Consumer Purchase Behavior

• Consumer decision making process – what are the main phases a consumer goes through to
make purchase & repurchase decision

• Need Recognition
• Information Search
• Alternative Evaluation
• Purchase and Consumption
• Post Purchase

• What are the main factors impacting the decision making at pre-purchase (ZMOT)?

• Types & examples of risks related to purchase

• 1. Performance 2. Financial 3. Social 4. Physiological/Safety 5. Psychological

• Influential factors: Psychological,Social, Situational, Marketing Mix

• What are factors impacting the decision during the actual purchase in store, meaning at first
moment of truth (FMOT)?

• 1. Real/virtual abandoned carts 2. Payment methods/options 3. Shopping service 4.

Availability

• What happens post purchase (SMOT and UMOT)?

• Satisfaction vs buyer’s remorse (cognitive dissonance)

• Satisfaction: 1. Realistic expectations are key 2. Negative Word of Mouth

• Remorse: 1. Functional 2. Psychological (Emotional)

• Word of Mouth, repeat purchase,…

• How does Compensatory decision making rule work during alternative evaluation?

• Compensatory Decision Rules: A type of decision rule in which a consumer

evaluates each brand in terms of each relevant attribute and then selects
the brand with the highest weighted score

• High Involvement vs Low Involvement purchase decisions – examples

• High Involvement: Greater attention Deeper Processing Develops strong attitudes and
purchase intentions i.e. Selling a car

• Low Involvement: Less attention Peripheral Processing Impulse: Generates weak

attitudes and increased use of cues i.e. Planter’s peanuts brand
Product

• Product Life Cycle stages; their characteristics (sales, profits, types of consumers entering the
market)

• Early adopters are the true opinion leaders. Their adoption decisions have a far-
reaching impact as examples. A critical requisite of a pioneer company, one that will
launch many new product categories and subcategories, is strong at research and
development

• Early majority group are slower to try new products, entering the market only after
their peers have adopted. They wait until a pioneer has launched a product and
monitor its progress. If they believe it has the potential for success, they invest heavily
in development.

• Late adopters buyers are slow to adopt innovations in part because their income is
below average. They wait until the price has fallen. Segmenters enter in the late
growth phase of the product life cycle with a modified product designed to fit the
specific needs of a particular market segment

• Laggards are excessively traditionalist. Their purchases are governed by long-

established habits that are slow to change. Me-too companies enter the market in
maturity, so they do not need research or development departments. They tend,
however, to be strong marketers

• What are the Key Factors to gain product adoption rapidly during Introduction stage (The
Diffusion of Innovation); examples

• Compatibility • Observability • Complexity and trialability • Relative Advantage

• What is a core product vs an associated product services? Examples

• I.e. Chase: Core product is the card, associated service is the customer support

• What’s the benefit of NPD? Why do companies try to innovate and introduce New Products?

• New product development: Satisfies customer requirements by increasing

competition, increases company’s market share

• Product Line definition? Product line breadth and depth definitions and examples?

• Breadth: Increase: Firms often add new product lines to capture new or evolving
markets. For example, a firm adds a whole new line of yogurt. Decrease: For example,
a firm drops its line of protein bars and focuses on energy drinks and vitamin water.

• Depth: Number of categories within a product line. Increase: Expanding your product
line means your business is seen by a much larger audience, or it is seen by existing
customers in a different way. ... As you build your credibility, you also build brand
 recognition and loyalty. Decrease: to realign the firm's resources, refocus resources on the
firm's more lucrative products

Pricing

• Value based pricing vs Cost based pricing

• Cost Based: Starts with cost and desired margin and is marked up along the channel to
a customer selling price of $940

• Value Based: Price is set based on competitive advantage and value ($1000) and
discounts and costs deducted to arrive at a company margin.

• What is the definition of Break even? How do you calculate B/E number of units? Why do you
calculate it

• BE = Fixed cost/Contribution of Units

• Find quantity of units where revenue line = cost line

• What is Value Thermometer? How does it relate to Pricing?

• A scale where the COGS is on bottom threshold, product price is in the middle, and
perceived value is the top threshold, which allows you to see where you can put you
product price and still be profitable

• What is elasticity of demand? How is it calculated? When do you say something is price inelastic
or price elastic? Examples?

• % Change in quantity demanded/% Change in price

• What is the demand curve of a product? How does premium priced products demand curve
differ from the common demand curve?

• For common products, demand increases when price decreases, but not necessarily
for premium products, i.e. Louis Vuitton

• Psychological Factors which impact Price Sensitivity of consumers: quality & price premium
relationship, switching cost, reference price, etc…

• Marking down a fake price that was never meant to sell for, bundle prices, etc.

Promotion

• Promotion planning steps? What are main promotion objectives at different stages of PLC?
What does each step try to achieve?
 • Inform: • Tell the audience about a new product • Describe product attributes,
benefits, uses, etc.

• Persuade • Create/strengthen positive associations • Establish brand superiority ▪

Remind

• Remind current customers to purchase again/more • Keep product in consumers’

minds during “off” seasons

• Earned/Paid/ Owned media definitions, examples, pros & cons

• What is SEM (search ads), how does it work, how can a brand increase its success in search ads?
What are pors & cons of using search ads?

• Pros: Unobtrusiveness: cater consumer needs Easy measurement & attribution

(#clicks)

• Cons: Limited effect on increasing brand awareness (Links to/from Social Media,
Buying Branded Key Words)

• What is Display ads? how does it work? (Ad exchange, RTB) What are pros & cons of using
display ads? How mitigate the cons?

• Pros: (Re)Targeting based on customer profile and browsing history Flexibility

• Cons: Obstructiveness of ads (Native Ads -sponsored content that blends into the
main story blurring the lines between editorial content and advertising!)

• Why Social Media? Pros & cons? What are some of the SM performance metrics

• Customers acquired through word-of-mouth avenues are worth twice as much as are
those attracted through other channels. According to Intuit co-founder Scott Cook, “A
brand is no longer what we tell the consumer it is—it is what consumers tell each
other it is.” McKinsey and Company estimates that between 20% and 50% of all
purchases are driven primarily by word-of-mouth recommendations. Social
interactions contribute to the retention of existing customers.

• Metrics:

• Conversion (Remind) 1. Conversion rate 2. CTR click through rate 3. Bounce

rate 4. CPC cost per click 5. CPM cost per thousand

• Engagement (Persuade) 1. Engagement rate (likes, shares, comments) 1.

Amplification rate 2. Virality rate

• Awareness (Inform) 1. Audience Growth Rate 2. Net new followers 3. Post

Reach rate 4. Social SOV Brand Mention/ Total Mentions

• What is Influencer marketing? Types/examples of influencers? Pros & cons?

• Pros: More engaging and persuasive Provide more detailed product info
 • Cons: Not applicable to all products Hard to measure the effectiveness Hard to control
the content and quality of ads (Influencer Relationship Management)

• What is IMC? Why is it important?

•  It ensures that all forms of communications and messages are carefully
linked together. At its most basic level,
Integrated Marketing Communications, or IMC, as we'll call it, means
integrating all the promotional tools, so that they work together in
harmony.