Chapter 1 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Consumer Decision Making © Nonstock/Jupiterimages 1 © iStockphoto.com/iStock Inhouse

Explain why marketing managers should understand consumer behavior Analyze the components of the consumer decision- making process Explain the consumer’s post-purchase evaluation process Identify the types of consumer buying decisions and discuss the significance of consumer involvement Learning Outcomes

3 Understanding Consumer Behavior Why should Marketing Managers understand consumer behavior? Helps marketing managers…  redesign products to meet consumer needs  promote products in an effort to change decisions  helps the government shape public policy by educating consumers (Affordable Health Care?) What is it?  The processes a consumer uses to make decisions when purchasing goods or services

What is the Consumer Decision-Making Process? A five-step process used by consumers when buying goods or services. Consumer Decision-Making Process 4 2 How the consumer goes about addressing needs

5 Consumer Decision-Making Process

Step 1-Need or Problem Recognition Result of an imbalance between actual and desired states. Need Recognition Need Recognition 6 2

7 Needs versus Wants Needs: Will trigger the decision-making process Needs: Result from an imbalance between actual and desired states  Internal stimuli (ex. hunger)  External stimuli (ex. peers) Wants: Recognition of an unfulfilled need and a product that will satisfy that need

Step 2-Information Search Internal Information Search  Recall information in memory External Information search  Seek information in outside environment  Non-marketing controlled-ex. Friends  Marketing controlled-ex. Radio, TV, Internet 8 2

Step 3-Evaluation of Alternatives Evoked Set Purchase! Analyze product attributes Analyze product attributes Rank attributes by importance Rank attributes by importance Use cutoff criteria 9 2 -Evaluative Criteria: How consumers make comparisons--$$$ -Evoked Set: Consumers preferred brands/what is considered

Step 4-Purchase/Product Choice To buy or not to buy... Determines which attributes are most important in influencing a consumer’s choice 10 2

Step 5-Postpurchase Evaluation Is the consumer satisfied or dissatisfied?  Consumers can reduce dissonance by:  Seeking information that reinforces positive ideas about the purchase  Avoiding information that contradicts the purchase decision  Returning the product and revoking the original decision  Marketers can minimize dissonance through effective communication with purchasers 11 3

Cognitive Dissonance Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions. 12 3

More Involvement Less Involvement Routine Response Behavior Routine Response Behavior Limited Decision Making Limited Decision Making Extensive Decision Making Extensive Decision Making Types of Consumer Buying Decisions and Consumer Involvement 13 4 Involvement: The amount of time and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior.

Routine Response Behavior  Little involvement in selection process  Frequently purchased low cost goods  May stick with one brand  Buy first/evaluate later  Quick decision/Heuristics 14 4

Limited Decision Making  Low levels of involvement  Low to moderate cost goods  Evaluation of a few alternative brands  Short to moderate time to decide 15 4

Extensive Decision Making  High levels of involvement  High cost goods  Evaluation of many brands  Long time to decide  May experience cognitive dissonance 16 4

Personality Social Influences Cultural Influences 17 5 Influences on Consumer Buying Decisions

Personality and Self-Concept Personality: a broad concept –How a person reacts to situations –Combines psychological makeup and environmental forces Human behavior: depends on self-concept Self-concept: how consumers perceive themselves –Ideal self-image versus real self-image –How an individual really wants to be viewed. –How 18 7

Social Class and Marketing  Social class: Measured as a combination of occupation, income, education & wealth  Indicates which medium to use for advertising (radio, TV, magazines, internet)  Helps determine the best distribution for products (MBZ vs. Honda) 19 5

Culture is... Learned: From others Functional: Rules & laws Pervasive: Everywhere Dynamic: Always changing 20 5

Components of Culture Myths Language Values Customs Rituals Laws Material artifacts 21 5

Subculture A homogeneous group of people who share elements of the overall culture as well as cultural elements unique to their own group. 22 5

Social Influences Reference Groups Opinion Leaders Family Members 23 6

Reference Groups  They serve as information sources and influence perceptions.  They affect an individual’s aspiration levels.  Their norms either constrain or stimulate consumer behavior. 24 6

…are the first to try new products and services out of pure curiosity …can be challenging to locate Marketers are increasingly using blogs, social networking, and other online media to determine and attract opinion leaders Opinion Leaders

Family Members  Initiators  Influencers  Decision Makers  Purchasers  Consumers Purchase Process Roles in the Family 26 6

Gender Age Life Cycle Personality Self-Concept Lifestyle Personality Self-Concept Lifestyle 27 7 Individual Influences

Age & Family Life Cycle Stage Consumer tastes in food, clothing, cars, furniture, and recreation are often age related Marketers define target markets according to life cycle stages such as –Young singles –Young married with children –Middle-aged married w/o children –Non-traditional households 28 7

Psychological Influences Perception Motivation Learning Beliefs & Attitudes 29 8

Perception ** Selective Exposure Selective Distortion Selective Retention Consumer notices certain stimuli and ignores others Consumer notices certain stimuli and ignores others Consumer changes or distorts information that conflicts with feelings or beliefs Consumer changes or distorts information that conflicts with feelings or beliefs Consumer remembers only that information that supports personal beliefs Consumer remembers only that information that supports personal beliefs 30 8

Motivation A method of classifying human needs and motivations into five categories in ascending order of importance. Maslow’s Hierarchy of Needs Maslow’s Hierarchy of Needs 31 8 As a person fulfills one need, a higher level need becomes more important.

Maslow’s Hierarchy of Needs 32