Consumer Buying Behavior And Decision Making

Irwin/McGraw-Hill & Dr. Chen4-1

Jason C. H. Chen, Ph.D.Professor

School of Business AdministrationGonzaga UniversitySpokane, WA 99223

[email protected]

Chapter 4Chapter 4Consumer Buying Behavior Consumer Buying Behavior

and Decision Makingand Decision Making


After studying this chapter, you should be able to:


Discuss the importance of consumer behavior.

Understand consumer decision making and some of the important influences on those decisions.

Distinguish between low-involvement and high-involvement consumer behavior.

Understand how attitudes influence consumer purchases.




Appreciate how the social environment affects consumer behavior.

Recognize many of the individual consumer differences that influence purchase decisions and behavior.

Recognize the outcomes of consumers’ decisions to purchase or not to purchase and how they affect marketing success.


OPENING VIGNETTE

WWW.USA.VISA. COM

1. How has Visa shown that the company understands consumer behavior?

2. Why do you suppose that Visa is more focused on in-store purchases that those on the Internet?


The Nature of Consumer Behavior and Decision Making

The Nature of Consumer Behavior and Decision Making

Consumer Behavior: The mental and emotional processes and

physical activities people engage in when they select, purchase, use, and dispose of products or services to satisfy particular needs and desires.

Consumer Behavior: The mental and emotional processes and

physical activities people engage in when they select, purchase, use, and dispose of products or services to satisfy particular needs and desires.


I. The Nature of Consumer Behavior and Decision MakingI. The Nature of Consumer

Behavior and Decision Making

Factors important to understanding consumer markets and consumer behavior: The size of the consumer market.

Changes in consumer shopping habits and purchase decisions.

Emphasis on consumer-oriented marketing.

The design of effective marketing strategy.


Growing Consumer MarketsGrowing Consumer Markets

1. New retail line-ups “Price-centric” Lifestyle “Occasion-centric”

2. Outdoor living market.

3. Consumer electronics.

4. Enhanced experience businesses.


Growing Consumer MarketsGrowing Consumer Markets

5. Anti-aging products and services.

6. Health as a national hobby.

7. High-end sports apparel and equipment.

8. Safe packaging, pure contents, and “green” concerns.


Consumer Behavior and the Design of Marketing Strategy

Consumer Behavior and the Design of Marketing Strategy

Brand Equity: The marketplace value of a brand.

Service Recovery: Winning back consumers who defect.


Understanding E-CustomersUnderstanding E-Customers

The 10 Most Important Website Attributes:

1. Product representation

2. Product prices

3. Product selection

4. On time delivery

5. Ease of ordering

6. Product information

7. Level and quality of consumer support

8. Product shopping and handling

9. Posted privacy policy

10. Site navigation and appearance

The 10 Most Important Website Attributes:

1. Product representation

2. Product prices

3. Product selection

4. On time delivery

5. Ease of ordering

6. Product information

7. Level and quality of consumer support

8. Product shopping and handling

9. Posted privacy policy

10. Site navigation and appearance

Irwin/McGraw-Hill & Dr. Chen4-11 © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Basic Marketing

Examples of Economic Needs

• Economy of purchase or use

• Convenience

• Efficiency in operation or use

• Dependability in use

• Improvement in earnings


Marketing Mixes All other stimuli

Psychological variablesMotivationPerceptionLearningAttitudePersonality/lifestyle

Social InfluencesFamilySocial classReference groupsCulture

Purchase SelectionPurchase reasonTimeSurroundings

Problem-solving processProblem-solving process

Person does or does not purchase (response)

Person making decision

A Model of Buyer BehaviorA Model of Buyer Behavior


Psychological (intra-personal) Variables

• Motivation

• Perception

• Learning

• Attitudes and beliefs

• Personality

• Lifestyle (psychographics)


Types of Needs Examples of Specific Needs

Hunger Thirst Activity Sleep Physiological needs Sex Rest Preservation Warmth

Aggression Curiosity Dominance Imitation Psychological needs Independence Love Nurturing Order Fulfillment Competition Relaxing Power Pride Self-Expression Tenderness Desire for… Acceptance Achievement Acquisition Affection Affiliation Appreciation Beauty Companionship Comfort Leisure Esteem Fame Happiness Knowledge Prestige Pleasure Recognition Respect Status Variety

Fear Pain Harm Depression Freedom from Ridicule Loss Sadness Anxiety

Discomfort Pressure Stress Illness

Types of Needs Examples of Specific Needs

Hunger Thirst Activity Sleep Physiological needs Sex Rest Preservation Warmth

Aggression Curiosity Dominance Imitation Psychological needs Independence Love Nurturing Order Fulfillment Competition Relaxing Power Pride Self-Expression Tenderness Desire for… Acceptance Achievement Acquisition Affection Affiliation Appreciation Beauty Companionship Comfort Leisure Esteem Fame Happiness Knowledge Prestige Pleasure Recognition Respect Status Variety

Fear Pain Harm Depression Freedom from Ridicule Loss Sadness Anxiety

Discomfort Pressure Stress Illness

Possible Needs Motivating a Person to Some Action


The PSSP Hierarchy of Needs


Ortho Tri-Cycle ad


SELECTIVEPROCESSES

Selective retention Selective perception

Selective exposure

Selective processSelective process


dfs

II. Consumer Decision MakingII. Consumer Decision Making

Individual differences

• Personality

• Lifestyles

• Motivation

Situational Factors

• Anticipated use

• In store stimuli

• Presence of others

Social Environment

• Culture

• Social Class

• Interpersonal Influences

• Family

Outcomes

• Consumer learning

• Dissatisfaction and Complaint

Behavior

• Presence of others

Consumer decision behavior Recognition of need or problem

Search for information

Evaluation of alternatives

Purchase

Exhibit 4-2 A general model of consumer decision making and influences

1

2

34


High- and Low-Involvement DecisionsHigh- and Low-Involvement Decisions

Involvement: The level of

importance or interest generated by a product or a decision.

Involvement: The level of

importance or interest generated by a product or a decision.

Consumer Information Processing: The cognitive

processes by which consumers interpret and integrate information from the environment.

Consumer Information Processing: The cognitive

processes by which consumers interpret and integrate information from the environment.


High-and Low-Involvement DecisionsHigh-and Low-Involvement Decisions

High-involvement Decisions: Characterized by high levels of importance

thorough information processing, and substantial differences between alternatives.

High-involvement Decisions: Characterized by high levels of importance

thorough information processing, and substantial differences between alternatives.

Low-involvement Decisions: Occur when

relatively little personal interest, relevance, or importance is associated with a purchase.

Low-involvement Decisions: Occur when

relatively little personal interest, relevance, or importance is associated with a purchase.


Types of Consumer ChoicesTypes of Consumer Choices

Six Generic Consumer Behavior Choices:

1. Product

2. Brand

3. Shopping area

4. Store type

5. Store

6. Nonstore source (catalogs, PC, & TV shopping)

Six Generic Consumer Behavior Choices:

1. Product

2. Brand

3. Shopping area

4. Store type

5. Store

6. Nonstore source (catalogs, PC, & TV shopping)


AttitudesAttitudes

Consumer Attitudes: Learned

predispositions to respond favorably or unfavorably to a product or brand.

Consumer Attitudes: Learned

predispositions to respond favorably or unfavorably to a product or brand.

Attitudes have valence; they can be positive, negative, or neutral.

Strong attitudes are resistant to change.

Attitudes can erode over time if not reinforce.

Attitudes have valence; they can be positive, negative, or neutral.

Strong attitudes are resistant to change.

Attitudes can erode over time if not reinforce.


Attitudes – Marketing ImplicationsAttitudes – Marketing Implications

1. Attitudes are based on beliefs consumers hold about the attributes or features (price, level of services, quality) of the products they are evaluating.

2. Attitudes are primary causes of behavior causing consumers to buy or not buy products

1. Attitudes are based on beliefs consumers hold about the attributes or features (price, level of services, quality) of the products they are evaluating.

2. Attitudes are primary causes of behavior causing consumers to buy or not buy products


Experiential ChoicesExperiential Choices

Consumers frequently make choices based on their emotions and feelings.

Affect Referral: Consumers elicit from

memory their overall evaluations of products and choose the alternative for which they have the most positive feelings.


Experiential ChoicesExperiential Choices

Impulse Purchases: Choices made on

the spur of the moment, often without prior problem recognition.

Time-inconsistent Choices: Choices consumers

make which act against their own better judgment and engage in behavior they would normally reject.


III. Influence of the Social EnvironmentIII. Influence of the Social Environment

Exhibit 4-3 Flows of influence with in the social structure

Individualconsumers

Organizations Reference colors Family Media

Culture

Subculture

Social class


Cultural InfluencesCultural Influences

Culture: The values, ideas,

attitudes, and symbols that people adopt to communicate, interpret, and interact as members of society.

Culture: The values, ideas,

attitudes, and symbols that people adopt to communicate, interpret, and interact as members of society.

Culture is learned and transmitted from one generation to the next.

Culture is learned and transmitted from one generation to the next.


Cultural InfluencesCultural Influences

Socialization: The process of

absorbing a culture

Socialization: The process of

absorbing a culture

Consumer Socialization: When socialization is

applied to marketing and consumer behavior.

Consumer Socialization: When socialization is

applied to marketing and consumer behavior.


ValuesValues

Values: Shared beliefs or cultural norms about what

is important or right.

Cultural values directly influence how

Consumers view and use individual

products, brands, and services.


ValuesValues

The List of Values (LOV):• Self-respect

• Warm relationships

• Self-fulfillment

• Sense of belonging

• Respect from others

• Excitement

• Security

• Sense of accomplishment

• Fun and enjoyment in life

The List of Values (LOV):• Self-respect

• Warm relationships

• Self-fulfillment

• Sense of belonging

• Respect from others

• Excitement

• Security

• Sense of accomplishment

• Fun and enjoyment in life


ValuesValues

Values and Lifestyles (VALS): Identifies eight market segments (chapter

7) that share similar end values.


SubculturesSubcultures

Ethnic Patterns: The norms and values of specific groups

or subcultures within a society. Ethnic groups or subcultures may be

formed around national, religious, racial, or geographic factors.

Members of a subculture share similar values and patterns of behavior, making them attractive marketing targets for specific products and brands.


SubculturesSubcultures

Demographic characteristics used to identify subcultures:

Nationality - Hispanics, Italians

Race - African-American, American Indian, Asian

Region - New England, the South

Age - Elderly, teenager

Religion - Catholic, Jewish, fundamentalist

Demographic characteristics used to identify subcultures:

Nationality - Hispanics, Italians

Race - African-American, American Indian, Asian

Region - New England, the South

Age - Elderly, teenager

Religion - Catholic, Jewish, fundamentalist


Social Class InfluencesSocial Class Influences

Social Classes: Relatively homogeneous divisions

within a society that contain people with similar values, needs, lifestyles, and behavior.

Social Classes: Relatively homogeneous divisions

within a society that contain people with similar values, needs, lifestyles, and behavior.


Family Influences and the Family Life CycleFamily Influences and the Family Life Cycle

Family influences play two important roles in:

The socialization of people.

Affecting individual purchase decisions.

Family influences play two important roles in:

The socialization of people.

Affecting individual purchase decisions.


Family Life Cycle: The sequence of steps a family goes through:

From young, to

Single adults, to

Married couples whose children have left home, to

The retired survivor

Family Life Cycle: The sequence of steps a family goes through:

From young, to

Single adults, to

Married couples whose children have left home, to

The retired survivor

Family Influences and the Family Life CycleFamily Influences and the Family Life Cycle

Irwin/McGraw-Hill & Dr. Chen4-37 © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Basic Marketing

Social (intra-personal) Influenceson Consumers

• Family

• Reference groups

• Social class

• Culture and subculture


Relative size Group Some (abbreviated) characteristics

Upper-class

Upper-middleclass

Lower-middleclass*

Upper-lower(“working”) class*

Lower-lowerclass

1.5%

12.5%

32%

38%

16%

People from old wealthy families and socially prominent new rich...

Small business people, teachers, office workers, technicians--the typical white collar workers...

The blue collar workers--factory workers, skilled laborers, and service people…most earn good incomes...

Unskilled laborers and people in very low status occupations

* America’s “mass market”

Characteristics and Relative Size of Different Social Class Groups in the United States


Characteristics and Attitudes of Middle and Lower Classes

• Middle classes–Plan and save for the

future

–Analyze alternatives

–Understand how theworld works

–Feel they have opportunities

–Willing to take risks

–Confident about decision making

–Want long-run qualityor value

• Lower classes– Live for the present

– "Feel" what is "best"

– Have simplistic ideas about how things work

– Feel controlled by the world

– "Play it safe"

– Want help with decision making

– Want short-run satisfaction


Interpersonal InfluencesInterpersonal Influences

Reference Groups: Those others look to for help and

guidance including friends, co-workers, and others.

Reference Groups: Those others look to for help and

guidance including friends, co-workers, and others.


Interpersonal Influence ProcessesInterpersonal Influence Processes

Three Types of Interpersonal Processes:1. Informational influence is based on the

consumer’s desire to make informed choices and reduce uncertainty.

2. Utilitarian influence is reflected in compliance with the expectations, real or imagined, of others – referred to as norms.

3. Value-expressive influence stems from a desire to enhance self-concept through identification with others.


Interpersonal Influence ProcessesInterpersonal Influence Processes

Normative Influence: A combination of Utilitarian and Value-

Expressive Influence.


IV. Individual DifferencesIV. Individual Differences

Sources of Individual Differences Influencing Consumer Behavior:

1. Word-of-mouth communications

2. Personality

3. Lifestyles and psychographics

4. Motivation


Word-of-Mouth CommunicationsWord-of-Mouth Communications

Opinion Leaders:Influence consumer behavior through

word-of-mouth communications.

Market Mavens:Consumers who know about many kinds of products,

places to shop, and other facts of the market, and they like to share this information with other consumers.


PersonalityPersonality

Personality: Reflects a person’s

consistent response to his or her environment.

Personality: Reflects a person’s

consistent response to his or her environment.

Personality traits related to consumer behavior: Extroversion self-esteem dogmatism (closed-

mindedness) aggressiveness

Personality traits related to consumer behavior: Extroversion self-esteem dogmatism (closed-

mindedness) aggressiveness


PersonalityPersonality

Self-Concept: The overall perception and feeling that one has

about herself or himself.

Self-Concept: The overall perception and feeling that one has

about herself or himself.


Lifestyles and PsychographicsLifestyles and Psychographics

Lifestyle: Describes a person’s

pattern of living as expressed in activities, interests, and opinions (AIO statements).

Psychographics: Divide a market into

lifestyle segments on the basis of consumer interests, values, opinions, personality characteristics, attitudes, and demographics.


MotivationMotivation

Motivation:

Refers to a state or condition within a person that prompts goal-directed behavior.

Motivation:

Refers to a state or condition within a person that prompts goal-directed behavior.

Maslow’s Hierarchy:

1. Self-actualization Needs - Art, books, recreation2. Esteem Needs - Clothing, home furnishings3. Love and Belonging Needs - Mementos, gifts, photos4. Safety Needs - Burglar alarms, seat belts5. Physiological Needs - Food, heat, shelter

Maslow’s Hierarchy:

1. Self-actualization Needs - Art, books, recreation2. Esteem Needs - Clothing, home furnishings3. Love and Belonging Needs - Mementos, gifts, photos4. Safety Needs - Burglar alarms, seat belts5. Physiological Needs - Food, heat, shelter


V. Situational FactorsV. Situational Factors

Consumers purchase goods

for use in certain situations.

Situational factors can inhibit as well as motivate.

The anticipated use influences choice.


Situational FactorsSituational Factors

Consumers buy products with anticipated uses in mind.

Consumers buy products with anticipated uses in mind.


VI. Consumer Behavior OutcomesVI. Consumer Behavior Outcomes

1. Consumer Learning happens when changes occur in knowledge or behavior patterns.

2. Consumer satisfaction, Dissatisfaction, and Complaint Behavior

3. Cognitive Dissonance


Consumer LearningConsumer Learning

Consumer Learning happens when changes occur in knowledge or behavior patterns.

Marketers influence consumers by imparting knowledge through advertising, product labels, and personal selling.

Marketers hope consumers will attend to, comprehend,

and then remember these messages


Drive

Cues

Response

Reinforcement

The Learning ProcessThe Learning Process


White Wave Silk and CardioLinks ads


Consumer Satisfaction, Dissatisfaction, and Complaint Behavior

Consumer Satisfaction, Dissatisfaction, and Complaint Behavior

Satisfaction and dissatisfaction describe the positive, neutral, or negative feelings that may occur after purchase.

Consumer complaints are overt expressions of dissatisfaction.

Firms adopting a customer value perspective must employ marketing communications that convey realistic expectations.


A Model of Consumer SatisfactionA Model of Consumer Satisfaction

Exhibit 4-8 A model of consumer satisfaction

Customer satisfaction:

car fixed

CustomerDissatisfaction:

car still broken

Actual serviceperformance:

poor repair job

Customer expectations:

repair work

Disconfirmation

Negative

Positive


Findings of Customer Satisfaction ResearchFindings of Customer Satisfaction Research

1. Satisfaction judgements evolve and are changeable as products are used.

2. Satisfaction judgments have a social component determined by the satisfaction of others in the household.

3. Emotions are important and yield insights beyond simple comparison standards, such as expectations and performance.

4. Product satisfaction is also related to quality of life and life satisfaction.

1. Satisfaction judgements evolve and are changeable as products are used.

2. Satisfaction judgments have a social component determined by the satisfaction of others in the household.

3. Emotions are important and yield insights beyond simple comparison standards, such as expectations and performance.

4. Product satisfaction is also related to quality of life and life satisfaction.


Customer ComplaintsCustomer Complaints

Voice Responses (seeking satisfaction directly from the seller)

Third-party Responses

(taking legal action, filing complaints

with consumer affairs agencies)

Private Responses (bad-mouthing to friends)


Cognitive DissonanceCognitive Dissonance

Cognitive Dissonance: A form of

postpurchase doubt about the appropriateness of a decision.

Cognitive Dissonance: A form of

postpurchase doubt about the appropriateness of a decision.

Cognitive Dissonance occurs when:

• Decisions are major• The purchase is important• Perceived risk is high• The purchase is visible• The decision involves a

long-term commitment

Cognitive Dissonance occurs when:

• Decisions are major• The purchase is important• Perceived risk is high• The purchase is visible• The decision involves a

long-term commitment


VII. Ethical and Social Issues in Consumer Behavior

VII. Ethical and Social Issues in Consumer Behavior

Unethical consumer behaviors include shoplifting and abuse of return policies

Consumers are increasingly incorporating

social concerns into their buying decisions


Ethical and Social Issues in Business Behavior

Ethical and Social Issues in Business Behavior

Standards of Business Behavior Evaluation

Corporate Social Responsibility

Business Ethics


Psychological variables

MotivationPerceptionLearningAttitudePersonality/lifestyle

Social influences

FamilySocial classReference groupsCulture

Purchase situation

Purchase reasonTimeSurroundings

Marketing Mixes All other stimuli

Response

Need-want awareness

Routinized response

Search for information

Set criteria and evaluatealternative solutions

Decide on solution

Purchase productPostponedecision Postpurchase

evaluation

Feedback ofinformationas attitudes

Person makingdecisions

An Expanded Model of the ConsumerProblem-Solving ProcessAn Expanded Model of the ConsumerProblem-Solving Process

Technology

Consumer Buying Behavior And Decision Making