What is Consumer Behavior?

1. What is Consumer Behavior? • 80% of new products fail to meet financial expectations!!!! • Study of individuals, groups, or organizations and the processes used to select, secure, use and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on consumers and society. • Answers the question of WHY? • Are managers telepathic? Do decisions regarding the 4 P’s just come to them? • What are some commonly asked questions regarding consumer’s behavior?

2. Commonly asked questions: • Product related: • What do they think of the product? • What do they think of competitor’s product? • How do you use the product? • What is their Aad /Aproduct? • Lifestyle related : • What are your hopes/dreams? • What is your place in the world? (role)

3. Applications of Consumer Behavior • Marketing strategy: MANAGERIAL RELEVANCE • Use common sense/ Look at successes and failures. • Regulatory Policy: Warning Labels/ Nutrition Labeling • Social Marketing/ TRUTH ads • Drug Use • HIV prevention

4. Overall Model Of Consumer Behavior

5. Consumer Decision Making Process Problem Recognition Information Search Cultural, Social, Individual and Psychological Factors affect all steps Evaluation of Alternatives Purchase Postpurchase Behavior

6. 1: Problem Recognition • Result of an imbalance b/t actual and desired states • How to recognize unfilled wants?

7. Involvement and Types ofDecision Making Low-purchase involvement High-purchase involvement Nominal decision making Limited decision making Extended decision making Problem recognitionSelective Problem recognitionGeneric Problem recognitionGeneric Information searchLimited internal Information searchInternalLimited external Information searchInternalExternal Alternative evaluationFew attributesSimple decision rules Few alternatives Alternative evaluationMany attributesComplex decision rules Many alternatives Purchase Purchase Purchase PostpurchaseNo dissonanceVery limited evaluation PostpurchaseNo dissonanceLimited evaluation PostpurchaseDissonanceComplex evaluation 14-1

8. 2: Information Search • Internal Search – recalling past information stored in memory • External Search – seeking information in the outside environment • Private (non marketing sources) • Public (non marketing sources) • Marketing controlled sources

9. The 8 Stages of Consumer Information Processing CPM

10. Consumer Information Processing: Stage 1 Exposure to information • Consumers come in contact with the marketer’s message • Gaining exposure is a necessary but insufficient for communication success • A function of key managerial decisions regarding the size of the budget and the choice of media and vehicles

11. Selective Attention: Stage 2 Attention • Focus on and consider a message to which one has been exposed • Highly selective

12. Selective Attention: Stage 2 To attract consumers attention: • Appeals to cognitive and hedonic needs • Use of novel stimuli • Use of intense stimuli • Use of motion

13. Selective Attention: Stage 2 Illustration of selective attention

14. Appeals to Cognitive andHedonic Needs Cognitive Needs Immediate functional needs of the consumer Hedonic Needs Needs that make them feel good and bring pleasure

15. Hedonic Needs Hedonic appeal to the love for babies

16. Use of Intense Stimuli Use of intensity

17. Use of Motion Another illustration of motion in advertising

18. Comprehension: Stage 3 • Understand and create meaning out of stimuli and symbols • Interpreting stimuli involves perceptual encoding • Peculiar to each individual (idiosyncratic) • Mood can influence • Miscomprehension are common

19. Consumer Information Processing: Stage 4 Agreement with what is comprehended The matter of whether consumers yield to - that is, agree with - what they have comprehended

20. Agreement: Stage 4 • Comprehension by itself does not ensure that the message influences consumers’ behavior • Agreement depends on • whether the message is credible • whether the information appeals to the consumer

21. Retention and Search/Retrieval of Stored Information These two information processing stages, retention and information search and retrieval, both involve memory factors related to consumer choice

22. Elements of Memory Memory Memory involves the related issues of what consumers remember about marketing stimuli and how they access and retrieve information when making consumption choices

23. Elements of Memory • Sensory stores(SS): • Information is rapidly lost unless attention is allocated to the stimulus • Short-Term Memory(STM): • Limited processing capacity • Not thought or rehearsed information will be lost in 30 seconds or less

24. Elements of Memory • Long-Term Memory (LTM): • A virtual storehouse of unlimited information • Information is organized into coherent and associated cognitive units called schemata, memory organization packets, or knowledge structures • The marketer’s job is to provide positively valued information that consumers will store in LTM

25. A Consumer’s Knowledge Structure for the Mazda Miata Little luggage space Mazda Miata British racing green Two- Seater Small Convertible Economical Sports car Fun to drive Nostalgic Japanese Sexy Well-Made Affordable Women

26. Learning and LTM • Learning represents changes in the content or organization of information in consumers’ long-term memories • Marketing communicators attempt to alter consumers’ long-term memories, knowledge structures, by facilitating learning of information that is compatible with the marketer’s interest

27. Retention and Search/Retrieval of Stored Information Facilitating consumer’s learning

28. Search and Retrieval of Information • Information that is learned and stored in memory only impacts consumer choice behavior when it is searched and retrieved • Retrieval is facilitated when new information is linked with another concept that is well known and easily accessed

29. Use of Concretizing and Imagery Concretizing It is easier for people to remember and retrieve tangible rather than abstract information, so claims about a brand are more concrete when they are made perceptible, palpable, real, evident, and vivid

30. Use of Concretizing and Imagery Imagery Representation of sensory experiences in short-term memory including visual, auditory, and other sensory, experiences

31. Use of Concretizing and Imagery Heartburn verbal framing

32. Evaluation of Alternatives • Consideration set • Analyze product attributes • Use cut off criteria [pros/cons] • Multi-attribute models

33. Consumer Decision Making: Stage 7 Decision heuristics for decision making • Affect referral • Compensatory heuristic • Conjunctive heuristic • Phased strategies

34. Affect Referral Recalls attitude, or affect, toward relevant alternatives Selects the alternative for which the affect is most positive

35. Compensatory Heuristic Evaluates alternatives in terms of criteria trade-off Chooses the alternative with criteria that best compensates for inferior criteria

36. Conjunctive Heuristic Evaluates alternatives in terms of criteria minimum cutoffs Selects the alternative with criteria that meets all minimum cutoffs

37. Phased Strategies Evaluates alternatives using both compensatory and noncompensatory heuristics Chooses using a combination of heuristics

38. 4: Purchase • To buy or not to buy… • Marketing determines which attributes are most important in influencing a consumers’ choice (differentiation…later)

39. Action: Stage 8 Action on the basis of the decision • People do not always behave in a manner consistent with their preferences due to the presence of events, or situational factors • Situational factors are especially prevalent in low-involvement consumer behavior

40. Some Issues That Arise During Stages in the Consumption Process Figure 1.1

41. 5: Post Purchase Behavior • Cognitive dissonance: • Did I make a good decision? • Did I buy the right one? Get a good value? • Marketing minimizes through: • Effective communication • Follow up • Guarantees • Warranties

42. Factors Influencing Buying Decisions Cultural Factors Social Factors CONSUMERDECISION- MAKING PROCESS BUY / DON’T BUY Psycho-logical Factors Individual Factors