Consumer Behavior

Consumer Behavior Actions consumer take and processes they engage in as they make a buying decision Amount of effort varies according to: Interest and perceived importance of product Frequency of product purchase Cost of the product Consequences/perceived risk associated with the purchase Various theories exist Marketer’s Goal: Understand how decision are made Get right info to them, in right format, at right point in decision process – in order to persuade

Consumer Decision Process: Funnel Problem recognition Information search Alternative evaluation From brands considered standpoint, this is a funnel. At problem stage, brands you are aware of is large list At info stage, number of brands being investigated narrows At alternative stage, number of brands considered as alternatives (possibilities) narrows At decision, one is bought Marketers want post-purchase stage to be brand loyalty Product choice Post-purchase behavior

Problem Recognition Perceive a need Occurs when a consumer becomes aware of a significant enough difference between a desired state and an actual condition Rapidly or slowly Marketer’s concern: what triggers it? © Used By Permission.

Sources of Problem Recognition Out of Stock Dissatisfaction New Needs or Wants Related Product Purchase Market-Induced Recognition New Products

Information Search Internal search External search Search memories for information about products that might solve their problem External search Seek information from outside sources Marketer’s concerns: What info does TM want/need? Where will they look for it?

Evaluation of Alternatives Consideration (evoked) set – all acceptable alternatives from larger set of all possible alternatives Who are my main competitors? Why? Evaluative criteria Rate and rank alternatives (pros/cons) on criteria What criteria will the TM use to decide?

Changes to Search and Evaluation Search & Evaluation have changed dramatically Driven by “Big data”, mobile, intelligent algorithms, etc. Results in more brand interactions than ever From passively viewing a photo to deep review of interactive content Interactions impact search capabilities and expectations “Big data” lets firms capture data real-time and personalize interactions with consumers Major impact on company promotional efforts

Steps 4 and 5: Purchase and Post-Purchase Evaluation Product choice Purchase Intent vs. Purchase Decision Why did they buy what they bought? Why did they reject what they rejected? Post-Purchase Evaluation Cognitive dissonance Satisfaction Impact Satisfied people tell Dissatisfied people tell

Consumer Decision Process: Journey

Funnel vs. Journey Both being with trigger / problem recognition Funnel: info search & alt eval are two discrete steps Journey: iterative process, resulting in many more brand touch point possibilities Simple to in-depth touches Each touch is opportunity for firm to impact brand perception and gather data Both recognize importance of consideration set Journey sees more opportunities to enter or exit set Journey: loyalty is less secure; more fleeting Funnel: loyalty is more secure, longer lasting Theory: journey more conducive to 2-way communication Funnel designed for 1-way broadcasting of info

Consumer Problem Solving Routine (Habitual) Limited Extended Perceived risk Low Moderate High Cost Brands considered Typically one preferred Several Many Sellers considered Few Information Processing Internal mostly. Some environmental cues. Little conscious processing of info Internal and some conscious processing of external info Extensive gathering & careful processing of external info Attributes considered Few (1-2) Time searching None - Minimal Little - Moderate Considerable