CONSUMER BEHAVIOR

1. CONSUMER BEHAVIOR BUAD 307 MARKETING FUNDAMENTALS

2. Why does Staples sell Starbucks coffee?

3. Influences on and of Consumer Behavior PERCEPTION/ SENSATION MARKET RESEARCH INFO SEARCH COGNITION CHOICES STRATEGY AFFECT PREFERENCES BELIEFS CONSUMER COMMUNICATION SOCIAL AND OTHER INFLUENCE

4. Learning Outcome Objectives • Understand how consumer cognitive (thinking) processes and limitations, affect, beliefs, social influences, and other contextual factors influence consumer decision making, choices, and behavior • Appreciate how these insights can be used to design and implement effective marketing strategies • Appreciate individual and segment differences in process and outcome

5. True or False? • If you have bad breath, you cannot smell it yourself. • If you eat a balanced diet, you do not need vitamin supplements. • Using a razor with five blades will reduce the likelihood of cutting yourself and will result in less skin irritation. • Dell Computers tend to be of higher quality than those made by HP and Sony. • Rust stains on clothes can be removed with the use of lemon juice. Bleach actually makes these stains worse.

6. Questions Faced By Consumers • Are veggie burgers actually healthy? • What makeup should you use to get an “even” skin tone? • Do I get any useful benefits from spending more than $125 on a digital camera? • Should I get a “make-over?” What am I looking for? What should I do? • Is my mechanic honest? • Which tie should I wear for a job interview? • Should I give my wife roses, chocolate, or software?

7. Consumer Problems and Recognition • Consumer problem:Discrepancy between ideal and actual state--e.g., consumer: • Has insufficient hair • Is hungry • Has run out of ink in his or her inkjet cartridge • Problems can be solved in several ways--e.g., stress reduction <----- vacation, movie, hot bath, medication

8. CONSUMER DECISIONS:Theory and Reality in Consumer Buying PROBLEM RECOGNITION INFORMATION SEARCH EVALUATION OF ALTERNATIVES PURCHASE POSTPURCHASE EVALUATION/ BEHAVIORS Theory Complications

9. Approaches to Search for Problem Solutions INTERNAL Memory Thinking EXTERNAL Word of mouth, media, store visits, trial CATALOG

10. Options Identified and Considered UNIVERSAL SET All possible options RETRIEVED SET Options that readily come to mind EVOKED SET Options that will be considered by the consumer Note: Retrieved and evoked sets will vary among different consumers

11. REMINDER • For low involvement products, efforts aimed at affecting internal search tend to be more effective—the consumer is usually not willing to expend energy on external search. • External search is more likely for higher involvement products.

12. Decision Making Issues • Involvement level • Temporary • Enduring • Consumer locus of control • Internal • External • Product category complexity • Consumer knowledge

13. Evaluation Type • Compensatory: Decision based on overall value of alternatives (good attribute can outweigh bad ones) • Non-compensatory: Absolutely must meet at least one important criterion (e.g., car must have automatic transmission) • Hybrid: Combination of the two (e.g., one non-compensatory measure, then compensatory tradeoffs on other attributes • Abandoned strategy: Consumer finds initial criteria unrealistic and proceeds to less desirable solution IMPORTANT LESS IMPORTANT

14. Heuristics—Low Involvement Decision Rules • If either Coke or Pepsi is on sale, buy that brand; otherwise, buy Coke • The larger the navels, the better the orange • The larger package is likely to offer a lower unit price (not true in reality)

15. Attitudes―components BELIEFS AFFECT (FEELING) BEHAVIORAL INTENTIONS

16. Attitude Components • Beliefs • Can be positive, negative, or neutral • May or may not be accurate • May contradict other beliefs held by the other person • Affect • May be positive or negative • May take on specific dimension (e.g., pleasure, disgust) • Behavioral Intentions • An individual’s plan or expectations of what he or she will do • May appear inconsistent with beliefs • May not predict well what the individual will do in reality

17. Generating Beliefs Through Advertising • Statements must be • Perceived • Comprehended • Remembered • Believed (at least in part)

18. Positioning Through Creating Beliefs • “It’s not delivery; it’s De Journo!” • “Wal-Mart. Always low prices. Always.” • “I just saved a bunch of money on my auto insurance.” • “U-um Good!” (Campbell’s Soup)

19. Multiattribute Models of Attitude • Attitude computed as a function of multiple attributes weighted for importance: Ab= attitude toward brand b Wi: weight of attribute I Xib: belief about brand b’s performance on attribute I • Model assumes rationality Calculations will not be required on the exam. You should know conceptually what this involves conceptually—i.e., weighing importance and intensity of feeling.

20. Multiattribute Models • Caveats • Different segments exist that will weight factors differently—thus, overall averages can be misleading. Separate analyses should be done for different segments of interest. (Segments can be identified by certain statistical techniques). • Individual differences exist in scale intensity—for some, it is much “easier” to be extremely good or extremely bad. • Prior research may be needed to identify issues (dimensions) to be weighted. • Some factors may be intangible—What are the substantive differences between Windows and Apple computers? • Non-compensatory factors—“must-haves”—may determine final result. • Applications • Determining • Overall performance • Areas of strength and weakness • Comparison to competitors • Overall • Areas of strength and weakness REMINDER: PERCEPTIONS ARE NOT NECESSARILY ACCURATE. We are looking to work with what consumers believe.

21. Affect • Based on • past emotional associations of product • emotional effect of beliefs

22. Attitude Characteristics • Availability/accessibility • Constructed vs. natural • Strength

23. Measurement of Attitude Components • Beliefs • Semantic Differential Scales • Good -------------------Bad • Fast --------------------Slow • Reliable-----------------Unreliable • Feelings • Likert Scales (Strongly agree … Strongly Disagree) • “This product makes me happy.”

24. Measurement • Behavioral Intention • Rating of likelihood of purchase • May need projection if social desirability affects willingness to admit to product use

25. Attitude Change Strategies, Part I • Change Affect • Classical conditioning • “Pairing” the brand or product with desired stimulus—e.g., a car with a beautiful woman • Attitude toward the ad • A likable ad for a brand in a mundane product category—e.g., • Energizer Bunny • Snuggles (fabric softener) • Mere exposure

26. Attitude Change Strategies II • Change behavior (e.g., sampling) • Attitudes are inferred from behavior (e.g., I buy the product  I must like it or It must be good) • Change Belief Component • Change existing beliefs • Difficult • Advertiser’s motives are suspect • Change importance of attributes • Add beliefs • Change ideal (fashion)

27. Adding Beliefs (True or Not): Examples • Brushing and flossing do not reach all areas of the mouth • People under stress need more vitamins • Baking soda will reduce odor of refrigerators • Fragmented hard drives may cause computer errors

28. REMINDER • Changing currently held beliefs tends to be difficult—people know the marketer has an ulterior motive • Adding new beliefs that are not inconsistent with what is already believed may be more effective

29. One-sided vs. two sided appeals • One-sided: only saying what favors your side • Two-sided: stating your case but also admitting points favoring the other side • Why is this effective?

30. Potential Family Life Cycle Stages YOUNG COUPLE YOUNG SINGLE EMPTY NEST I/II FULL NEST I/II/III SINGLE PARENT OLDER SINGLE BLENDED

31. Income tends to increase with time But children/ obligations add cost Divorce increases costs may change income distribution marriage Product demand due to singles with low expenses new couples divorced families children empty nesters --> more income Economic/Marketing Implications of Household Cycles

32. Roles/influence Information gatherers/holders Influencers Decision makers Purchasers Users Household Decision Making

33. The Means-End Chain Aim promotion/ positioning at higher levels of chain! Self-esteem Values Feeling of power Consequences Performance Attributes Fast acceleration Large engine

34. Subliminal Perception: A Diabolical Marketing Tool? • Subliminal messages in ads are illegal in U.S. • Some research support for modest effects • Probably limited to one syllable words • Complex messages can probably not be processed subliminally

35. Message Framing • Many tradeoffs can be stated in two, mathematically equivalent ways—e.g., • “80% lean” vs. “20% fat” • $49.00 per person per night based on double occupancy

36. Some Consumer Behavior Issues That Will Come Up Elsewhere in the Course • Demographics (segmentation) • Lifestyle (segmentation) • Culture/subculture (segmentation, international marketing) • Diffusion of innovation (product) • Attention (promotion)

37. Types Industrial Reseller Government and non-profit organizations Purchase types Straight rebuy Limited decision making Extended decision making Characteristics Greater involvement Bureaucracy Long term relationships Price is important but may not be the most important factor Organizational Buyers