopefully to Kodak
PhotoNet Online where you will find more ways to extend your picture use by printing them on t-
shirts or neckties or making your own calendar or mouse pad. That’s for starters.
In Advanced Functions, you can adjust brightness and contrast; trim; remove red-eye or
stylize your pictures with artistic effects such as embossing, mosaics, or even convert them to black
and white. You can apply visual effects to create new looks such as mirror images or painting one
picture over another.
The Other Cool Stuff enables you to use Cosmopolitan Virtual Makeover Beauty Sample
from SegaSoft to glamorize your pictures.
Choosing not to make the same mistake, Kodak test marketed the Picture CD in the last
quarter of 1998 in Salt Lake City and Indianapolis. These markets were chosen because of their
geographic isolation (no spillover effects to other markets), normal penetration of PCs, and
availability of Kodak Qualex labs (necessary for the digitization process). Picture CD was
purchased by 5% of consumers who had film processed—a greater percentage than Kodak had
“We’ve tapped into a pent-up demand for digitization,” says Rory Gumina. “We think, with
these products, we’re finally hitting a sweet spot that consumers have been waiting for.”
Based on the results, Kodak planned to roll out Picture CD to 40,000 labs nation-wide in
1999. The rollout will be backed by a $150 million campaign over a three year period. In that
campaign, Kodak has some powerful partners. First, it has inked a deal with AOL (America Online)
that will allow users to use the famous e-mail service—You’ve Got Mail--to send pictures—You’ve
Got Pictures. This expands the Picture CD market by 19 million , the size of the AOL customer
base. Second, both Kodak and Intel, the firm that developed the technology to actually make digital
images from traditional film, will advertise the product. “First, Kodak’s ad will show how Kodak
Picture CD lets people do innovative things with their pictures on computers, followed by Intel
Pentium II advertisements promoting Kodak Picture CD as a feature application,” says Gumina.
The Kodak ads will introduce a new tagline, “Take Pictures Further.”
The combined companies have come up with a new slogan “Cool Technology. Warm
Moments.” to capture the Intel technology image and the Kodak moments image. The result is
possibly a fusion in the consumers’ mind of Kodak + Intel. Kodak becomes more of a technology
company and Intel becomes a warmer, fuzzier company. The goal is to re-position Kodak as a
technology firm for the new millenium. That’s why it is leveraging its alliances with Adobe, Intel
and Hewlett Packard (what else are you going to print those pictures on?) in advertising and co-
branding of products.

While you may not think that 5% of film processing sounds like a big market, just consider
that 750 million rolls of film are processed each year. If Kodak captures just 5% of that processing
business with an additional cost of $9 per Picture CD, they will generate over $330 in revenue which
would be split between Kodak and its partners. Twenty percent of the market would be over $1
billion in extra revenue.
But are sales of Picture CD Kodak’s desired end result? Think about consumers who begin
having fun remaking their pictures. For every roll of film developed, it costs them an additional $9
for Picture CD. Eventually, they will realize that they are buying the same software over and over.
Would they then begin to think about buying—you guessed it—a digital camera? After buying 33
Picture CDs, they would have paid for a digital camera!
In between purchase of the first Picture CD and eventual possible purchase of a digital
camera lies the Internet. Kodak’s PhotoNet Online service not only enables consumers to do more
with their pictures—remember the t-shirts and neckties? It also brings Kodak into contact with its
customers. At present, Kodak produces the film, the cameras, lenses and filters and the
photographic developing equipment, but it’s the retailer who has personal contact with the end user.
Through its Internet operation, Kodak can begin to identify its customers and build a database that
could be used for direct marketing offers. Then, it would be in a position to engage in relationship
marketing with its consumers which could increase the potential to trade Picture CD users up to
digital cameras. Heavy users could be identified and offers for cameras and other Kodak products
could be sent to them.
Will digital imaging succeed in the consumer market? So far, Kodak has found this a
difficult concept to sell, but maybe Picture CD will change that. Being copied by the competition is
usually a good sign. In 1998, Seattle FilmWorks, Inc., a mail order developer began offering a
similar product with lower image resolution and a lower price tag – about $4.00. Both Konica and
Fuji plan to enter the market with CD products in the year 2000. What does that mean for Kodak?
“They (Kodak) have a leg up on the competition with regards to taking advantage of the Web for
imaging, because no one knows imaging better than they do,” says Jack Kelly, analyst at Goldman
Sachs in New York. If Kelly is right, Kodak may finally be able to leverage its imaging investment.
If not, it may be in another price war with Fuji.

Questions for Discussion

1. Who are likely to be opinion leaders for Picture CD?

2. Evaluate Picture CD on the five characteristics of relative advantage, compatibility, complexity,
trialability and observability. Evaluate the digital camera. Which scores better? Why?
3. Why were consumers resistant to earlier versions of digital imaging from Kodak? What were the
barriers to their diffusion?
4. If Kodak gets 5% of the film processing market in 1999, what categories of adopters will have
used Picture CD?
5. How could Kodak affect each of the stages in the adoption process? Awareness, interest,
evaluation, trial and adoption? Is this likely to lead to full-scale adoption of Picture CD?
6. If purchasers of Picture CD buy it because “Even though it cost more, it provides more useful
features”, what kind of decision rule are they using? If they bought it just because they want to
see loved ones and friends pictures with e-mails, what kind of decision rule is that? If they buy
from Seattle FilmWorks, “Because it was cheaper, even though the resolution wasn’t as good,”
what kind of decision rule is that? If they bought it “Because Kodak and Intel are both
wonderful companies that make great products” what kind of decision rule is that?