What is Consumer Behavior?What is Consumer Behavior?

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

• 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.

• Answers the question of WHY?

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

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

Commonly asked questions:Commonly asked questions:

• Product related: »What do they think of the product?»What do they think of competitor’s product?»How do you use the product?

»What is their Aad /Aproduct?

• Lifestyle related : »What are your hopes/dreams?»What is your place in the world? (role)

Applications of Consumer Applications of Consumer BehaviorBehavior

• Marketing strategy: MANAGERIAL RELEVANCE

» Use common sense/ Look at successes and failures.

• Regulatory Policy: Warning Labels/ Nutrition Labeling

• Social Marketing/ TRUTH ads

» Drug Use

» HIV prevention

Overall Model Of Consumer BehaviorOverall Model Of Consumer Behavior

Consumer Decision Consumer Decision Making ProcessMaking Process

Postpurchase Behavior

Postpurchase Behavior

PurchasePurchase

Evaluation of Alternatives

Evaluation of Alternatives

Information SearchInformation Search

Problem RecognitionProblem Recognition

Cultural, Social, Individual and Psychological

Factors affect

all steps

Cultural, Social, Individual and Psychological

Factors affect

all steps

1: Problem Recognition1: Problem Recognition

• Result of an imbalance b/t actual and desired states

• How to recognize unfilled wants?

Involvement and Types ofInvolvement and Types ofDecision MakingDecision Making

Involvement and Types ofInvolvement and Types ofDecision MakingDecision Making

14-1

Low-purchase involvement High-purchase involvement

Nominal decision making Limited decision making Extended decision making

Problem recognitionSelective

Problem recognitionGeneric

Problem recognitionGeneric

Information searchInternal

Limited external

Information searchLimited internal

Information searchInternalExternal

Alternative evaluationFew attributes

Simple decision rulesFew alternatives

Alternative evaluationMany attributes

Complex decision rulesMany alternatives

Purchase Purchase Purchase

PostpurchaseNo dissonance

Limited evaluation

PostpurchaseNo dissonance

Very limited evaluation

PostpurchaseDissonance

Complex evaluation

2: Information Search2: 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

The 8 Stages of Consumer The 8 Stages of Consumer Information ProcessingInformation Processing

CPMCPMCPMCPM

Consumer Information Consumer Information Processing: Stage 1Processing: Stage 1

Exposure to information

• 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 2Selective Attention: Stage 2

Attention

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

• Highly selective

Selective Attention: Stage 2Selective Attention: Stage 2

To attract consumers attention:

• Appeals to cognitive and hedonic needs

• Use of novel stimuli

• Use of intense stimuli

• Use of motion

Selective Attention: Stage 2Selective Attention: Stage 2

Illustration of

selective attention

Appeals to Cognitive andAppeals to Cognitive andHedonic NeedsHedonic Needs

Hedonic Needs

Needs that make

them feel good

and bring pleasure

Cognitive Needs

Immediate functional needs of the consumer

Hedonic NeedsHedonic Needs

Hedonic appeal to

the love for babies

Use of Intense StimuliUse of Intense Stimuli

Use of intensity

Use of MotionUse of Motion

Another illustration

of motion

in advertising

Comprehension: Stage 3Comprehension: Stage 3

• 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 Consumer Information Processing: Stage 4Processing: Stage 4

Agreement with what is comprehended

The matter of whether consumers yield to

- that is, agree with - what they have

comprehended

Agreement: Stage 4Agreement: Stage 4

• Comprehension by itself does not ensure that the message influences consumers’ behavior

• Agreement depends on» whether the message is credible» whether the information appeals to the

consumer

Retention and Search/Retrieval of Retention and Search/Retrieval of Stored InformationStored Information

These two information processing stages,

retention and information search and

retrieval, both involve memory factors

related to consumer choice

Elements of MemoryElements 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 MemoryElements of Memory

• Sensory stores(SS):» Information is rapidly lost unless attention is

allocated to the stimulus

• Short-Term Memory(STM):» Limited processing capacity» Not thought or rehearsed information will be lost

in 30 seconds or less

Elements of MemoryElements of Memory

• Long-Term Memory (LTM):» A virtual storehouse of unlimited information» Information is organized into coherent and

associated cognitive units called schemata, memory organization packets, or knowledge structures

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

A Consumer’s Knowledge A Consumer’s Knowledge Structure for the Mazda MiataStructure for the Mazda Miata

Two-Seater

Convertible

Fun to drive

Japanese

Well-Made Affordable

Small

Sports car

MazdaMiata

Little luggagespace

Economical

Nostalgic

Sexy

British racinggreen Women

Learning and LTMLearning and LTM

• 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 Retention and Search/Retrieval of Stored InformationStored Information

Facilitating

consumer’s

learning

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

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

Search and Retrieval of InformationSearch and Retrieval of Information

Use of Concretizing and ImageryUse 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 ImageryUse of Concretizing and Imagery

Imagery

Representation of sensory experiences

in short-term memory including visual,

auditory, and other sensory, experiences

Use of Concretizing and ImageryUse of Concretizing and Imagery

Heartburn verbal

framing

Evaluation of AlternativesEvaluation of Alternatives

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

Consumer Decision Making: Stage 7Consumer Decision Making: Stage 7

Decision heuristics for decision making

• Affect referral

• Compensatory heuristic

• Conjunctive heuristic

• Phased strategies

Affect ReferralAffect Referral

Selects the alternative for which the affect is

most positive

Recalls attitude, or

affect, toward relevant

alternatives

Compensatory HeuristicCompensatory Heuristic

Chooses the alternative with criteria that best compensates for inferior criteria

Evaluates alternatives in terms of criteria

trade-off

Conjunctive HeuristicConjunctive Heuristic

Selects the alternative with criteria that

meets all minimum cutoffs

Evaluates alternatives in

terms of criteria minimum cutoffs

Phased StrategiesPhased Strategies

Chooses using a combination of

heuristics

Evaluates alternatives using both

compensatory and noncompensatory

heuristics

4: Purchase4: Purchase

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

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

Action: Stage 8Action: Stage 8

Action on the basis of the decision

• People do not always behave in a manner

consistent with their preferences due to the

presence of events, or situational factors

• Situational factors are especially prevalent in

low-involvement consumer behavior

Some Issues That Arise During Stages in Some Issues That Arise During Stages in the Consumption Processthe Consumption Process

Figure 1.1

5: Post Purchase Behavior5: 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 Factors Influencing Buying DecisionsBuying Decisions

Social Factors

Individual Factors

Psycho-logical Factors

Cultural Factors CONSUMER

DECISION-MAKING

PROCESS

BUY /

DON’T BUY