What is Consumer Behavior? 80% of new products fail to meet financial expectations!!!! Study of individuals, groups, or organizations and the processes used to select, secure, use and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on consumers and society. Answers the question of WHY? Are managers telepathic? Do decisions regarding the 4 P’s just come to them? What are some commonly asked questions regarding consumer’s behavior?

Commonly asked questions: Product related: »What do they think of the product? »What do they think of competitor’s product? »How do you use the product? »What is their A ad /A product ? Lifestyle related : »What are your hopes/dreams? »What is your place in the world? (role)

Applications of Consumer Behavior Marketing strategy: MANAGERIAL RELEVANCE »Use common sense/ Look at successes and failures. Regulatory Policy: Warning Labels/ Nutrition Labeling Social Marketing/ TRUTH ads »Drug Use »HIV prevention

Overall Model Of Consumer Behavior

Consumer Decision Making Process Postpurchase Behavior Postpurchase Behavior Purchase Evaluation of Alternatives Evaluation of Alternatives Information Search Problem Recognition Cultural, Social, Individual and Psychological Factors affect all steps Cultural, Social, Individual and Psychological Factors affect all steps

1: Problem Recognition Result of an imbalance b/t actual and desired states How to recognize unfilled wants?

Involvement and Types of Decision Making 14-1 Low-purchase involvement High-purchase involvement Nominal decision makingLimited decision makingExtended decision making Problem recognition Selective Problem recognition Generic Information search Internal Limited external Information search Limited internal Information search Internal External Alternative evaluation Few attributes Simple decision rules Few alternatives Alternative evaluation Many attributes Complex decision rules Many alternatives Purchase Postpurchase No dissonance Limited evaluation Postpurchase No dissonance Very limited evaluation Postpurchase Dissonance Complex evaluation

2: Information Search Internal Search – recalling past information stored in memory External Search – seeking information in the outside environment »Private (non marketing sources) »Public (non marketing sources) »Marketing controlled sources

The 8 Stages of Consumer Information Processing CPMCPM

Consumer Information Processing: Stage 1 Exposure to information Consumers come in contact with the marketer’s message Gaining exposure is a necessary but insufficient for communication success A function of key managerial decisions regarding the size of the budget and the choice of media and vehicles

Selective Attention: Stage 2 Attention Focus on and consider a message to which one has been exposed Highly selective

Selective Attention: Stage 2 To attract consumers attention: Appeals to cognitive and hedonic needs Use of novel stimuli Use of intense stimuli Use of motion

Selective Attention: Stage 2 Illustration of selective attention

Appeals to Cognitive and Hedonic Needs Hedonic Needs Needs that make them feel good and bring pleasure Cognitive Needs Immediate functional needs of the consumer

Hedonic Needs Hedonic appeal to the love for babies

Use of Intense Stimuli Use of intensity

Use of Motion Another illustration of motion in advertising

Comprehension: Stage 3 Understand and create meaning out of stimuli and symbols Interpreting stimuli involves perceptual encoding Peculiar to each individual (idiosyncratic) Mood can influence Miscomprehension are common

Consumer Information Processing: Stage 4 Agreement with what is comprehended The matter of whether consumers yield to - that is, agree with - what they have comprehended

Agreement: Stage 4 Comprehension by itself does not ensure that the message influences consumers’ behavior Agreement depends on »whether the message is credible »whether the information appeals to the consumer

Retention and Search/Retrieval of Stored Information These two information processing stages, retention and information search and retrieval, both involve memory factors related to consumer choice

Elements of Memory Memory Memory involves the related issues of what consumers remember about marketing stimuli and how they access and retrieve information when making consumption choices

Elements of Memory Sensory stores(SS): » Information is rapidly lost unless attention is allocated to the stimulus Short-Term Memory(STM): » Limited processing capacity »Not thought or rehearsed information will be lost in 30 seconds or less

Elements of Memory Long-Term Memory (LTM): »A virtual storehouse of unlimited information »Information is organized into coherent and associated cognitive units called schemata, memory organization packets, or knowledge structures »The marketer’s job is to provide positively valued information that consumers will store in LTM

A Consumer’s Knowledge Structure for the Mazda Miata Two-Seater Convertible Fun to drive Japanese Well-MadeAffordable Small Sports car Mazda Miata Little luggage space Economical Nostalgic Sexy British racing green Women

Learning and LTM Learning represents changes in the content or organization of information in consumers’ long-term memories Marketing communicators attempt to alter consumers’ long-term memories, knowledge structures, by facilitating learning of information that is compatible with the marketer’s interest

Retention and Search/Retrieval of Stored Information Facilitating consumer’s learning

Information that is learned and stored in memory only impacts consumer choice behavior when it is searched and retrieved Retrieval is facilitated when new information is linked with another concept that is well known and easily accessed Search and Retrieval of Information

Use of Concretizing and Imagery Concretizing It is easier for people to remember and retrieve tangible rather than abstract information, so claims about a brand are more concrete when they are made perceptible, palpable, real, evident, and vivid

Use of Concretizing and Imagery Imagery Representation of sensory experiences in short-term memory including visual, auditory, and other sensory, experiences

Use of Concretizing and Imagery Heartburn verbal framing

Evaluation of Alternatives Consideration set Analyze product attributes Use cut off criteria [pros/cons] Multi-attribute models

Consumer Decision Making: Stage 7 Decision heuristics for decision making Affect referral Compensatory heuristic Conjunctive heuristic Phased strategies

Affect Referral Selects the alternative for which the affect is most positive Recalls attitude, or affect, toward relevant alternatives

Compensatory Heuristic Chooses the alternative with criteria that best compensates for inferior criteria Evaluates alternatives in terms of criteria trade-off

Conjunctive Heuristic Selects the alternative with criteria that meets all minimum cutoffs Evaluates alternatives in terms of criteria minimum cutoffs

Phased Strategies Chooses using a combination of heuristics Evaluates alternatives using both compensatory and noncompensatory heuristics

4: Purchase To buy or not to buy… Marketing determines which attributes are most important in influencing a consumers’ choice (differentiation…later)

Action: Stage 8 Action on the basis of the decision People do not always behave in a manner consistent with their preferences due to the presence of events, or situational factors Situational factors are especially prevalent in low-involvement consumer behavior

Some Issues That Arise During Stages in the Consumption Process Figure 1.1

5: Post Purchase Behavior Cognitive dissonance: »Did I make a good decision? »Did I buy the right one? Get a good value? Marketing minimizes through: »Effective communication »Follow up »Guarantees »Warranties

Factors Influencing Buying Decisions Social Factors Individual Factors Psycho- logical Factors Cultural Factors CONSUMER DECISION- MAKING PROCESS BUY / DON’T BUY