Consumer Behavior

1. Consumer Behavior By SuwattanaSawatasuk

2. Consumer Behavior • Processes a consumer uses to make purchase decisions, as well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and product use • How - consumers make purchase decisions - consumers use and dispose of products

3. Importance of Understanding Consumer Behavior • Consumer product & service preferences are constantly changing • In order to address this constant state of flux and to create a proper marketing mix for a well-defined market, marketing managers must have a thorough knowledge of consumer behavior

4. Types of Buying Decisions • Extended problem solving: occurs when consumers devote considerable time and effort to analyze alternatives (high risk) • Limited problem solving: occurs when a purchase decision calls for a moderate amount of effort and time. (moderate risk) • Impulse buying: buying decision made by customer on spot when they see merchandise • Habitual decision making: occurs when consumers engage with little conscious effort (low risk)

5. Consumer Decision-Making Process • 5-step process used by consumers when buying goods or services 1 2 3 4 5 Need Recognition Information Search Evaluation of Alternatives Purchase Decision Postpurchase Behavior

6. Consumer Decision-Making Process • Need Recognition: result of an imbalance between actual and desired states • External Stimulus e.g. when you have seen TV commercials for a new sport car and wanted to buy it • Internal Stimulus e.g. when you hear your stomach growl and then realize that you are hungry

7. Materials Perceive as Functionally Superior • Gore-Tex is a waterproof/breathable fabric, and a registered trademark of W.L. Gore & Associates. • Thinsulate is a trademark of the 3M Corporation, for a type of synthetic fiber thermal insulation used in clothing. • Polartec is a trademark for a fabric innovation for performance apparel and accessories e.g. odor resistance, durable water repellency, sun protect technology, and flame resistance.

8. Luxury Brands Fulfill Consumer Psychological Needs

9. Consumer Decision-Making Process (con’t) • Need Recognition • Information Search: after recognizing a need or want, consumer search for information about the various alternatives available to satisfy it • Internal information search: the process of recalling past information stored in the memory • External information search: the process of seeking information in the outside environment

10. Search for Options Which one will I choose for my hair…

11. Factors Affecting Consumers’ Search Processes • The perceived benefits VS. perceived costs of search: Is it worth the time & effort to search for info. about product/service? • The locus of control: • Internal = people who believe they have some control over the outcomes of their actions = search more for info. • External = people who believe the fate or external factors control all outcomes = search less for info.

12. Factors Affecting Consumers’ Search Processes (con’t) • Actual or perceived risk: higher risk = do more searching for info. • Performance risk = involves the perceived danger inherent in poorly performing product/service • Financial risk = is associated with money both initial cost of purchase and costs of using product/service • Psychological risks = are associated with the way people will feel if product/service doesn’t convey the right image

13. Factors Affecting Consumers’ Search Processes (con’t) • Type of product or service: 3 main types of products/services • Specialty = products/services toward which customers show a strong preference = they will expend considerable effort to search for the best suppliers • Shopping = products/services consumers will spend time comparing alternatives • Convenience = products/services consumers are not willing to spend any effort to evaluate prior to purchase

14. Consumer Decision-Making Process (con’t) • Need Recognition • Information Search • Evaluation of Alternatives: • Attribute sets = sets of alternative choices • Universal sets = all possible choices for the product category • Retrieval sets = brands/stores can be readily brought forth from memory • Evoked sets = alternative brands/stores consumers states he/she would consider when making purchase decision

15. Consumer Decision-Making Process (con’t) • Need Recognition • Information Search • Evaluation of Alternatives (con’t): • Determinant attributes = product/service features that are important to buyer and other choices are perceived to differ • Consumer decision rules = set of criteria consumers use to quickly & efficiently select from among alternatives

16. Consumer Decision-Making Process (con’t) • Need Recognition • Information Search • Evaluation of Alternatives (con’t): • Consumer decision rules (con’t) • Compensatory= good characteristics compensate for bad characteristics when consumer evaluating alternatives (based on overall features of concerns) • Noncompensatory= consumers choose product/service on basis of subset of its characteristics, regardless of values of other attributes (based on specific feature of concern) • Decision heuristics = consumers choose based on their self preferences e.g. price, brand, or product presentation

17. Consumer Decision-Making Process (con’t) • Need Recognition • Information Search • Evaluation of Alternatives • Purchase Decision: consumer purchase product/service that they believe provide them with the best value

18. Consumer Decision-Making Process (con’t) • Need Recognition • Information Search • Evaluation of Alternatives • Purchase Decision • Postpurchase Evaluation: 3 possible positive postpurchase outcomes • Increased customer satisfaction • Decreased postpurchasecognitive dissonance (buyers’ disappointment or discomfort) • Increased loyalty The negative outcomes can be no repeated purchase or recommend product to others and more serious can be negative word of mouth and rumors

19. Summary: Consumer Decision-Making Process Consumers take further action after purchase, based on their satisfaction or dissatisfaction. Consumer uses information to evaluate alternative brands in the choice set. Consumer recognizes a problem or need. 1 3 5 Need Recognition Information Search Evaluation of Alternatives Purchase Decision Postpurchase Behavior 2 4 Consumer is aroused to search for more information; the consumer may simply have heightened attention or may go into an active information search. The buyer’s decision about which brand to purchase.

20. Factors Influencing the Consumer Decision Process Psychological Factors Marketing Mix (4Ps) Social Factors Situational Factors

21. Psychological Factors VS. • Motive (drive): a need or want that strong enough to cause the person seek satisfaction • Attitude: a person’s consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea • Example = Your attitude toward Tops supermarket is better than BigC supercenter as Tops offers more variety of imported food ingredients and snacks that you like. • Perception: the process by which we select, organize, and interpret info. to form a meaningful picture of the world. • Example= You perceive that shopping in Tops supermarket is more expensive, in most items, than shopping in BigC supercenter. • Learning: changes in an individual’s behavior arising from experience

22. Maslow Hierarchy of Needs

23. Social Factors • Family: family-members needs/wants • Reference Groups: one or more persons whom individual uses as a basis for comparison regarding beliefs, feelings, friends, co-workers, or famous people the consumer would like to emulate • Opinion leader = person within ref. group who exerts social influence on others by his/her special skills, knowledge, personality = brand ambassadors • Culture: the shared meanings, beliefs, morals, values, and customs of group of people influence consumer behavior Subculture = a group of people with shared value systems based on common life experiences and situations • Social Class: relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors. It can be determined by many factors: income, occupation, education, wealth, and etc. • It can be categorized by Social Economic Status (SES) as examples: • Upper Class, Middle Class, and Lower Class • Upper-Upper, Lower-Upper, Upper-Middle, Middle class, Working Class, Upper-Lower, Lower-Lower • Thailand: A (Upper), B (Upper-Middle), C (Middle Class), D (Lower Class)

24. Situational Factors • Purchase situation: the purpose of purchase (for what, whom) • Shopping situation: store atmosphere, salespeople, crowding, in-store demonstration, promotions, packaging • Temporal state: state of mind at any particular time or mood swing

25. Personal Factors • Age & life-cycle stage • Occupation Economic situation • Lifestyle: a person’s pattern of living as expressed in his/her activities, interests, and opinion • Personality & self concept i.e. honest, intelligent, imaginative, up-to-date, successful, upper class, outdoorsy, reliable, and etc.