Consumer Behavior– you are what you buy…

1. Consumer Behavior– you are what you buy… • Did you know? • Paper • Marketing news • Consumer behavior (web) • Consumer behavior (ppt) • Innovation diffusion (ppt) • NLP • Next week: Market research

2. Think of a recent important purchase– briefly draw a flowchart of the steps you recall moving through from the awareness of need to post purchase • What influenced you at each step?

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

4. Complete model of consumer behavior Start Need recognition Internal search • Influences • culture • social class • family • situation Search Exposure Memory Stimuli (marketer dominated, other) Attention Alternative evaluation Comprehension • Individual • differences • resources • motivation & • involvement • knowledge • attitudes • personality, • values, lifestyle Purchase Acceptance Retention Outcomes External search Dissatisfaction Satisfaction

5. How do you know when to shop? What are the triggers that initiate an awareness & search? • What are the internal & external sources of these triggers?

7. Need Recognition • When a current product isn’t • performing properly • When the consumer is running out of an product • When another product seems • superior to the one currently used Marketing helps consumers recognize (or create) an imbalance between present status and preferred state Preferred State

8. The information search stage An internal search involves the scanning of one's memory to recall previous experiences or knowledge concerning solutions to the problem-- often sufficient for frequently purchased products. Personal sources (friends and family) Public sources (rating services like Consumer Reports) An external search may be necessary when past experience or knowledge is insufficient, the risk of making a wrong purchase decision is high, and/or the cost of gathering information is low. Marketer-dominated sources (advertising or sales people) The evoked set: a group of brands from which the buyer can choose

9. go back to your past purchase– what were the specific internal and external sources of information that influenced your decision? • how do you determine (and rate) the credibility of these sources? • what specific information influenced you?

10. Determinants of External Search

11. Buyer Behavior Other people often influence a consumers purchase decision. The marketer needs to know which people are involved in the buying decision and what role each person plays, so that marketing strategies can also be aimed at these people. (Kotler et al, 1994). • Initiator: the person who first suggests or thinks of the idea of buying a particular product or service. • Influencer: a person whose views or advice carry weight in making the final buying decision • Decider: the person who ultimately makes the final buying decision or any part of it • Buyer: the person who makes the actual purchase • User: the person who consumes the product or service Note: teens are increasingly assuming more of these roles Think about your past purchase– who was in which role?

12. Wife Dominant Relative influence of husbands & wives Child clothing Women’s clothing Information search Final decision groceries Pots & pans NonRx lamps Toys/games furniture luggage carpet Paint wallpaper refrigerator vacations Men’s leisure clothing Joint Men’s business clothing stereo TV sets camera Financial planning Family car Sport equipment hardware Lawn mower Husband Dominant Extent of role specialization 100 75 50 25 0

13. Consumer decision making varies with the level of involvement in the purchasing decision • Extensive: problem solving occurs when • buyers purchase more expensive, less • frequently purchased products in an • unfamiliar product category requiring • information search & evaluation; may • experience cognitive dissonance. • Limited: problem solving occurs when buyers are confronted with an unfamiliar brand in a familiar product category • Routine: response behavior occurs • when buyers purchase low cost, low risk, brand loyal, frequently purchased, low personal identification or relevance, items with which they are familiar. Increase in Consumer evaluation processes

14. quickly list 10 items you have purchased in the past month • reexamine how long it took you to make a decision on each • why did such a difference in decision occur?

16. Previous experience: low level involvement • Interest: high involvement • Perceived risk of negative consequences: high involvement • Situation: low to high due to risk • Social visibility: involvement increases with product visibility Factors affecting Consumer involvement So… • Offer extensive information on high involvement products • In-store promotion & placement is important for low involvement products • Linking low-involvement product to high-involvement issue can increase sales

17. Types of consumer involvement and decision making

18. Compensatory Decision: Using product characteristics to guide decision • Select the best overall brand-- evaluates brand options in terms of each relevant attribute and computes a weighted or summated score for each brand. The consumer chooses the brand with the highest score. • Compensatory model because a positive score on one attribute can outweigh a negative score on another attribute. • Conjunctive Decision Rule (cutoff criteria)-- Consumer sets a minimum standard for each attribute and if a brand fails to pass any standard, it is dropped from consideration. • Reduces a large consideration set to a manageable size. • Often used in conjunction with another decision rule. • Disjunctive Decision Rule (rank by importance)--sets a minimum acceptable standard as the cutoff point for each attribute--any brand that exceeds the cutoff point is accepted. • Reduces large consideration set to a more manageable number of alternatives. • Consumer may settle for the first satisfactory brand as final choice or may use another decision rule. • Synthesized decision rule-- Consumers maintain overall evaluations of brands in their long term memories. Brands on not evaluated on individual attributes but on the highest perceived overall rating.

19. think of an important purchasing decision you have made • what are some of the thoughts you have had following your purchase? Any regrets? • what has influenced those thoughts? • how have you dealt with the discomfort? • how has the company anticipated or dealt with your discomfort?

20. Cognitive Dissonance ? Did I make a good decision? Did I buy the right product? Did I get a good value? Postpurchase Behavior Marketing Can minimize through: Effective Communication Follow-up GuaranteesWarranties Underpromise & overdeliver

21. Sour Grapes– a story of cognitive dissonance …after being unable to reach the grapes the fox said, “these grapes are probably sour, and if I had them I would not eat them.” --Aesop

22. Cognitive Dissonance • psychological discomfort caused by inconsistencies among a person’s beliefs, attitudes, and actions • varies in intensity based on importance of issue and degree of inconsistency • induces a “drive state” to avoid or reduce dissonance by changing beliefs, attitudes, or behaviors and thereby restore consistency Applications: Tendency to avoid information can be countered by eliciting interest, norm of fairness, or perceive usefulness of information Post-decision “buyer’s remorse” may be increased by importance or difficulty or irreversibility of decision Counter-attitudinal action, freely chosen with little incentive or justification, leads to attitude change (e.g., new product at special low price)

23. think of an innovation in your field • describe different groups of employees in your organization who would respond early and favorably, as well as later and unfavorably • what are the differences between these groups? • how could you use this information to market the innovation to them more effectively?

26. Identify an innovation in your organization or an organization you are familiar with • Identify the subgroups who responded to the innovation using the Rogers & Shoemaker stakeholder model • What could have been done to facilitate acceptance by each of these groups?

27. Decision Processing

29. Persuasive Communication • Attitude Shift: • short-lived • susceptible to influence • unpredictable Motivated to Process? • personal relevance • personal importance • personal responsibility • dissonance arousal • need for cognition • repetition • Peripheral Cues Present? • reciprocity (obligated, did a favor) • consistency (way it’s done, similar to before) • social proof (peer pressure, conformity) • liking (attractiveness, friendliness) • celebrity (identification, prestige) • authority (expertise, experience, credibility) • rapid speech, forceful presentation, charismatic style • scarcity (limited time offer) • tangible rewards • appealing visuals & music (emotional arousal) • fear appeal • weak counter-arguments Ability to Process? • cognitive complexity • critical thinking • distraction free • low arousal • appropriate schema • message pace • repetition • issue familiarity Nature of Active Cognitive Processing: (initial attitude, argument quality, etc.) Favorable Thoughts Predominate Unfavorable Thoughts Predominate Neither or Neutral Predominate Retain or Regain Initial Attitude Cognitive Structure Change: Are new cognitions adopted and stored in memory? Are different responses made salient than previously? • greater persistence • resistant to counterattacks & fading • predictive of behavior • > brand memory • > elaboration • >usage intention • > attitude accessibility • > attitude confidence • > attitude-behavior consistency Enduring positive attitude change (persuasion) Enduring negative attitude change (boomerang) Elaboration Likelihood Method (ELM) of persuasion

30. back to Attitudesback to 7670 Homepage Write in the number that best fits your view:                                1                        2                      3                   4                         completely            mostly             mostly          completely                         false                      false                true              true _____1.   I would prefer complex to simple problems. _____2.   I like to have the responsibility of handling a situation that requires a lot of thinking. _____3.   Thinking is not my idea of fun. * _____4.   I would rather do something that requires little thought than something that is sure to                 challenge my thinking abilities. * _____5.   I try to anticipate and avoid situations where there is likely chance I will have to think                 in depth about something. * _____6.   I find satisfaction in deliberating hard and for long hours. _____7.   I only think as hard as I have to. * _____8.   I prefer to think about small, daily projects to long-term ones. * _____9.   I like tasks that require little thought once I’ve learned them. * _____10. The idea of relying on thought to make my way to the top appeals to me. _____11. I really enjoy a task that involves coming up with new solutions to problems. _____12. Learning new ways to think doesn’t excite me very much. * _____13. I prefer my life to be filled with puzzles that I must solve. _____14. The notion of thinking abstractly is appealing to me. _____15. I would prefer a task that is intellectual, difficult, and important to one that is somewhat                 important but does not require much thought. _____16. I feel relief rather than satisfaction after completing a task that required a lot of mental                 effort. * _____17. It’s enough for me that something gets the job done; I don’t care how or why it works. * _____18. I usually end up deliberating about issues even when they do not affect me personally. Items 3, 4, 5, 7, 8, 9, 12, 16, and 17 are reverse scored Need for Cognition Scale

31. Sleeper Effect: • when secondary source becomes more credible than primary source over time • persuasion may increase over time with a weak source • forget the source but remember the message • not if source is learned prior to the message (will ignore or bias processing) Example: Attack ads during political campaigns

32. Next week: Survey & questionnaire design • Think of our graduate program in management • Formulate 5 questions that you think would get at customer (student) satisfaction with the program • Term paper • Bring 1 page with title, 1 paragraph on purpose & overview • Citation for 1 journal and one book