MKT3050 – Consumer Behavior Seminar                      Week 7 – April 30, 2012©2012 Cengage Learning. All Rights Reserve...
So how do Consumers make decisions?                              Consumption Process and Decision-Making                  ...
Objectives• This week, we’ll apply planning, forecasting and evaluation skills to  consumer behavior patterns within the m...
Consumers Develop Criteria to Evaluate                                                              Options…              ...
Remember that when we are gathering                                            information, we place it into categories….•...
What determines the type of evaluative criteria                                                  consumers use?•     Situa...
How good are Consumers evaluating options?                                         Consumer Judgment• Consumer judgment is...
Issues Affecting Consumer Judgments              Just noticeable                                                          ...
Consumers have rules for choices…                                                          Sometimes we make trade-offs.  ...
Non compensatory rules for selection•     Lexicographic      – Strong performance on most important attribute yields a ‘ye...
What is Consumption?                    And What is the Basic Consumption Process?                                        ...
What are the types of Consumption Behavior?http://www.youtube.com/watch?v=4DHT7b0QjW8http://www.youtube.com/watch?v=MOBdTP...
How can Marketers Change Consumption?        • Increasing Consumption                – Increase frequency, sometimes throu...
What are the Outcomes of Consumption?                                                                                     ...
Satisfaction and Dissatisfaction                                                                                          ...
Consumer ReactionsWhy good / bad happenedWas my experience the sameas others?                                             ...
Strategies for Keeping Customers          • Offer some type of customization          • Demonstrate a commitment to qualit...
Consumer and Company: Travelocity                   • Watch this clip on how Internet travel company                     T...
Characteristics of Relationship Quality                                                                                   ...
Value Types and Loyalty                                                                                                   ...
Remember that building loyalty also involves                                                    Associations              ...
Loyalty affected by                                                                                                       ...
Tactics for Building Loyalty                                                                                              ...
Consumer Value Framework (CVF)                                                                                            ...
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Mkt3050 – consumer behavior week 7 april 30, 2012

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  • This webinar covers material from Chapters 13 and 14 in the CB3 textbook.
  • Now that we’ve talked about the internal and external influences consumers face when making decisions, let’s talk more specifically about the decision making process. This diagram links the consumption process on the left that we talked about in Chapter 1 with the decision-making process on the right. All along the process is the idea of choice – with the goal to find value. Note that the process doesn’t always go in order – sometimes the process isn’t completed (we may stop after evaluating alternatives, for example, and not make a choice or purchase). And decision making is also linked to the ideas of motivation and emotion that we covered earlier in the class. We’re going to build on need recognition and searching for information to talk about evaluating alternatives and making a choice.
  • Marketers continue to learn how consumer evaluate their options… the first aspect of this understanding is to learn the criteria that are important to the decision. Evaluative criteria are the attributes, features, or potential benefits consumers consider when reviewing possible options… the discussion board, “How do you Choose a New Computer” helped you outline your evaluative criteria. Determinant criteria are those attributes that you use to make your final decision. Even though many of you listed similar criteria, you may not share determinant criteria – for some of you, price may be a determinant, for others, it’s brand name or service, or even hard drive space. Like much of the decision process we’ve examined to-date, evaluative criteria are based on what you value!
  • As we gather information about product attributes / benefits, we tend to categorize it. Remember we put information in a context of what’s familiar so we can understand it and so the information has meaning. When we are evaluating a new product or service, we first look at the ‘category’ – a mental representation of a group of products that share similar attributes and benefits. Categories are broken into superordinate and subordinate categories – the superordinate category is the highest level – somewhat abstract. Our assignment last week about orange juice? That superordinate category is beverages. The subordinate or more detailed category is juice. You gave some very detailed attributes about orange juice that helps you make evaluations.
  • The number of criteria a consumer uses to evaluate options depends on several factors… if the situation involves a purchase for someone else, you may have different criteria than when buying for yourself. When you have a lot of product knowledge, you tend to focus on what’s most important to you – if you are new to the category, then you may have to sift through more criteria to decide what to focus on. Having access to experts – or relying on reference groups, on-line sources and marketing communications -- are all types of product knowledge – sources that can help you focus on key attributes. The number of criteria needed to make a choice vary – and can reach 15 aspects before consumers become too overloaded to make a decision … sometimes the number of criteria is very small.
  • Judgment will differ by culture, micro culture – and consumer knowledge of the product. Based on our earlier discussions, you can see how someone new to a micro culture may have more difficulty evaluating a product they’ve never seen before… they need to make judgments about the features, benefits and value of those benefits – and look across several options. Think about smart phones… the attached commercial is designed to offer information about features / benefits to micro-cultures who haven’t made the change yet.
  • Our ability as consumers to make accurate judgments depends on several issues – can consumers perceive a difference between the new product and an existing product? If not, then the consumer won’t place much value on the new option. Judgments also reflect consumer linkages between attributes – things like price and quality... Or wait time… for some consumers, wait time means individual attention, for others it means poor service. The judgment of that service and its value – will be different depending on consumer opinions. And brand name associations also carry weight with consumers – names like Apple and Dell carry different connotations that affect consumer judgments about the products.
  • Once evaluative criteria are identified – consumers develop the list of attributes / benefits the product must have, then consumers have two types of rules they use to make choices. Compensatory rules allow consumers to select products that don’t meet expectations on one attribute if they DO meet expectations on another attribute. Our discussion about Curves and the assignment about energy drinks examined this idea – if the product or service scores highly overall, we can overlook some deficiencies. In contrast, noncompensatory rules are strict guidelines that eliminate any option that doesn’t meet exact needs.
  • Non compensatory rules are shown here. The lexicographic rule chooses the product that performs best on the most important attribute. The conjunctive rule establishes cut-offs for each important attribute… the item selected must ‘hit’ that minimum on all attributes. The disjunctive rule focuses on how well the product performs – so a high ‘score’ on any one attribute can lead to a choice… it doesn’t matter if another attribute is more important – the choice is based on the product that has the highest score on at least 1 attribute. Finally, the elimination by aspects model looks at the most important attribute… any brand that ‘passes’ the performance hurdle moves on to the next attribute… if a brand falls short on performance, it’s eliminated from consideration. This process continues until a brand is selected. One of your assignments this week will take your New Computer discussion board responses and apply these different rules to make a brand choice.
  • After a choice is made, then consumption begins… consumption converts the goods or services purchased into value – hopefully satisfactory value!
  • Just as we study decision-making behavior, marketers also watch consumption behavior. Answering questions like ‘when is it consumed?’ and ‘where is it consumed’ help with segmentation… I can focus on consumers who drink orange juice at home in the morning with one product / message…and focus on those who buy orange juice to take to the gym after work with another product / message. Those who use orange juice as a mixer represent a way to expand usage… and understanding how much is consumed can lead to ideas for promotions -- like coupons or recipes – that will get people to use more. Take a look at the two commercials that look at the ‘need states’ of consuming orange juice.
  • Marketers can increase consumption – sometimes making smaller packages that lead to more frequent purchases. Then can also make larger packages, which surprisingly lead to faster consumption. And making product modifications - -more flavors, more added benefits like vitamin C or fiber for juice – can increase consumption as people add more options. Sometimes, marketers strive to decrease consumption – we had a discussion board earlier in the class about smoking – certainly messaging and gov’t intervention have focused on that! Certain medications have been moved to behind the pharmacy counter to decrease consumption by teens.
  • When consumption leads to satisfaction, then marketers have delivered value… and hopefully are building loyalty.
  • Here are the textbook definitions of satisfaction and dissatisfaction – no surprises here.
  • Marketers are concerned with consumer reactions because dissatisfaction leads to complaining, switching and negative word-of-mouth. Satisfaction leads to positive word of mouth and loyalty.
  • How to keep customers? Some ideas are noted here, and we’ll also have a discussion board about how marketers can build loyalty.
  • Loyalty can be a function of several dynamics as shown here… consumers place value on competence, communication, trust, equity, personalization and customer focus.
  • And just as purchases and criteria can be utilitarian or hedonic in value – so can loyalty. Sometimes loyalty is based on utilitarian values… in other situations, hedonic value drives loyalty.
  • Loyalty can also be affected by associations… these personalities created positive associations that helped generate loyalty… but for Tony Hayward of BP Oil, negative associations led to erosion of loyalty and he lost his job.
  • Walmart has struggled with loyalty … as more consumers focus on buying local and Walmart is viewed by some as a destroyer of local communities.
  • Several tactics are employed by marketers to build loyalty… we’ll have a discussion board that examines this idea in more detail.
  • But for now, we’ll close with the consumer value framework that summarizes ideas we’ve covered in the past few weeks. Consumer behavior is value seeking – either utilitarian or hedonic value (sometimes a bit of both). The seeking of value is affected by a host of internal influences – and external influences – that can create a gap between what we have and what we desire. This gap -- or need – leads consumers to begin a decision making process to find value. If the process is successful in delivering value – the satisfied consumer may become a loyal customer… but if the process fails, the dissatisfied consumer may continue the quest for value – the solution to their problem. We’ll examine these elements in more detail in our last week in the Capstone Project – a New Products case study. For now, head to the Week 7 class folder for discussion boards and assignments.
  • Mkt3050 – consumer behavior week 7 april 30, 2012

    1. 1. MKT3050 – Consumer Behavior Seminar Week 7 – April 30, 2012©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    2. 2. So how do Consumers make decisions? Consumption Process and Decision-Making • CHOICE occurs throughout the process. – These choices are always linked to finding value! • Doesn’t necessarily lead to a product – – May be a service – Participation – Attendance • Decision making is also linked to motivation and emotion©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    3. 3. Objectives• This week, we’ll apply planning, forecasting and evaluation skills to consumer behavior patterns within the marketing process.• More specifically, we’ll examine: – Evaluation models for selecting an alternative – The idea of choice and how cultural, ethnic, family and social changes are affecting how consumers make decisions – Consumer consumption and its effect on satisfaction – Consumer switching behavior and loyalty• We’ll also talk about the Capstone Project: New Product Case Study. 3 ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    4. 4. Consumers Develop Criteria to Evaluate Options… Evaluative Criteria AND Determinant Criteria Evaluative criteria are the attributes, features, or potential benefits that consumers consider when reviewing possible solutions to a problem. Determinant criteria are the evaluative criteria that are related to the actual choice that is made. Remember – criteria are ‘built’ around aspects the consumer VALUES !©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    5. 5. Remember that when we are gathering information, we place it into categories….• So we can understand it and provide meaning.• With products, we have 2 levels of organization: – Superordinate categories • Highest level – somewhat abstract – global – Subordinate categories • More detailed, more relevant for evaluations 5 ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    6. 6. What determines the type of evaluative criteria consumers use?• Situational influences• Product knowledge• Expert opinions• Social influences – reference groups• Online sources• Marketing communications• How many criteria are necessary? – 10-15 before overload – Sometimes it’s just ONE! ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    7. 7. How good are Consumers evaluating options? Consumer Judgment• Consumer judgment is the mental assessments of the presence of attributes and the benefits associated with those attributes.• Consumers make judgments about: – Presence of features – Feature levels – Benefits associated with features – Value associated with the benefit – How objects differ from each other – http://www.youtube.com/watch?v=4oQ4hjQ_9Bc©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    8. 8. Issues Affecting Consumer Judgments Just noticeable Attribute correlation – difference – can does long wait = poor consumers perceive a service or individual difference? attention? Quality perceptions – Brand name does price = quality? associations©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    9. 9. Consumers have rules for choices… Sometimes we make trade-offs. les Comp ensatory ru lect Allow cons umers to se Nonco mpens t may atory r products tha Strict g uideline ules rly on one perform poo atin g to sele s ction, a are set prior attribute by compens that do es not nd any op p erformance spec meet th tion for the poor ce on fro ifications is e e for man by good per m cons ideratio liminate d anothe r attribute. n. l (Our Fis hbein mode exercise)©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    10. 10. Non compensatory rules for selection• Lexicographic – Strong performance on most important attribute yields a ‘yes’• Conjunctive – Acceptable cutoffs established for each important attribute. A ‘miss’ on any one eliminates a brand. Choice must ‘hit’ on all attributes.• Disjunctive – Minimum cutoff for features… usually high.• Elimination by Aspects – Measure performance on most important attribute – if more than 1 brand ‘passes’ then compare on next attribute. Continue process of elimination until 1 choice left. 10 ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    11. 11. What is Consumption? And What is the Basic Consumption Process? Consumption The process that converts time and goods, services, or ideas into value. 11©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    12. 12. What are the types of Consumption Behavior?http://www.youtube.com/watch?v=4DHT7b0QjW8http://www.youtube.com/watch?v=MOBdTP9ZB-I&feature=related Helps with Opportunities Promo/ Segmentation for Coupons to Expansion Push Consumption 12 ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    13. 13. How can Marketers Change Consumption? • Increasing Consumption – Increase frequency, sometimes through product modification – Increase usage per occasion • Large packages = more consumption! – Offer greater variety • Decreasing Consumption – Change location – make it less convenient – Change messaging – warn of risks / danger 13©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    14. 14. What are the Outcomes of Consumption? 14©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    15. 15. Satisfaction and Dissatisfaction Defined Dissat isfacti A mild on , nega affecti tive ve rea resulti ction Satisfaction ng f r om unf av o a A mild, positive rable a n a c ons pprais emotional state o umptio al of ut c om n resulting from a e. favorable appraisal of a consumption outcome. 15©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    16. 16. Consumer ReactionsWhy good / bad happenedWas my experience the sameas others? 16 ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    17. 17. Strategies for Keeping Customers • Offer some type of customization • Demonstrate a commitment to quality • Develop an early warning system (measure customer satisfaction) • Don’t overpromise • Provide guarantees 17©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    18. 18. Consumer and Company: Travelocity • Watch this clip on how Internet travel company Travelocity handles consumer relationships. 18©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    19. 19. Characteristics of Relationship Quality 19©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    20. 20. Value Types and Loyalty 20©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    21. 21. Remember that building loyalty also involves Associations EMPIRE, La. (AP) — BP chief executive Tony Hayward took a day off Saturday to see his 52-foot yacht “Bob” compete in a glitzy race off England’s shore, a leisure trip that further infuriated residents of the oil-stained Gulf Coast. While Hayward’s pricey ship whipped around the Isle of Wight on a good day for sailing — breezy and about 68 degrees — anger simmered on the steamy Gulf Coast, where crude has been washing in from the still-gushing spill. “Man, that ain’t right. None of us can even go out fishing, and he’s at the yacht races,” said Bobby Pitre, 33, who runs a tattoo shop in the crossroads town of Larose, La. “I wish we could get a day off from the oil, 21 too.”posted to a publicly accessible website, in whole or in part.©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
    22. 22. Loyalty affected by Market Relationships 22©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    23. 23. Tactics for Building Loyalty Appreciation (Thank you ‘points’) Rewards (just because) Rebates (money back) 23©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    24. 24. Consumer Value Framework (CVF) 24©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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