Consumer Behavior

1. Consumer Behavior • Readings: Flat World • Chapters 10, 3, • Primary and Secondary Research (http://www.allbusiness.com/marketing/market-research/1310-1.html) • Skill Soft: MKT0203: Competitive Factors in Strategic Marketing • WGU Library E-Reserves • Figure 8.2 Types of Primary Research (Contemporary Marketing pg. 251)

2. 0 • Consumer behavior Process through which buyers make decisions. • Marketers borrow extensively from psychology and sociology to better understand consumer behavior. • Consumer behavior is usually understood as a function of interpersonal influences and personal factors.

3. 0 INTERPERSONAL DETERMINANTS OFCONSUMER BEHAVIOR CULTURAL INFLUENCES • Culture Values, beliefs, preferences, and tastes handed down from one generation to the next. • Culture is a broad environmental determinant of behavior. Core Values in U.S. Culture • Work ethic and desire the accumulate wealth. • Importance of family and home life. • Individualism, education, freedom, youth, health, and others. • Consumers are adopting new values as communication technology changes.

4. 0 International Perspective on Cultural Influences • Successful strategies in one country may not extend to others. • Example: McDonald’s allows local managers to run their own advertising campaigns tailored to the preferences of their customers. Subcultures • Groups within a culture that have their own modes of behavior. • In U.S. subcultures can differ by ethnicity, nationality, age, rural versus urban location, religion, and geographic distribution. • Population mix in U.S. is changing as the Hispanic, African American, and Asian populations grow.

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6. 0 Hispanic-American Consumers • Forty-eight million Hispanics in U.S. are not homogenous. • Acculturation—the degree to which newcomers have adopted U.S. culture—shapes consumer behavior. • Despite differences among the various Hispanic segments, the Hispanic market in general is large and fast growing. • Some other important trends for marketers to consider: • Hispanics control more disposable income than any other minority group, a figure expected to hit $1.3 trillion by 2012. • During recent years, large consumer goods companies have invested huge sums in advertising to Hispanic consumers, in both English and Spanish. • Hispanic families tend to be somewhat larger than those of other population groups. They also tend to be younger, so deaths don’t balance out births.

7. 0 African American Consumers • Thirty-eight million today; expected to grow to more than 61 million by 2050. • Buying power expected to be $1.1 trillion by 2012. • As with other subcultures, demographic factors such as age, language, and educational level all affect how marketers appeal to different segments of the African-American segment. Asian American Consumers • More than 14 million Asian Americans are spread among culturally diverse groups. • Asian American consumers are expected to wield $670 billion in buying power by 2012. • Many culturally diverse segments within this group, including Chinese, Filipinos, Japanese, Koreans, Indians, Vietnamese, and others. • Marketers today are working to better understand the needs of this market.

8. 0 SOCIAL INFLUENCES • Everyone belongs to multiple social groups: family, neighborhood, clubs, and sports teams. • Group membership influences buying decisions. • Groups establish norms of behavior—values, attitudes, and behaviors that a group deems appropriate for its members. • Differences in status and roles within groups also influence behavior. • Some Americans make purchases to enhance their status within social groups, and others work to reduce their consumption dramatically. The Asch Phenomenon • Theory of psychologist S. E. Asch that individuals conform to majority rule, even if that majority rule goes against their beliefs.

9. 0 Reference Groups • Reference groups People or institutions whose opinions are valued and to whom a person looks for guidance in his or her own behavior, values, and conduct, such as family, friends, or celebrities. • Influence of reference group depends on two conditions: • Purchased product must be seen and identifiable. • Purchased product must be conspicuous, something not everybody owns. Social Classes • Six classes: upper-upper, lower-upper, upper-middle, lower-middle, working class, lower class. • Income not always a primary factor. • Individuals’ buying habits sometimes reflect the class to which they aspire.

10. 0 Opinion Leaders • Opinion leaders Trendsetters who purchase new products before others in agroup and then influence others in their purchases. • Individuals tend to act as opinion leaders for specific goods or services. • Information sometimes flows from massmedia to opinion leaders to consumers; sometimes flows directly to consumers.

11. 0 • FAMILY INFLUENCES • • Like other influences, families have norms of expected behavior, status relationships, and roles. • • Family structure changing. • • Only about half of all households are headed by married couples. • • Many couples are separated or divorced, so single heads of households are more common.

12. 0 FAMILY INFLUENCES • Four roles of spouses: • Autonomic role—partners independently make an equal number of decisions. • Husband-dominant role—husband usually makes certain buying decisions, such as purchasing life insurance. • Wife-dominant role—wife makes buying decisions, such as buying children’s clothing. • Syncratic role—buying decision made jointly. • Increasing occurrence of two-income households increases likelihood of spouses making joint buying decisions. Children and Teenagers in Family Purchases • Preteens and teens will spend $200 billion each year by 2011, and marketers are taking notice.

13. 0 PERSONAL DETERMINANTS OFCONSUMER BEHAVIOR NEEDS AND MOTIVES • Need Imbalance between a consumer’s actual and desired states. • Motive Inner state that directs a person toward the goal of satisfying a need. Maslow’s Hierarchy of Needs • Developed by psychologist Abraham H. Maslow • Identifies five levels of human needs. • Person must at least partially satisfy lower-level needs before higher-level needs affect behavior.

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15. 0 PERCEPTIONS • Perception Meaning that a person attributes to incoming stimuli gathered through the five senses. • Results from two types of factors: • Stimulus factors—characteristics of the physical object such as size, color, weight, and shape. • Individual factors—unique characteristics of the individual, including not only sensory processes but also experiences with similar inputs and basic motivations and expectations. Perceptual Screens • Consumers are bombarded by commercial messages. • Perceptual screens help people filter out some messages. • Advertisers work to break through these screens such as through using large ads, word-of-mouth advertising, and virtual reality.

16. 0 Subliminal Perception • Subconscious receipt of incoming information. • Use is aimed at subverting perceptual screens. • Unlikely to work in customers not already inclined to buy. • Example: Retailers beaming commercials to individual customers in specific areas of the store, such as the cereal aisle. ATTITUDES • Attitudes Person’s enduring favorable or unfavorable evaluations, emotions, or action tendencies toward some object or idea. Attitude Components • Cognitive—individual’s knowledge about an object or concept. • Affective—deals with feelings or emotional reactions. • Behavioral—tendencies to act in a certain manner.

17. 0 Changing Consumer Attitudes • Marketers have two choices for appealing to consumer attitudes: • Attempt to produce consumer attitudes that will motivate purchase of a particular product. • Evaluate existing consumer attitudes and then make the product features appeal to them. • Attitudes may not be unfavorable, just not motivating the consumer toward a purchase. Modifying the Components of Attitude • Provide information about product benefits and correcting misconceptions. • Engaging buyers in new behavior. • New technologies can encourage changes in customers’ attitudes.

18. 0 LEARNING • Learning Knowledge or skill that is acquired as a result of experience, which changes consumer behavior. • Learning process: • Drive—any strong stimulus that impels action. • Cue—any object in the environment that determines the nature of the consumer’s response to a drive. • Response—an individual’s reaction to a set of cues and drives. • Reinforcement—the reduction in drive that results from a proper response; creates bond between the drive and the purchase of the product.

19. 0 • Applying Learning Theory to Marketing Decisions • • Marketers use shaping, the process of applying a series of rewards and reinforcements to permit more complex behavior to evolve. • • Product and promotional strategy work together in the shaping process. • • First step – customer receives a free sample that includes a substantial discount for first purchase. • • Second step – Customer likes product and purchases it with little financial risk. • • Third step – Customer uses discount coupon to buy at moderate cost. • • Final step – Customer decided whether to buy the item at its true price. • SELF-CONCEPT THEORY • • Self-concept Person’s multifaceted picture of himself or herself. • • Four components—real self, self-image, looking-glass self, and ideal self— influence purchasing decisions.

20. 0 THE CONSUMER DECISION PROCESS • High-involvement purchasing decisions include purchasing a condominium. • Low-involvement purchasing decisions include buying a candy bar.

21. 0 PURCHASE DECISION AND PURCHASE ACT • Consumer decides where or from whom to make the purchase. POST-PURCHASE EVALUATION • Buyer feels either satisfaction at the removal of the discrepancy between the existing and desired states or dissatisfaction with the purchase. • Cognitive dissonance Imbalance among knowledge, beliefs, and attitudes that occurs after an action or decision, such as a purchase. • Reasons dissonance may increase: • The dollar value of a purchase increases. • The rejected alternatives have desirable features that the chosen alternatives do not provide. • The purchase decision has a major effect on the buyer.

22. 0 CLASSIFYING CONSUMER PROBLEM-SOLVING PROCESSES • Results from two types of factors: Routinized Response Behavior • Consumer makes many purchases routinely by choosing a preferred brand or one of a limited group of acceptable brands. Limited Problem Solving • Consumer has previously set evaluative criteria for a particular kind of purchase but then encounters a new, unknown brand. Extended Problem Solving • Results when brands are difficult to categorize or evaluate. • Typical of high-involvement purchases.

23. Watch Mitsubishi Video Watch Cadillac Video Compare the Cadillac and Mitsubishi ads.  Which type of information source(s) does each make use of to tout its product?  What competitive advantage is demonstrated by each vehicle?  Which ad is most effective?  Why? 0 VIDEO