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This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part without permission. Marketing 3331 Understanding Consumer Behavior

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Page 1: Understanding Consumer Behavior Marketing 3331 Consumer Behavior.pdf · contain Tide Pods . meme . Teenagers filming themselves ... • Consists of the actions a person takes in purchasing

This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part without permission.

Marketing 3331 Understanding Consumer Behavior

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This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part without permission.

IN MARKETING NEWS TODAY

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This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part without permission.

Netflix’s valuation passes $100bn ● Netflix’s strategy has been to create

popular original content such as Stranger Things

● Also streaming iconic older shows such as Friends

● Led to rapid growth with new customers but also ensured it retained current users.

Source https:/ / venturebeat.com/ 2018/ 01/ 21/ amazon-set-to-open-doors-on-ai-powered-grocery-store/

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This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part without permission.

P&G struggles to contain Tide Pods meme. ● Teenagers filming themselves ● Working with YouTube and

Facebook ● NFL Star Ron Gronkowski

Source: https:/ / www.wsj.com/ articles/ p-g-grapples-with-how-to-stop-a-tide-pods-meme-1516449600

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This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part without permission.

Amazon Go Begins! ● No lines. No checkout. ● Pay with app on phone. ● AI technology pick up what you

bought and charges you later Source: https:/ / venturebeat.com/ 2018/ 01/ 21/ amazon-set-to-open-doors-on-ai-powered-grocery-store/

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This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part without permission.

A world without waste. ● Coca-Cola today announced an

industry-first goal to collect and recycle the equivalent of 100% of every bottle or can it sells globally by 2030 Source: http:/ / www.coca-colacompany.com/ stories/ world-without-waste

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This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part without permission.

More marketing disasters from the past Top 10 Marketing Fails: Coke, Ford, Netflix. . . . Source: https:/ / www.youtube.com/ watch?v=hxRqKgjD3vY

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This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part without permission.

Consumer Behavior • Consists of the actions a person takes in purchasing and using

products and services, including the mental and social processes that come before and after these actions

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Purchase Decision Process • consists of the five stages a buyer passes through in making choices

about which products and services to buy:

1. problem recognition 2. information search 3. alternative evaluation 4. purchase decision, 5. post purchase behavior.

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The purchase decision process consists of FIVE stages

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Information Search ● Internal Search

○ Internal Memory ● External Search

○ Personal Sources – family/ friends ○ Public Sources – consumer reports ○ Marketer-Dominated Sources - sellers

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Common consumer selection criteria for evaluation of smartphones

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Evaluative Criteria ● The factors that represent both the objective attributes of

a brand and the subjective ones a consumer uses to compare different products and brands

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Consideration Set ● The group of brands that a consumer would consider

acceptable from among all the brands in the product class of which he or she is aware

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Purchase Decision ● Decide from whom to buy ● Decide when to buy

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Post-Purchase Behavior ● Customer Satisfaction Studies

○ Satisfied customers tell 3 people ○ Dissatisfied customers tell 9 people

● Cognitive Dissonance ○ Post-purchase anxiety or tension

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Cognitive Dissonance ● the feeling of postpurchase psychological tension or

anxiety consumers may experience when faced with two or more highly attractive alternatives

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How much is a satisfied customer worth?

A 5% improvement in customer retention can increase profits by 70-80%

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Involvement ● the personal, social, and economic significance of the

purchase to the consumer ○ Extended Problem Solving (High involvement) ○ Limited Problem Solving (Moderate) ○ Routine Problem Solving (Low involvement)

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Low Involvement ● Maintain Product Quality ● Avoid Stockouts ● Reduce Cognitive Dissonance with Ads

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High Involvement ● Use Comparative Ads ● Use Personal Selling

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Common consumer selection criteria for evaluation of smartphones

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Situational Influences ● Purchase Task (purpose) ● Social Surroundings (other people) ● Physical Surroundings (décor) ● Temporal Effects (time) ● Antecedent States (mood)

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Influences on the consumer purchase

decision process from both internal and external sources

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Motivation Maslow’s Hierarchy of Needs ● Based on the idea that motivation comes

from a need. ● Once need is met, a higher-level need

becomes the motivator. 25

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Hierarchy of Needs

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Personality • A person’s consistent behaviors or responses to recurring situations • Self Concept

• The way people see themselves and the way they believe others see them

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Perception ● Selective Perception: Filtering ● Selective Exposure: Paying attention ● Physical Surroundings (décor) ● Selective Comprehension: Interpreting ● Selective Retention: Remembering

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Subliminal Messaging • Subliminal messages are visual or auditory stimuli that the conscious

mind cannot perceive • They are often inserted into other media such as TV commercials or

songs. This kind of messaging can be used to strengthen or heighten the persuasiveness of advertisements, or to convey an altogether different message entirely

• Bottom line: They don’t work!

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Some are almost blatant and straightforward.

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SFX magazine courted notoriety when it altered the typeface of its logo for its Jennifer Garner issue in such a way that the moniker appeared to spell out something else entirety.

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Aaaand they kept going!

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Sexuality causes anxiety and “FOMO”

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It is also to invoke favorable mental images.

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Perceived Risk • The anxiety felt because the consumer cannot anticipate the

outcomes of a purchase but believes that there may be negative consequences

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Strategies to reduce perceived risk. ● Obtain Seals of Approval ● Secure Endorsements ● Provide Free Trials/ Samples ● Give Extensive Instructions ● Provide Warranties/ Guarantees

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What’s the strategy to reduce perceived risk?

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What’s the strategy to reduce perceived risk?

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Learning • Behaviors that result from repeated experience and reasoning

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Behavioral Learning are automatic responses.

Motivation (Drive)

Cues (Stimulus)

Response (Action)

Reinforcement (Reward)

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Motivation ● Driving force of all important things to be learnt. ● Motives allow individuals to increase their readiness to

respond to learning. ● It also helps in activating the energy to do so. Thus the

degree of involvement usually determines the motivation to search information about a product. ○ For example, showing advertisements for summer

products just before summer season or for winter clothes before winters.

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Cues ● Not strong as motives, but their influence in which the

consumer responds to these motives. ● For example, in a market, the styling, packaging, the store

display, prices all serve as cues to help consumers to decide on a particular product, but this can happen only if the consumer has the motive to buy.

● Thus, marketers need to be careful while providing cues, especially to consumers who have expectations driven by motives.

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Response ● Signifies how a consumer reacts to the motives or even

cues. ● The response can be shown or hidden, but in either of the

cases learning takes place. ● Often marketers may not succeed in stimulating a

purchase but the learning takes place over a period of time and then they may succeed in forming a particular image of the brand or product in the consumer’s mind.

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Reinforcement ● Extremely important as it increases the probability of a

particular response in the future driven by motives and cues.

● Directly relates to building brand loyalty ○ A favorable attitude toward and consistent purchase

of a single brand over time

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Attitude Formation • Attitude

• Shaped by beliefs, feelings (affect) and behavioral intentions

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Beliefs • A consumer may hold both positive beliefs toward an object (e.g.,

coffee tastes good) as well as negative beliefs (e.g., coffee is easily spilled and stains papers)

• Beliefs may be neutral (coffee is black), and some may be differ in valance depending on the person or the situation (e.g., coffee is hot and stimulates--good on a cold morning, but not good on a hot summer evening when one wants to sleep)

• Beliefs that consumers hold need not be accurate (e.g., that pork contains little fat)

• Some beliefs may, upon closer examination, be contradictory (e.g., that a historical figure was a good person but also owned slaves)

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Affect (Feelings) • Consumers also hold certain feelings toward brands or other objects • Sometimes these feelings are based on the beliefs (e.g., a person

feels nauseated when thinking about a hamburger because of the tremendous amount of fat it contains)

• But there may also be feelings which are relatively independent of beliefs

• For example, an extreme environmentalist may believe that cutting down trees is morally wrong, but may have positive affect toward Christmas trees because he or she unconsciously associates these trees with the experience that he or she had at Christmas as a child

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Behavioral Intention • The behavioral intention is what the consumer plans to do with

respect to the object (e.g., buy or not buy the brand). • As with affect, this is sometimes a logical consequence of beliefs (or

affect), but may sometimes reflect other circumstances--e.g., although a consumer does not really like a restaurant, he or she will go there because it is a hangout for his or her friends.

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Looking at the consumer lifestyle.

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VALS segments U.S. adults into eight distinct types—or mindsets—using a specific set of psychological traits and key demographics that drive consumer behavior. Lets take income as an example. If you are a person with high income your lifestyle would probably include habits such as dining out of home frequently and that too in top class restaurants, wearing only branded clothes and buying the best cars out there. Whereas if you are a middle class income group consumer, you would be more wary of spending money and would rather concentrate on savings.

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Reference Groups • Consists of people to whom an individual looks as a basis for self-

appraisal or as a source of personal standards. • Brand Community

• A specialized group of consumers with a structured set of relationships involving a particular brand, fellow customers of that brand, and the product in use

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Looking at the different reference groups ● Associative Group

○ Group someone belongs to ● Aspiration Group

○ Group we want to belong to ● Dissociative Group

○ Group we distance from

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Family Life Cycle • consists of the distinct phases that a family progresses through from

formation to retirement, each phase bringing with it identifiable purchasing behaviors.

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The family cycle determines purchasing habits

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Family Decision-Making ● Styles

○ Single, Spouse-Dominant, Joint ● Family Member Roles

○ Information Gatherer ○ Influencer ○ Decision Maker ○ Purchaser ○ User

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Culture and Sub-cultures • Culture

• Set of values, ideas, attitudes shared among a group • Subculture

• the subgroups within the larger, or national, culture with unique values, ideas, and attitudes

• \Hispanic, African American, and Asian American buying patterns

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Culture and Subculture Influences

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Remember these terms? Do you still use them?

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• Alcoholics Anonymous

• Bodybuilding (i.e. IFBB)

• Biker • Cosplay • Emo • Gamer • Grunge

• Heavy Metal • Hipster • Juggalo • Preppy • Rave • Rocker • Skater

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What exactly is a Juggalo?

Common characteristics of identifying a member of the Juggalo subculture are as follows: • Drinking and spraying the inexpensive soft drink Faygo.[9][10] • Listening to horrorcore and other types of underground rap music. • Wearing face paint, generally those either like a clown or perhaps similar to corpse paint. • Wearing HatchetGear. • Having the Hatchet man logo applied on personal effects and, die cast, worn as jewelry. • Doing hair in the spider legs style, i.e. like the Twiztid members[7] • Displaying the gesture of wicked clown, the westside sign with the left hand and the C sign

in ASL with the right, with arms crossed over. • Making and responding to "whoop, whoop" calls. • Expressing a (generally) tongue-in-cheek obsession with murder, committed with

a blade weapon.

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What exactly is a Juggalo?

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“When a company identifies how to integrate the processes needed to give the consumer a sense of completion, it can blow away the competition. A

product is easy to copy, but experiences and how you make them feel are very hard to replicate.”

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