Chapter 6 Consumer Decision Making with NOTES

Editor's Notes

• #2: Consumers’ product and service preferences are constantly changing.
• #6: Notes: Understanding consumer behavior can help marketing managers adapt the marketing mix to influence consumer purchasing decisions. For example, if a manager knows through research that gas mileage is the most important attribute for a certain target market, the manufacturer can redesign the product, and create the appropriate marketing mix, to meet that criterion.
• #10: Notes: The consumer decision-making process represents a general five-step process that moves the consumer from recognition of a need to the evaluation of a purchase decision. It is a guideline for studying how consumers make decisions. Note that consumer decisions may not proceed in order through all the processes, and in fact, may end at any time without a purchase decision.
• #11: •The consumer decision-making process begins with need recognition, when stimuli trigger awareness of an unfulfilled want. •If additional information is required to make a purchase decision, the consumer may engage in an internal or external information search. • The consumer then evaluates the alternatives using the additional information and establishes purchase guidelines. Finally, a purchase decision is made.
• #12: Notes: The first stage in the decision-making process is need recognition.
• #13: On November 26, 2011, a woman turned herself in to police after allegedly pepper spraying a crowd of shoppers at a Los Angeles, California, Walmart. According to reports, the woman doused shoppers as they frantically reached for limited numbers of discounted Xbox 360s during an early morning Black Friday sale the day before. Deal-hunter Juan Castro witnessed the event, telling reporters, “I don't know if she felt threatened or she felt she had to do that to get what she wanted,” though a police statement indicated that the woman’s actions didn’t appear to be in self-defense. Ten people were treated for exposure to the caustic compound, and many nearby shoppers at the Los Angeles store—including Castro—suffered moderate irritation. Black Friday—the day immediately following Thanksgiving—has become something of holiday in its own right for retailers (some of whom offer their best bargains of the year) and consumers (some of whom camp out for days at stores’ front doors) alike. Violent incidents were reported in at least seven states during the 2011 Black Friday sales, most occurring at or near Walmart stores. Similar incidents have occurred in previous years—in 2008, a Walmart employee was trampled by a crowd of shoppers as he and other workers unlocked a New York Walmart’s front doors at 5 a.m. While Juan Castro’s injuries were minor, the pepper spray event altered his view on Black Friday: “I tried to get away as quickly as possible because I didn't think it was worth it. No deal is worth that.”
• #14: Notes: A marketing manager’s objective is to get consumers to recognize an imbalance between their present status and their preferred state. Advertising and sales promotion often provide this stimulus. Discussion/Team Activity List products and services that have been purchased recently. Indicate the types of internal and/or external stimuli that influenced the decision.
• #16: Notes: Marketers create new products and services by observing trends in the marketplace, and can create wants on the part of the consumer. Consumers recognize unfilled wants in various ways, in particular, in the ways shown on this slide.
• #17: Notes: An internal information search is the process of recalling information in memory. This includes prior experience or prior knowledge about a product. An external information search relies on information in the outside environment. This includes personal and public references, advertisements, and publicity. External information may be obtained from non-marketing controlled sources and/or marketing controlled sources. Nonmarketing controlled sources include personal experience, personal sources, and public sources such as Underwriters Laboratories. Marketing-controlled information is biased toward a specific product because it originates with marketers promoting that product. These sources include mass-media advertising, sales promotion, salespeople, product labels and packaging, and the Internet.
• #18: Notes: The extent to which an individual conducts an external source depends on such factors as the perceived risk of purchasing a product, knowledge, prior experience, and level of interest in the good or service. The external search is also influenced by the consumer’s confidence in her decision-making ability. If a consumer has prior experience, he/she will spend less time searching. Discussion/Team Activity: Discuss information searches conducted for products or services recently evaluated or purchased. Characterize this discussion based on the factors described on this slide.
• #19: Notes: The information search should yield a group of brands, or evoked set, which are the consumer’s preferred alternatives. From this set, consumers will further evaluate the alternatives and make a choice. Discussion/Team Activity: Describe the evoked set derived from information searches previously conducted. What were the characteristics that made these products the preferred alternatives?
• #20: Notes: Once the evoked set is constructed, the consumer is ready to make a decision. One way to make a choice is to pick product attributes that are important to him/her, then exclude all products in the set that do not have that attribute. Another way to narrow the number of choices is to use cutoffs, or minimum or maximum levels of an attribute that an alternative must have. Many times, price is an important cutoff attribute. The goal of the marketing manager is to determine which attributes have the most influence on a consumer’s choice, and design a marketing mix that stresses those attributes to the consumer. A single attribute, such as price, may not always explain a consumer’s evaluation of products. Attributes that the marketer may consider important are not always important to the consumer. Brand names, such as Johnson & Johnson, have a significant impact over the choice of products.
• #21: Notes: Following the evaluation of alternatives, the consumer decides which product to buy or decides not to buy at all. Ultimately, the consumer must specifically decide: Whether to buy When to buy What to buy (product type and brand) Where to buy (type of retailer, specific retailer, online or in store) How to pay
• #23: Notes: Once a purchase decision is made, the next step in the process is the evaluation of the product after purchase. Consumers expect certain outcomes from the purchase, and how well these expectations are met determines the level of customer satisfaction. Price influences the level of expectations for a product or service. When people feel inconsistency between their values or opinions and their behavior, they feel an inner tension called cognitive dissonance. In purchase decisions, this is also called “buyer’s remorse.” Marketers try to reduce any lingering doubt. For example: Why do people who have been repeatedly warned that cigarettes are bad for their health continue to smoke? Because smokers "know" one thing and "feel" another—that's cognitive dissonance at work.
• #24: Once a purchase decision is made, the next step in the process is the evaluation of the product after purchase. Consumers expect certain outcomes from the purchase, and how well these expectations are met determines the level of customer satisfaction. Price influences the level of expectations for a product or service. When people feel inconsistency between their values or opinions and their behavior, they feel an inner tension called cognitive dissonance. In purchase decisions, this is also called “buyer’s remorse.” 75 percent of consumers say they had a bad experience in the last year with a product purchased. Marketing managers can help reduce cognitive dissonance through effective communication with consumers, such as follow-up notes, advertising, and guarantees.Marketing managers can help reduce dissonance through effective communication with purchasers. For example, a customer service manager may slip a note inside the package congratulating the buyer on making a wise decision. Postpurchase letters sent by manufacturers and dissonance-reducing statements in instruction booklets may help customers feel at ease with their purchase. Advertising that displays the product’s superiority over competing brands or guarantees can also help relieve the possible dissonance of someone who has already bought the product. Apple’s Genius Bar and customer service will ease cognitive dissonance for purchasers of an iPad because they know that the company is there to support them.
• #26: Notes: Consumer buying decisions fall along a continuum of three broad categories: routine response behavior, limited decision making, and extensive decision making. Routine response behavior: Frequently purchased, low-cost goods and services, with low involvement on search and decisions by consumers before making the purchase. Consumers buy first and evaluate later. Limited decision making: Consumer has previous product experience but is unfamiliar with the current brands available. A moderate effort is spent searching for information or in considering alternatives. Extensive decision making: Applies to unfamiliar, expensive products, or an infrequently bought item. The most complex type of consumer buying decisions, and is associated with high involvement on the part of the consumer. Discussion/Team Activity: Name products that fall into each of the decision making descriptions, and describe the decision making process for each.
• #28: Notes: 1. Exhibit 6.2 illustrates the continuum of consumer buying decisions.
• #32: The level of involvement in the purchase depends on the following factors: Previous experience: When consumers have had previous experience with a product or repeat trials, the level of involvement typically decreases and quick choices are made. Interest: Involvement is directly related to consumer interests, such as cars, motorcycles, or electronics. Perceived risk of negative consequences: As the risk increases, so does the consumer level of involvement. Risks include financial risks, social risks, and psychological risk. Situation: The circumstances of a purchase may transform a low-involvement decision into a high-involvement one. For example, a low-priced brand of wine may be purchased routinely, but a high-involvement decision might be required for purchasing a more prestigious wine for a special occasion. Social visibility: Involvement increases as the social visibility of a product increases. These products that make a statement about the user may include cars, jewelry, furniture, and clothing.
• #33: Product involvement means that a product category has high personal relevance. • Situational involvement means that the circumstances of a purchase may temporarily transform a low-involvement decision into a high-involvement one. • Shopping involvement represents the personal relevance of the process of shopping. Modern shoppers tend to browse less and make fewer impulse buys because they shop on a mission. • Enduring involvement represents an ongoing interest in some product or activity. The consumer is always searching for opportunities to consume the product or participate in the activity. • Emotional involvement represents how emotional a consumer gets during some specific consumption activity.
• #34: For high involvement products, a good ad gives consumers the information they need for making the purchase decision, as well as specifying the benefits and advantages of owning the product. For low-involvement purchases, customers may not recognize their wants until they are in the store. In-store promotion and package design are important tools for catching the customer’s attention. Good displays can help explain a product’s purpose and create recognition of a want.
• #36: Notes: The consumer decision-making process is strongly influenced by cultural, social, individual, and psychological factors. Exhibit 6.3 summarizes these influences.
• #37: Notes: 1. This list contains the defining components of culture. Push students to think about American cultural elements for each category. The most defining element of a culture is its values. A value is an enduring belief shared by a society that a specific mode of conduct is personally or socially preferable to another mode of conduct Language -- General Motors discovered too late that Nova (the name of an economical car) literally means “doesn’t go” in Spanish; Coors encouraged its English-speaking customers to “Turn it loose,” but the phrase in Spanish means “Suffer from diarrhea.”
• #38: Notes: Culture is: Pervasive: Cultural values influence individual life, yet most are completely unaware of its presence. What people eat, how they dress, and what language they speak are all cultural dimensions. Functional: By establishing expectations, culture gives order to society, such as laws. Learned: Culture is not genetic. Instead, consumers must learn what is acceptable from family and friends. Dynamic: It adapts to changing needs and an evolving environment. The rapid growth of technology has accelerated the rate of cultural change.
• #39: Notes: The most defining element of a culture is its values. People with similar value systems tend to react alike to prices and other marketing-related inducements. Values also correspond to consumption patterns.
• #40: Notes In the United States alone, countless subcultures can be identified, and many are concentrated geographically.
• #41: Notes: One view of contemporary U.S. status structure is shown in Exhibit 6.4.
• #44: Notes: Marketers are interested in social class for the reasons of determining which medium to use for advertising, and for determining where best to distribute their products. Because many lower-income consumers are still struggling to recover from job loss, retailers such as Walmart are selling smaller packages of items because customers do not have enough cash to buy more standard-size products. Apparel stores that target the middle class are raising prices by only pennies for fear of driving away customers.
• #46: Notes: Consumers interact socially with reference groups, opinion leaders, and family members to obtain product information and decision approval.
• #47: Notes: Reference groups are characterized as either direct or indirect. Direct reference groups may be primary or secondary. Primary membership groups include all groups with which people interact regularly in an informal way, such as family, friends, and coworkers. People associate with secondary membership groups less consistently and more formally. This includes clubs, professional groups, and religious groups. Indirect reference groups include aspirational reference groups, such as organizations that a person would like to join. On the other hand, a nonaspirational reference group is one that someone wants to avoid being identified with.
• #48: Notes: For marketers, reference groups have three implications, as stated on this slide. Understanding the effect of reference groups on a product is important for marketers in tracking the product life cycle.
• #49: Notes: Opinion leaders are often the first to try new products. Technology companies have found that teenagers, because of their willingness to experiment, are key opinion leaders for the success of new technologies. Opinion leadership is a casual, face-to-face phenomenon. Locating opinion leaders can be a challenge. Marketers may try to create opinion leaders, such as cheerleaders or civic leaders. On a national level, companies sometimes use prominent public figures, such as movie stars, sports figures, and celebrities to promote products. Discussion/Team Activity: Name examples of opinion leaders, and the promoted products/services, in each of the categories shown on this slide.
• #50: Notes: The family is the most important social institution for many consumers, influencing values, attitudes, and buying behavior. Purchase decisions vary significantly among family members, who assume a variety of roles in the purchase process. Initiators are the ones who suggest or initiate the purchase process. Influencers are those members whose opinions are valued.Decision makers actually makes the decision to buy or not to buy.The purchaser is the one who exchanges money for the product. The consumer is the one who uses the product. Children can have great influence over the purchase decision.
• #52: Notes: A person’s buying decisions are also influenced by unique personal characteristics, such as gender; age and life cycle stage; and personality, self-concept, and lifestyle. The physiological differences in men and women result in the need for different products. Trends in gender marketing are influenced by the changing roles of men and women. The age and family life cycle can have a significant impact on consumer behavior. Consumer tastes in clothes, food, cars, and recreation are often age related. Related to age is the family life cycle, an orderly series of stages through which consumers’ attitudes and behavior evolve through maturity, experience, and changing income and status. Personality is a broad concept combining psychological makeup and environmental forces. Self-concept combines the ideal self-image and the real self-image. Consumers seldom buy products that jeopardize their self-image. A lifestyle is a mode of living as identified by a person’s activities, interests, and opinions.
• #56: Notes: The psychological influences are the factors consumers use to interact with their world. They are the tools used to recognize feelings, gather and analyze information, formulate thoughts and opinions, and take action.
• #57: Notes: People cannot perceive every stimulus in their environment. They use selective exposure, along with the closely related concepts of selective distortion and retention to decide which stimuli to notice and which to ignore. Discussion/Team Activity: Discuss examples representing each of the described perception states.
• #58: Notes: Marketers must recognize the importance of cues or signals in a consumers perception of products. Marketing managers first identify the important attributes such as those listed on this slide, then design signals to communicate these attributes to consumers.
• #59: Notes: Maslow’s Hierarchy of Needs: A method of classifying human needs and motivations into five categories in ascending order of importance. Maslow’s Hierarchy of Needs, shown in Exhibit 6.6 and here, arranges needs in ascending order of importance. By studying motivation, marketers can analyze the major forces influencing consumers’ purchase decisions. When a product is purchased a need is usually fulfilled. These needs become motives when aroused sufficiently. Motives are the driving forces that cause a person to take action to satisfy those needs.
• #60: Online: Center for Science in the Public Interest (CSPI)) The CSPI regularly campaigns to change consumers’ beliefs about products it perceives as dangerous or harmful. What products are of interest to the CSPI at present? How should companies respond if their products become targets of the CSPI? www.cspinet.org Notes: Almost all consumer behavior results from learning, the process that creates changes in behavior through experience and practice. There are two types of learning: experiential and conceptual. Reinforcement and repetition boost learning. This is a key strategy in promotional campaigns because it can lead to increased learning. Generally, to enhance learning, advertising messages should be spread over time rather than clustered together.
• #61: Notes: Beliefs and attitudes are closely linked to values. If a product is meeting its profit goals, positive attitudes toward the product need to be reinforced. If the brand is not succeeding, the marketing manager must work to change the consumers’ attitudes toward it. Changes in attitudes can be accomplished in three ways:* Changing beliefs about the brand’s attributes* Changing the relative importance of these beliefs* Adding new beliefs