BUAD 307 MARKETING FUNDAMENTALS CONSUMER BEHAVIOR BUAD 307 MARKETING FUNDAMENTALS

Learning Outcome Objectives Analyze how cognitive (thinking) processes and limitations, affect, beliefs, social influences, and other contextual factors influence consumer decision making, choices, and behavior affect consumer response to offerings Apply these insights to the design and implementation of effective marketing programs Identify individual and segment differences in process and outcome

Influences on and of Consumer Behavior PERCEPTION/ SENSATION MARKET RESEARCH INFO SEARCH COGNITION CHOICES STRATEGY AFFECT PREFERENCES BELIEFS CONSUMER COMMUNICATION SOCIAL AND OTHER INFLUENCE

True or False? If you have bad breath, you cannot smell it yourself. If you eat a balanced diet, you do not need vitamin supplements. Using a razor with five blades will reduce the likelihood of cutting yourself and will result in less skin irritation. Dell Computers tend to be of higher quality than those made by HP and Sony. Rust stains on clothes can be removed with the use of lemon juice. Bleach actually makes these stains worse.

Some Questions Faced By Consumers Are soft drinks sweetened with high fructose corn syrup worse than those sweetened with cane sugar? Are veggie burgers actually healthy? What makeup should you use to get an “even” skin tone? Do I get any useful benefits from spending more than $125 on a digital camera? Should I get a “make-over?” What am I looking for? What should I do? Is my mechanic honest? Should I give my wife roses, chocolate, or software?

Consumer Problems and Recognition Consumer problem: Discrepancy between ideal and actual state--e.g., consumer: Has insufficient hair Is hungry Has run out of ink in his or her inkjet cartridge Problems are not always recognized immediately (e.g., an individual may develop alcohol problems and be in denial) Problems can range from very small to very large Problems can be solved in several ways--e.g., stress reduction  vacation, movie, hot bath, medication

CONSUMER DECISIONS: Theory and Reality in Consumer Buying PROBLEM RECOGNITION INFORMATION SEARCH EVALUATION OF ALTERNATIVES PURCHASE POSTPURCHASE EVALUATION/ BEHAVIORS Theory Complications

Post Purchase Behavior

Usefulness of the Model of Consumer Decision Making Most useful to determine how search for a particular consumer need or a product category may systematically differ from others Importance of different steps What may happen in each step (e.g., brand switching) Extent of overlap of stages Likeliness of different types of post purchase behaviors (e.g., WOM, positive or negative review, returning product) Not as useful for assessing search for frequently used products

Approaches to Search for Problem Solutions Use of what is inside the consumer’s mind INTERNAL Memory Thinking Typically used more for relatively low involvement decisions Use of information inside the consumer’s mind—talking to others, reading, visiting stores We now turn to the consumer’s search for potential solutions to the problems that he or she is facing. Search strategies can be divided into those involving internal and external search, although consumers may use both in some combination. Internal search is based on the consumer’s memory and his or her thinking processes. In the case of a motorist stranded with a blown tire, for example, he or she may remember preferred provider of replacement tires and thus go to that one. An implication of this reality is that it may pay to advertise to establish an identity among potential future consumers. For example, bail bonds people will advertise on TV to people, suggesting a solution if they, for some reason, should find themselves in jail. Similarly, Midas Mufflers and various other auto service providers attempt to create internal beliefs about the benefits of patronizing their establishments if and when the need arises. Aamco Transmissions advertises that half the half the transmissions they see do not need to be replaced, presumably implying that it is safer to take a car there than to ostensibly less skilled competitors. The marketer, however, faces some significant problems in creating this kind of awareness. First, many consumers, not readily expecting to encounter a need for the products and services in question, may have little motivation to process and store the information. Secondly, recalling the relevant information may be difficult as need arises. External search involves the consultation of outside sources, ranging from friends and acquaintances to the yellow pages and the media. (We will revisit this issue in Chapter 18, when we discuss, within the context of the diffusion of innovation, which EXTERNAL Word of mouth, media, store visits, trial Typically used more for relatively high involvement decisions

Options Identified and Considered UNIVERSAL SET All possible options RETRIEVED SET Options that readily come to mind EVOKED/ CONSIDERATION SET Options that will be considered by the consumer Note: Retrieved and evoked sets will vary among different consumers. Brand awareness is important since this is required for the brand to be in the evoked and retrieved sets.

REMINDER For low involvement products, efforts aimed at affecting internal search tend to be more effective—the consumer is usually not willing to expend energy on external search. External search is more likely for higher involvement products.

Consumer Involvement Involvement: The extent to which the consumer is willing to make an effort to make the best decision Involvement levels: A continuum from very low to very high (typically dependent on the importance of the product category) Involvement duration Temporary: The consumer may temporarily become highly involved to make an impending decision on an important purchase (e.g., a car) but may then stop following the category if it is not of great interest Enduring: The consumer has a lasting interest in the product category even if he or she will not need to make a purchase in the near future

Temporary Involvement READING REVIEWS CONSUMER NEEDS TO MAKE A DECISION IN AN IMPORTANT PRODUCT CATEGORY OF LIMITED PERSONAL INTEREST EXTENSIVE RESEARCH AND ANALYSIS IN ORDER TO MAKE A GOOD DECISION LOOKING AT PRODUCTS ASKING FRIENDS DECISION THINKING ABOUT OPTIONS NO NEED TO REMAIN INVOLVED UNTIL NEXT PURCHASE NEED FILLED PURCHASE Note that temporary involvement can be very high while it takes place. A very important decision may have to be made even if the product is not particularly interesting to the consumer. The point is that once an important decision has been made, interest—and further information search—tends to end.

Enduring Involvement READING REVIEWS CONSUMER HAS AN INHERENT INTEREST IN THE PRODUCT CATEGORY EXTENSIVE RESEARCH AND ANALYSIS TO SATISFY CURIOSITY LOOKING AT PRODUCTS ASKING FRIENDS DECISION MAY OR MAY NOT NEED TO BE MADE AT THIS TIME THINKING ABOUT OPTIONS PURCHASE MAY OR MAY NOT BE NEEDED AT THIS TIME CONSUMER REMAINS INTERESTED IN PRODUCT CATEGORY

Evaluation Type IMPORTANT Compensatory: Decision based on overall value of alternatives (good attribute can outweigh bad ones) Non-compensatory: Absolutely must meet at least one important criterion (e.g., car must have automatic transmission) Hybrid: Combination of the two (e.g., one non-compensatory measure, then compensatory tradeoffs on other attributes Abandoned strategy: Consumer finds initial criteria unrealistic and proceeds to less desirable solution IMPORTANT LESS IMPORTANT

Heuristics Low effort decision rules for low stakes decisions that should be made quickly—e.g., If either Coke or Pepsi is on sale, buy that brand; otherwise, buy Coke The larger the navels, the better the orange Foods with “natural” ingredients are “better.” Organic = healthy. If something is on sale, it is a good deal (not always the case in reality) The larger package is likely to offer a lower unit price (not true in reality) Intended for a quick decision rather than the best one that could be made with more effort and time

Tippability The potential of a small factor to change a low stakes decision from one alternative (possibly the one usually chosen) to another one offering this benefit—e.g., Going to Staples instead of Office Depot because the Amazon Kindle can be examined there Choosing Snapple over other bottled tea brands due to the “fun facts” in the caps

Consumer Information Processing Note: This is a simplified conceptual model that should not be taken too literally. The boundaries between the steps are actually rather “blurry.” PERCEPTION CONSCIOUS PRE-CONSCIOUS ATTENTION LIMITED—SUBJECT TO PRIORITY DIVIDED BEHAVIOR ELABORATION (THINKING BRINGS ABOUT NEW LINKS AND THOUGHTS) LINKS TO OTHER ITEMS IN MEMORY  ASSOCIATION COMPREHENSION CORRECT OR INCORRECT ELABORATE OR SHALLOW Trigger may or may not be strong enough to cause retrieval under circumstances STORAGE (IN MEMORY) Trigger may or may not occur TRIGGERS (“REMINDERS” TO ACTIVATE MEMORY) RETRIEVAL (ACTIVATION) Reinforcement/Strengthening of memory

Key Takeaways from the Model Perceived stimuli are prioritized; not all are given conscious attention Limited attention tend to lead to less (or no) thinking and behavior in subsequent steps Under low involvement, a message may not be comprehended The more attention, the more linking Storage in memory means that a possibility (but not a certainty) of recall is possible If triggers do not occur, retrieval (remembering) is unlikely Elaboration strengthens a memory in storage, possibly adding new triggers Relevant behavior strengthens storage, possibly adding new triggers You will not be asked to reproduce the model on the exam, but you should know the takeaways.

Associate Network of Knowledge SANDWICH PEANUT BUTTER DONALD TRUMP FAT PEANUTS REPUBICAN PARTY ELEPHANT 7 BLIND MEN TRUNK ZOO GIRAFFE MEDICINE TIGER

APPLE TRAVEL iTUNES E-MAIL TEXTING CASKET PORTABLE FUNERAL DEAD STEVE JOBS GOSSIP iPHONE iPAD INNO- VATION LAPTOP APPLE FRUIT HEALTHY PEAR SPREAD-SHEET REPORT TV MONITOR FINANCE DESKTOP SOAP OPERAS JUICY GRANDMA PRINTER

The Means-End Chain Self-esteem Values Feeling of power Consequences Promotion/ positioning should be aimed at higher levels of chain! Self-esteem Values Feeling of power Consequences Performance Attributes Fast acceleration Note additional details on the handout. Large engine 11 15

Subliminal Perception: A Diabolical Marketing Tool? Subliminal messages in ads are effectively illegal in U.S. Almost certainly not a useful method to sell products At most one or two syllables can be “registered” or understood Complex messages cannot be processed subliminally

Consumer Attitudes Please see text. Note that the term “attitude” has a special meaning in psychology—not the one intended when we use the word in everyday conversations. Note that there are three interrelated components: Beliefs Affect (emotion) Behavioral intentions

The Mythical Theater Experiments An advertising executive claimed in 1957 to have “spliced” messages of “EAT POPCORN” or “DRINK COCA COLA” into film footage (24 frames per second in traditional movie films) A frame with the message inserted every, say, 20th frame Not consciously notable Claimed that popcorn sales increased 57% and Coca Cola sales by 18% on days the respective message was used Admitted to be a hoax These messages are much longer than the 1-2 syllables the brain can pick up Tachistoscope research: People giggle at brief “dirty” (“four letter”) words exposed for a fraction of a second but not at neutral ones (those exposed to dirty words do not consciously know specifically what they saw)

Procedural Knowledge: One Component of Ability Knowledge—some conscious and some unconscious—of how to do something Drive a car Draw in 3D Handwrite Hit a baseball with a bat Touch type Tie a tie Walk in high heels Usually contains a large unconscious component (over time, clumsy conscious actions become semi-automatic with practice) Often involves a component of fine motor skills Lack of training may prevent consumers from buying and using certain products—e.g., manual transmission car, motorcycle Some products can be optimized to reduce the effort needed to gain sufficient procedural knowledge

Demographics (segmentation) Lifestyle (segmentation) Some Consumer Behavior Issues That Will Come Up Elsewhere in the Course Demographics (segmentation) Lifestyle (segmentation) Culture/subculture (segmentation, international marketing) Diffusion of innovation (product) Attention (promotion)

Organizational Buyers Types Industrial (components) Reseller Government and non-profit organizations Purchase types Straight rebuy (same brand, same vendor as last time) Limited decision making Extended decision making Characteristics Greater involvement (more important decisions) Bureaucracy (more people involved) Long term relationships—investing in providing value to the customer over time; anticipating customer needs Price is important but may not be the most important factor