Notes: Whether a company is analyzing buying behavior, sharpening its target marketing skills, or understanding the competition, information is the key to success. It should realize that the marketplace belongs to the entire company, making it everyone’s responsibility to gather marketplace information. Consumer product and service preferences are constantly changing. Understanding consumer behavior can help marketing managers adapt the marketing mix to influence consumer purchasing decisions. For example, if a manager knows through research that gas mileage is the most important attribute for a certain target market, the manufacturer can redesign the product, and create the appropriate marketing mix, to meet that criterion.
Notes: The consumer decision-making process represents a general five-step process that moves the consumer from recognition of a need to the evaluation of a purchase decision. It is a guideline for studying how consumers make decisions. Note that consumer decisions may not proceed in order through all the processes, and in fact, may end at any time without a purchase decision.
The consumer decision-making process is shown here and described on subsequent slides.
Notes: The first stage in the decision-making process is need recognition.
Notes: A marketing manager’s objective is to get consumers to recognize an imbalance between their present status and their preferred state. Advertising and sales promotion often provide this stimulus. Recognition of needs may be triggered by internal stimuli, such as hunger and thirst, or by external stimuli, including package design, advertisements, or a brand name mentioned by a friend. Surveying buyer preferences provides information about consumer wants and needs that can be used to tailor products and services. For example, Proctor & Gamble used the Internet to test market its Crest Whitestrips home-bleaching kit. The test revealed that 80% of potential buyers were women between ages 35 and 54, identifying the best target market. Discussion/Team Activity List products and services that have been purchased recently. Indicate the types of internal and/or external stimuli that influenced the decision.
Notes: Marketers create new products and services by observing trends in the marketplace, and can create wants on the part of the consumer. Consumers recognize unfilled wants in various ways, in particular, in the ways shown on this slide.
Notes: An internal information search is the process of recalling information in memory. This includes prior experience or prior knowledge about a product. An external information search relies on information in the outside environment. This includes personal and public references, advertisements, and publicity. External information may be obtained from non-marketing controlled sources and/or marketing controlled sources. Nonmarketing controlled sources include personal experience, personal sources, and public sources such as Underwriters Laboratories. Marketing-controlled information is biased toward a specific product because it originates with marketers promoting that product. These sources include mass-media advertising, sales promotion, salespeople, product labels and packaging, and the Internet.
Notes: The extent to which an individual conducts an external source depends on such factors as the perceived risk of purchasing a product, knowledge, prior experience, and level of interest in the good or service. The external search is also influenced by the consumer’s confidence in decision making. If a consumer has prior experience, he/she will spend less time searching. Discussion/Team Activity: Discuss information searches conducted for products or services recently evaluated or purchased. Characterize this discussion based on the factors described on this slide.
Notes: The information search should yield a group of brands, or evoked set, which are the consumer’s preferred alternatives. From this set, consumers will further evaluate the alternatives and make a choice. Discussion/Team Activity: Describe the evoked set derived from information searches previously conducted. What were the characteristics that made these products the preferred alternatives?
Notes: Once the evoked set is constructed, the consumer is ready to make a decision. One way to make a choice is to pick product attributes that are important to him/her, then exclude all products in the set that do not meet that criteria. Another way to narrow the number of choices is to use cutoffs, or minimum or maximum levels of an attribute that an alternative must have. Many times, price is an important cutoff attribute. The goal of the marketing manager is to determine which attributes have the most influence on a consumer’s choice, and design a marketing mix that stresses those attributes to the consumer. A single attribute, such as price, may not always explain a consumer’s evaluation of products. Attributes that the marketer may consider important are not always important to the consumer. Brand names, such as Johnson & Johnson, have a significant impact over the choice of products.
Notes: Following the evaluation of alternatives, the consumer decides which product to buy or decides not to buy at all.
Notes: The next step in the process is an evaluation of the product after the purchase.
Notes: Once a purchase decision is made, the next step in the process is the evaluation of the product after purchase. Consumers expect certain outcomes from the purchase, and how well these expectations are met determines the level of customer satisfaction. Price influences the level of expectations for a product or service. When people feel inconsistency between their values or opinions and their behavior, they feel an inner tension called cognitive dissonance. In purchase decisions, this is also called “buyer’s remorse.” 75 percent of consumers say they had a bad experience in the last year with a product purchased. Marketers try to reduce any lingering doubt.
Notes: Marketing managers can help reduce cognitive dissonance through effective communication with consumers, such as follow-up notes, advertising, and guarantees. Discussion/Team Activity: Discuss any of your purchases that generated cognitive dissonance and what was done to address the situation. What role, if any, did marketing play in minimizing cognitive dissonance? What was the outcome? Discuss ways in which the provider of the products/services might have reduced this inner tension.
Notes: Consumer buying decisions fall along a continuum of three broad categories: routine response behavior, limited decision making, and extensive decision making. Routine response behavior: Frequently purchased, low-cost goods and services, with low involvement on search and decisions by consumers before making the purchase. Consumers buy first and evaluate later. Limited decision making: Consumer has previous product experience but is unfamiliar with the current brands available. A moderate effort is spent searching for information or in considering alternatives. Extensive decision making: Applies to unfamiliar, expensive products, or an infrequently bought item. The most complex type of consumer buying decisions, and is associated with high involvement on the part of the consumer. Discussion/Team Activity: Name products that fall into each of the decision making descriptions, and describe the decision making process for each.
Notes: The level of consumer involvement is the most significant determinant in classifying buying decisions. Involvement is the amount of time and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior.
Notes: 1. Exhibit 5.2 compares the three categories of buying decisions.
Notes: The level of involvement in the purchase depends on the following factors: Previous experience: When consumers have had previous experience with a product or repeat trials, quick choices are made. Interest: Involvement is directly related to consumer interests, such as cars, motorcycles, or electronics. Perceived risk of negative consequences: As the risk increases, so does the consumer level of involvement. Risks include financial risks, social risks, and psychological risk. Situation: The circumstances of a purchase may transform a low-involvement decision into a high-involvement one. For example, a low-priced brand of wine may be purchased routinely, but a high-involvement decision might be required for purchasing a more prestigious wine for a special occasion. Social visibility: Involvement increases as the social visibility of a product increases. These products that make a statement about the user may include cars, jewelry, furniture, and clothing.
Notes: For high involvement products, a good ad gives consumers the information they need for making the purchase decision, as well as specifying the benefits and advantages of owning the product. For low-involvement purchases, customers may not recognize their wants until they are in the store. In-store promotion and package design are important tools for catching the customer’s attention. Good displays can help explain a product’s purpose and create recognition of a want.
Notes: The consumer decision-making process is strongly influenced by cultural, social, individual, and psychological factors. Exhibit 5.3 summarizes these influences.
Notes: Cultural factors exert the deepest influence over consumer behavior and decision making. Culture is the character of society, and the underlying elements of every culture are values, language, myths, customs, rituals, and laws, as well as material artifacts.
Notes: 1. Exhibit 5.4 lists and describes some defining components of American culture.
Notes: Culture is: Pervasive: Cultural values influence individual life, yet most are completely unaware of its presence. What people eat, how they dress, and what language they speak are all cultural dimensions. Functional: By establishing expectations, culture gives order to society, such as laws. Learned: Culture is not genetic. Instead, consumers must learn what is acceptable from family and friends. Dynamic: It adapts to changing needs and an evolving environment. The rapid growth of technology has accelerated the rate of cultural change. In the U.S., diversity is causing major shifts in culture. There are tremendous marketing opportunities for products and services geared to the Hispanic, African American, and Asian American segments.
Notes: The most defining element of a culture is its values. People with similar value systems tend to react alike to prices and other marketing-related inducements. Values also correspond to consumption patterns.
Online The Source What culture does the material at The Source Web appeal to? How would you define it? Consider that culture in terms of its components, and explain why you think The Source transcends the typical racial segmentation of culture. Notes: Exhibit 5.5 lists components of core American values—those considered central to the American way of life. The personal values of the target market have important implications for marketing managers. When marketers understand the core values, they can target their message more effectively. For example, the personal values of seniors, baby boomers, and Generations X and Y are quite different. Discussion/Team Activity: Discuss the personal values of each of the age groups listed above, and what marketing managers can do to appeal to each group.
Online Grateful Dead What kind of marketing program could you design to attract the subculture of Grateful Dead followers? Visit the GD Online Store to see how marketers are currently doing this. What other elements of the site could help you design a successful program?
Notes: Marketers are interested in social class for the reasons of determining which medium to use for advertising, and for determining where best to distribute their products.
Notes: Consumers interact socially with reference groups, opinion leaders, and family members to obtain product information and decision approval.
Notes: Reference groups are characterized as either direct or indirect. Direct reference groups may be primary or secondary. Primary membership groups include all groups with which people interact regularly in an informal way, such as family, friends, and coworkers. People associate with secondary membership groups less consistently and more formally. This includes clubs, professional groups, and religious groups. Indirect reference groups include aspirational reference groups, such as organizations that a person would like to join. On the other hand, a nonaspirational reference group is one that someone wants to avoid being identified with.
Notes: For marketers, reference groups have three implications, as stated on this slide. Understanding the effect of reference groups on a product is important for marketers in tracking the product life cycle.
Notes: Reference groups often include individuals known as opinion leaders who influence others.
Notes: Opinion leaders are often the first to try new products. Technology companies have found that teenagers, because of their willingness to experiment, are key opinion leaders for the success of new technologies. Opinion leadership is a casual, face-to-face phenomenon. Location can be a challenge. Marketers may try to create opinion leaders, such as cheerleaders or civic leaders. On a national level, companies sometimes use prominent public figures, such as movie stars, sports figures, and celebrities to promote products. For example, Nike signed Tiger Woods as its spokesperson. Steve & Barry’s signed Stephon Marbury to promote a new athletic shoe. Discussion/Team Activity: Name examples of opinion leaders, and the promoted products/services, in each of the categories shown on this slide.
Notes: The family is the most important social institution for many consumers, influencing values, attitudes, and buying behavior. Purchase decisions vary significantly among family members, who assume a variety of roles in the purchase process. Initiators are the ones who suggest or initiate the purchase process. Influencers are those members whose opinions are valued. Decision makers actually makes the decision to buy or not to buy. The purchaser is the one who exchanges money for the product. The consumer is the one who uses the product. Children can have great influence over the purchase decision.
Notes: Exhibit 5.9 represents the patterns of family purchasing relationships that are possible.
Notes: A person’s buying decisions are also influenced by unique personal characteristics, such as gender; age and family life cycle; and personality, self-concept, and lifestyle. The physiological differences in men and women result in the need for different products. In addition, the distinct cultural, social, and economic roles of men and women result in differing decision-making processes. Men and women shop differently. As a broad statement, women enjoy shopping; men shop out of necessity in more convenient stores with less variety. Trends in gender marketing are influenced by the changing roles of men and women. With working women on the rise, many industries are directing their marketing attention to women. The age and family life cycle can have a significant impact on consumer behavior. Consumer tastes in clothes, food, cars, and recreation are often age related. Related to age is the family life cycle, an orderly series of stages through which consumers’ attitudes and behavior evolve through maturity, experience, and changing income and status. Personality is a broad concept combining psychological makeup and environmental forces. Self-concept combines the ideal self-image and the real self-image. Consumers seldom buy products that jeopardize their self-image. A lifestyle is a mode of living as identified by a person’s activities, interests, and opinions.
Notes: The psychological influences are the factors consumers use to interact with their world. They are the tools used to recognize feelings, gather and analyze information, formulate thoughts and opinions, and take action.
Notes: People cannot perceive every stimulus in their environment. They use selective exposure, along with the closely related concepts of selective distortion and retention to decide which stimuli to notice and which to ignore.
Discussion/Team Activity: Discuss examples representing each of the described perception states.
Notes: Marketers must recognize the importance of cues or signals in a consumers perception of products. Marketing managers first identify the important attributes such as those listed on this slide, then design signals to communicate these attributes to consumers.
Notes: By studying motivation, marketers can analyze the major forces influencing consumers’ purchase decisions. When a product is purchased a need is usually fulfilled. These needs become motives when aroused sufficiently. Motives are the driving forces that cause a person to take action to satisfy those needs.
Maslow’s Hierarchy of Needs, shown in Exhibit 5.10 and here, arranges needs in ascending order of importance.
Online: Center for Science in the Public Interest (CSPI)) The CSPI regularly campaigns to change consumers’ beliefs about products it perceives as dangerous or harmful. What products are of interest to the CSPI at present? How should companies respond if their products become targets of the CSPI? Notes: Almost all consumer behavior results from learning, the process that creates changes in behavior through experience and practice. There are two types of learning: experiential and conceptual. Reinforcement and repetition boost learning. This is a key strategy in promotional campaigns because it can lead to increased learning. Generally, to enhance learning, advertising messages should be spread over time rather than clustered together.
Notes: Beliefs and attitudes are closely linked to values. If a product is meeting its goals, positive attitudes toward the product need to be reinforced. If the brand is not succeeding, the marketing manager must work to change the consumers’ attitudes toward it. Changes in attitudes can be accomplished in three ways: * Changing beliefs about the brand’s attributes * Changing the relative importance of these beliefs * Adding new beliefs
CHAPTER 5 Consumer Decision Making Designed by Eric Brengle B-books, Ltd. Prepared by Deborah Baker Texas Christian University Introduction to Marketing McDaniel, Lamb, Hair 9
Learning Outcomes Explain why marketing managers should understand consumer behavior Analyze the components of the consumer decision-making process Explain the consumer’s postpurchase evaluation process LO I LO 2 LO 3
Learning Outcomes Identify the types of consumer buying decisions and discuss the significance of consumer involvement Identify and understand the cultural factors that affect consumer buying decisions Identify and understand the social factors that affect consumer buying decisions LO 5 LO 6 LO 4
Learning Outcomes Identify and understand the individual factors that affect consumer buying decisions Identify and understand the psychological factors that affect consumer buying decisions LO 8 LO 7
The Importance of Understanding Consumer Behavior Explain why marketing managers should understand consumer behavior LO I
Consumer Behavior LO I Consumer Behavior Processes a consumer uses to make purchase decisions, as well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and the product use.
REVIEW LEARNING OUTCOME Understanding Consumer Behavior LO I Consumer behavior consumers make purchase decisions consumers use and dispose of product = HOW
The Consumer Decision-Making Process Analyze the components of the consumer decision-making process LO 2
Consumer Decision-Making Process LO 2 Consumer Decision-Making Process A five-step process used by consumers when buying goods or services.
Consumer Decision-Making Process LO 2 Postpurchase Behavior Purchase Evaluation of Alternatives Information Search Need Recognition Cultural, Social, Individual and Psychological Factors affect all steps
Need Recognition LO 2 Need Recognition Result of an imbalance between actual and desired states.
Need Recognition LO 2 Marketing helps consumers recognize an imbalance between present status and preferred state. Present Status Preferred State Internal Stimuli External Stimuli
Stimulus LO 2 sight smell taste touch hearing Stimulus Any unit of input affecting one or more of the five senses:
Recognition of Unfulfilled Wants <ul><li>When a current product isn’t performing properly </li></ul><ul><li>When the consumer is running out of a product </li></ul><ul><li>When another product seems superior to the one currently used </li></ul>LO 2
Information Search LO 2 <ul><li>Internal Information Search </li></ul><ul><ul><li>Recall information in memory </li></ul></ul><ul><li>External Information search </li></ul><ul><ul><li>Seek information in outside environment </li></ul></ul><ul><ul><ul><li>Nonmarketing controlled </li></ul></ul></ul><ul><ul><ul><li>Marketing controlled </li></ul></ul></ul>
External Information Searches LO 2 Need More Information More Risk Less knowledge Less product experience High level of interest Lack of confidence Less Risk More knowledge More product experience Low level of interest Confidence in decision Need Less Information
Evoked Set LO 2 Group of brands, resulting from an information search, from which a buyer can choose. Evoked Set
Evaluation of Alternatives and Purchase LO 2 Evoked Set Purchase! Analyze product attributes Rank attributes by importance Use cutoff criteria
Purchase LO 2 To buy or not to buy... Determines which attributes are most important in influencing a consumer’s choice Marketing
REVIEW LEARNING OUTCOME Consumer Decision-Making Process LO 2 CULTURAL SOCIAL PSYCHOLOGICAL INDIVIDUAL Need Recognition 1 Information Search 2 Evaluate Alternatives 3 Purchase 4
Postpurchase Behavior Explain the consumer’s postpurchase evaluation process LO 3
Cognitive Dissonance LO 3 Cognitive Dissonance Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions.
Postpurchase Behavior <ul><li>Consumers can reduce dissonance by: </li></ul><ul><li>Seeking information that reinforces positive ideas about the purchase </li></ul><ul><li>Avoiding information that contradicts the purchase decision </li></ul><ul><li>Revoking the original decision by returning the product </li></ul>LO 3 Marketing can minimize through: Effective Communication Follow-up Guarantees Warranties
Consumer Buying Decisions and Consumer Involvement Identify the types of consumer buying decisions and a discuss the significance a of consumer involvement LO 4
Consumer Buying Decisions and Consumer Involvement LO 4 More Involvement Less Involvement Routine Response Behavior Limited Decision Making Extensive Decision Making
Five Factors Influencing Decisions LO 4 1. Level of consumer involvement 2. Length of time to make decision 3. Cost of good or service 4. Degree of information search 5. Number of alternatives considered
Routine Response Behavior <ul><li>Little involvement in selection process </li></ul><ul><li>Frequently purchased low cost goods </li></ul><ul><li>May stick with one brand </li></ul><ul><li>Buy first/evaluate later </li></ul><ul><li>Quick decision </li></ul>LO 4
Limited Decision Making <ul><li>Low levels of involvement </li></ul><ul><li>Low to moderate cost goods </li></ul><ul><li>Evaluation of a few alternative brands </li></ul><ul><li>Short to moderate time to decide </li></ul>LO 4
Extensive Decision Making <ul><li>High levels of involvement </li></ul><ul><li>High cost goods </li></ul><ul><li>Evaluation of many brands </li></ul><ul><li>Long time to decide </li></ul><ul><li>May experience cognitive dissonance </li></ul>LO 4
Factors Determining the Level of Consumer Involvement LO 4 Situation Social Visibility Interest Perceived Risk of Negative Consequences Previous Experience
Marketing Implications of Involvement LO 4 High-involvement purchases require: Extensive and informative promotion to target market Low-involvement purchases require: In-store promotion, eye-catching package design, and good displays. Coupons, cents-off, 2-for-1 offers
REVIEW LEARNING OUTCOME Consumer Buying Decisions and Consumer Involvement LO 4 Routine Limited Extensive Previous experience Interest Perceived risk of negative consequences Situation Social visibility
Cultural Influences on Consumer Buying Decisions Identify and understand the cultural factors that affect consumer buying decisions LO 5
Factors Influencing Buying Decisions LO 5 Social Factors Individual Factors Psycho- logical Factors Cultural Factors CONSUMER DECISION- MAKING PROCESS BUY / DON’T BUY
Culture LO 5 Culture Set of values, norms, attitudes, and other meaningful symbols that shape human behavior and the artifacts, or products, of that behavior as they are transmitted from one generation to the next.
Components of Culture LO 5 Myths Language Values Customs Rituals Laws Material artifacts
Culture is. . . LO 5 Learned Functional Pervasive Dynamic
Value LO 5 Value Enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct.
Core American Values LO 5 Success Materialism Freedom Progress Youth Capitalism http://www.thesource.com Online
Subculture LO 5 Subculture A homogeneous group of people who share elements of the overall culture as well as unique elements of their own group. http://www.dead.net Online
Social Class LO 5 Social Class A group of people in a society who are considered nearly equal in status or community esteem, who regularly socialize among themselves both formally and informally, and who share behavioral norms.
Social Class Measurements LO 5 Wealth Other Variables Income Education Occupation
Social Influences on Consumer Buying Decisions Identify and understand the social factors that affect consumer buying decisions LO 6
Social Influences LO 6 Reference Groups Opinion Leaders Family Members
Reference Group LO 6 Reference Group A group in society that influences an individual’s purchasing behavior.
Reference Groups LO 6 Reference Groups Direct Indirect Primary Secondary Aspirational Nonaspirational
Influences of Reference Groups <ul><li>They serve as information sources and influence perceptions. </li></ul><ul><li>They affect an individual’s aspiration levels. </li></ul><ul><li>Their norms either constrain or stimulate consumer behavior. </li></ul>LO 6
Opinion Leaders LO 6 An individual who influences the opinion of others. Opinion Leaders
Opinion Leaders LO 6 <ul><li>Teenagers </li></ul><ul><li>Movie stars </li></ul><ul><li>Sports figures </li></ul><ul><li>Celebrities </li></ul>Marketers are looking to Web logs, or blogs, to find opinion leaders
Family LO 6 <ul><li>Initiators </li></ul><ul><li>Influencers </li></ul><ul><li>Decision Makers </li></ul><ul><li>Purchasers </li></ul><ul><li>Consumers </li></ul>Purchase Process Roles in the Family
Relationships among Purchasers and Consumers in the Family LO 6
REVIEW LEARNING OUTCOME Social Factors LO 6 Direct Indirect Reference Groups Primary Secondary Aspirational Nonaspirational Opinion Leaders People you know Socialization Process Family Celebrities Initiators Decision Makers Consumers Influencers Purchasers
Individual Influences on Consumer Buying Decisions Identify and understand the individual factors that affect consumer buying decisions LO 7
Individual Influences LO 7 Gender Age Life Cycle Personality Self-Concept Lifestyle
Psychological Influences on Consumer Buying Decisions Identify and understand the psychological factors that affect consumer buying decisions LO 8
Perception LO 8 Perception Process by which people select, organize, and interpret stimuli into a meaningful and coherent picture.
Perception LO 8 Selective Exposure Selective Distortion Selective Retention
Perception LO 8 Selective Exposure Selective Distortion Selective Retention Consumer notices certain stimuli and ignores others Consumer changes or distorts information that conflicts with feelings or beliefs Consumer remembers only that information that supports personal beliefs
Marketing Implications of Perception <ul><li>Important attributes </li></ul><ul><li>Price </li></ul><ul><li>Brand names </li></ul><ul><li>Quality and reliability </li></ul><ul><li>Threshold level of perception </li></ul><ul><li>Product or repositioning changes </li></ul><ul><li>Foreign consumer perception </li></ul>LO 8
Motivation LO 8 Maslow’s Hierarchy of Needs A method of classifying human needs and motivations into five categories in ascending order of importance.
Types of Learning LO 8 Experiential Conceptual An experience changes behavior Not learned through direct experience http://www.cspinet.org Online
Stimulus Generation and Discrimination LO 8 Stimulus Generalization A form of learning that occurs when one response is extended to a second stimulus similar to the first. Stimulus Discrimination A learned ability to differentiate among similar products.
Beliefs and Attitudes LO 8 Belief Attitude An organized pattern of knowledge that an individual holds as true about his or her world. A learned tendency to respond consistently toward a given object.
Changing Attitudes LO 8 <ul><li>Change beliefs about the brand’s attributes </li></ul><ul><li>Change the relative importance of these beliefs </li></ul><ul><li>Add new beliefs </li></ul>