Chapter 5: The Consumer and Marketing Fundamentals

Consumer Behaviour Basics

Consumer behavior is affected by both internal and external forces. The challenge lies in dissecting the consumer mindset and analyzing basic underlying motivations - the world of needs and wants.

Personal Traits and Psychographics

Decisions are influenced by internal personality traits and demographic factors. Not only does the mindset vary, but also personal backgrounds.

What Others Think

Our opinions are formed by what others say or do. We often make decisions based on what other people will think of our purchases. Many people follow others for conformity, whether out of fear of being different, a desire to belong or both. 

Market Niches

Consumers are social and the urge to flock with others of similar psychographic, ethnic, age and etc. is strong. The consumer marketplace is made up of many sub-markets that can be based on such factors as - ethnicity, income level, lifestyle, family structure, and age.

Culture

The Electronic World Beyond 

Brand Loyalty

Confidence personally attributed to a specific product through brand loyalty. Often, consumers unconsciously dismiss countless valid alternatives, only to pick up that favorable label.

Product Appeal

People don't buy houses, they buy homes. The design, layout, amenities, colors, all play out in the decision-making process.

 

Consumer Needs and Wants

Hierarchy of Needs (Maslow):

1. Self-Actualization - personal fulfillment and the ability to develop one's potential in terms of creativity and outward expression.
2. Ego - general feeling of self-satisfaction. Behind these are financial security and social acceptance. Status Symbols - a tangible sign of economic or social status.
3. Social - involves love, family, companionship, social ties and desire to belong.
4. Security - can range from either physical or financial.
5. Physiological - basic human drive needs for existence (ex. search for food and water). If these needs are not fulfilled, they become #1 priority.

 

Consumer Vulnerabilities (Уязвимости)

Confusion Regarding Who Represents Who

Consumers often don't understand agency law. REBBA 2002 sets out detailed disclosure requirements, which require that buyers and sellers are fully aware of service alternatives available through the brokerage.

Caution When Inspecting Properties

Brokers and Salespersons should ensure that the buyer understands the importance of carefully inspecting properties, and seeking out an appropriate professional advice.

Due Care When Signing Docs

A Clear understanding of printed clauses. Consumers must read documents carefully before signing. Explain them everything.

Cooling Off Periods

A time period that provides the consumer with an opportunity to cancel whatever action has been taken. Cooling off periods doesn't typically apply when entering into a real estate transaction. Consumers must fully understand what they are signing when purchase or sale.

Failure to Include Conditions

Not Respecting Deadlines

Not Getting Finances in Order

Lenders are cautious and want to see stability (credit history, employment, financial resources, available funds for the downpayment etc.). Also, buyers should have additional cash on hand for any adjustments.

 

Ethics and The Consumer

Morals vs. Ethics

Morals - fundamental principles of right and wrong. Ethics - standards adopted by a society that is deemed to be cultural-specific.

Business Ethics and Professional Standards

Business ethics - professional standards. Real estate registrants in ON must follow RECO Code of ethics. This code has the force of statutory law, contained under REBBA 2002.

Ethics and Law

It is possible to be legally correct, but not ethically acceptable. Law is designed to keep us from doing wrong while ethics encourages us to do that which is right and good.

Ethical Dilemmas

Typically occur when one's moral values are in conflict with standards adopted in a particular society. This dilemma can also extend to a conflict with the law.

 

Consumer Protection Legislation

1. Consumer Protection Act (CPA) - provincial legislation concerning consumer protection in ON. It set out penalties including a max sentence of 2 years with individual fines up to $50k and $250k for corporations.
2. The Competition Act - federal statute addressing many forms of competition in the interest of promoting a fair and efficient Canadian marketplace. The act covers criminal and civil law matters.
3. ON Human Rights Code - an anti-discrimination law for all persons in ON. The ON Human Rights Commission is an independent body, representing the public interest.

 

Privacy Legislation

Personal Info Protection and Electronic Docs Act (PIPEDA)

This federal statute is focused on privacy matters involving business activities. Personal info can't be collected, used or disclosed without the informed consent of individuals. Sensitive personal info should be properly secured either by way of locked cabinets for print materials or password-protected electronic files.

 

Professionals and The Consumer

Lawyers

Lawers provide legal advice and assistance to consumers. Lawers are governed by the Law Society of Upper Canada (LSUC), that will assist regarding complaints provided by the lawyer (misleading info, improper communication, failure to correctly handle funds etc.).

Appraisers

A professional who estimates value and possesses the necessary qualifications, ability, and experience to execute or direct the appraisal of the property. Logical analysis leading to an estimate of value:

1. Define the problem
2. Inspection and planning the work
3. Data collection and analysis
4. Apply the cost approach
5. Apply the direct comparison approach
6. Apply the income approach
7. Final estimate
8. Write the appraisal report

Surveyors

Licensed by the Association of ON Land Surveyors (AOLS). They prepare a Surveyor's Real Property Report that sets out all visible improvements in relation to the property's boundaries. 

Lenders

Federal Acts containing the cost of borrowing Regulations include the Bank Act, the Insurance Companies Act, and the Trust and Loan Companies Act.

Mortgage Brokers

The Financial Services Commission of ON (FSCO) regulates mortgage brokers. They may also be members of IMBA or CAAMP.

Insurance Agents and Brokers

Consumers seek protection against property loss by obtaining insurance through insurance agents and brokers. Agents represent a specific insurance company and brokers have relationships with several companies.

Home Inspectors

Are common when buying a home in ON, inspections are requested by buyers seeking to know about the condition of the property. The report can assist in determining needed repairs and generally placing the house in a better condition for marketing purposes. Ontario Building Code (OBC).