What is Consumer Behavior?

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80% of new products fail to meet financial expectations!!!!

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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.

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Answers the question of WHY?

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Are managers telepathic? Do decisions regarding the 4 P’s just come to them?

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What are some commonly asked questions regarding consumer’s behavior?

Commonly asked questions:

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Product related:

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What do they think of the product?

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What do they think of competitor’s product?

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How do you use the product?

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What is their A ad /A product ?

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Lifestyle related :

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What are your hopes/dreams?

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What is your place in the world? (role)

Applications of Consumer Behavior

• Marketing strategy: MANAGERIAL RELEVANCE »

Use common sense/ Look at successes and failures.

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Regulatory Policy: Warning Labels/ Nutrition Labeling

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Social Marketing/ TRUTH ads

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Drug Use

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HIV prevention

Overall Model Of Consumer Behavior

Consumer Decision Making Process

Problem Recognition Cultural, Social, Individual and Psychological Factors affect all steps Information Search Evaluation of Alternatives Purchase Postpurchase Behavior

1: Problem Recognition

• Result of an imbalance b/t actual

and desired states

• How to recognize unfilled wants?

14-1 Low-purchase involvement Nominal decision making

Problem recognition Selective

Involvement and Types of Decision Making Limited decision making

Problem recognition Generic

High-purchase involvement Extended decision making

Problem recognition Generic Information search Limited internal Information search Internal Limited external Alternative evaluation Few attributes Simple decision rules Few alternatives Information search Internal External Alternative evaluation Many attributes Complex decision rules Many alternatives Purchase Purchase Purchase Postpurchase No dissonance Very limited evaluation Postpurchase No dissonance Limited evaluation Postpurchase Dissonance Complex evaluation

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

CPM The 8 Stages of Consumer Information Processing

Consumer Information Processing: Stage 1 Exposure to information

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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

Selective Attention: Stage 2

Attention

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Focus on and consider a message to which one has been exposed

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Highly selective

Selective Attention: Stage 2

To attract consumers attention:

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Appeals to cognitive and hedonic needs Use of novel stimuli Use of intense stimuli Use of motion

Selective Attention: Stage 2

Illustration of selective attention

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

Hedonic appeal to the love for babies

Hedonic Needs

Use of Intense Stimuli

Use of intensity

Another illustration of motion in advertising

Use of Motion

Comprehension: Stage 3

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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

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

Agreement: Stage 4

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Comprehension by itself does not ensure that the message influences consumers’ behavior Agreement depends on

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whether the message is credible

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whether the information appeals to the consumer

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

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

Elements of Memory

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Sensory stores(SS):

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Information is rapidly lost unless attention is allocated to the stimulus

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Short-Term Memory(STM):

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Limited processing capacity Not thought or rehearsed information will be lost in 30 seconds or less

Elements of Memory

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Long-Term Memory (LTM):

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A virtual storehouse of unlimited information Information is organized into coherent and associated cognitive units called schemata, memory organization packets, or knowledge

structures

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The marketer’s job is to provide positively valued information that consumers will store in LTM

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

Learning and LTM

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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

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

Search and Retrieval of Information

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Information that is learned and stored in memory only impacts consumer choice behavior when it is searched and retrieved

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Retrieval is facilitated when new information is linked with another concept that is well known and easily accessed

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

Use of Concretizing and Imagery

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

Use of Concretizing and Imagery

Heartburn verbal framing

Evaluation of Alternatives

• Consideration set • Analyze product attributes • Use cut off criteria [pros/cons] • Multi-attribute models

Consumer Decision Making: Stage 7 Decision heuristics for decision making

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Affect referral Compensatory heuristic Conjunctive heuristic Phased strategies

Recalls attitude, or affect, toward relevant alternatives

Affect Referral

Selects the alternative for which the affect is most positive

Compensatory Heuristic

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

Conjunctive Heuristic

Evaluates alternatives in terms of criteria minimum cutoffs Selects the alternative with criteria that meets all minimum cutoffs

Phased Strategies

Evaluates alternatives using both compensatory and noncompensatory heuristics Chooses using a combination of heuristics

4: Purchase

• To buy or not to buy… • Marketing determines which

attributes are most important in influencing a consumers’ choice (differentiation…later)

Action: Stage 8

Action on the basis of the decision

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People do not always behave in a manner consistent with their preferences due to the presence of events, or situational factors

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Situational factors are especially prevalent in low-involvement consumer behavior

Some Issues That Arise During Stages in the Consumption Process

Figure 1.1

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

Factors Influencing Buying Decisions

Cultural Factors Individual Factors Social Factors Psycho logical Factors CONSUMER DECISION MAKING PROCESS BUY / DON’T BUY