Understanding Consumer Behavior: The Decision-Making Process and Influencing Factors

Consumer Behavior: How and Why People Buy

Chapter Objectives • Define consumer behavior • explain why consumers buy what they buy • Explain the prepurchase, purchase, and postpurchase activities • that consumers engage in when making decisions • internal factors that influence consumers’ decision-making processes

Chapter Objectives • How situational factors influence consumer behavior • at the time and place of purchase • How consumers’ relationships with other people • influence their decision-making processes • How Internet offers consumers opportunities • to participate in consumer-to-consumer marketing

Decisions, Decisions • Consumer behavior: • The process we use to select, purchase, use, and dispose of goods, services, ideas, or experiences to satisfy needs/desires • Influences: • Internal, situational, and social

Problem Recognition Brandon is fed up with driving old clunker Information Search Brandon talks to friends, visits car showrooms, etc. Evaluation of Alternatives Brandon looks at 3 models with good/bad features Product Choice Brandon chooses one car based on feature/image Postpurchase Evaluation Brandon drives car and is happy with choice Figure 5.1 (Abridged) Decision-Making Process

Steps in Consumer Decision Process • Extendedproblem-solving vs. habitual decision-making • Involvement: relative importance of perceived consequences of the purchase • Perceived risk: choice of product has potentially negative consequences

Step 1: Problem Recognition • Occurs when consumer sees a significant difference between current state and ideal state • Marketers can develop ads that stimulate problem recognition

Step 2: Information Search • Consumers need adequate information to make a reasonable decision • Search memory and the environment for information

Step 2: Information Search • Internet: search engines, portals, or “shopping robots” • Behavioral targeting: • Marketers deliver ads for products consumers look for, by watching what they do

YAHOO! • EXCITE.COM • MYSIMON.COM Internet Options forInformation Search • Shopping portals • Search engines • “Shop-bots”

Step 3: Evaluation of Alternatives • Consumers are interested in a small number of products, then narrow choices and compare pros/cons • Evaluative criteria: • product characteristics consumers use • to compare competing alternatives

Step 3: Evaluation of Alternatives • Marketers point out their brand’s superiority on most important evaluative criteria.

Step 4: Product Choice • Deciding on one product and acting on choice • Heuristic: a mental rule of thumb used for a speedy decision, such as: Price equals quality Brand loyalty Country of origin

Step 5: Postpurchase Evaluation • Consumer satisfaction/dissatisfaction • after purchase of product • Expectations of product quality • are met/exceeded or not • MARKETERS: Ads/communications must create • accurate expectations of product

Part 2: INFLUENCES • Internal • Social • situational

Figure 5.4: Influences on Consumer Decision Making

Internal Influenceson Consumer Behavior • Factors that cause us each to interpret information about the outside world differently: • Perception Motivation • Learning Attitudes • Personality Age group • The family life cycle • Lifestyle

Perception • Process by which we • select, • organize, • interpret information • from outside world

Perception • Necessary for perception to occur • Exposure: • capable of registering a stimulus • Attention: • mental processing activity • Interpretation: • assigning meaning to a stimulus

SOLOFLEX.COM Motivation • Internal state that drives us to • satisfy needs • by activating • goal-oriented behavior

Figure 5.5:Maslow’s Hierarchy of Needs and Related Products

Learning • A change in behavior • caused by • information or experience American Express Video

Learning • Behavioral learning • Classical conditioning • Operant conditioning • Stimulus generalization • Cognitive learning • Observational learning American Express Video

Attitudes • Lasting evaluations of • a person, object, or issue • 3 attitude components Affect (feeling): emotional response Cognition (knowing): beliefs or knowledge Behavior (doing): intention to do something

Personality • The set of unique psychological characteristics • that consistently influences • the way a person responds • to situations in the environment

Personality • Personality traits: • Innovativeness, • materialism, • self-confidence, • sociability, • need for cognition • Self-concept

Age Group and Family Life Cycle • Goods/services appeal to specific age group • Family Life Cycle: • The stages through which family members pass as they grow older

Lifestyle • Lifestyle: • A pattern of living • determines how we choose to spend • time, money, and energy • Psychographics: • grouping consumers re: • psychological and behavioral similarities

Situational Influenceson Consumer Decisions • Physical environment dimensions • such as décor, smells, and lighting • Arousal and pleasure • determine consumers’ reaction to store environment • Time • as a situational factor

Social Influenceson Consumer Decisions • We are members of many groups that influence our buying decisions: • Culture/subcultures • Social class • Group memberships • Opinion leaders • Sex roles

Culture • The values, beliefs, customs, and tastes • produced or practiced (& taught) • by a group of people • Rituals • such as weddings and funerals • Cultural values: • deeply held beliefs • about right and wrong ways to live

Subcultures • A group within a society • whose members share • a distinctive set of beliefs, characteristics, or common experiences • Subcultures important to marketers • racial and ethnic groups.

Social Class • The overall rank or social standing • of groups of people within a society, • Re: factors • family background, • education, • occupation, • income.

Social Class • Status symbols • such as luxury products • provide a way for people to • flaunt their membership • in higher social classes.

TUPPERWARE.COM Group Memberships • Reference group: • a set of people a consumer wants to please or imitate • this impacts an individual’s • evaluations, • aspirations, or • behavior

TUPPERWARE.COM Group Memberships • Conformity: • changing behavior • due to group pressure.

Opinion Leaders • People who influence • others’ attitudes or behaviors • because others perceive them • as possessing expertise about the product

Opinion Leaders • Have high interest in product category • Update knowledge by • reading, talking with salespeople, etc. • Impart positive & negative product information • among first to buy new products

Gender Roles • Society’s expectations • regarding appropriate • attitudes, behaviors, and appearance • for men and women • Consumers often associate “sex-typed” products with one gender or the other. • Blue = boys, … Pink = girls • Baby Boy diapers, baby girl diapers

eBay Consumer-to-ConsumerE-Commerce • Online communications and purchases • that occur among individuals • without directly involving • the manufacturer or retailer

eBay Consumer-to-ConsumerE-Commerce • Popular online C2C formats • Gaming • Chat rooms, rings, and lists • Boards • Blogs

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Discussion • The Internet provides a unique opportunity for consumers to communicate and make purchases from each other. • What do you think the future of C2C e-commerce is? • How do you think it will affect traditional marketing firms?

Real People, Real Choices • Wild Planet (Daniel Grossman) • Daniel chose option 3: reposition the line toward either boys or girls • The firm renamed the line Girls Livin’ in Style (GLS), which has had moderate success.

Marketing Plan Exercise • Marketers must understand consumers and how they select products. Pick a good or service you like and have purchased in the past. As part of developing a marketing plan for this product: • List what you need to know about consumers of your product and how they make product decisions. • How might you gather that information? • How could you use that information in developing successful marketing strategies?

Marketing in Action Case:You Make the Call • What decision must Facebook.com make? • What factors are important in understanding this decision situation? • What are the alternatives? • What decision(s) do you recommend? • What are some ways to implement your recommendation?

Keeping It Real: Fast Forward to Next Class Decision Time at PPG Industries • Meet Vicki Holt, Senior VP, Glass & Fiber Glass for PPG Industries, Inc. • PPG’s Insulating Glazing Unit, or IGU, has an aggressive competitor marketing a complete IGU unit. • The decision: How to react to the competition.

WILD PLANET Real People, Real Choices • Meet Daniel Grossman at Wild Planet • Creating brands/products that parents endorse and kids find cool • Future direction of Room Gear product line • Option 1: acknowledge that Wild Planet missed the mark and drop the line • Option 2: retain line concept and develop products similar to those already selling • Option 3: reposition the line toward either boys or girls

Group Activity • Marketing activities can create problem recognition, by showing consumers benefits of a new product or pointing out problems with products they already own • For the following, suggest a creative way to stimulate problem recognition through marketing : • Videogames An airline • A hamburger Furniture

Discussion • Do you agree that having too many choices is a bigger problem than not having enough choices? • Is it possible to have too much of a good thing?

Understanding Consumer Behavior: The Decision-Making Process and Influencing Factors