C H A P T E R © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Consumer Buying Behavior and Decision Making 4

4-2 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Learning Objectives After studying this chapter, you should be able to:  Discuss the importance of consumer behavior.  Understand consumer decision making and some of the important influences on those decisions.  Distinguish between low-involvement and high involvement consumer behavior.  Understand how attitudes influence consumer purchases.  Appreciate how the social environment affects consumer behavior.  Recognize many of the individual consumer differences that influence purchase decisions and behavior.  Recognize the outcomes of consumers’ decisions to purchase or not to purchase and how they affect marketing success.

4-3 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed VisaVisa Visa credit cards are the world’s most used form of “plastic” payment. In 2004 Visa U.S.A. achieved record sales of $956 billion and better than expected revenues of $2.4 billion. Visa’s cards are accepted at more than 21 million locations in over 300 countries.

4-4 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Consumer Behavior Consumer behavior can be defined as the mental and emotional processes and the physical activities that people engage in when they select, purchase, use, and dispose of products or services to satisfy particular needs and desires.

4-5 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed The Nature of Consumer Behavior UnderstandingConsumer Markets & Behavior Size of the ConsumerMarket Changes in the Consumer Market Consumer-OrientedMarketing UnderstandingE-Customers Design of Strategy

4-6 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Consumer Markets In 2004, the consumption expenditures for U.S. consumer market were huge: $8.2 trillion out of a total gross domestic product of $11.7 trillion. Some important growing consumer markets are:

4-7 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Consumer Decision Process Exhibit 4-2

4-8 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed High and Low-Involvement Decisions Involvement represents the level of importance or interest generated by a product or a decision. Low- involvement decisions Low-involvement decisions occur when relatively little personal interest, relevance, or importance is associated with a purchase. High- involvement decisions High-involvement decisions are characterized by high levels of importance, thorough information processing, and substantial differences between alternatives.

4-9 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Types of Consumer Choices Product Brand Shopping Area Store Type Store Nonstore (Catalog, PC, TV shopping)

4-10 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Typology of Decision Making  Extended purchase decision making based on logical and objective criteria.  Symbolic purchase behavior based on image or social approval.  Repetitive purchase behavior (decisions based on brand loyalty).  Hedonic purchase behavior based on simple liking.  Promotional purchase behavior because products are on sale.  Exploratory purchase behavior due to curiosity or desire for variety.  Casual purchase behavior involving little thought.  Impulsive purchase behavior

4-11 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Influence of the Social Environment Exhibit 4-3

4-12 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Culture Influences Culture refers to the values, ideas, attitudes, and symbols that people adopt to communicate, interpret, and interact as members of society. The process of absorbing a culture is called socialization. Values are shared beliefs or cultural norms about what is important or right. The norms and values of specific groups or subcultures within a society are called ethnic patterns.

4-13 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Social Class Influences Social classes are relatively homogeneous divisions within a society that contain people with similar values, needs, lifestyles, and behavior. A recent perspective on social class includes the four factors impacting social class:  social capital (whom you know)  credential capital (where you received your degree),  income capital  investment capital (stocks and bonds)

4-14 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Family Influences Exhibit 4-4

4-15 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Transitions in Household Types Exhibit 4-5

4-16 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Reference Groups Marketers recognize interpersonal influences beyond the family, including friends, coworkers, and others. These sources of influence are often called reference groups, or those others look to for help and guidance. Exhibit 4-6

4-17 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Utilitarian influence Value-expressive influence Utilitarian influence is reflected in compliance with the expectations, real or imagined, of others. Value-expressive influence stems from a desire to enhance self-concept through identification with others. Informational influence Informational influence is based on the consumer’s desire to make informed choices and reduce uncertainty. Interpersonal Influence Processes Three types of interpersonal processes form the basis for interpersonal influences.

4-18 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed IndividualDifferences Word-of-mouthcommunications Personality Lifestyles and Psychographics Motivation Individual Differences

4-19 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Individual Differences Market Mavens Consumers who know about many kinds of products, places to shop, and other facets of the market, and they like to share this information with other consumers. Opinion Leader Opinion leaders influence consumer behavior through word-of-mouth communications. Personality Personality reflects a person’s consistent response to his or her environment. Psychographics Psychographics divide a market into lifestyle segments on the basis of consumer interests, values, opinions, personality characteristics, attitudes, and demographics.

4-20 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Situational Factors Situational determinants of consumer behavior can be summarized as follows:  Consumers purchase many goods for use in certain situations, and the anticipated use influences choice. Gift giving and social occasions are often important determinants of purchase behavior.  Situational factors can be inhibitors as well as motivators. Inhibitors that constrain consumer behavior include time or budget constraints.  The likely influence of situations varies with the product. Consumers buy clothing items, books, and many food products with anticipated uses in mind.

4-21 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed A Model of Consumer Satisfaction Judgments of satisfaction and dissatisfaction are generally thought to result from comparisons between a person’s expectations about a purchased product and the product’s actual performance. Exhibit 4-7

4-22 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Consumer Satisfaction Consumer researchers now recognize that satisfaction is often a more dynamic process:  Satisfaction judgments evolve and are changeable as products are used.  Satisfaction judgments have a social component determined by the satisfaction of others in the household.  Emotions are important and yield insights beyond simple comparison standards, such as expectations and performance.  Product satisfaction is also related, in some situations, to quality of life and life satisfaction.

4-23 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Ethical and Social Issues Consumer Behavior  Unethical consumer behaviors include shoplifting and abuse of return policies.  consumers are increasingly incorporating social concerns into their buying decisions.  Environmentally concerned consumers show high awareness of label information and product content. Business Behavior  Business behavior is evaluated in terms of two standards: corporate social responsibility and business ethics.

4-24 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed SummarySummary After studying this chapter, you should be able to:  Discuss the importance of consumer behavior.  Understand consumer decision making and some of the important influences on those decisions.  Distinguish between low-involvement and high involvement consumer behavior.  Understand how attitudes influence consumer purchases.  Appreciate how the social environment affects consumer behavior.  Recognize many of the individual consumer differences that influence purchase decisions and behavior.  Recognize the outcomes of consumers’ decisions to purchase or not to purchase and how they affect marketing success.