Consumer Behavior you are what you buy

Did you know? Paper Marketing news Consumer behavior (web) Consumer behavior (ppt) Innovation diffusion (ppt) NLP Next week: Market research

 Think of a recent important purchase briefly draw a flowchart of the steps you recall moving through from the awareness of need to post purchase What influenced you at each step?

Consumer Decision-Making Process

Need Recognition Need Recognition Information Search Information Search Evaluation Evaluation of Alternatives of Alternatives Purchase Purchase Postpurchase Postpurchase Behavior Behavior

Cultural, Social, Cultural, Social, Individual and Individual and Psychological Psychological Factors Factors affect affect all steps all steps

Complete model of consumer behavior

Start
Need recognition Internal search Exposure Stimuli (marketer dominated, other) Attention Comprehension Acceptance Retention Memory Alternative evaluation Search Influences culture social class family situation

Purchase

Outcomes

Individual differences resources motivation & involvement knowledge attitudes personality, values, lifestyle

External search

Dissatisfaction

Satisfaction

 How do you know when to shop? What are the triggers that initiate an awareness & search? What are the internal & external sources of these triggers?

Need Recognition
Marketing helps consumers recognize (or create) an imbalance between present status and preferred state When a current product isnt performing properly When the consumer is running out of an product When another product Preferred seems superior to the one currently used

State

The information search stage

An internal search involves the scanning of one's memory to recall previous experiences or knowledge concerning solutions to the problem-- often sufficient for frequently purchased products. An external search may be necessary when past experience or knowledge is insufficient, the risk of making a wrong purchase decision is high, and/or the cost of gathering information is low.

Personal sources (friends and family) Public sources (rating services like Consumer Reports) Marketer-dominated sources (advertising or sales people)

The evoked

set: a group of

brands from which the buyer can choose

 go back to your past purchase what were the specific internal and external sources of information that influenced your decision? how do you determine (and rate) the credibility of these sources? what specific information influenced you?

Determinants of External Search

Buyer Behavior
Other people often influence a consumers purchase decision. The marketer needs to know which people are involved in the buying decision and what role each person plays, so that marketing strategies can also be aimed at these people. (Kotler et al, 1994).

Initiator: the person who first suggests or thinks of the idea of buying a
particular product or service.

Influencer: a person whose views or advice carry weight in making the final
buying decision

Decider: the person who ultimately makes the final buying decision or any part
of it

Buyer: the person who makes the actual purchase User: the person who consumes the product or service
Note: teens are increasingly assuming more of these roles

Think about your past purchase who was in which role?

Relative influence of husbands & wives

Child clothing

Wife Dominant
Womens clothing Pots & pans

Final decision

Information search
lamps furniture luggage carpet refrigerator vacations

groceries NonRx Toys/games

Paint wallpaper Mens leisure clothing Mens business clothing

Joint
TV sets stereo Financial planning

camera

Family car

Sport equipment hardware Lawn mower

Extent of role specialization

100 75 50 25

Husband Dominant
0

Consumer decision making

varies with the level of involvement in the purchasing decision Extensive: problem solving occurs when buyers purchase more expensive, less frequently purchased products in an unfamiliar product category requiring information search & evaluation; may experience cognitive dissonance. Limited: problem solving occurs when buyers are confronted with an unfamiliar brand in a familiar product category Increase in Consumer evaluation processes

Routine: response behavior occurs

when buyers purchase low cost, low risk, brand loyal, frequently purchased, low personal identification or relevance, items with which they are familiar.

 quickly list 10 items you have purchased in the past month reexamine how long it took you to make a decision on each why did such a difference in decision occur?

Factors affecting Consumer involvement

Previous

experience: low level involvement risk of negative consequences: high involvement

Interest: high involvement Perceived

Situation: low to high due to risk Social

visibility: involvement increases with product visibility

So Offer extensive information on high involvement products In-store promotion & placement is important for low involvement products Linking low-involvement product to high-involvement issue can increase sales

Types of consumer involvement and decision making Routine

Involvement Time Cost Information Search Number of alternatives Short Low Short Internal only one

Limited
Low to moderate Short to moderate Low to moderate Mostly internal few

Extensive
High Long High Internal & external many

Compensatory Decision: Using product characteristics to guide decision

Select the best overall brand-- evaluates brand options in terms of each relevant
attribute and computes a weighted or summated score for each brand. The consumer chooses the brand with the highest score. negative score on another attribute.

Compensatory model because a positive score on one attribute can outweigh a

Conjunctive Decision Rule (cutoff criteria)-- Consumer sets a minimum standard for
each attribute and if a brand fails to pass any standard, it is dropped from consideration.

Reduces a large consideration set to a manageable size. Often used in conjunction with another decision rule.

Disjunctive Decision Rule (rank by importance)-- sets a minimum acceptable

standard as the cutoff point for each attribute--any brand that exceeds the cutoff point is accepted.

Reduces large consideration set to a more manageable number of alternatives. Consumer may settle for the first satisfactory brand as final choice or may use another decision rule.

Synthesized decision rule-- Consumers maintain overall evaluations of brands in

their long term memories. Brands on not evaluated on individual attributes but on the highest perceived overall rating.

 think of an important purchasing decision have made

you

what are some of the thoughts you have had following your purchase? Any regrets? what has influenced those thoughts? how have you dealt with the discomfort? how has the company anticipated or dealt with your discomfort?

Postpurchase Behavior
Cognitive Dissonance
Can minimize through:

Did I make a good decision? Did I buy the right product? Did I get a good value?

Effective Communication Follow-up Guarantees Warranties Underpromise & overdeliver

Sour Grapes a story of cognitive dissonance

after being unable to reach the grapes the fox said, these grapes are probably sour, and if I had them I would not eat them. --Aesop

Cognitive Dissonance
psychological discomfort caused by inconsistencies among a persons beliefs, attitudes, and actions varies in intensity based on importance of issue and degree of inconsistency induces a drive state to avoid or reduce dissonance by changing beliefs, attitudes, or behaviors and thereby restore consistency
Applications: Tendency to avoid information can be countered by eliciting interest, norm of fairness, or perceive usefulness of information Post-decision buyers remorse may be increased by importance or difficulty or irreversibility of decision Counter-attitudinal action, freely chosen with little incentive or justification, leads to attitude change (e.g., new product at special low price)

 think of an innovation in your field describe different groups of employees in your organization who would respond early and favorably, as well as later and unfavorably what are the differences between these groups? how could you use this information to market the innovation to them more effectively?

 Identify an innovation in your organization or an organization you are familiar with Identify the subgroups who responded to the innovation using the Rogers & Shoemaker stakeholder model What could have been done to facilitate acceptance by each of these groups?

Decision Processing

Elaboration Likelihood Method (ELM) of persuasion

Persuasive Communication Motivated to Process? personal relevance personal importance personal responsibility dissonance arousal need for cognition repetition Attitude Shift: short-lived susceptible to influence unpredictable

Ability to Process? cognitive complexity critical thinking distraction free low arousal appropriate schema message pace repetition issue familiarity

Nature of Active Cognitive Processing: (initial attitude, argument quality, etc.) Favorable Thoughts Predominate Unfavorable Thoughts Predominate Neither or Neutral Predominate

Peripheral Cues Present? reciprocity (obligated, did a favor) consistency (way its done, similar to before) social proof (peer pressure, conformity) liking (attractiveness, friendliness) celebrity (identification, prestige) authority (expertise, experience, credibility) rapid speech, forceful presentation, charismatic style scarcity (limited time offer) tangible rewards appealing visuals & music (emotional arousal) fear appeal weak counter-arguments

Cognitive Structure Change: Are new cognitions adopted and stored in memory? Are different responses made salient than previously?

Retain or Regain Initial Attitude greater persistence resistant to counterattacks & fading predictive of behavior > brand memory > elaboration >usage intention > attitude accessibility > attitude confidence > attitude-behavior consistency

Enduring positive attitude change (persuasion)

Enduring negative attitude change (boomerang)

Write in the number that best fits your view: Need for Cognition 1 2 3 4 completely mostly mostly completely Scale false false true true _____1. I would prefer complex to simple problems. _____2. I like to have the responsibility of handling a situation that requires a lot of thinking. _____3. Thinking is not my idea of fun. * _____4. I would rather do something that requires little thought than something that is sure to challenge my thinking abilities. * _____5. I try to anticipate and avoid situations where there is likely chance I will have to think in depth about something. * _____6. I find satisfaction in deliberating hard and for long hours. _____7. I only think as hard as I have to. * _____8. I prefer to think about small, daily projects to long-term ones. * _____9. I like tasks that require little thought once Ive learned them. * _____10. The idea of relying on thought to make my way to the top appeals to me. _____11. I really enjoy a task that involves coming up with new solutions to problems. _____12. Learning new ways to think doesnt excite me very much. * _____13. I prefer my life to be filled with puzzles that I must solve. _____14. The notion of thinking abstractly is appealing to me. _____15. I would prefer a task that is intellectual, difficult, and important to one that is somewhat important but does not require much thought. _____16. I feel relief rather than satisfaction after completing a task that required a lot of mental effort. * _____17. Its enough for me that something gets the job done; I dont care how or why it works. * _____18. I usually end up deliberating about issues even when they do not affect me personally.

Items 3, 4, 5, 7, 8, 9, 12, 16, and 17 are reverse scored

Sleeper Effect:
when secondary source becomes more credible than primary source over time persuasion may increase over time with a weak source forget the source but remember the message not if source is learned prior to the message (will ignore or bias processing)

Example: Attack ads during political campaigns

Next week: Survey & questionnaire design Think of our graduate program in management Formulate 5 questions that you think would get at customer (student) satisfaction with the program Term paper Bring 1 page with title, 1 paragraph on purpose & overview Citation for 1 journal and one book