CHAPTER 5 Consumer Behavior: How and Why People Buy

M A R K E T I N G Real People, Real Choices Fourth Edition CHAPTER 5Consumer Behavior: How and Why People Buy

Consumer Behavior The process individuals and groups go through to select, purchase, or use goods, services, ideas, or experiences to satisfy their needs and desires

Imagine… • Imagine you want to buy a car. What process would you go through before you actually drive one home? • Imagine you feel thirsty and want to buy a soda. What process do you go through before you actually drink one?

Consumer Decision-Making Process • Problem recognition • Information search • Evaluation of alternatives • Product choice • Post-purchase evaluation

Problem Recognition • Occurs whenever a consumer recognizes a difference between the current state and the ideal or desired state • Internal cues - consumers recognize state of discomfort • External cues - marketers may stimulate consumers to recognize problem • E.g. seeing a health club ad may help you recognize that you are not getting enough exercise.

Information Search • Consumer checks memory and surveys environment to identify what options are available • Internal search • External search • Sources might include personal experience and knowledge, friends, advertising, websites, and magazines • Marketers should make information accessible to consumers. How?

Evaluation of Alternatives • Identify consideration set • Typical size – 5 to 9 brands • Narrow list and compare pros and cons • Use evaluative criteria to decide among remaining choices • Importance weights for evaluative criteria • Marketers should try to ensure that their brand has high awareness. How? • Marketers should position their brands important evaluative criteria. How?

Product Choice • People may ultimately make the choice based on heuristics • Heuristics represent rules of thumb • brand loyalty (“billions served”) • country of origin (“Australian for Beer”) • Liking • Price = quality (Nike shoes better than Payless shoes) • Mom/Dad knows best, etc. (Inter-generational effect) • Marketers should understand the heuristics most commonly used by their consumers and use them to their advantage. Examples.

Post-purchase Evaluation • How good a choice was it? • Customer satisfaction/dissatisfaction • Cognitive Dissonance (Buyers regret) • High-involvement products • Ultimately affects future decisions and word-of-mouth communication • Marketers should assure consumers that they made an excellent choice. How can they do that?

Isolate the key variables • What distinguishes a purchase of a new car from soda? • Product Involvement • Perceived risk • Cost • What should marketers do when product involvement is high? Low?

Three consumer buying strategies • Extended problem solving – e.g. buying a house • Limited problem solving – e.g. buying a new pair of running shoes • Habit / Variety seeking – e.g. buying soda

Internal Influences (Individual Influences) • Perception • Motivation • Learning • Attitudes • Personality • Age • Lifestyle

Perception • Process by which people select, organize, and interpret information • Exposure: stimulus must be within sensory receptors to be noticed. E.g. highway billboards • Attention: consumers will pay attention to some stimuli and not to others. E.g. hunger and restaurant signs • Interpretation: consumers assign meaning to stimuli

Motivation • Motivation is an internal state that drives us to satisfy needs • Once we activate a need, a state of tension exists that drives the consumer to some goal that will reduce this tension and eliminate the need • Consequently, only unmet needs motivate

Maslow’s Need Hierarchy • Five levels of needs • Physiological (food, water, etc.), Safety (security, protection, shelter, etc.), Belonging (love, friendship, acceptance, etc.), Ego (prestige, status, etc.) and Self Actualization (education, hobbies, etc.) • Higher needs are activated only after lower level needs are met.

Learning • Learning is a change in behavior caused by information or experience • Behavior learning theories – learning takes place as the result of connections formed between events (e.g. Eagle points awarded for attending Winthrop games) • Cognitive learning theories – learning occurs when consumers make a connection between ideas or by observing things in the environment (e.g. new exercise equipment and a healthier body)

Attitudes • An attitude is a lasting evaluation of a person, object, or issue • Sum of beliefs about an object • Belief = Attribute x Strength of Association • 3 components of attitudes • affect • cognition • Intentions

Personality • Personality is the set of unique psychological characteristics that consistently influences the way a person responds to situations in the environment • Innovativeness • Self-confidence • Sociability • Materialism • Need for cognition (the extent to which you need to process all information cognitively before taking a decision) • Purchase of which products may be influenced by personality? • How do marketers use your personality type to their advantage?

Age Group • Products and services often appeal to a specific age group • Children • Teens • Young Adults • Middle-aged • Elderly

Family Life Cycle • Related to age groups, our purchases also depend on our current position in the family life cycle • stages through which family members pass as they grow older • Singles spend more money on entertainment and recreation • Couples with small children spend more money on baby furniture, etc.

Lifestyles • A pattern of living that determines how people choose to spend their time, money, and energy and reflects their values, tastes, and preferences • Expressed through preferences for sports activities, music interests, and political opinions • Psychographics is the segmentation tool used to group consumers according to AIOs • You choose products / brands associated with your lifestyle or the lifestyle you aspire to. Examples? • How do marketers use lifestyle preferences to their advantage?

Situational Influences • When, Where and How consumers shop. • Physical Environment (décor, layout, music, odors, lighting, temperature, etc,) • arousal • Pleasure • E.g. Bass Pro Shops, Mall of America • Time • time poverty • E.g. One hour photo processing, drive-through banking, etc.

Social Influences (Group Influences) • Culture and Subcultures • Social Class • Group Behavior and Reference Groups • Opinion Leaders

Cultures and Subcultures • Culture is the values, beliefs, customs, and tastes produced and valued by a group of people • E.g. prom dresses • A subculture is a group coexisting with other groups in a larger culture whose members share a distinctive set of beliefs or characteristics • E.g. HOGS and black leather wear

Breakfast habits in India • Compare this to American breakfast habits: • Indians like to eat hot, sit-down breakfasts • Milk generally comes in fresh every morning. Needs to be heated before consumption • Rice preparations in the south, wheat and corn preparations in the north • Are used to and prefer spicier foods • Drink hot tea with milk and sugar with breakfast • Oats are for horses • Often eat with their fingers – may use a spoon

Kelloggs breakfast cereals in India • What should Kelloggs do differently in India?

Islamic Cultures • Women to cover heads & face • Women not allowed to socialize with men • Whither dating services? • Strict rules about depicting women in ads • Banks cannot charge interest • Which products are most affected by this?

Language: Some communication gaffes • The Big Mac: Originally sold in France under the name Gros Mec. The expression means "big pimp" in French. • The Rolls-Royce Silver Myst: In German, mist means "human waste." (Clairol's Mist Stick curling iron had the same problem.) • GM cars: Originally sold in Belgium using the slogan, "Body by Fisher," which translated as "Corpse by Fisher." • Cue toothpaste: Marketed in France by Colgate-Palmolive until they learned that Cue is also the name of a popular pornographic magazine.

Communication gaffes • Puffs tissues: In Germany, puff is slang for "whorehouse." • The Jotter: A pen made by Parker. In some Latin countries, jotter is slang for "jockstrap." • Schweppes Tonic Water: The company changed the name from Schweppes Tonic Water to Schweppes Tonica when they learned that in Italian, "il water" means "the bathroom.“ • What should marketers do to avoid such gaffes?

Social Class • Social class is the overall rank of people in a society usually based on income levels • E.g. shoppers in Walmart and Saks • People in the same class tend to have similar occupations, similar income levels, share common tastes in clothes, decorating styles, and leisure activities. They may share political and religious beliefs. • How many social classes exist in the US? • Your class membership influences product choices

Group Memberships • A reference group is a set of people a consumer wants to please or imitate • The “group” can be composed of one person, a few people, or many people. They may be people you know or don’t know. • Conformity is at work when people change as a reaction to real or imagined group pressure • E.g. Imagine wanting to belong to your peer group.

Opinion Leaders • An opinion leader is a person who influences others’ attitudes or behaviors because they are perceived as possessing expertise about the product • Impart both positive and negative information • How does marketing use opinion leaders to their advantage?

C2C E-Commerce • Communications and purchases that occur among individuals without directly involving the manufacturer or retailer E.g. E-bay and other Auction sites • Virtual Communities • Multi-User Dungeons (MUDs) e.g. Sony and Microsoft’s gaming websites • Rooms, Rings, Lists • Boards, Blogs • Auction sites • Protest sites • Visitors often express their views on many subjects like music, books, bands, products, etc.

CHAPTER 5 Consumer Behavior: How and Why People Buy