Marketing Concepts Consumer Behavior

1. MarketingConceptsConsumer Behavior MKTG 3110-003 Spring 2014 Mrs. Tamara L. Cohen Class #4

2. KEY TERMS • Cognitive dissonance • Motivation • Personality • Traits • Self-concept • Perception • Selective perception • Subliminal perception • Attitudes • Beliefs • Values • Lifestyle • Opinion leaders • Word of mouth • Subcultures

3. KEY CONCEPTS Purchase decision process: • Problem recognition • Information search • Alternative evaluation • Purchase decision • Post-purchase behavior • Maslow’s Hierarchy of Needs • Brand loyalty • Reference groups • Family life cycle • Social class

4. What is CONSUMER BEHAVIOR ? = the actions taken by an individual to purchase & use products & services Actions include mental & social processes that come before & after these actions. Behavioral sciences help explain WHY & HOW choices are made. Organizations use this knowledge to provide value to consumers, and to influence their choices.

5. It’s complicated … Consumers make many buying decisions every day. What? Where? How? How much? When? Why? How do consumers respond to various marketing efforts?

6. Stimulus-Response Model of Buyer Behavior Marketing & other stimuli Buyer’s ‘black box’ Buyer responses Marketing Product Price Place Promotion Other Economic Technological Political Cultural Buyer character-istics Buyer decision process Product choices Brand choices Dealer choices Purchase timing Purchase amount

7. The purchase decision process

8. can be stimulated by marketing activity, or by simple observation

9. Internal search • relevant information in memory External search • personal sources • public sources • marketer sources

10. Evaluative criteria • objective & subjective attributes Consideration set • group of brands consumer finds acceptable (i.e. short list)

11. Where to buy? (i.e. from whom) • When to buy?

12. Experience versus Expectations • Cognitive dissonance • Customer satisfaction studies: • satisfied - tell 3 people • dissatisfied - tell 9 people

13. Cognitive Dissonance = feeling of post-purchase psychological tension or anxiety Consumers alleviate cognitive dissonance by seeking affirmation • ask friends to applaud choice • read ads of rejected brands to confirm why they were not chosen • companies follow up with phone calls or ads to reinforce or confirm buyer’s good decision, e.g. “Aren’t you really glad you bought a Buick?”

14. Impact of “The Situation” • The purchase task • reason for decision • personal use or gift, i.e. social visibility • Social surroundings • others present during purchase, e.g. consumers with children buy 40% more than consumers shopping alone • Physical surroundings • ambiance; crowds • Time • time of day, e.g. grocery shoppers before lunch time buy more than when they are not hungry; time available • Pre-existing conditions • mood, e.g. “shopping therapy”; cash-on-hand, e.g. shoppers using credit cards buy more than those using debit cards or cash

15. Psychological Factors • Motivation & Personality • Perception • Learning • Values, Beliefs & Attitudes • Lifestyle

16. Psychological Factors 1. Motivation & Personality NEEDS- biological & psychological MOTIVES Freud - believed people are largely unconscious of real psychological forces shaping their behavior. Buying decisions are affected by subconscious motivation. Maslow - wanted to explain why people are driven by particular needs at particular times. Human needs are arranged in a hierarchy, with most pressing at the bottom, and least pressing at the top.

17. Maslow’s Hierarchy of Needs Satisfaction of needs Psychological needs Physical needs

18. Psychological Factors 1. Motivation & Personality Key traits = the unique psychological characteristics that lead to relatively consistent and enduring responses to an environment e.g. assertiveness, extroversion, compliance, dominance, aggression Traits are formed at a young age, & usually remain fairly intact. Self-concept - actual & ideal

19. Psychological Factors 2. Perception = process by which people select , organize & interpret information, to form a meaningful picture of the world Selective perception = selective attention +selective distortion+selective retention Selective attention / exposure = tendency for people to screen out most information to which they are exposed Selective distortion / comprehension= tendency to interpret information in ways that support what a person already believes Selective retention = remember good features of preferred brands; forget good features about competing brands

20. Perception - it’s all a matter of perspective A stunning steel sculpture was created in honor of Nelson Mandela. Up close it looks like 50 rods of steel. Step back and it looks much different.

21. Subliminal Perception = exposure to advertising messages without being aware of that exposure Consumer concern that subliminal advertising will affect them without their knowing it. Australia, Britain, Canada, California - banned subliminal advertising

22. Psychological Factors 3. Learning • changes in a person’s behavior resulting from experience + reasoning • most human behavior is learned • marketers can build up demand for a product by associating it with strong drives, using motivating cues, & providing positive reinforcement • reduce perceived risk • endorsement • seals of approval • free trial / sample • Instructions • warranty / guarantee ? brand loyalty

23. Psychological Factors 4. Values, Beliefs & Attitudes These are all learned, beginning at a young age. Values – can be personal or group Beliefs – consumer’s subjective perception of product performance; beliefs affect buying behavior Attitudes – consumer’s consistent or inconsistent feelings & tendencies toward a product; hard to change

24. Psychological Factors 5. Lifestyles = mode of living identified by how people spend their time & resources, what they consider important in their environment, what they think of themselves & the world around them Psychographics = analysis of consumer lifestyles • combines psychology, lifestyle & demographics • useful for segmenting & targeting markets

25. Sociocultural Factors • Personal influence • Reference groups • Family • Social class • Culture & subculture

26. Sociocultural Factors 1. Personal Influence Consumer purchases are often influenced by others. Opinion leaders = people who exert direct or indirect social influence over others • considered knowledgeable about particular products, services or brands • often sports figures or celebrities Word-of-mouth = influence via communications between target buyers and their circle of acquaintance (friends, family, neighbors, associates)

27. Sociocultural Factors 2. Reference groups = people to whom an individual looks for self-appraisal or as a source of personal standards - affect luxury product & brand choices, but not necessities Membership group - membership by choice or by birth; e.g. social clubs, fraternities/sororities; family Aspiration group - membership is desired in this group; e.g. professional society, professional sports team Dissociative group - membership is avoided, due to differences in values or behaviors

28. Sociocultural Factors 3. Family Family is most important buying organization in society. - buying roles change; consumer lifestyles evolve - family life cycle - in US, wife traditionally made majority of purchase decisions about food, household products, clothing; now men make 40% of food-shopping purchases - in US, women make almost 85% of all purchases; $6 trillion a year

29. Sociocultural Factors 4. Social Class UPPER = relatively permanent, homogeneous divisions of society into which people sharing similar values, interests & behavior can be grouped - determined by occupation, source (not size) of income, & education - almost everywhere in the world - media preferences differ: tabloids (lower & working); fashion, romance, celebrity (middle); literary, travel, news (upper) MIDDLE LOWER LOWER MIDDLE UPPER

30. Upper Uppers (1%) Social elite; live on inherited wealth; give large sums to charity; own more than one home; children go to finest schools Lower Uppers (2%) Earned high income or wealth through exceptional ability; active in civic affairs; buy expensive homes, education, cars Upper Middles (12%) Professionals, independent businesspeople, corporate managers with neither family status nor unusual wealth; believe in education, are joiners & highly civic-minded; want ‘better things in life’ Middle Class (32%) Average-pay white- & blue-collar workers; live on ‘the better side of town’; buy popular products to keep up with trends; better living means owning a nice home in a nice neighborhood with good schools Working Class (38%) ‘Working-class lifestyle’, whatever their income, school background or occupation; depend heavily on relatives for economic & emotional support, advice on purchases, assistance in times of trouble Upper Lowers (9%) The working poor. Living standard is just above poverty; strive toward higher class; often lack education; poorly paid for unskilled work Lower Lowers (7%) Visibly poor; often poorly educated unskilled laborers; often out of work; some depend on public assistance; tend to day-to-day existence

31. Sociocultural Factors 5. Culture & Subculture Important American subcultures: • Hispanic e.g. Cuban, Mexican, Puerto Rican, Latin American • tend to buy more branded, higher-quality, not generics • family shopping; brand loyal • African American • growing affluence & sophistication; more price conscious; quality & selection important; most fashion-conscious ethnic group; enjoy shopping • Asian Americans e.g. Chinese Americans, Filipinos, Japanese Americans, Asian Indians, Korean Americans • fastest-growing & most affluent segment; shop frequently; most brand conscious but least brand loyal; most tech savvy segment • Mature consumers as the US population ages • more time & money - leisure marketers; anti-aging products & services

32. break

33. Midterm Exam Preview

34. Next class Feb.7: Midterm Exam #1 Preparation: Study power points, your own notes, assignments & assigned readings for each class.

35. Next class: Marketing in the big wide world class #6, Feb.14 Preparation: Read ch.7(pages below) Homework #3:Ethnocentrism