Mkt3050 – consumer behavior week 7

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  • Welcome to week 7 of MKT3050 Consumer Behavior.
  • This week, we’ll complete the discussion about the consumer decision process. We’ll examine the evaluation models for selectingan alternative.We’ll apply planning, forecasting and evaluation skills to consumer behavior patterns within the marketing process.More specifically, we’ll examine:Consumer consumption and its effect on satisfactionThe ‘Path to Purchase’ that consumers take when making decisionsConsumer switching behavior and loyaltyWe’ll examine the role that ethics play in marketing and building loyalty
  • This diagram we examined last week 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 talk about evaluating alternatives, making a choice, and evaluation of that choice this week.
  • 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” will helpyou outline your evaluative criteria. Determinant criteria are those attributes that you use to make your final decision. Many of you may list similar criteria, but 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 – think about this as the ‘big picture’ definition of the product or the ‘aisle’ of the grocery store. So if you’re evaluating toothpaste, it’s in the oral care aisle. Bandaids? First aid aisle. Dish Detergent? Cleaning Supplies. The subordinate or more detailed category is juice – where all the products in that category are similar in nature. Each of those categories has brands within it that are differentiated by specific features. You gave some very detailed attributes about orange juice that help 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 the micro-culture of smart phone owners… 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 commercial that focuses on a specific type of consumption for 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 – issues like smoking or consumption of high-fat foods –messaging and gov’t intervention have focused on those issue! 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. As you mentioned in the discussion board about reference groups last week, satisfaction leads to positive word of mouth which influences purchase…. And personal satisfaction can lead toloyalty. This diagram illustrates this part of the consumption experience. Consumers have expectations about how consumption will perform – if performance is better than expected, positive disconformation, then reactions are positive; if performance is less than expected, reactions are negative. After the consumption experience, we develop attributions to the experience – why it was good / bad… and we evaluate the equity of our experience – was it the same as others? Or was my experience unfair vs others?
  • If the consumption experience is negative, due to unfair treatment or prices for example, this can lead to dissatisfaction or anger – and create the possibility that the consumer will switch to another product or service. Before making this switch, however, consumers will consider the costs associated with changing – will it be more expensive? Will I need to develop new relationships? New procedures? If the costs to switch are too high, the consumer will stay with the product or service, even if it’s not delivering the expected level of satisfaction. Think about the decision to move… let’s say you lived in an apartment above a really noisy neighbor… and just found out your rent was increasing $200 per month. That may lead you to consider moving… so you look at other options and find an apartment for the same rent you’re currently paying, but it’s 10 miles further from work. You’d need to rent a trailer to move – that’s $1500, and you need to deliver first / last month’s rent as a deposit. All of those considerations would weigh in your decision about moving or ‘switching’ apartments. This same type of thinking process occurs whenever you’re considering changing from your current consumption pattern.
  • 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…but as a marketer, be careful with how you structure these programs… a ‘point card’ for Speedway may be creating loyalty to the point card – so that if you do away with the program, consumers will go down the street to the other gas station with a loyalty program.
  • As you think about how to build relationships with your consumers, it’s important to understand some fundamentals principles of consumer behavior – and recognize that the consumer has rights.
  • Ethical behavior is key to developing true loyalty. Here are some examples of ethical approaches to the 4 Ps of marketing… and some unethical practices – that you may have experienced first hand. If you did have one of these negative experiences, think about the effect it had on your attitude toward that product or retailer… remember attitudes affect future behavior, and your experience, shared through word-of-mouth, can influence the attitudes of others. The cost of unethical practices seems so high… makes me wonder why marketers still try these scams.
  • As you consider where you want to work, be sure to evaluate the company’s ethics, its contribution to the community – though altruistic activities like fundraisers and giving back – and its strategic initiatives – what does it stand for and how it is meeting customer needs. Your decision to pursue employment with a company is another type of ‘purchase decision’ – you’re looking for value out of the experience.
  • The government has tried to legislate ethics in the U.S. Here are some of the guidelines enacted over the past 200 years. How many of these were you aware of?
  • As many of you have noted over the last few weeks, consumers are more connected, more knowledgeable, and more skeptical – they are challenging deceptive ads, marketing to children, pollution, and products that you have to ‘upgrade’ every year to keep functionality – this idea of planned obsolescence. You’ve all raised questions about needs vs wants – and several of you have mentioned marketing approaches that aren’t ethical. I want to focus your attention on marketing to children – since they are the future consumers.
  • Here are two videos that examine marketing approaches to children. Like the “Big Ideas” video, these videos show the extremism of marketing to children. Many of you pointed out that consumers ARE becoming more deliberate and conscious in their choices and decisions – for themselves and their families… but I wanted to share these with you so that a) you’re aware of this perspective b) you can develop your own point-of-view about marketing to children and c) you can take action you deem appropriate with your own family and / or with your organization if it markets to this age group.
  • 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

    1. 1. ©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.MKT3050 – Consumer BehaviorWeek 7 – April 28, 2013
    2. 2. ©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.Objectives• This week, we‘ll complete the discussion about the consumer decisionprocess.– Evaluation models for selecting an alternative• We‘ll apply planning, forecasting and evaluation skills to consumerbehavior patterns within the marketing process.• More specifically, we‘ll examine:– Consumer consumption and its effect on satisfaction– The ‗Path to Purchase‘ that consumers take when making decisions– Consumer switching behavior and loyalty• We‘ll examine the role that ethics play in marketing and buildingloyalty2
    3. 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.So how do Consumers make decisions?Consumption Process and Decision-Making• CHOICE occursthroughout the process.– These choices arealways linked to findingvalue!• Doesn‘t necessarily lead toa product –– May be a service– Participation– Attendance• Decision making is alsolinked to motivation andemotion
    4. 4. ©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.Consumers Develop Criteria to EvaluateOptions…Evaluative Criteria AND Determinant CriteriaEvaluative criteria are theattributes, features, or potential benefits thatconsumers consider when reviewing possiblesolutions to a problem.Determinant criteria are the evaluative criteriathat are related to the actual choice that ismade.Remember – criteria are ‗built‘ around aspects the consumer VALUES !
    5. 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.Remember that when we are gatheringinformation, we place it into categories….• So we can understand itand provide meaning.• With products, we have 2levels of organization:– Superordinate categories• Highest level –somewhat abstract –global– Subordinate categories• More detailed, morerelevant for evaluations5
    6. 6. ©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.What determines the type of evaluative criteriaconsumers 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!
    7. 7. ©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.How good are Consumers evaluating options?Consumer Judgment• Consumer judgment is the mental assessmentsof the presence of attributes and the benefitsassociated 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
    8. 8. ©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.Issues Affecting Consumer JudgmentsAttribute correlation –does long wait = poorservice or individualattention?Brand nameassociationsJust noticeabledifference – canconsumers perceive adifference?Quality perceptions –does price = quality?
    9. 9. ©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.Consumers have rules for choices…Sometimes we make trade-offs.
    10. 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.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 allattributes.• Disjunctive– Minimum cutoff for features… usually high.• Elimination by Aspects– Measure performance on most important attribute – if more than 1brand ‗passes‘ then compare on next attribute. Continue processof elimination until 1 choice left.10
    11. 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.What is Consumption?And What is the Basic Consumption Process?11ConsumptionThe process that convertstime andgoods, services, or ideasinto value.
    12. 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.What are the types of Consumption Behavior?12Helps withSegmentationOpportunitiesforExpansionPromo/Coupons toPushConsumptionhttp://www.youtube.com/watch?v=MOBdTP9ZB-I&feature=related
    13. 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.How can Marketers Change Consumption?• Increasing Consumption– Increase frequency, sometimes through productmodification– Increase usage per occasion• Large packages = more consumption!– Offer greater variety• Decreasing Consumption– Change location – make it less convenient– Change messaging – warn of risks / danger13
    14. 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.What are the Outcomes of Consumption?14
    15. 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.Satisfaction and DissatisfactionDefined15SatisfactionA mild, positiveemotional stateresulting from afavorable appraisalof a consumptionoutcome.
    16. 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.Consumer Reactions16Why good / bad happenedWas my experience the sameas others?
    17. 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.Exhibit 15.3: Factors Contributing to SwitchingCosts
    18. 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.Strategies for Keeping Customers• Offer some type of customization• Demonstrate a commitment to quality• Develop an early warning system (measurecustomer satisfaction)• Don‘t overpromise• Provide guarantees18
    19. 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.Characteristics of Relationship Quality19
    20. 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.Value Types and Loyalty20
    21. 21. ©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.Remember that building loyalty also involvesAssociations21EMPIRE, La. (AP) — BP chief executive Tony Haywardtook a day off Saturday to see his 52-foot yacht ―Bob‖compete in a glitzy race off England‘s shore, a leisuretrip that further infuriated residents of the oil-stained GulfCoast.While Hayward‘s pricey ship whipped around the Isle ofWight on a good day for sailing — breezy and about 68degrees — anger simmered on the steamy GulfCoast, where crude has been washing in from the still-gushing spill.―Man, that ain‘t right. None of us can even go outfishing, and he‘s at the yacht races,‖ said BobbyPitre, 33, who runs a tattoo shop in the crossroads townof Larose, La. ―I wish we could get a day off from theoil, too.‖
    22. 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.Loyalty affected byMarket Relationships22
    23. 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.23Tactics for Building LoyaltyAppreciation(Thank you‗points‘)Rewards(just because)Rebates(money back)
    24. 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.The Underlying Principles of Consumer Behavior• The Consumer Is Sovereign (King)• The Consumer Is Global• Consumers Are Different; Consumers Are Alike• The Consumer has Rights• President Kennedy introduced the Consumer Bill of Rights in1962.24
    25. 25. ©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.How do Ethics enter in to The Marketing Mix?25
    26. 26. ©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.Corporate Social Responsibility26An organization‘s activities and statusrelated to its societal obligations.Strategic initiativesAltruistic dutiesEthical duties
    27. 27. ©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.Prescriptions for Improved Marketing Ethics27
    28. 28. ©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.Major Acts Affecting Commerce andConsumer Safety28
    29. 29. ©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.Public Criticism of Marketing• Deceptive advertising• Marketing to children• Pollution• Planned obsolescence• True versus artificialneeds• Manipulative salestactics• Stealth marketing• Products liability29©MIKE WATSON/MOODBOARD/JUPITERIMAGES
    30. 30. ©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.Influence of Children• http://www.youtube.com/watch?v=S-KwCNOg0qs• http://www.youtube.com/watch?v=HKH4YGKnOSs&feature=related30
    31. 31. ©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.31Consumer Value Framework (CVF)

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