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This 13 page Class Notes was uploaded by Dr. Lolita McCullough on Sunday October 25, 2015. The Class Notes belongs to DSCI 4520 at University of North Texas taught by Evangelopoulos in Fall. Since its upload, it has received 20 views. For similar materials see /class/229140/dsci-4520-university-of-north-texas in Decision Sciences at University of North Texas.
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Date Created: 10/25/15
Chapter 5 Consumer Behavior Life Lesson 0 Most people consumers pass through life unaware that they are surrounded by factors that manipulate the choices they make Those all should learn how possible it becomes of us all to make better choices by becoming 1 more aware of the forces that impact our choices 2 how much the choices we make impact our physical emotional and economic wellbeing and 3 how we use choice to express and create our own identities 0 Presented at closing point of this discussion as well In this chapter three key concepts or topics should be leamed o The rst is the overarching model of consumer behavior a model that serves as a guide to most of the chapter Simply stated if you understand the model and its components then you understand most of the chapter If you don t you don t 7 See Figure 54 o The second is the array of factors that exercise in uence on consumer behavior and that thus should be accounted for and managed to the degree that a given factor can be managed by marketers o The third is the ve stages that comprise the consumer buyer purchase decision making process See Figure 51 0 Each concept is deep and complicated in its implications Key Thoughts 7 0 Today capitalism is de ned not by a producer mentality but by a consumer ethos The prosperity that until recently we saw and experienced was in some respects an economic mirage purchased with a credit card Until recently US consumers were continuously buying more and more stuff they could not afford 0 Marketing and consumer behavior implications 0 Rational people respond to incentives But they don t all respond to the same incentives do they When doing something or buying something becomes more costly in terms of money time inconvenience stress or perceivedactual risk than doing or buying something else which something do you believe most consumers are going to buy or do if they are rational When something becomes easier less expensive or more bene cial they will do or buy more of it 7 if they are rational right But in weighing these choices people will bear in mind the overall constraints pressing on them not just the costs and bene ts of a particular choice 7 if they are rational And they will also consider the future consequences of the presentcurrent choice if they are rational But who is rational all the time in their behavior as consumers The study of and an understanding of consumer behavior 7 it is no slam dunk 0 People buy things to realize their aspirations 7 that s the foundation of our business taken from the award winning show Mad Men DEFINING CONSUMER BEHAVIOR commonly known as CB 0 CB 7 refers to the buying behavior of final consumers CB also refers to the factors that in uence the buying behavior of final consumers 0 Final consumers are best described as individuals and households who buy products or services for personal consumption Marketers study CB 0 To no small degree marketers should study CB in the same manner and for the same reason that sherman study sh to learn how best to catch them 0 But ideally marketers should al study CB in the manner and for the same reasons that ichthyologists study sh to understand them better so as to serve their needs better to help the sh better solve their problems at least in the case of engaged sh species From a marketing rm s perspective all rms are marketing rms it is important to answer in great detail with great focus the following questions regarding consumers and their behaviors o What consumers buy where consumers buy how and how much they buy as well as when and why consumers buy what they decide to buy Then once these questions are answered to the best degree possible the resulting information should be used in the development and execution of strategies The rst ve of these questions are comparatively easier to answer whereas the sixth question which is why is exceedingly dif cult to answer 0 The reason why Because the reasons why consumers do anything are locked deeply inside of their respective minds or in the socalled black box I Think of the airplane s so called black box which explains what happened and why it happened in terms of a crash Moreover what may make perfect sense as a reason as a reason to buy or not buy anything to you or to me may seem absolutely illogical to me or to you O 0 Marketing stimuli 7 generally consist of the four P s ie the marketing mix a strategic marketing tool that delivers hopefully differentiating value to consumers or other customers 7 through Positioning 0 These controllable marketing stimuli can shapein uence consumer perceptions about products or brands And they are controllable 7 can be controlled 7 by marketers 0 Remember the Law of Perceptions ie marketing is not a battle of products or brands instead it is a battle of perceptions about products or brands that unfolds in consumers minds Other stimuli which are uncontrollable from the perspective of the marketing firm consist of the major factors forces and events that are present in the buyer s economic technological political or cultural or social environments or the consumers personal factors themselves All these stimuli which function as inputs enter the consumers eg the decision maker s BLACK BOX or the orange box in Figure 54 from which certain outputs or responses are produced These consumer outputs or responses include making decisions about Product choices or making no choice at al 7 What or what not to buy Brand choices ditto again a What to buy decision Dealerstore choice where to buy Purchase timing when to buy Purchase amount how much to buy Consumers can also make decisions about whether to a Pay attention or not to what marketers are saying b Like or dislike anything c Evangelize spread good news or bad news to others about their great or horrible experience with the product store or brand d Choose a product or brand or choose nothing at all Consumers characteristics ie their demographics attitudes beliefs lifestyles activities interests and opinions family life stage etc in uence how they perceive and react to any stimuli that enter the consumer s black box as inputs Marketers use information gathered about these consumer characteristics to classify consumers into certain segments 7 Segmentation Some of these segments are more attractive to marketing rms some are less attractive 7 Targeted And the consumer s decision process the way in which consumers make decision which is discussed later affects the consumers or the buyers behavior Various other factors in uence consumer purchasing behaviors By and large marketers cannot control these factors But by no means does this inability to control these factors imply that marketers should ignore these factors In fact marketers who ignore the impact of any of these factors do so at their own peril risk These factors which in uence CB are generally assumed to entail 0 Culture or cultural 0 Social 0 Personal 0 Psychological 1 Fquot 0 3 1 D 9 Culture INFLUENCES CONSUMER BEHAVIOR a Defined as the most basic cause of a person s wants and behaviors not a person s needs mind you which remain constant and consistent regardless of cultural circumstance 7 Culture is learned i From whom Cultural is glacierlike as you know but it is also lenslike think THICK eyeglasses through which you see and attempt to make sense of what is happening around you as good or bad or acceptable or unacceptable Culture is important but what s really important are trends and movements in the culture because these represent opportunities and threats to various companies Subcultures in this or any other country are also important to marketers i In fact subcultures played a tremendously important role in the latest Presidential election Certain quintessentially US cultural values are critical both to what it means to be an American citizen and to the firms that market the following brands i Merrill Lynch Jeep SUVs in general Our sub cultural differences Within a country or cultural differences across one or more countries lead us to process and interpret ie make sense of the same information differently This is meaningful for marketers 2 Social Factors INFLUENCE CONSUMER BEHAVIOR a b 0 Social classes are society s relatively enduring and ordered divisions Consumers residing within particular social classes typically share relatively similar values interests and behaviors i That means consumers from particular social classes likely respond in similar ways to promotions or desire the same sorts of productsbrands Social class is never determined by any single factor i Instead it is determined and measured by several variables including occupation incomeI education wealth and other variables which should be consolidated ie grouped and considered together when trying to determine social class membership 3 1 Social classes tend to have distinct product and brand preferences in product categories such as clothin home fumishin s nei borhoods in which the live leisure activities and entertainment choices or quot e Other social factors also come into play i Groups 7 Small 1 Membership groups 7Fratemities Rotary CPAs 2 Families a Exercise a huge in uence i Women Men and Family Roles ii Children and their Roles 3 Reference groups a Reference groups 7 we look toward such groups for references regarding how we should consume or behave Aspirational groups 7 groups to which we would like to belong we typically model group behaviors even if we don t belong to the group c Opinion leaders are individuals generally emerging from within a reference group who exercise in uence on others and their purchasing behaviors Marketers are very interested in identifying and attempting to in uence opinion leaders for the obvious reason that they will in uence others Marketers usually target opinion leaders when they introduce new products 6 3 1 D 3 Personal factors INFLUENCE CONSUMER BEHAVIOR a Age and family life cycle stage occupation economic situationcircumstances lifestyle personality and selfconcept i Lifestyle 7 pattern of living as re ected in one s psychographics ie AIOs ii AIOs Activities Interests and Opinions 1 AIOs psychographics lifestyles 2 Lifestyle profiles an individual consumer s whole pattern of acting and interacting with others and various stimuli within the world Personality 7 unique psychological characteristics that lead to relatively enduring and consistent responses to events and stimuli as each arise in a given consumer s environment 1 Critical personality traits at least from the perspective of marketers include selfconfidence dominance sociability adaptability 2 There is much evidence suggesting that consumers often select products that they believe are consistent with or re ective of their personality a Brands have personalities too i Examples of brands with dominant personalities iv Selfconcept 7 how we feel above ourselves ii39 1 Can you understand how and why consumers want to behave and consume in ways that reinforce or enhance their selfconcepts 4 Psychological factors In uence Consumer Behavior too a Four major factors come into play here These are motivation perceptions old friend from day 1 learning and beliefs amp attitudes i Motives or drives these are needs that are suf ciently important and pressing to direct the individual consumer to seek satisfaction to the need or problem underlying the motive or drive 1 Some needs are biological 2 Some needs are psychological a All basic human needs are depicted in the wellknown pyramid shape known as Maslow s Hierarchy of Needs Figure 55 P39 39 39 39 39 safetv social personal self esteem and selfactualization NEEDS top to bottom in that order What drives this hierarchy The assumption that different needs drive the same person at different times People are motivated to satisfy their most pressing needs first once it is satisfied they look forward and upward toward the next level of needs to satisfy Old Testament Please understand that products can be targeted and positioned based on what hierarchical need they are intended to satisfy Note Some products can be positioned to satisfy more than one need hierarchy ii Perceptions 7the process by which people select organize and interpret attempt to make sense of information in an effort create a meaningful and useful picture of their surrounding world Culture and social class affects perceptions 1 There are varying levels and types of perceptions This is because humans all of us engage in a Selective attention 7 we do not pay attention to most of the stimuli to which we are exposed for example some people ignore everything H Clinton says but listen to everything B Obama says That s selective attention Fquot O b Selective distortion 7 we tend to interpret information in ways that support what we already believe c Selective retention 7 we tend to retain only that information that supports attitudes and beliefs that we already hold iii Learning 7 Learning describes the changes that arise in our behaviors as a result of experiences eg the child and touching the hot stove top represents a classic ex We learn as a result of the interaction between our drives stimuli marketing cues to which we are exposed our responses to those stimuli and the rewards or punishments positive or negative reinforcements that result from our behavioral responses iv Beliefs and attitudes l A belief is a descriptive thought someone has about something Less deeply held that attitudes Attitudes by contrast capture individual consumers relatively enduring consistent and more deeply held evaluations feelings and tendencies toward an idea object experience or person Attitudes are more deeply held Thus they are more in uential than beliefs The idea that any marketer should attempt to change any consumer s attitudes is generally a stupid idea The far more preferred approach for marketers is to align the productvalue they are creatingmaking and promoting and distributing and pricing notice the marketing mix 4 P s such that the value package aligns with the attitudes of already consumers present within a particular target market Most marketers will or would go broke if their success depends on changing people s attitudes N E 5 Equot 0 The Consumer Buyer Decision Process consists of ve stages WHO IS GETTING MARRIED SOON 1 Stage 17 Need Recognition a Begins the decision process b Houston we have a problem ithat sort of recognition arises i Recognition of the problem can be stimulated internally or externally by the marketer s efforts or by some other stimuli in the environment c What do you do when you recognize you have a problem i You try to solve it right That s what consumers do too 2 Stage 2 7 Information Search a This stage may or may not take place b If it does consumers can derive information about what solutions are available and which are preferable from many sources i Sources include personal sources commercial sources experiential sources public sources c The importance of these various sources will vary a great dealt dependent largely on the individual characteristics of the consumer or the characteristics associated with the problem itself 3 Stage 3 7 Evaluation of Alternatives Alternative Evaluation a At times very careful evaluation occurs other times very little to no evaluation occurs impulse buying or intuition based purchases Evaluations of the attributes for each wedding dress alternative 4 Stage 4 7 The Actual Purchase Decision beginning typically with purchase intention a Here attitudinal factors including the attitudes of others who are important to you or your own attitudes can intervene and contravene a decision b Here unexpected or predictable situational factors can also intervene economic dips or gains or a competitor lowers prices such that consumers choose another brand alternative 5 Stage 5 7 PostPurchase Decision Behaviors a Expectations about value that will be received met 7 satisfaction b Expectations about value to be received not met7 dissatisfaction i Complaint behavior likely7 people love to complain of course c Expectations about value received greatly exceeded i Positive WOMis more likely 1 Signi cance of 7 or 8 to 1 complaint to praise ratio d Something called cognitive dissonance is likely to arise dependent on size and risks associated with consumer decision Involvement Their level of Involvement greatly in uences the manner in which consumers pass through the ve consumerdecisionmaking stages Involvement particularly impacts the amount of effort consumers expend during each stage All ve stages are all impacted by the degree to which consumers are involved in the decision process So too is the prospect that a given stage will be engaged in by consumers 0 To illustrate an old marketing joke 7 consider a breakfast of ham and eggs Having given its all to this breakfast the pig is deeply committed to the process whereas the chicken having merely laid an egg is merely highly involved Bad joke not on test Consumers degree or level of Involvement is impacted by the degree of importance they assign to a particular decision For example a prospective bride buying a wedding dress tends to be highly involved in each of these decision stages There is lots of risk cost and stress is involved in a decision to buy a wedding dress Consequently involvement tends to be high as is effort 0 Our bride her mother perhaps her wedding advisor and any other member of her family or entourage who in uences the decision process are thus involved in extended or extensive problem solving But if our bride were buying a can of Campbell s pork amp beans or carton of WalMart brand 2 milk she would experience far less involvement The decision process she would then be engaging in could be described as routine because it entails little to no risk low costs and little to no information search 0 Our bride is engaged in routine problem solving Finally our bride might be deciding which restaurant in which to have lunch with her two best girl friends to say to discuss her wedding or honey moon In making the decision to choose one as opposed to another restaurant she is likely 0 To engage in limited problem solving Here she chooses one from one of several brands or restaurant alternatives each of which would likely already be relatively familiar or quite familiar to her Another critical point students should understand is that rms should engage in different marketing mix activities during each of the ve stages of the consumer decision process 0 Marketers should engage in distinct activities to stimulate problem recognition marketers should engage in distinct information provision activities as consumers pass through alternative evaluation marketers should engage in distinct activities as consumers pass through post purchase cognitive processes ie they should reinforce the great choice that the bride or home buyer made Two other key points to understand is that not all consumers go through the same consumer stages at the same time Nor do all consumers pass through all ve stages or in the order that they stages were presented above Key Point 7 Gaining new customers almost always costs more than retaining existing customers This fact underscores the need that exists for rms to satisfy existing customers by providing them with value that exceeds the costs associated with owning or using a product and with value that exceeds the value any other competitor can provide 0 This inspires customer loyalty AKA brand loyalty Word of Mouth Negative word of mouth always travels more rapidly and penetrates more deeply into the mind of the market than positive good word of mouth Managing customer satisfaction and effectively handling any problems associated with purchases as they arise is crucial to long term success of brands and rms 0 So what is word of mouth WOM 0 People in uencing each other in personal conversational settings which could take place in person over the phone online through various transmission devices In America the young are always ready to give to those older than themselves the full bene ts of their inexperience 7 Oscar Wilde A Discussion of 4 V VI V The Purchase Decision for New Products What s a new product a Definitiondescription of a new product How does news or awareness about new products spread throughout the population a Think of diffusion and perfume What s the adoption process itself a The natural mental process through which individual consumers pass from the point where they learn about the existence of a new product to the point where they final adopt the new product OR NOT What s adoption a Defined as a decision where a consumer elects to become a regular user of a new product What stages do consumers typically pass through on their way toward adoption of new products Generally there five stages involved in consumers adoption of new products Once again marketers should manage each stage of the adoption process differently by preparing and emphasizing different aspects of their marketing mixes Stage 1 Awareness 7 What happens here what sorts of marketing actions and consumer outcomes should marketing firms be pursuing here Stage 2 Interest What happens here what sorts of marketing actions and consumer outcomes should marketing firms be pursuing here Stage 3 Evaluation What happens here what sorts of marketing actions and consumer outcomes should marketing firms be pursuing here Stage 4 Trial What happens here what sorts of marketing actions and consumer outcomes should marketing firms be pursuing here Stage 5 Adoption What happens here what sorts of marketing actions and consumer responses should marketing firms be pursuing here There are adoption categories into which entire segments of consumers fall as new products diffuse throughout a social system 0 Again these various stages call for different responses by strategic marketers again in accordance with what stage a particular segment or a particular consumer is in eg is a consumer in the interest stage or is she in the trial stage 0 Understand that not all consumers go through all stages and that any consumer can drop out of the adoptiondiffusion process at any time for any reason 6 What categories or segments of consumers arise as innovations or new products are diffused throughout a relevant population or marketplace The ve adoption categories or groups of consumers are 0 The Innovator Category 0 What is an innovator and why are they so doggone important to marketers o The Early Adopter Category I What is an early adopter and why are they important to marketers The Early Majority Category 0 The Late Majority Category Laggards 0 And some people never adopt new products or innovations This is related to the diffusion of innovations process and question and how quickly a product is adopted throughout a social system 0 To understand more about how the diffusion process itself works think back to that bottle of perfume just opened down here The diffusion of innovations occurs over time Similarly categories of potential consumers early adopters late adopters nonadopters inbetween who collectively make up a social system of interest adopt new products over time Alternatively some consumers may never adopt a specific new product all For example your Professor will probably never adopt a Nintendo or Xbox gaming system are they the same thing although he has played badly one on more than one occasion 0 New Products are also called Innovations o Innovations are supposedly new involve some aspect of creativity and hopefully are useful USEFUL is an important dimension of innovations otherwise we are just talking about creativity I Creativity is good but it alone is not sufficient to ensure marketing success Certain characteristics associated with innovations or new products appear to in uence the rate at which those new product are adopted 7 What are the specific characteristics 7 which could be associated with new products that improve the new products prospects for success 11 They are l The Relative Advantage of the New Product a De ned 7 think the IPOD or the once oversized but now normally sized standard tennis racket 2 The Compatibility with how customers already do things a De ned 3 The Complexity how dif cult is it to use the NP a De ned 4 The Divisibility how dif cult is it to try out trial of the NP a De ned 5 The Communicability how dif cult is it to understand or see or explain to others the bene ts of the NP a De ned Discuss the impact of these characteristics in terms of new tennis rackets or a new IPhone or an 0 Absolute costs as re ected in pricing costs of switching ie costs associated with switching from the product that was once used the level of risk or uncertainty involved with using a NP 7 will it work and the level of social approval required to adopt the new product and the relative importance to targeted consumers of social approval 7 will my friends still like me will also in uence the rate at which a new product or idea diffuses throughout a social system of interest New product introduction and new product success is critical to the ongoing success of any lm Absent successful NPD and introduction no rm can ever hope to survive long term This is no exaggeration It is plain fact 0 Remember the Woody amp the Shark example and the need that most rms encounter to grow nearly continuously Otherwise in today s marketplace yes even with the recession rms will tend to fall further behind merely by standing still Go to the real story 0 Why does anyone buy anything that is consumed in a generally public or highly visible manner Closing Thoughts 7 Relates to evoked sets of consumers a topic introduced to you during our first night together Marketers should understand that giving consumers more choices is usually not better for business There is a famous jam ie jelly study involving choices between 6 options and 24 options Implications The number and presentation of the options we are given can impact what we choose and how satis ed we are with our choices
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