© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter Three Consumer Behavior Key Words / Outline Consumer research findings, Advances in consumer research, American Demographics, Journal of the academy of Marketing sciences, Journal of advertising, Journal of advertising research, Journal of applied Psychology, Journal of consumer Psychology, Journal of consumer research, Journal of Marketing, Marketing Applications, Advertising age, Business week, Forbes, Fortune, Marketing communication, Nation’s week, Sales and Marketing management © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin Marketing Management, 8e

Understanding Consumer Behavior An understanding of consumers’, their needs and purchasing behavior, shapes successful marketing No single theory of consumer behavior can totally explain why consumers’ behave the way they do

Overview of the Buying Process

Consumer Decision Making It should be noted that influences have both direct and indirect effects on the buying process Direct effect refers to the direct communication between the individual and other members of the society Indirect influence refers to the influence of society on an individual’s basic values and attitudes

Understanding Cultural Impact On Consumer Behavior One of the most basic influences on an individual’s needs Transmitted through three basic organizations Family Religious organizations Educational institutions Marketing managers should adapt the marketing mix to cultural values and constantly monitor value changes and differences in both domestic and global markets

Social Classes Upper Americans Lower Americans 14% of the population High income – high quality, high prestige brands Lower Americans 34% of the population Concerned with following media recommendations and what peers say is popular

Social Classes Working Classes Lower Americans 38% of the population “Family folk” – depend upon relatives for financial and emotional support Lower Americans 16% of the population Very diversified, from frugality to instant gratification

Reference Groups and Families Primary reference groups include family and close friends Secondary reference groups include fraternal (brotherlike) and professional organizations The family constitutes an important reference group The family life cycle is a useful way of classifying and segmenting individuals and families

Marketing Influences On Consumer Decision Making Product influences: As a key task, marketers differentiate their products from their competitors and create the perception of a worthwhile product purchase. Price Influence: Today’s value-conscious consumers may buy products more on the basis of price than other attributes.

Decision Influences Promotion Influence: Marketing communications plays a critical role in informing consumers about products and services Place influences: Convenience increases the probability of consumers finding and buying certain products

Situational Influences Physical features are the most readily apparent features of a situation geographical & institutional location, such as decor ,sounds ,lightening , whether Social features provide additional depth to a description of a situation person present , characteristics and their apparent . Time is a dimension of situations that may be specified in units from day to week to season Task features include intent or requirement to select, shop for, or obtain information about a purchase Current conditions are things like momentary moods rather than chronic individual traits such as anxiety ,pleasant

Psychological Influences Product knowledge refers to the amount of information a consumer has stored in his or her memory about the product Product involvement refers to a consumer’s perception of the importance or personal relevance of an item

Decision Making Process

Decision Making Styles Extensive decision making: Requires high degrees of time and effort because the purchase is complex, high priced or has high importance to the consumer Limited decision making: Less time and effort but still may involve some time and effort to search for alternatives Routine decision making: The most common way people purchase most packaged goods. Products are simple, inexpensive and familiar

Need Recognition Maslow’s Hierarchy of Needs Physiological needs: Primary needs of the human body Safety needs: Protection from physical harm, ill health, economic disaster and avoidance of the unexpected. Belongingness Social /affiliation : Needs related to social nature of humans and need for companionship Esteem needs: Consists of need for both self esteem and actual esteem from others Self-actualization needs: A desire or need to become everything one is capable of becoming

Marketing Highlight Marketing Association Code of Ethics Product development and management area should be safe Promotion area not be deceptive Distribution area no exploitation in the availability of products Pricing area fair

Consumer Data Sources Internal sources: Comes from experience with similar products Group sources: Communication from other people Marketing sources: Advertising, sales people, packaging Public sources: Publicity from article, independent ratings Experiential sources: Handling, examining and trying the actual product

Alternative Evaluation Consumer completes information gathering Consumer identifies alternative (s) Differences in alternative characteristics identified Alternative’s characteristics compared to the characteristics deemed most needed and relevant The favored brand generally offers the most desirable attributes The consumer buys the alternative with the greatest number of desired characteristics

Factors Affecting Information Search by Customers Market characteristics Product characteristics Consumer characteristics Situational characteristics

Purchasing Traditional risk theorists believe that consumers tend to make risk minimizing decisions based on their perception of risk associated with a particular purchase Consumers generally try to reduce their risk by reducing negative consequences or by reducing perceived uncertainty

Postpurchase Evaluation Cognitive Dissonance: Inconsistency or disharmony with attitudes and beliefs Anxiety over decisions occur when The decision carries importance financially, psychologically, or both The alternatives appear plentiful The forgone alternatives display many favorable features