Consumer Buying Behavior And Decision Making


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  • Consumer Buying Behavior And Decision Making

    1. 1. Chapter 4 Consumer Buying Behavior and Decision Making Jason C. H. Chen, Ph.D. Professor School of Business Administration Gonzaga University Spokane, WA 99223 [email_address]
    2. 2. After studying this chapter, you should be able to: <ul><li>Discuss the importance of consumer behavior. </li></ul><ul><li>Understand consumer decision making and some of the important influences on those decisions. </li></ul><ul><li>Distinguish between low-involvement and high-involvement consumer behavior. </li></ul><ul><li>Understand how attitudes influence consumer purchases. </li></ul>
    3. 3. After studying this chapter, you should be able to: <ul><li>Appreciate how the social environment affects consumer behavior. </li></ul><ul><li>Recognize many of the individual consumer differences that influence purchase decisions and behavior. </li></ul><ul><li>Recognize the outcomes of consumers’ decisions to purchase or not to purchase and how they affect marketing success. </li></ul>
    4. 4. OPENING VIGNETTE <ul><li>WWW .USA.VISA. COM </li></ul><ul><li>How has Visa shown that the company understands consumer behavior? </li></ul><ul><li>Why do you suppose that Visa is more focused on in-store purchases that those on the Internet? </li></ul>
    5. 5. The Nature of Consumer Behavior and Decision Making <ul><li>Consumer Behavior: </li></ul><ul><ul><li>The mental and emotional processes and physical activities people engage in when they select, purchase, use, and dispose of products or services to satisfy particular needs and desires. </li></ul></ul>
    6. 6. I. The Nature of Consumer Behavior and Decision Making <ul><li>Factors important to understanding consumer markets and consumer behavior: </li></ul><ul><ul><li>The size of the consumer market. </li></ul></ul><ul><ul><li>Changes in consumer shopping habits and purchase decisions. </li></ul></ul><ul><ul><li>Emphasis on consumer-oriented marketing. </li></ul></ul><ul><ul><li>The design of effective marketing strategy. </li></ul></ul>
    7. 7. Growing Consumer Markets <ul><li>New retail line-ups </li></ul><ul><ul><ul><li>“ Price-centric” </li></ul></ul></ul><ul><ul><ul><li>Lifestyle </li></ul></ul></ul><ul><ul><ul><li>“ Occasion-centric” </li></ul></ul></ul><ul><li>Outdoor living market. </li></ul><ul><li>Consumer electronics. </li></ul><ul><li>Enhanced experience businesses. </li></ul>
    8. 8. Growing Consumer Markets <ul><li>Anti-aging products and services. </li></ul><ul><li>Health as a national hobby. </li></ul><ul><li>High-end sports apparel and equipment. </li></ul><ul><li>Safe packaging, pure contents, and “green” concerns. </li></ul>
    9. 9. Consumer Behavior and the Design of Marketing Strategy <ul><li>Brand Equity: </li></ul><ul><ul><li>The marketplace value of a brand. </li></ul></ul><ul><li>Service Recovery: </li></ul><ul><ul><li>Winning back consumers who defect. </li></ul></ul>
    10. 10. Understanding E-Customers <ul><li>The 10 Most Important Website Attributes: </li></ul><ul><ul><li>Product representation </li></ul></ul><ul><ul><li>Product prices </li></ul></ul><ul><ul><li>Product selection </li></ul></ul><ul><ul><li>On time delivery </li></ul></ul><ul><ul><li>Ease of ordering </li></ul></ul><ul><ul><li>Product information </li></ul></ul><ul><ul><li>Level and quality of consumer support </li></ul></ul><ul><ul><li>Product shopping and handling </li></ul></ul><ul><ul><li>Posted privacy policy </li></ul></ul><ul><ul><li>Site navigation and appearance </li></ul></ul>
    11. 11. Examples of Economic Needs © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Basic Marketing <ul><li>Economy of purchase or use </li></ul><ul><li>Convenience </li></ul><ul><li>Efficiency in operation or use </li></ul><ul><li>Dependability in use </li></ul><ul><li>Improvement in earnings </li></ul>
    12. 12. Marketing Mixes All other stimuli Psychological variables Motivation Perception Learning Attitude Personality/lifestyle Social Influences Family Social class Reference groups Culture Purchase Selection Purchase reason Time Surroundings Problem-solving process Person does or does not purchase (response) Person making decision A Model of Buyer Behavior
    13. 13. Psychological (intra-personal) Variables <ul><li>Motivation </li></ul><ul><li>Perception </li></ul><ul><li>Learning </li></ul><ul><li>Attitudes and beliefs </li></ul><ul><li>Personality </li></ul><ul><li>Lifestyle (psychographics) </li></ul>
    14. 14. Possible Needs Motivating a Person to Some Action
    15. 15. The PSSP Hierarchy of Needs
    16. 16. Ortho Tri-Cycle ad
    17. 17. SELECTIVE PROCESSES Selective retention Selective perception Selective exposure Selective process
    18. 18. II. Consumer Decision Making dfs <ul><li>Individual differences </li></ul><ul><li>Personality </li></ul><ul><li>Lifestyles </li></ul><ul><li>Motivation </li></ul><ul><li>Situational Factors </li></ul><ul><li>Anticipated use </li></ul><ul><li>In store stimuli </li></ul><ul><li>Presence of others </li></ul><ul><li>Social Environment </li></ul><ul><li>Culture </li></ul><ul><li>Social Class </li></ul><ul><li>Interpersonal Influences </li></ul><ul><li>Family </li></ul><ul><li>Outcomes </li></ul><ul><li>Consumer learning </li></ul><ul><li>Dissatisfaction and Complaint </li></ul><ul><li>Behavior </li></ul><ul><li>Presence of others </li></ul>Consumer decision behavior Recognition of need or problem Search for information Evaluation of alternatives Purchase Exhibit 4-2 A general model of consumer decision making and influences 1 2 3 4
    19. 19. High- and Low-Involvement Decisions <ul><li>Involvement: </li></ul><ul><ul><li>The level of importance or interest generated by a product or a decision. </li></ul></ul><ul><li>Consumer Information Processing: </li></ul><ul><ul><li>The cognitive processes by which consumers interpret and integrate information from the environment. </li></ul></ul>
    20. 20. High-and Low-Involvement Decisions <ul><li>High-involvement Decisions: </li></ul><ul><ul><li>Characterized by high levels of importance thorough information processing, and substantial differences between alternatives. </li></ul></ul><ul><li>Low-involvement Decisions: </li></ul><ul><ul><li>Occur when relatively little personal interest, relevance, or importance is associated with a purchase. </li></ul></ul>
    21. 21. Types of Consumer Choices <ul><li>Six Generic Consumer Behavior Choices: </li></ul><ul><ul><li>Product </li></ul></ul><ul><ul><li>Brand </li></ul></ul><ul><ul><li>Shopping area </li></ul></ul><ul><ul><li>Store type </li></ul></ul><ul><ul><li>Store </li></ul></ul><ul><ul><li>Nonstore source (catalogs, PC, & TV shopping) </li></ul></ul>
    22. 22. Attitudes <ul><li>Consumer Attitudes: </li></ul><ul><ul><li>Learned predispositions to respond favorably or unfavorably to a product or brand. </li></ul></ul><ul><li>Attitudes have valence; they can be positive, negative, or neutral. </li></ul><ul><li>Strong attitudes are resistant to change. </li></ul><ul><li>Attitudes can erode over time if not reinforce. </li></ul>
    23. 23. Attitudes – Marketing Implications <ul><li>Attitudes are based on beliefs consumers hold about the attributes or features (price, level of services, quality) of the products they are evaluating. </li></ul><ul><li>Attitudes are primary causes of behavior causing consumers to buy or not buy products </li></ul>
    24. 24. Experiential Choices <ul><li>Consumers frequently make choices based on their emotions and feelings. </li></ul><ul><li>Affect Referral: </li></ul><ul><ul><li>Consumers elicit from memory their overall evaluations of products and choose the alternative for which they have the most positive feelings. </li></ul></ul>
    25. 25. Experiential Choices <ul><li>Impulse Purchases: </li></ul><ul><ul><li>Choices made on the spur of the moment, often without prior problem recognition. </li></ul></ul><ul><li>Time-inconsistent Choices: </li></ul><ul><ul><li>Choices consumers make which act against their own better judgment and engage in behavior they would normally reject. </li></ul></ul>
    26. 26. III. Influence of the Social Environment Exhibit 4-3 Flows of influence with in the social structure Individual consumers Organizations Reference colors Family Media Culture Subculture Social class
    27. 27. Cultural Influences <ul><li>Culture: </li></ul><ul><ul><li>The values, ideas, attitudes, and symbols that people adopt to communicate, interpret, and interact as members of society. </li></ul></ul><ul><li>Culture is learned and transmitted from one generation to the next. </li></ul>
    28. 28. Cultural Influences <ul><li>Socialization: </li></ul><ul><ul><li>The process of absorbing a culture </li></ul></ul><ul><li>Consumer Socialization: </li></ul><ul><ul><li>When socialization is applied to marketing and consumer behavior. </li></ul></ul>
    29. 29. Values <ul><li>Values: </li></ul><ul><ul><li>Shared beliefs or cultural norms about what is important or right. </li></ul></ul>Cultural values directly influence how Consumers view and use individual products, brands, and services.
    30. 30. Values <ul><li>The List of Values (LOV): </li></ul><ul><ul><ul><li>• Self-respect </li></ul></ul></ul><ul><ul><ul><li>• Warm relationships </li></ul></ul></ul><ul><ul><ul><li>• Self-fulfillment </li></ul></ul></ul><ul><ul><ul><li>• Sense of belonging </li></ul></ul></ul><ul><ul><ul><li>• Respect from others </li></ul></ul></ul><ul><ul><ul><li>• Excitement </li></ul></ul></ul><ul><ul><ul><li>• Security </li></ul></ul></ul><ul><ul><ul><li>• Sense of accomplishment </li></ul></ul></ul><ul><ul><ul><li>• Fun and enjoyment in life </li></ul></ul></ul>
    31. 31. Values <ul><li>Values and Lifestyles (VALS): </li></ul><ul><ul><li>Identifies eight market segments (chapter 7) that share similar end values. </li></ul></ul>
    32. 32. Subcultures <ul><li>Ethnic Patterns: </li></ul><ul><ul><li>The norms and values of specific groups or subcultures within a society. </li></ul></ul><ul><ul><li>Ethnic groups or subcultures may be formed around national, religious, racial, or geographic factors. </li></ul></ul><ul><ul><li>Members of a subculture share similar values and patterns of behavior, making them attractive marketing targets for specific products and brands. </li></ul></ul>
    33. 33. Subcultures <ul><li>Demographic characteristics used to identify subcultures: </li></ul><ul><ul><li>Nationality - Hispanics, Italians </li></ul></ul><ul><ul><li>Race - African-American, American Indian, Asian </li></ul></ul><ul><ul><li>Region - New England, the South </li></ul></ul><ul><ul><li>Age - Elderly, teenager </li></ul></ul><ul><ul><li>Religion - Catholic, Jewish, fundamentalist </li></ul></ul>
    34. 34. Social Class Influences <ul><li>Social Classes: </li></ul><ul><ul><li>Relatively homogeneous divisions within a society that contain people with similar values, needs, lifestyles , and behavior . </li></ul></ul>
    35. 35. Family Influences and the Family Life Cycle <ul><li>Family influences play two important roles in: </li></ul><ul><ul><li>The socialization of people. </li></ul></ul><ul><ul><li>Affecting individual purchase decisions. </li></ul></ul>
    36. 36. <ul><li>Family Life Cycle: </li></ul><ul><ul><li>The sequence of steps a family goes through: </li></ul></ul><ul><ul><ul><li>From young, to </li></ul></ul></ul><ul><ul><ul><li>Single adults, to </li></ul></ul></ul><ul><ul><ul><li>Married couples whose children have left home, to </li></ul></ul></ul><ul><ul><ul><li>The retired survivor </li></ul></ul></ul>Family Influences and the Family Life Cycle
    37. 37. Social (intra-personal) Influences on Consumers © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Basic Marketing <ul><li>Family </li></ul><ul><li>Reference groups </li></ul><ul><li>Social class </li></ul><ul><li>Culture and subculture </li></ul>
    38. 38. Characteristics and Relative Size of Different Social Class Groups in the United States Relative size Group Some (abbreviated) characteristics Upper-class Upper-middle class Lower-middle class* Upper-lower (“working”) class* Lower-lower class 1.5% 12.5% 32% 38% 16% People from old wealthy families and socially prominent new rich... Small business people, teachers, office workers, technicians--the typical white collar workers... The blue collar workers--factory workers, skilled laborers, and service people…most earn good incomes... Unskilled laborers and people in very low status occupations * America’s “mass market”
    39. 39. Characteristics and Attitudes of Middle and Lower Classes <ul><li>Middle classes </li></ul><ul><ul><li>Plan and save for the future </li></ul></ul><ul><ul><li>Analyze alternatives </li></ul></ul><ul><ul><li>Understand how the world works </li></ul></ul><ul><ul><li>Feel they have opportunities </li></ul></ul><ul><ul><li>Willing to take risks </li></ul></ul><ul><ul><li>Confident about decision making </li></ul></ul><ul><ul><li>Want long-run quality or value </li></ul></ul><ul><li>Lower classes </li></ul><ul><ul><li>Live for the present </li></ul></ul><ul><ul><li>&quot;Feel&quot; what is &quot;best&quot; </li></ul></ul><ul><ul><li>Have simplistic ideas about how things work </li></ul></ul><ul><ul><li>Feel controlled by the world </li></ul></ul><ul><ul><li>&quot;Play it safe&quot; </li></ul></ul><ul><ul><li>Want help with decision making </li></ul></ul><ul><ul><li>Want short-run satisfaction </li></ul></ul>
    40. 40. Interpersonal Influences <ul><li>Reference Groups: </li></ul><ul><ul><li>Those others look to for help and guidance including friends, co-workers, and others. </li></ul></ul>
    41. 41. Interpersonal Influence Processes <ul><li>Three Types of Interpersonal Processes: </li></ul><ul><ul><li>Informational influence is based on the consumer’s desire to make informed choices and reduce uncertainty. </li></ul></ul><ul><ul><li>Utilitarian influence is reflected in compliance with the expectations, real or imagined, of others – referred to as norms . </li></ul></ul><ul><ul><li>Value-expressive influence stems from a desire to enhance self-concept through identification with others. </li></ul></ul>
    42. 42. Interpersonal Influence Processes <ul><li>Normative Influence: </li></ul><ul><ul><li>A combination of Utilitarian and Value-Expressive Influence . </li></ul></ul>
    43. 43. IV. Individual Differences <ul><li>Sources of Individual Differences Influencing Consumer Behavior: </li></ul><ul><ul><li>Word-of-mouth communications </li></ul></ul><ul><ul><li>Personality </li></ul></ul><ul><ul><li>Lifestyles and psychographics </li></ul></ul><ul><ul><li>Motivation </li></ul></ul>
    44. 44. Word-of-Mouth Communications <ul><li>Opinion Leaders: </li></ul><ul><ul><li>Influence consumer behavior through </li></ul></ul><ul><ul><li>word-of-mouth communications. </li></ul></ul><ul><li>Market Mavens: </li></ul><ul><ul><li>Consumers who know about many kinds of products, </li></ul></ul><ul><ul><li>places to shop, and other facts of the market, and they </li></ul></ul><ul><ul><li>like to share this information with other consumers. </li></ul></ul>
    45. 45. Personality <ul><li>Personality: </li></ul><ul><ul><li>Reflects a person’s consistent response to his or her environment. </li></ul></ul><ul><li>Personality traits related to consumer behavior: </li></ul><ul><ul><li>Extroversion </li></ul></ul><ul><ul><li>self-esteem </li></ul></ul><ul><ul><li>dogmatism (closed-mindedness) </li></ul></ul><ul><ul><li>aggressiveness </li></ul></ul>
    46. 46. Personality <ul><li>Self-Concept: </li></ul><ul><ul><li>The overall perception and feeling that one has about herself or himself. </li></ul></ul>
    47. 47. Lifestyles and Psychographics <ul><li>Lifestyle: </li></ul><ul><ul><li>Describes a person’s pattern of living as expressed in activities, interests, and opinions (AIO statements). </li></ul></ul><ul><li>Psychographics: </li></ul><ul><ul><li>Divide a market into lifestyle segments on the basis of consumer interests, values, opinions, personality characteristics, attitudes, and demographics. </li></ul></ul>
    48. 48. Motivation <ul><li>Motivation: </li></ul><ul><ul><li>Refers to a state or condition within a person that prompts goal-directed behavior. </li></ul></ul><ul><li>Maslow’s Hierarchy: </li></ul><ul><ul><li>Self-actualization Needs - Art, books, recreation </li></ul></ul><ul><ul><li>Esteem Needs - Clothing, home furnishings </li></ul></ul><ul><ul><li>Love and Belonging Needs - Mementos, gifts, photos </li></ul></ul><ul><ul><li>Safety Needs - Burglar alarms, seat belts </li></ul></ul><ul><ul><li>Physiological Needs - Food, heat, shelter </li></ul></ul>
    49. 49. V. Situational Factors Consumers purchase goods for use in certain situations. Situational factors can inhibit as well as motivate. The anticipated use influences choice.
    50. 50. Situational Factors <ul><li>Consumers buy products with anticipated uses in mind. </li></ul>
    51. 51. VI. Consumer Behavior Outcomes 1. Consumer Learning happens when changes occur in knowledge or behavior patterns. 2. Consumer satisfaction, Dissatisfaction, and Complaint Behavior 3. Cognitive Dissonance
    52. 52. Consumer Learning Consumer Learning happens when changes occur in knowledge or behavior patterns. Marketers influence consumers by imparting knowledge through advertising, product labels, and personal selling. Marketers hope consumers will attend to, comprehend, and then remember these messages
    53. 53. Drive Cues Response Reinforcement The Learning Process
    54. 54. White Wave Silk and CardioLinks ads
    55. 55. Consumer Satisfaction, Dissatisfaction, and Complaint Behavior <ul><li>Satisfaction and dissatisfaction describe the positive, neutral, or negative feelings that may occur after purchase. </li></ul><ul><li>Consumer complaints are overt expressions of dissatisfaction. </li></ul><ul><li>Firms adopting a customer value perspective must employ marketing communications that convey realistic expectations. </li></ul>
    56. 56. A Model of Consumer Satisfaction Exhibit 4-8 A model of consumer satisfaction Customer satisfaction: car fixed Customer Dissatisfaction: car still broken Actual service performance: poor repair job Customer expectations: repair work Disconfirmation Negative Positive
    57. 57. Findings of Customer Satisfaction Research <ul><li>Satisfaction judgements evolve and are changeable as products are used. </li></ul><ul><li>Satisfaction judgments have a social component determined by the satisfaction of others in the household. </li></ul><ul><li>Emotions are important and yield insights beyond simple comparison standards, such as expectations and performance. </li></ul><ul><li>Product satisfaction is also related to quality of life and life satisfaction. </li></ul>
    58. 58. Customer Complaints Voice Responses (seeking satisfaction directly from the seller) Third-party Responses (taking legal action, filing complaints with consumer affairs agencies) Private Responses (bad-mouthing to friends)
    59. 59. Cognitive Dissonance <ul><li>Cognitive Dissonance: </li></ul><ul><li>A form of postpurchase doubt about the appropriateness of a decision. </li></ul><ul><li>Cognitive Dissonance occurs when: </li></ul><ul><ul><li>Decisions are major </li></ul></ul><ul><ul><li>The purchase is important </li></ul></ul><ul><ul><li>Perceived risk is high </li></ul></ul><ul><ul><li>The purchase is visible </li></ul></ul><ul><ul><li>The decision involves a long-term commitment </li></ul></ul>
    60. 60. VII. Ethical and Social Issues in Consumer Behavior Unethical consumer behaviors include shoplifting and abuse of return policies Consumers are increasingly incorporating social concerns into their buying decisions
    61. 61. Ethical and Social Issues in Business Behavior Standards of Business Behavior Evaluation Corporate Social Responsibility Business Ethics
    62. 62. Psychological variables Motivation Perception Learning Attitude Personality/lifestyle Social influences Family Social class Reference groups Culture Purchase situation Purchase reason Time Surroundings Marketing Mixes All other stimuli Response Need-want awareness Routinized response Search for information Set criteria and evaluate alternative solutions Decide on solution Purchase product Postpone decision Postpurchase evaluation Feedback of information as attitudes Person making decisions An Expanded Model of the Consumer Problem-Solving Process