Consumer behavior

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  • 1. Consumer behaviorThe overview of buying process
  • 2. Why to study consumers behavior?The study of consumers helps firms andorganizations improve their marketingstrategies by understanding issues such ashow: 1) The psychology of how consumersthink, feel, reason, and select betweendifferent alternatives(e.g., brands, products, and retailers);
  • 3. 2) The behavior of consumers while shopping or making other marketing decisions;3) The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media);
  • 4. Definitions• Customer behavior: 1) a broad term that covers both individual consumers who buy goods and services for their own use and organizational buyers who purchase business products 2) the process through which the ultimate buyer makes purchase decisions
  • 5. Consumer behavior involves the use anddisposal of products as well as the study ofhow they are purchased. Since manyenvironmental problems result from productdisposal (e.g., motor oil being sent intosewage systems to save the recycling fee, orgarbage piling up at landfills) this is also anarea of interest.
  • 6. The impact of consumer behavior on society isalso of relevance. For example, aggressivemarketing of high fat foods, or aggressivemarketing of easy credit, may have seriousrepercussions for the national health andeconomy.
  • 7. Fast-Moving Consumer Goods (FMCG’s)These are high volume, low unit value butwith fast purchase e.g. readymeals, newspapers, soap, and cooking oil
  • 8. Consumer Durables These have low volume but high unit valuee.g. cars, fridges/freezers, cookers, televisionsets, washing machines, computers etc.
  • 9. Soft GoodsThese are similar to consumer durables exceptthat they wear out more quickly and thereforehave shorter replacement cycle e.g.clothes, shoes etc.
  • 10. Characteristics Affecting Consumer Behavior1. Cultural Factors2. Social Factors3. Personal Factors4. Psychological Factors5. Situational Factors
  • 11. 1. Cultural Factors• Culture – Culture is the fundamental determinant of a person’s wants and behaviour. The growing child acquires a set of values, perceptions, preferences and the behaviour through his or her family and other key institutions.
  • 12. Culture• Culture is often the most powerful cause of a persons needs, wants and behavior.• Characteristics of Culture – Culture is learned. – Certain aspects of culture never change. – Cultural shifts create opportunities. – Subcultures can be of even greater interest to marketers than cultures.
  • 13. A child grown in USA is exposed to thefollowing values: achievements and success,efficiency and practicality, progress, materialcomfort, individualism, freedom andyouthfulness. What about a child grown inGhana? In Ukraine?
  • 14. SubcultureEach culture consists of smaller group(subculture) of people with shared value systemsbased on common life experiences andsituations. These subcultures can be ethnic,religious, racial or regional groups as well asthose that form around music groups. Nestle GhLtd (MaggieHomowoCooking contest) Guinness &MTN have been exploiting our festivals topromote and build their brands and CorporateImage.
  • 15. Social ClassSocial classes reflect not only income but alsoother indicators such as occupation, area ofresidence, education, and wealth. Socialclasses show distinct product and brandpreferences in many areas, including clothing,home furnishing, leisure activities,automobiles, and media consumption
  • 16. 2. Social FactorsGroup Membership: Anyone knows thatpeople act differently in groups than they doon their own. Since many of the things we buyare consumed in the presence ofothers, group behaviours are important tomarketers
  • 17. Social Factors• Groups: – Reference Groups – Aspirational Groups – Dissociative Groups• Opinion Leaders• Family• Roles and Status
  • 18. The FamilyThis is probably the most important consumerbuying organization in society. Familymembers constitute the most influentialprimary reference group. Marketers areinterested in the roles and relative influenceof the husband, wife, and children in thepurchase of a large variety of products andservices.
  • 19. Toyota caters to family buying influences.
  • 20. 3. Personal Factors• Age and Life-Cycle Stage – Tastes and preferences change over time.• Occupation – Occupation influences the purchase of clothing, cars, memberships, etc.• Economic Situation – Income-sensitive goods – Counter-cyclical goods
  • 21. 4. Psychological FactorsPsychology helps marketers understand the‘why” and “how” of consumer behavior. In thepsychological situation, consumer buyingbehavior is influenced by four factorsincluding:Motivation, Perception, Learning, and Beliefs& Attitudes.
  • 22. MotivationMotivation is an inner state thatenergizes, activates, moves or channelsbehavior towards certain goals (Assael).Motivation arises from perceived needs. Thesecan be grouped into biogenic (e.g.thirst, hunger, discomfort) and psychogenic needs (arise from psychological state of tensionsuch as esteem, belongingness).
  • 23. PerceptionA motivated person is ready to act. How themotivated person actually acts is influencedby his or her perception of the situation.Perception is the process by which anindividual selects, organizes, and interpretsinformation inputs to create a meaningfulimage of a situation.
  • 24. Beliefs & Attitudes• Lifestyle (determines how people choose to spend their time, money, and energy and that reflects their values, tastes, and preferences Consumers often choose goods, services and activities that are associated with a certain lifestyle.)• Personality (The idea is that brands also have personalities, and that consumers are likely to choose brands whose personality matches their own. )• Self-Concept (an individual’s self-image that is composed of a mixture of beliefs, observations, and feelings about personal attributes. Self-image is how a person thinks of himself or he thinks others think of him.)
  • 25. 5. Situational Factors• The Physical Environment: Marketers are aware that factors such as decor, smells, lighting, music, crowding, and even temperature can significantly influence many purchases. Many retailers are focusing on adequate packing, cyber-hangout and in-store display to influence the consumer decision- making process.
  • 26. 4) How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.
  • 27. Generating Beliefs Through Advertising• Statements must be – Perceived – Comprehended – Remembered – Believed (at least in part)
  • 28. Product Personality Issues• Gender – Often used for brand personalities – Some product perceived as masculine (coffee and toothpaste) while others as feminine (bath soap and shampoo)• Geography – Actual locations like Philadelphia cream cheese and Arizona iced tea – Fictitious names also used such as Hidden Valley and Bear Creek• Color – Color combinations in packaging and products denotes personality
  • 29. Marketers often use a fictitiouslocation to help with personality.
  • 30. • Caution, novelty, temporary, warmth• Eyes register it faster• Coffee in yellow can perceived as “weak”• Stops traffic• Sells a house
  • 31. • Secure, natural, relaxed or easy- going, living things• Good work environment• Associated with vegetables and chewing gum• Canada Dry ginger ale sales increased when it changed sugar-free package from red to green and white
  • 32. • Human, exciting, hot, passionate, strong• Makes food “smell” better• Coffee in a red can perceived as “rich”• Women have a preference for bluish red• Men have a preference for yellowish red• Coca-Cola “owns” red
  • 33. • Goodness, purity, chastity, cleanliness, delicac y, refinement, formality• Suggests reduced calories• Pure and wholesome food• Clean, bath products, feminine
  • 34. • Sophistication, power, authority, mystery• Powerful clothing• High-tech electronics• Regal, wealthy, stately• Suggests premium price
  • 35. Positioning Through Creating Beliefs• “It’s not delivery; it’s De Journo!”• “Wal-Mart. Always low prices. Always.”• “I just saved a bunch of money on my auto insurance.”• “U-um Good!” (Campbell’s Soup)
  • 36. Consumer Research Methods Market research is often needed to ensure that we produce what customers really want and not what we think they want.
  • 37. There are two main approaches to marketing:1) Primary research;2) Secondary research.
  • 38. 1. Primary researchPrimary research is research that you designand conduct yourself. For example, you mayneed to find out whether consumers wouldprefer that your soft drinks be sweater ortarter.
  • 39. 1. Secondary researchSecondary research involves usinginformation that others have already puttogether. For example, if you are thinkingabout starting a business making clothes fortall people, you don’t need to question peopleabout how tall they are to find out how manytall people exist—that information has alreadybeen published
  • 40. The Buyer Decision Process
  • 41. Need Recognition Buyers recognize a need or problem as a result of internal or external stimuli.Marketing communications often stimulate need recognition.
  • 42. Triggering Need Recognition Hungry yet?
  • 43. Information Search• High vs. Low Involvement Purchases• Cost vs. Benefit Model• “Big-Ticket” Anomolies• Cognitive Economy edmunds.com
  • 44. Information Sources– Personal – Public • Family, friends, neighbors, an • Mass media articles or news d casual or work programs, Internet searches, acquaintances consumer rating organizations– Commercial – Experiential • Advertising, salespeople, dea • Using, handling, examining or lers, Web sampling the product sites, packaging, and displays Which source is most influential?
  • 45. Evaluation of Alternatives• ELM: Central vs. Peripheral Route processing• Some Types of Evaluation Calculus: – Compensatory vs. Non-compensatory – Weighted Tally Processes – Elimination-by-aspects – Lexicographic – “Checkbox Choice” – Affect Referral
  • 46. Purchase Decision• Intentions to purchase are sometimes interrupted.• Potential “Interrupters”: – Attitudes & influences of others – Unexpected situational factors – Buyer’s Remorse – Speed of decision
  • 47. Postpurchase Behavior• Consumer satisfaction/dissatisfaction results from gaps between expectations and perceived performance. – Performance BELOW Expectations → Disappointment – Performance EQUALS Expectations → Satisfaction – Performance GREATER than Expectations → Delight – Performance MUCH GREATER than Expectations → Expectation Recalibration
  • 48. Cognitive Dissonance• Cognitive Dissonance: “Did I make the right purchase? Should I have bought this?”• Minimize dissonance by: – Offering mechanisms for making complaints (Customer Service, 800 hotlines, e-mail, etc.) – Being responsive to problems and questions – Advertising (remind consumer why choice made sense) – Minimizing the potential for product misuse (good product instructions) and “Poke-Yoke”.
  • 49. Product Adopter Categories Not everyone adopts at the same pace.• Innovators: venturesome, try new ideas at some risk.• Early adopters: opinion leaders who adopt new ideas early, but carefully.• Early majority: deliberate adopters, who adopt before the average person.• Late majority: skeptical, adopt only after the majority of people have tried a product.• Laggards: last to adopt, tradition bound, and skeptical of change.
  • 50. Adopter Categorization Distribution
  • 51. In-Class Activity – WHY WE BUYChoose a product, product line, brand, or company and answer the following:• What are the obvious (i.e. more superficial) reasons why consumers buy these products?• What are the not-so-obvious, more deep-seated reasons/motivations why consumers buy these products?• What are the obvious (i.e. more superficial) reasons why consumers do not buy these products?• What are the not-so-obvious, more deep-seated reasons/motivations why consumers do not buy these products?• Choose one or more of the above reasons/motivations to buy or not buy and provide an appropriate implication for Marketing strategy.