Copyright © 2006 Thomson Business and Economics. All rights reserved. Chapter 5 Advertising and Consumer Behavior

5–25–2Copyright © 2006 Thomson Business and Economics. All rights reserved. Consumer Behavior The process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires

5–35–3Copyright © 2006 Thomson Business and Economics. All rights reserved. Consumer Decision-Making: The Systematic Decision Maker I think, therefore I buy

5–45–4Copyright © 2006 Thomson Business and Economics. All rights reserved. The Consumer Decision-Making Process 1.Need recognition Functional or Emotional benefits 2.Information Search Internal and External search 4.Purchase 5. Post-purchase use and evaluation Customer satisfaction Cognitive dissonance 3.Alternative Evaluation Consideration Set Evaluative Criteria

5–55–5Copyright © 2006 Thomson Business and Economics. All rights reserved. 1. Need Recognition Consumer perceives a need and is motivated to solve the problem Result of discrepancy between desired state & actual state –Actual state – the way an individual perceives his/her feelings and situation to be at the present time –Desired state – the way an individual wants to feel or be at the present time

5–65–6Copyright © 2006 Thomson Business and Economics. All rights reserved. Sources of Problem Recognition Out of stock Dissatisfaction New needs or wants Related product purchase New products

5–75–7Copyright © 2006 Thomson Business and Economics. All rights reserved. Maslow’s Hierarchy of Needs Physiological needs (hunger, thirst) Safety needs (security, protection) Social needs (sense of belonging, love) Esteem needs (self-esteem, recognition, status) Self-actualization needs (self-development, realization)

5–85–8Copyright © 2006 Thomson Business and Economics. All rights reserved. Advertiser’s Role Pertaining to Need Recognition Products/services should provide benefits to fulfill consumer needs Functional benefits: objective performance aspects of product/service Emotional benefits: perceived differently from one consumer to another; help consumers feel pride, avoid guilt and shame, relieve fear, and experience pleasure

5–95–9Copyright © 2006 Thomson Business and Economics. All rights reserved. 2. Information Search Once consumers perceive a problem or need that can be satisfied by the purchase of a product or service, they begin to search for information needed to make a purchase decision. Internal search External search

5–10Copyright © 2006 Thomson Business and Economics. All rights reserved. Information Search - External Personal sources –Friends, relatives, co-workers Market-controlled sources –Ads, salespeople, displays Public sources –Print articles, news reports Personal experience –Handling, examining, testing, using

5–11Copyright © 2006 Thomson Business and Economics. All rights reserved. Psychological Process Associated with Information Search – Perception

5–12Copyright © 2006 Thomson Business and Economics. All rights reserved.

5–13Copyright © 2006 Thomson Business and Economics. All rights reserved. SENSATION & PERCEPTION Sensation – the response of our sensory receptors (eyes, ears, nose, mouth, fingers) to basic stimuli Perception – the process by which sensations are selected, processed, and interpreted

5–14Copyright © 2006 Thomson Business and Economics. All rights reserved. EXPOSURE ATTENTIONINTERPRETATION THREE COMPONENTS OF PERCEPTION How the consumer comes into contact with stimuli Allocation of cognitive resources to stimuli Assignment of meaning to stimuli

5–15Copyright © 2006 Thomson Business and Economics. All rights reserved. EXPOSURE The process by which the consumer comes into physical contact with the stimulus; the presentation of stimuli That doesn’t mean the individual will pay attention to it! Selective exposure Zipping Zapping Muting

5–16Copyright © 2006 Thomson Business and Economics. All rights reserved. ATTENTION When an individual allocates cognitive resources to the stimulus “paying attention” Selective attention We decide what is worthy of processing

5–17Copyright © 2006 Thomson Business and Economics. All rights reserved. HOW CAN MARKETERS INCREASE ATTENTION? 1. Size and intensity – bigger is better! 2. Color and movement – brighter is better! 3. Position – on the page, on the shelf 4. Isolation – separating the focal object from others 5. Contrast – objects that contrast with background

5–18Copyright © 2006 Thomson Business and Economics. All rights reserved. SIZE & INTENSITY COLOR

5–19Copyright © 2006 Thomson Business and Economics. All rights reserved. POSITION, ISOLATION, & CONTRAST

5–20Copyright © 2006 Thomson Business and Economics. All rights reserved. INTERPRETATION The assignment of meaning to sensations Individual characteristics that influence interpretation:

5–21Copyright © 2006 Thomson Business and Economics. All rights reserved.

5–22Copyright © 2006 Thomson Business and Economics. All rights reserved.

5–23Copyright © 2006 Thomson Business and Economics. All rights reserved. 3. Alternative Evaluation The consumer compares the various brands or products/services he or she has identified as being capable of solving the consumption problem and satisfying the needs or motives that initiated the decision process

5–24Copyright © 2006 Thomson Business and Economics. All rights reserved. Evaluation of Alternatives All available brands Brand ABrand BBrand CBrand DBrand E Brand FBrand GBrand HBrand IBrand J Brand KBrand LBrand MBrand NBrand O Consideration Set of Brands Brand BBrand E Brand I Brand M Brand F

5–25Copyright © 2006 Thomson Business and Economics. All rights reserved. Consideration Set The subset of brands from a particular product category that becomes the focal point of the consumer’s evaluation Reduces the number of brands to be evaluated to a manageable level Goal of advertiser – increase the likelihood that your brand will be a part of the evoked set

5–26Copyright © 2006 Thomson Business and Economics. All rights reserved. Evaluative Criteria Dimensions or attributes of a product or service used to compare alternatives Used to help consumers form evaluations between brands in consideration set –Differs from one product category to another –Ex: price, texture, warranty, color, scent, or fat content

5–27Copyright © 2006 Thomson Business and Economics. All rights reserved. Consumer Attitudes Learned predispositions to respond toward an object—an individual’s overall feelings toward or evaluation of an object. Consumers may hold attitudes toward: –Individuals –Brands –Companies –Organizations –Product categories –Retailers –Advertisements –Media

5–28Copyright © 2006 Thomson Business and Economics. All rights reserved. Ways to Influence or Change Attitudes Increase or change the strength or belief rating of a brand on an important attribute Change consumers’ perceptions of the importance or value of an attribute Add a new attribute to the attitude formation process Change perceptions of belief ratings for a competing brand

5–29Copyright © 2006 Thomson Business and Economics. All rights reserved. 4. Purchase Decision At this point, the consumer stops searching for and evaluating information about alternatives in the consideration set and makes a purchase decision. –Commitment to brand –Decision about shopping medium –How will you pay for the purchase?

5–30Copyright © 2006 Thomson Business and Economics. All rights reserved. 5. Postpurchase Use & Evaluation After using the product or service, the consumer compares the level of performance with expectations Satisfaction – consumer expectations are met or exceeded Dissatisfaction – performance is below expectations

5–31Copyright © 2006 Thomson Business and Economics. All rights reserved. Cognitive Dissonance 1.The purchase price is high 2.There are many close alternatives 3.The item is intangible (example?) 4.The purchase is important 5.The item purchased lasts a long time The feelings of doubt and concern after a purchase is made. Dissonance increases when:

5–32Copyright © 2006 Thomson Business and Economics. All rights reserved. Consumer Involvement The degree of perceived personal relevance & importance accompanying the choice of a certain product/service –Interests & hobbies –Purchase risk (price or commitment) –Symbolic meaning of product/service –Emotional concerns/motives Involvement & prior experience produce 4 types of consumer decision making

5–33Copyright © 2006 Thomson Business and Economics. All rights reserved. Low Experience High Experience High Involvement Low Involvement Extended Problem Solving Brand Loyalty Limited Problem Solving Habit or Variety Seeking

5–34Copyright © 2006 Thomson Business and Economics. All rights reserved. Modes of Consumer Decision-Making (Vary by involvement and experience) 1.Extended Problem Solving Deliberate, careful search 2. Limited Problem Solving Common products, limited search 3. Habit or Variety Seeking Variety seeking—switch brands at random Habit—buy single brand repeatedly 4. Brand Loyalty Conscious commitment to find same brand each time purchase is made

5–35Copyright © 2006 Thomson Business and Economics. All rights reserved. Consuming in the Real World Social class Society Rituals Family Values Reference Groups (membership/aspiration) Reference Groups (membership/aspiration) Race / Ethnicity Race / Ethnicity Gender Culture Community Object Meaning Object Meaning