Understanding Consumer Behavior

er um n s io r Co hav Be

The exchange processes by which consumers conduct their lives.

Af Co fec gn t & iti on

Part 1 of 3

Consumer Environment

Objectives
To conceptualize basic models of consumer behavior To understand the consumer decision process for goods, services, and ideas

implified !odel
Target Audience #esponse

!ar"eting timuli

Blac" Bo$

!ultiple timuli
!ar"eting !i$ %roduct %rice %lace %romotion

Blac" Bo$

Environmental Events Economic Technolog& %olitical Cultural

E$panding the Blac" Bo$'

(ntra)%ersonal, ps&chological (nfluences Situational Influences Occasion, usage (nter)%ersonal, social (nfluences

Motives, perceptions,..

Culture, social class,..

Mediated by audience characteristics: Gender,age, *ecision %rocess

!ultiple #esponses
Blac" Bo$ %otential Bu&er #esponses %roduct choice Brand choice #etailer choice %urchase timing +eed atisfaction

,h& tud& Consumer Behavior To implement the !ar"eting Concept . . a plan to influence bu&er / seller e$changes to meet organizational goals To understand comple$ influences on consumption processes To increase a manager0s confidence to predict consumer responses to their mar"eting strateg& To avoid 1the elf)#eference Criterion'

elf #eference Criterion2 %roduct 3no4ledge (5

7o4 "no4ledge

MEAN

6igh "no4ledge

Information Gaps: Listen to Your Customer s!

elf #eference2 6ome Builders
construct 4hat the& thin" customers needed 8%resumptuous9

#E U7T2 Coo"ie Cutter designs, mass

production for economies of scale and sales pressure A home builder 8;inall&9 urve&s Bu&ers 8<==>9

U#%#( E:::

Information Gaps: Listen to Your Customer s!

"#$%&Y 'I()I(G" !an& Customers prefer doing 4ithout . . . ;ireplaces *enver ) an ;ran. Covered %orches %hoeni$ ) outh Coffee Bar . . . Bedroom ) 3itchen 7office ) A combination loft ? office space for a computer

Consumer *ecision %rocesses

Objectives To understand the t&pes of consumer decision processes To understand the steps in the consumer0s decision process. To discover ho4 bu&ers learn about and bu& products.

Continuum of *ecision %rocess Effort

@um Cigarettes +e4 Car

%ure #outine
,ater @as

7imited
Education +e4 6ouse

E$tended +egotiation

(mpulse %urchase
8no conscious pre planning9

Continuum of *ecision %rocess (nvolvement

%ersonal sources %roduct characteristics Environmental characteristics ituational sources

7o4 (nvolvement
+ea& attitude

6igh (nvolvement
'trong attitude

Degree of perceived !portance:"nduring#situational $%is&: 'ocial, (inancial , Physical ) "!otional *

!ultiple %articipants in the Consumer0s *ecision %rocess

(nitiators Users (nfluencers 8@ate"eeper9 *eciders

implified 7inear !odel of the Consumer *ecision %rocess

%roblem #ecognition (nformation earch Evaluation of Alternatives

%urchase *ecision

%ost %urchase Behavior ",pectations

!ajor (nfluences in the Consumer0s 1Blac" Bo$'

(TUAT(O+A7 (+;7UE+CE
* %h&sical and

% AC6O7O@(CA7 (+;7UE+CE
* %erception

OC(A7 (+;7UE+CE
* #oles * ;amil& * #eference @roups ocial Classes * Culture

* ocial urroundings * Time * %urchase Use * Bu&er0s Condition

* !otives * 7earning * Attitudes * %ersonalit&

Consumer *ecision %rocess

Proble! %ecognition Post Purchase

Bu&ing %rocess
%roblem or need recognition E$istent tate
(ncrease @ap ize

*esired tate

(ncrease (ntensit& of 8+eed9 ,ant

!ajor Causes of %roblem #ecognition or Opportunit&

cience and Technolog& Advancements - ne4 products - ne4 information Changing Consumer Circumstances & E$pectations - improved education - famil& life c&cle - income adjustments

ICEBERG EFFECT
The act of buying is 10% visible effort

90% of buying rocess is invisible

! "roble# recognition ! Infor#ation search ! "re evaluation ! "ost 'y!pto!s "urchase e$ucation Caution: .s. Causes

/pplied Mar&eting

C ONVENIENCE. . . CONVENIENCE. . . CONVENIENCE. . . The average consumer a woman! ta+es ,ust -. minutes to do her supermar+et shopping buys an avg. of ./ items out of 01 2 314111 browse time decreased -56 over past 5yrs. 7 she doesn8t bother to chec+ prices
"roctor % &a#ble '(S), 199*+

%s&cholog& of implificationBComplication
Consumers tr& to simplif& decision ma"ing b& reducing the amount of information processing
6igh (nformation Amount 7o4 imple *ecision Comple$

%s&cholog& of Complication
@um ) colorCcrDme 4Bblue spec0s
sugar9or9sugar free: 'lavor;taste Cool <int4:! Chewable ness9 bubble blowing9or not: li=uid center9or not : "hape4 chic+ let casing 'amily pac+age or individual: "tic+ to your teeth or not: Length of chew time :

Bu&ing %rocess
(nformation earch
nfor!ation s &no0ledge

(nformation ources
<. (nternal ources 8%s&chological9 - e$perience - memor& storageBretrieval - mental processing E. E$ternal ources 8 ocial9 <. famil& E. friends F. professionals

%ersonal interaction

(nformation ources
F. %ublic ources
government studies product testing magazines media stories advertising sales people product pamphlets

G. Commercial ources

(nformation ource Comparisons

"ource 11 (nternal 8e$perience9 E$periential 8e$amining or testing the product! HE %ersonal 8friends, relatives9 7o4 HF %ublic 8consumer reports9 6igh
HG Commercial 8%romotions9

&ffort $e=uired 7o4 6igh

>elievability 6igh 6igh

6igh 6igh 7o4

7o4

/pplied Mar&eting

%ic"ing %h&sicians

urve&ed consumers said the most freIuent sources for selecting a doctor are2
#eferral from friend EGJ #eferral from another doctor <GJ #eferral from famil& member <KJ @eneral 4ord of mouth =J

/pplied Mar&eting

#esearching ervices

Consumers spend time researching professional service providers2

;inancial %lanner FK hours toc"bro"er E< hours 7a4&er <= hours Accountant

,entist - "ri#ary .are "hysician 12 ) 13 hours

<L hours

%rinciples2 (nformation earch

Consumers see" to simplif& decision ma"ing via time, energ& & costs. Consumers see" (nformation credibilit& & predictive ness Tactics2 (dentif& the information sources & importance to assure processing of &our brand0s information.

(nfluences on (ntensit& of (nformation earch

?ersonal factors @ ability to process product
information4 physical energy and mobility to search out alternative information .. "hopping propensity @special sales4 return policies. "ocial factors @ social pressures for rightA choice4 time pressure on the purchase &nvironmental 'actors - availability of product substitutes4 supplier alternatives and resources to search - ?roduct life long or short:!

/pplied Mar&eting

Information Gaps

&xamples of )ell8s Customer 'eedbac+

) ,here0s the po4er button) ,on0t 4or" after ( 4ashed the "e&board ) ,here0s the an& "e&8Clic" an& "e& to continue9 ) fa$ 4on0t 4or" ) ( refuse to read manual

Buestions and "ometimes! Cnswers

Cll )ay Counts Include Dee+ends!
Deb site Coca@cola $eebox Dhat we as+ed Dhat happened Eow much caffeine (o response. is in co+e: Is it dangerous to wear 'our wee+s later running shoes to play bas+etball: )o post@it notes get less Twenty days later stic+y from ,ust sitting around:

0<

%rinciple2 (nformation Overload

,ith greater amounts of information available, Consumers ma"e poorer choices 8Threshold effects9 Tactic2 - focus on product information 8features9 that is important 8salient9 to consumers

%rinciple2 (nformation ,ear out

#epetition increases consumer learning Too much repetition M 4ear out 8consumers decrease attention over time9 Tactic2 Change information andBor format %ictures are better than 4ords

Infor#ation search lea$s to a .onsi$eration Set of 3ran$ Alternatives All bran$s in a ro$uct class /n0no1n bran$s
3ran$s foun$ acci$entally 3ran$s foun$ through search

2no1n bran$s Evo0e$ set

/nrecalle$ bran$s

.onsi$eration set of bran$ choice alternatives

? ( li"e o +eutral ) ( disli"e

Bu&ing %rocess
Evaluation of Alternatives

Utilit& Theor& ) Consumers perform

rational, Iuantitative calculations to ma$imize personal utilities .. economic, behavioral & societal.

F !ajor Evaluation Criteria

Economic2 costBperformance Behavioral2 prestigeBstatusBpeer influenceBlifest&le ocietal2 product e$ternalities Lots of storage environmental effects ?erformance - societ&0s long run 4elfare
"afety %ariety of colors

Evaluation Criteria
%rinciple2 Evaluation criteria change over time and among mar"et segments. %romotions 1frame' certain product attributes 8evaluation criteria9 to influence their perceived relative importance

upermar"et election Criteria Change over time

1456 1471 1473
11

Cleanliness attractive location 7abeling of %roducts

%roduct 5ualit& 7o4 prices %roduct variet& Cleanliness attractive

7o4 prices 7ocation %roduct Nariet& Courteous emplo&ees

Economic Theor&
Economic #ationalit& is C price and Iualit& M value.
Cssumptions: Complete product +nowledge4 freedom of choice 7 ability to measure utilities satisfaction!

Economic Theor& 7imitations

Consumers are not always economically FrationalA due to social 7 emotional motives 7 imperfect +nowledge. &xpenditures do not vary with income due to varying resource constraints

7a4 of *iminishing #eturns 8!arginal Utilit&9

EP EG

Utilit& EK atisfaction <O <K

<

F Beer

>

Appl&ing Evaluative Criteria

8Behavioral,
*eca& %revention and %rice Taste and ;lavor %ac"aging

Toothpaste

ocietal,Economic9
Economic Attributes Behavioral Attributes ocietal Attributes

8safet&, rec&clable, resources9

Evaluation criteria are the basis of product attitudes

#etailer Attributes %roduct Attributes ) %rice 8value9, ) location, ) 5ualit&, ) credit terms, ) st&le, etc. ) return policies,etc. ? relative importance 8utilit&9 ? relative importance 8utilit&9 M Attitude to4ard #etailer 8(mage9 M Attitude to4ard %roduct

%roduct Attitude
?roduct >eliefs x &valuations G Cttitude Cn overall evaluation of a good4 service or idea . . .with a predisposition to purchase the type of product or specific brand Generally4 9 a wea+ predictor of product or brand choice due to mediators time4situation4money!

%roduct attitudes lead to . . . Behavioral intentions

Of each <KK persons 4ho stated a definite intention to bu& a 8brand9 appliance. Brand A
GGJ bought the appliance >PJ bought the brand intended FEJ changed brands

O>J did not bu& the appliance

;actors that 4ea"en the relationship bet4een intention and behavior

(ntervening time *ifferent levels of specificit& Unforeseen environmental conte$t *egree of voluntar& control (nstabilit& of intentions +e4 information Unforeseen event

Bu&ing %rocess
%urchase *ecision8s9
DEH >#Y": DECT: DE&(: DE&$&: C() DEY:

(nfluences on %urchase *ecisions

%urchase ituation8s9 Usage 8 ocial or %rivate9 Time %erspective 8long or short9 #esource Capabilities 7evel of personal control

%urchase *ecisions
%rinciple2 Consumers disli"e ma"ing decisionsBchoices Tactic2 ho4 satisfied customers
- ordinar& people - e$perts - celebrities

Bu&ing %rocess
%ost)%urchase Behavior

Cognitive dissonance: postpurchase tension .

%ost %urchase Behavior

%roduct E$perience
Actual Benefits
@ap ize atisfied *issatisfied

Actual E$pectations

%ost %urchase Behavior

%rinciple2 *issatisfied customers
communicate more negative 4ord of mouth than satisfied customers communicating positive 4ord of mouth

%ost %urchase Behavior

Cognitive *issonance
7ac" of confidence 8doubts9 about the correctness of a prior purchase decision and efforts to reconcile doubts
)id I )o the $ight Thing:

Cognitive *issonance
Causes2 %erceived #is"
%erformance ris" %h&sical ris" 84ear)out9 6igh financial commitment 6igh involvement level 6igh social visibilit& (nformation Overload

Cognitive *issonance
%otential #eactions
- #eturn product - ee" confirming information

!ar"eting Tactic
- %rovide post decision positive information

Cognitive *issonance

A !odel of Consumer *ecision !a"ing

(nformation in the environment (nterpretation E$posure,attention, and comprehension !emor& %roduct "no4ledge and involvement 3no4ledge, meanings and beliefs (ntegration Attitudes and intentions *ecisionBBehavior Consumer decision ma"ing

5uestions-