Chapter 05 MKT120 Consumer Behavior
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The document discusses key concepts related to consumer decision making including: - The five stages of the consumer decision process: need recognition, search for information, evaluation of alternatives, purchase decision, and post-purchase behavior. - Factors that influence consumer decisions such as psychological, social, and situational factors. - Different types of consumer buying decisions like limited problem solving, habitual decision making, and extended problem solving. - Key terms involved in consumer decision making are defined in a glossary.
Chapter 05 MKT120 Consumer Behavior
- 1. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
- 2. Learning Objectives LEARNING OBJECTIVES How do firms adjust their product lines to changing market conditions? Why are brands valuable to firms? How do firms implement different branding strategies? How do a product’s packaging and label contribute to a firm’s overall strategy? © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-2
- 3. Prius 09 1,000,000 units sold and demand still growing Introducing 9 new models by 2011 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-3
- 4. The Consumer Decision Process © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-4
- 5. Adding Value: H.O.G. Heaven How does Harley Davidson add value? Who is a typical Harley owner? Harley Davidson Website © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-5
- 6. Need Recognition Functional needs Functional needs Psychological needs Psychological needs © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-6
- 7. “It’s hard to find your litter box if you can’t smell it” © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-7
- 8. Search for Information © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-8
- 9. Factors Affecting Consumers’ Search Process Perceived Perceived Benefits Benefits © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-9
- 10. The Locus of Control Internal Locus of Control = Internal Locus of Control = more search activities more search activities External Locus of Control = External Locus of Control = Fate, external factors Fate, external factors © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-10
- 11. Actual or Perceived Risk © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-11
- 12. Type of Product or Service © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-12
- 13. Evaluation of Alternatives: Attribute Sets © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-13
- 14. Evaluation of Alternatives: Evaluate Criteria What are some of the features of a vacation that would be in your evaluative criteria? © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-14
- 15. Evaluation of Alternatives: Consumer Decision Rules © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-15
- 16. Evaluation of Alternatives: Decision Heuristics © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-16
- 17. Purchase and Consumption Ritual consumption © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-17
- 18. Post-purchase: Customer Satisfaction Customer contact Encourage feedback Provide money back guarantee Build realistic expectations Demonstrate correct product use © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-18
- 19. Post-purchase: Dissonance Firm’s attempt to reduce dissonance by reinforcing the decision Thank you letters, congratulations letters, quality ratings © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-19
- 20. Factors Influencing the Consumer Decision Process © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-20
- 21. Psychological Factors: Motives © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-21
- 22. Psychological Factors: Attitude © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-22
- 23. Psychological Factors: Perception © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-23
- 24. Psychological Factors: Learning and Lifestyle © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-24
- 25. Social Factors: Family Decision makers Influencers © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-25
- 26. Social Factors: Reference Groups © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-26
- 27. Reference Group GEICO Commercial © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-27
- 28. Social Factors: Culture © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-28
- 29. Situational Factors © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-29
- 30. Involvement and Consumer Buying Decisions © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-30
- 31. Types of Buying Decisions • Limited Problem Solving • Habitual Decision Making • Extended Problem Solving • Impulse Buying Skittles Commercial © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-31
- 32. Check Yourself 1. What are the types of needs suggested by Maslow’s Hierarchy of Needs? 2. Which social factors likely have the most influence on: a. The purchase of a new outfit for going out dancing? b. The choice of a college to attend? 3. List some of the tactics stores can use to influence consumers’ decision processes. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-32
- 33. Check Yourself 1. Name the five stages in the consumer decision process. 2. What differences mark the way a highly involved versus a less involved consumer likely looks at the information provided in an advertisement? 3. What is the difference between compensatory and non-compensatory decision rules? © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-33
- 34. Check Yourself 1. How do low versus high involvement consumers process information in an advertisement? 2. What is the difference between extended versus limited problem solving? © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-34
- 35. Glossary An attitude is a person’s enduring evaluation of his or her feelings about and behavioral tendencies toward an object or idea. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-35
- 36. Glossary Consumer decision rules are the set of criteria that consumers use consciously or subconsciously to quickly and efficiently select from among several alternatives. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-36
- 37. Glossary Determinant attributes are product or service features that are important to the buyer and on which competing brands or stores are perceived to differ. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-37
- 38. Glossary Evaluative criteria consist of a set of salient, or important, attributes about a particular product. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-38
- 39. Glossary A consumer’s evoked set comprises the alternative brands or stores that the consumer states he or she would consider when making a purchase decision. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-39
- 40. Glossary Extended problem solving occurs during a purchase decision that calls for a lot of effort and time. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-40
- 41. Glossary Functional needs pertain to the performance of a product or service. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-41
- 42. Glossary Habitual decision making describes a purchase decision process in which consumers engage little conscious effort. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-42
- 43. Glossary Impulse buying is a buying decision made by customers on the spot when they see the merchandise. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-43
- 44. Glossary Involvement is the consumer’s degree of interest in the product or service. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-44
- 45. Glossary Limited problem solving occurs during a purchase decision that calls for, at most, a moderate amount of effort and time. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-45
- 46. Glossary Psychological needs pertain to the personal gratification consumers associate with a product and/or service. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-46
- 47. Glossary Retrieval sets are the brands or stores that can be readily brought forth from memory. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-47
- 48. Glossary Ritual consumption is a pattern of behaviors tied to life events that affect what and how we consume. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-48
- 49. Glossary Shopping goods/services are products or services for which consumers will spend time comparing alternatives. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-49
- 50. Glossary Situational factors are factors specific to the situation. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-50
- 51. Glossary Specialty goods/services are products or services toward which the customer shows a strong preference and for which he or she will expend considerable effort to search for the best suppliers. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-51
- 52. Glossary Universal sets include all possible choices for a product category. Return to slide © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 5-52
Editor's Notes
- #3: These questions are the learning objectives guiding the chapter and will be explored in more detail in the following slides.
- #4: Consumers consider many factors when they purchase a car including safety, costs, features, brand, gas mileage, and going green. The Prius offers great mileage and is good for the environment.
- #5: This slide illustrates the entire consumer decision process. This model represents the steps that consumers go through before, during, and after making purchasing decisions.
- #6: Harley Davidson has developed this cult-like following from cultivating its own Harley Owner’s group.
- #7: The consumer decision process begins when consumers recognize they have an unsatisfied need. Consumer needs can be functional, which pertain to the performance of a product or service or consumer needs can be psychological, which pertain to the personal gratification consumers associate with a product or service . Ask students about needs they have and whether they are functional or psychological?
- #8: Kitty litter marketers know that cat owners have a need for litter boxes that do not smell . Ask students : Why is this ad effective? First of all, animals are usually highly effective at attracting attention – in this ad they are in unusual positions which attracts additional attention. This campaign is effective because the humor (the cat “holding it”) ties to the product benefit of not being able to find (smell) the litter box.
- #9: After a consumer recognizes a need, he or she must search for information about the various options that exist to satisfy that need. In an internal search for information, the buyer examines his or her own memory and knowledge about the product or service. In an external search for information, the buyer seeks information outside his or her personal knowledge base to help make the buying decision. Ask students where they looked for external information when conducting a search for colleges?
- #10: One important factor that affects consumers’ search process is perceived benefits versus perceived costs. Is it worth the time and effort to search for information about a product or service?
- #11: Another factor affecting the consumer search process is locus of control. Locus of control actually indicates how much control people think they have over the outcomes of various activities, such as purchasing a product or service. Some people sense their own internal control, whereas others feel virtually powerless. The former engage in more search activities.
- #12: There are three types of risk associated with purchase decisions that can delay or discourage a purchase. Performance risk involves the perceived danger inherent in a poorly performing product or service. Financial risk is associated with a monetary outlay and includes the initial cost of the purchase, as well as the costs of using the item or service. Psychological risks are those risks associated with the way people will feel if the product or service does not convey the right image. Ask students about the search for a college and have them classify examples of the three types of risks.
- #13: The same product can represent different goods categories for different consumers. For example, some consumers consider jewelry a shopping good and therefore visit their local department store or warehouse store such as Costco or BJ’s to find products, whereas others view it as a specialty good that should be purchased from a jewelry store or even a specific jewelry store. Ask students if there are any other products that might fall in all three groups depending on the customer and the situation. Students may mention products like a tire: it would be a specialty good if someone owned a BMW or high end car, it could be a shopping good if they were searching for a new tire, or it could be convenience if they were broken down and needed a tire right away.
- #14: Research has shown that a consumer’s mind organizes and categorizes alternatives to aid his or her decision-making process. Universal sets include all possible choices for a product category. A subset of the universal set is the retrieval set, which are those brands or stores that can be readily brought forth from memory. Another is an evoked set, which comprises the alternative brands or stores that the consumer states he or she would consider when making a purchase decision. Ask students to name cookie brands – this is their retrieval set. They may be surprised at how few brands they retrieve.
- #15: Evaluative criteria consist of a set of important attributes about a particular product. Determinant attributes are product or service features that are important to the buyer and on which competing brands or stores are perceived to differ. The students will respond to the question on this slide with weather, beach, friends, price, outdoor activities.
- #16: Consumer decision rules are a set of criteria that consumers use consciously or subconsciously to quickly and efficiently select among several alternatives. Compensatory decision rules assume that the consumer, when evaluating alternatives, trades off one characteristic against another, such that good characteristics compensate for bad characteristics. Sometimes consumers use non-compensatory decision rules in which they choose a product or service on the basis of a subset of its characteristics, regardless of the values of its other attributes.
- #17: Decision heuristics are mental shortcuts that help a consumer narrow down his or her choices. Some examples of these heuristics include price, product presentation, and brand.
- #18: Ritual consumption refers to a pattern of behaviors tied to life events that affect what and how we consume. These behaviors tend to have symbolic meaning and vary greatly by culture. Ask students if there are certain purchases that are made on holidays – types of sweets, types of gifts, etc.
- #19: Setting unrealistically high consumer expectations of the product can lead to dissatisfaction when the product fails to achieve high performance expectations. Marketers can take several steps to ensure post-purchase satisfaction such as demonstrating correct product use, building realistic expectations, providing a money back guarantee, encouraging feedback, and periodically making contact with customers.
- #20: Post-purchase dissonance, also known as buyer’s remorse, is the psychologically uncomfortable state produced by an inconsistency between beliefs and behaviors that in turn evokes a motivation to reduce the dissonance. Ask students how firms attempt to reduce dissonance. They may mention that firms send thank you letters, advertise awards and quality, follow up with phone calls.
- #21: This slide lists the factors influencing the consumer decision process, which are discussed in more detail in the following slides.
- #22: A motive is a need or want that is strong enough to cause the person to seek satisfaction. People have several types of motives, such as those illustrated in the PSSP hierarchy of needs. Ask students if there are any products that fulfill several levels of needs? They will mention products like an expensive fur coat given as a gift is physiological, love, and esteem.
- #23: An attitude is a person’s enduring evaluation of his or her feelings about behavioral tendencies toward an object or idea. An attitude consists of three components: The cognitive aspect reflects what we believe to be true, the affective component involves what we feel about the issue at hand, and the behavioral component comprises the actions we undertake with regard to that issue.
- #24: Perception is the process by which we select, organize, and interpret information to form a meaningful picture of the world. Societies’ perceptions can change. For example, tattoos used to be only considered acceptable for unsavory individuals. They were clearly NOT mainstream, yet today people from a variety of demographic backgrounds get tattooed. Many celebrities have tattoos, even some parents and children have matching tattoos.
- #25: Learning refers to a change in a person’s thought process or behavior that arises from experience and takes place throughout the consumer decision process. Learning affects both attitudes and perceptions. A person’s perceptions and ability to learn are affected by their social experiences.
- #26: Many purchase decisions are made about products or services that the entire family will consume or use. Thus, firms must consider how families make purchase decisions and understand how various family members might influence these decisions. Ask students about a purchase that their family recently made and have them determine the decision makers and the influencers.
- #27: A reference group is one or more persons whom an individual uses as a basis for comparison regarding beliefs, feelings, and behaviors. A consumer might have various reference groups including family, friends, coworkers, or famous people. These reference groups affect buying decisions by offering information, providing rewards for specific purchasing behaviors, and enhancing a consumer’s self-image.
- #28: Celebrities are often used in advertising because they have expertise, power, glamour and consumer’s want to have these same qualities. This web link (always check links before class) goes to an ad in the GEICO campaign in which they use celebrities (actors) to tell real people’s stories.
- #29: Culture is defined as the shared meanings, beliefs, morals, values, and customers of a group of people. Like reference groups, cultures influence consumer behavior.
- #30: Situational factors are factors specific to the situation that override, or at least influence, psychological and social issues. These situational factors are related to the purchase and shopping situation, as well as to the temporal state as illustrated in this slide. Ask students what certain restaurants or stores do to make the shopping situation more pleasant and conducive to purchasing?
- #31: Ask students: What was the last thing you purchased? Based on their answers, get them to determine whether they used limited problem solving, extensive problem solving, or whether it was a habitual purchase or impulse purchase.
- #32: Students will mostly likely identify the orange juice as habitual, Subway as limited, and the car as extended problem solving. This is a YouTube link (always check before class) for a skittles ad. Ask students why there is so much advertising with these types of products. It is in part because they are often impulse purchases.
- #33: Physiological (e.g., food, water, shelter), safety (e.g., secure employment, health), love (e.g., friendship, family), and esteem (e.g., confidence, respect), and self-actualization (people engage in personal growth activities and attempt to meet their intellectual, aesthetic, creative, and other such needs). A. Reference groups and culture B. Family Store atmosphere, crowding, in-store demonstrations, promotions and packaging
- #34: Need Recognition, Information Search, Alternative Evaluation, Purchase, Post Purchase. A more highly involved consumer would spend more time and more thoroughly absorb the content of an ad. A compensatory decision rule assumes that the consumer, when evaluating alternatives, trades off one characteristic against another. On the other hand, in a non-compensatory decision rule, choose a product or service on the basis of one or a subset of its characteristics, regardless of the values of its other attributes.
- #35: The high involvement consumer will scrutinize all the information provided and process the key elements of the message more deeply. As a consequence, an involved consumer is likely to either end up judging the message to be truthful and will form a favorable impression for the product being advertised or alternatively view the message as superficial in nature and develop negative product thoughts Limited problem solving occurs during a purchase decision that calls for, at most, a moderate amount of effort and time. Customers engage in this type of buying process when they have had some prior experience with the product or service and the perceived risk is moderate. Limited problem solving usually relies on past experience more than on external information. Extended problem solving , which is common when the customer perceives that the purchase decision entails a lot of risk, entails much external information.