Ch.7 Consumer Decision Making and Behavior
Ch.7 Consumer Decision Making and Behavior MKTG 3650
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This 11 page Class Notes was uploaded by Alora Lornklang on Saturday March 26, 2016. The Class Notes belongs to MKTG 3650 at University of North Texas taught by David Strutton in Spring 2016. Since its upload, it has received 17 views. For similar materials see Foundations of Marketing in Marketing at University of North Texas.
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MKTG 3650 Foundations of Marketing Practice Chapter 7: Consumer Decision Making and Behavior Almost anyone can make better consumption decisions once they understand: o The forces that influence their choices o How much the consumer decisions they make impact their physical, emotional, and economic wellbeing. o How they frequently use consumer choice to create and express their self identities. What is Consumer Behavior? Consumer behavior refers to the buying behavior of final consumers o Final consumers are individuals who acquire products or services for their personal consumption or for their family’s consumption. Consumer behavior (CB) also refers to the factors that influence the decisions made by, and the buying behaviors of, final consumers as they acquire, consume, and dispose of products. Various consumerrelated factors influence the CB decisions that consumers make. o Consumers’ demographic o Belief and attitude o Lifestyle o Personality o Family life cycle style characteristics o Consumers’ wants, needs, and problems o Events in economic, technological, political, social class, cultural or neighborhood, school, and/or church environments Rational consumers respond to incentives. o An incentive is anything that motivates or encourages anybody to do something. o The perception that they will acquire new or extra value from making one product choice as opposed to choosing an alternative product option incentivizes consumers to purchase a product. Humans are “predictably irrational,” in the words of Dan Ariely. o At net, insightful marketers can often predict how specific consumer segments will act irrationally in the same generally anticipated ways at the same time to similar marketing or environmental stimuli. o Most people pass through life unaware of the factors that manipulate their decisionmaking. Decisions Made Inside Consumer Minds When studying consumers, Firms should answer the following 6 questions: o What consumers buy o Where consumers buy o How and how much consumers buy o When and why consumers buy The Why is more challenging to answer accurately because the primary reason why consumers do or buy anything is locked away inside the “black boxes” of their minds. Decisions made routinely by consumers include: o Product choices o Brand choices o Dealer/store/website choice o Purchase timing o Purchase amount Consumers also have to decide whether to: o Pay attention to or ignore what marketers are saying o Like or dislike any product, value, or anything that marketers are saying or offering o Evangelize, or spread the good or bad news, to others about their positive or negative experience with products, brands, or stores. How Consumers Make Decisions Steps of the decisionmaking process: o Problem recognition, or the realization that purchasing need exists. o Information search, or seeking relevant info about products that may satisfy the need. o Alternative evaluation, or assessing alternative product solutions to determine which one appears most likely to do the best job of satisfying the aroused need. o Choice, and subsequent purchase of one or more products based on the prior evaluation process. o Postpurchase processes, or the cognitive and behavioral responses initiated by consumers as their expectations about the value delivered by the product they selected are exceeded, met, or unmet. A primary reason why this model is so important is because Firms should be doing different things with their marketing mix as consumers pass through the various stages. Extensive problemsolving o Time consuming, highinvolvement, features higher risk greater costs, and more personal relevance o Ex: Cars, houses Routine purchase decisions o Inexpensive, low risk, and socially inconspicuous endeavor o Ex: milk, gas Consumer Decision Stage 1: Problem Recognition Motives (or drives) are needs that are sufficiently important and pressing to direct individuals to seek satisfaction for the need or a solution to the problem that created the motive. Problem or need recognition that promotes routine decisionmaking processes usually involves shallow, surfacelevel thinking. Problem recognition can be triggered by internal states. o Hunger, thirsty, cold, or tired Consumers needs or problem recognition can be activated through exposure to external stimuli o FOMA= fear or missing out Consumers’ need recognition can be aroused through exposure to planned marketing activities. o Advertising, promotion, personal selling, direct marketing, or commentary shown on favorite news program Consumer Decision Stage 2: Information Search Information search typically starts with a memory scan/internal search o Consumers usually possess knowledge about one or more products and/or brands that may meet their needs. (Prior experience, friend recommendations) Low Involvement Search Processes Little prior thought is given to the purchase choice because the risks associated with the product or selecting the wrong alternative are very low. Marketers of convenience goods should initiate measures to ensure that their brands are among the first to be recalled from memory. Those brands that are recalled first are generally more frequently purchased, underscoring the power of promotional strategies designed to create topofmind brand awareness (TOMA) via repeat advertising across a wide range of media. High Involvement Search Processes Consumers possess high levels of expertise and confidence about the product and how to use it. Brand loyalty reduces the likelihood and degree of external search and is one of the strongest assets any marketer could hope to possess Consumers do engage in external info searches for most highinvolvement purchase decisions. When purposefully gathering info during external search processes, consumers typically rely on printed media or personal sources. Social and environmental pressures may influence the extent to which consumers search for information as well as physical constraints such as lack of transportation. Marketers try to constrain consumers’ search efforts with “buy now” buttons. Consumer Decision Stage 3: Alternative Evaluation Alternative evaluation and information search essentially occur together Consumers instantly evaluate how alternatives measureup against one another and how the value of each may satisfy their needs. When engaged in extensive decisionmaking, consumers generally employ, even subconsciously, complicated “cognitive decision algebra” to aid the evaluation process. Consumer Decision Stage 4: Choice For extensive problemsolving decisionmaking, consumers’ alternative evaluation processes should culminate with the selection and purchase of one and only one alternative. When consumers choose nothing at all they have still made a decision. Any product chosen will always be the one that promises the highest level of expected satisfaction as perceived by the decision maker. Actual brand choice may result from inertia: positive consumer responses to various instore stimuli; a desire to variety seek; or brand familiarity stemming form exposure to promotional activities; such as advertising. Inertia A term that emanates from the physics discipline, infers that an object at rest tends to remain at rest Consumer inertia amounts to spuriousor pseudobrand loyalty in which consumers continue to buy the same brand because that is the brand they always purchase. Variety seeking The desire to try something new. Brand familiarity created a repetitive advertising experienced across time may cause consumers to unconsciously pull brands from shelves into their basket. Brand choice implies that purchase of the chosen alternative readily follows. However, for higherinvolvement decisions, purchase may not immediately occur. Purchase also may delayed, or not happen at all, due to the intervention of external constraints. o These constraints are typically beyond the control of the consumer and can effectively halt the purchase process, or cause the consumer to revisit earlier stages in decisionmaking process. Consumer Decision Stage 5: Post-Purchase behaviors A loyal customer and eventual brand evangelist who spreads the good word about the product may be born Consumers often experience feelings of doubt or anxiety following purchases; especially those purchases associated with highrisk, highcost, socially conspicuous, highinvolvement decisions. o This is called postpurchase cognitive dissonance or buyer’s remorse. Each dissatisfied customer will, on average, tell 8 to 10 others about their dissatisfying experiences. o This translates to lost customers, but makes new customers that much more difficult and expensive to recruit. o This is called negative word of mouth. Psychological Factors Influence Consumer Decision-Making Consumer Needs and Motives Wants are learned. Needs are more basic in nature. Figure 1 Maslow's Hierarchy of Needs Motivation Research investigates consumers’ reasons for engaging in consumptionrelated behaviors and for making the decisions they make. Motivation Research presumes that underlying or unconscious motives exist and influence consumer behavior. Consumer Perception Perception involves the process by which consumers select, organize and interpret information. Selective Exposure Occurs when consumers are exposed to some forms of info but not others Selective Attention Occurs when consumers, once exposed to info, pay attention to only part of that information Selective Interpretation Occurs when consumers construe info in ways to allow it to fit with existing beliefs and attitudes Selective Retention Means that only a portion of the info that makes it through the other perceptual filters is retained in memory How long something is remembered and how much it retained are functions of the importance of the information to the consumer, the extent to which the importance of the information has been reinforced, how often the info has been repeated, and the extent to which imagery has been employed to create the memory. Consumer Learning Learning can be viewed as any change in beliefs, attitudes, and behavior resulting form personal experience, mental interpretations, or representations of these experiences, or through observing the experiences of other individuals. Learning is any change in the content or organization of our longterm memory. In highinvolvement situations, consumers are motivated to learn. Lowinvolvement situations arise more often than highinvolvement learning situations for consumers and students. Two highly respected theories are classical conditioning and iconic rote learning Classical Conditioning Associations between conditioned and unconditioned stimuli must be learned. The keys to stimulating this learning are repetition and contiguity. A common approach to classical conditioning in advertising is to present a product within the context of an appealing lifestyle setting, as in most perfume and cologne ads. If the associating between the brand and the lifestyle setting is repeatedly demonstrated in other ads, consumers may link the brand with the lifestyle theme Classical conditioning is also illustrated through ads that connect brands with sports themes or heroes. Passive (or Iconic Rote) Learning Iconic rote learning, also called incidental or passive learning, explains how most consumer learning occurs for low involvement products. Iconic rote learning involves learning the association between two or more concepts in the absence of conditioning. The key element is message repetition. Repetition is employed to create a link between a brand name and key benefits delivered by that brand. Unlike classical conditioning, no stimulusresponse mechanism is involved. Marketers simply attempt to create top of mind awareness (TOMA) for the brand and associate the brand with certain key features, attributes, and benefits that it delivers to consumers. Operant Conditioningbased Learning Operant conditioning, also called instrumental learning, occurs when consumers choose between alternative stimuli based on rewards associated with choices they learn to make. The operant conditioning based learning often unfolds as a result of trial and error. As customers respond to various marketing stimuli, they learn that different choices are associated with different rewards. Relies heavily on consumers actually using a product Each satisfying experience is assumed to build on previous experiences in operant learning. Vicarious Learning Arises hwen consumers observe the results of other peoples’ decisions/behaviors/consequences and adjust their consumption behaviors based on the desirable or undesirable outcomes that were observed. Most vicarious learning probably occurs in highinvolvement situations but can happen in lowinvolvement situations also. Learning Through Reasoning Reasoning is the basis by which we gather and evaluate information that is employed in making extended or complex decisions. Reasoning is a highinvolvement problemsolving process. Reasoning occurs when new information is collected an is combined with information already in memory for purposes of problem solving. Consumer Beliefs and Attitudes Beliefs and attitudes about products are generated naturally as consumers experience, learn more, and develop insights about those products. Beliefs are descriptive thoughts that consumers have about something and are less deeply held than attitudes. Beliefs are formed as consumers accumulate knowledge about products’ characteristics and their performance. They are generally devoid of emotion. Attitudes capture consumers’ relatively enduring, consistent, deeplyheld evaluations, feelings, and tendencies held toward a person, idea, place, or an experience. Attitudes are comprised of multiple, bundled, linked, and interconnected beliefs. Thus, consumers’ beliefs about product characteristics influence their attitudes toward those products. Attitudes capture emotions. The usual approach to changing consumer attitudes is to first attempt to structure or change consumers’ beliefs about that product. This approach is typically employed when marketers develop new products or reposition existing products in order to enter a new market. Consumer Personality Personality is defined as unique and lasting psychological characteristics that lead consumers to respond in enduring and consistent ways to events and stimuli as each arise in a given consumers’ environment. Our personalities describe who we are and remain constant Consumers’ personality traits impact their preferences for specific products and brands, and affect their decisionmaking. Self Concept Selfconcept is a multidimensional construct that captures how consumers feel about and see themselves. Selfconcept reflects consumers’ personal identity. Idealprivate self encapsulates how consumers would prefer to see themselves. Idealsocial self captures how consumers would like others to see them. Consumers often buy products in part because the values they deliver reflect or seemingly may further those consumers’ ideal private or social selves. Brand images are designed and communicated to encourage consumers to perceive a match between the brand’s image and some dimension of their ideal selfconcept. Consumer Lifestyle Consumer lifestyle entails and captures consumers’ patterns of daily living. Lifestyle is measured using three sets of variables: o Activities in which consumers routinely and voluntarily engage during their free time o Consumer interests in things or events around them o The opinions consumers possess about themselves, social or cultural events or trends, political affairs or trends, business, technological, and environmental trends Lifestyle, when measured, answers the following question: o What do consumers do and think about in their free time? Many lifestylerelated activities, interests, and opinions result from consumers’ desires to achieve their ideal private or social selves. Socio-Cultural Factors Influence Consumer Decision-Making The wants and needs, decisionmaking processes, and product preferences of consumers are shaped by trends and events as each unfold in social environments around them. These include culture and subculture, social class membership, family, and various reference groups Culture and Subculture Culture is the broadest factor that influences consumer behavior. Culture is the most basic cause of a person’s wants and behaviors. Culture is the set or collection of values, beliefs, attitudes, norms, symbols, and customers that consumers share with or learn from other members of their cultural group. A value is an enduring belief that is shared by members of a society that a specific behavior is personally or socially preferred over another. Culture is important. But the cultural enttiteis that prove most important for marketing managers are the leading edges of trends and movements unfolding inside any culture at a point in time. Cultural shifts can create or destroy market opportunities for new products. Cultural change can evolve from emerging subcultures. Subcultures are smaller subsets of groups that exist within broader cultures. Members of subcultures may share common value systems based on similar life experiences, ethnicities, religious or political views, or even the teams that they follow. Subcultures often are treated as market segments for products because their memberships share certain values and beliefs in common. Subcultures grow in size, influence, and power. These shared values can diffuse throughout and affect value systems held by the larger culture as a whole. Social Class, Income, and Education Social classes in virtually all societies are strongly correlated with many consumption patterns and behaviors. Consumers from particular social class segments likely respond in similar ways to the same sorts of products, brands, marketing messages, prices, and even retail establishments. Upperupper class, lowerupper class, uppermiddle class, middle class, working class, upperlower class, lowerlower class Social class status often represents what is known as a positional good in America. The Family Unit The singlemost important sociocultural influence on consumption behavior is the family unit. A family consists of two or more people related by marriage, blood, or adoption living together in a household. Family directly affects the sale of many products and services that are geared to family use. Members of the family unit typically assume different roles with respect to decisionmaking. These roles include: o Influencers Those having input into the decision in some manner o Decisionmakers The person or persons actually making the decision o Purchasers The person or persons who actually buy the product o Users The person or persons who use the product Reference Groups A reference group is a group of two or more individuals whose beliefs, attitudes, values, norms of behavior, or symbols are used by another person or persons as guides to behavior Primary membership groups include family, friends, and colleagues Secondary membership groups include groups as professional associations, churches, and local organizations Aspirational reference groups, groups whom consumers aspire to be identified or associated with, can impose tremendous effects on consumption behaviors Dissociative reference groups are those which consumers view negatively. o Consumers might decide to not buy particular styles or brands because of the symbolic meanings associated with the stereotypical buyers of these products. Online social networks consist of groups of people who employ social media to share information, experiences, and opinions. Purchase Situations Influence Consumer Decision-Making Time constraints can impact decision outcomes “Outside constraints” such as outofstock, unanticipated changes in price, sudden arrival of new info Becoming a Smarter Consumer As a consumer you should be aware that: Your favorite books, TV shows, movies or music, rarely provide deep insights into your psychological makeup but that doesn’t mean that marketers don’t take advantage of the decisions you make in these areas. Your anger makes your more optimistic, more prone to taking risks and more likely to buy anything. Your fear makes you more pessimistic, and riskadverse; less likely to buy anything. Your sadness makes you anxious to buy the wrong stuff; your disgust makes you unlikely to buy anything. Avoid each. You should limit the number of small or large decisions in your life. Limit your options.