Consumer Decision Making & Buying

Objectives Determine cultural, economic, societal, and environmental influences on consumer decision making Determine the components of effective consumer buying

Importance of Consumer Decision Making and Buying Consumer decision making affects each consumer individually society as a whole Making decisions carefully is in the best interest of both Rational analysis and careful use of the decision-making processes are essential The processes of consumer decision making and buying plays an important role in economics!

Dealing with Difficult Decisions Any decision can be simplified by taking time to: Identify your priorities Evaluate your options Make your best decision

Values & Family Impact on the Economy The economy of the U.S. depends on: individual participation decision making Choices of consumers can combine to strongly influence the entire economic system Factors that influence consumer choices Values & Family

Influence of Values on Consumer Choices Values influence: what to buy when to buy whether to spend or save Acknowledging the importance of values and ensuring they are clear is important in making effective consumer decisions

Influence of Values on Consumer Choices Values are abstract, therefore goals (based on values) are often used in decision making goals are more specific and give direction Value = economic independence Goal = get a job, or work toward a college degree

Family Influences on Consumer Choices Stage in the family life cycle Family circumstances Family resources Values of each family member 8

General scenario of the life cycle The Role of the Family Life Cycle The family life cycle greatly influences consumer decision making and buying General scenario of the life cycle Child/teenager Young single Young couple Full nest Empty nest Widow (er)

The Role of the Family Life Cycle Divorce and death can alter this pattern A change in the diagram would include: This scenario increases demand for furniture household items time-saving goods and service If a parent remarries, changes might include: Full nest Single parent Full nest Single parent Blended family

The Role of the Family Life Cycle Decision making and buying can often become a source of conflict for families One or more family members may try to resolve the conflict by bargaining reasoning “wearing down” the other party manipulating making your side “look good” evoking “authority” the one who makes the most money, etc… making emotional displays

Family Influences on Consumer Choices Values that are transmitted by the family religion customs traditions ethnic or cultural influences Peer groups also strongly influence values, particularly during adolescence and young adulthood

The Role of Economics on Decision Making Economics = a study of the processes people and societies use to make choices about making and spending their money United States = Capitalist Economy goals: economic freedom individual’s freedom to make economic choices including deciding to reject products or services, as well as choices concerning saving, investing and career paths

The Role of Economics on Decision Making Economic growth is another consumer concern, including: overall economic progress ever-increasing standard of living Every consumer choice is a vote in the marketplace Consumer votes are based on values

Economic Efficiency Energy Ability Income Talent For individual consumers, economic efficiency means making the best possible use of resources Energy Ability Income Talent

$ INCOME PAYMENTS (WAGES) $ PRODUCTIVE SERVICES (LABOR) Cycle of American Economy $ INCOME PAYMENTS (WAGES) $ PRODUCTIVE SERVICES (LABOR) CIRCULAR FLOW OF THE AMERICAN ECONOMY GOODS AND SERVICES CONSUMERS BUSINESSES $ CONSUMER SPENDING $

Decision making is fundamental to every business AND individual! What Influences Purchasing Decisions? Consumers rely heavily on Price Value for the money Supply and demand when supply and demand are not at an equilibrium state, the price will be higher or lower, therefore causing a family to reconsider their purchase Decision making is fundamental to every business AND individual! $ $ $

A single trigger is enough to complete the decision-making process! Routine vs. Excitement A balance exists in consumer buying between: Routine decisions consumers tendency to stick with a specific product or brand when they find one that satisfies them Excitement of complexity consumers enjoy finding new things if shopping becomes monotonous, they may reject the routine and look for ways to complicate the decision by considering new brands sometimes referred to as the ‘psychology of complication’ A single trigger is enough to complete the decision-making process!

The Strategy... Consumers often follow a “shopping strategy” Practical loyalists loyal to specific brands and products, but still look for ways to save on those particular items and brands Bottom-line price shoppers make purchases based almost solely on the biggest savings and cheapest items Opportunistic switchers choose products and brands based on sales or coupons Deal hunters search for the best bargains

Cycle of Complexity and Simplification ‘Psychology of Simplification’ -consumer seeks information and experience to help make a decision ‘Psychology of Complication’ and the ‘Psychology of Simplification’ often cycle continuously If decision-making becomes too complicated, the consumer looks to simplify, or if process becomes too simple (dull), consumer looks to complicate

Influences on the Consumer How the consumer… thinks feels reasons selects between alternatives …affects consumer buying Culture Signs Family Media

Influences on the Consumer A consumer is also often influenced by his or her culture knowledge beliefs morals customs capabilities habits As culture changes continually, so do consumers’ decisions and decision-making habits

QUIZ (T/F) Practical loyalists are shoppers who choose products and brands based on sales or coupons. What are the three steps in simplifying a difficult decision? What is consumer decision-making a result of? ANSWERS: B- FALSE (opportunistic switchers) Identify priorities, evaluate options, make your best decision Attempting to solve consumer problems

QUIZ List three of the six tools family members sometimes try to use to settle buying conflicts What are the two goals of the capitalist U.S. economy? What do values influence? ANSWERS: Bargaining, Reasoning, Wearing down the other party, Manipulating, Evoking authority, Making emotional displays 5.Economic freedom, individual’s freedom to make economic choices 6.What to buy, When to buy, Whether to spend or save

Production Coordinator Research & Graphic Editor Acknowledgements Hawkings, Del I., Roger J. Best, and Kenneth A. Coney (1998), Consumer Behavior: Building Marketing Strategy, 7th ed., Boston: McGraw Hill. The Psychology of Consumers. Consumer Behavior and Marketing. http://www.consumerpsychologist.com/ http://www.themanagementor.com/kuniverse/kmailers_universe/mktg_kmailers/CBMR_0603_2.htm The Curriculum Center for Family and Consumer Sciences. Texas Tech University. 2002. www.hs.ttu.edu/ccfcs Production Coordinator Allison Mangold Production Manager Geoff Scott Research & Graphic Editor Lauren Mangold Executive Produce G.W. Davis © MMIII, MMIV CEV Multimedia, Ltd.