2. Chapter 3 Consumer decision-making

3. Learning objectives 1Explain why marketing managers should understand consumer behaviour 2Analyse the components of the consumer decision-making process 3Explain the consumer’s post-purchase evaluation process 4Identify the types of consumer buying decisions and explain how they relate to consumer involvement

4. Learning objectives (cont.) 5Identify and understand the cultural factors that affect consumer buying decisions 6Identify and understand the social factors that affect consumer buying decisions 7Identify and understand individual factors that affect consumer buying decisions 8Identify and understand the psychological factors that affect consumer buying decisions

5. 1 Explain why marketing managers should understand consumer behaviour Learning objective

6. 1Consumer behaviour Processes a consumer uses to make purchase decisions, as well as use and dispose of purchased goods or services –Includes factors that influence purchase decisions and product use.

7. 2 Analyse the components of the consumer decision-making process Learning objective

8. 2 Marketing managers need to know….. Who buys our products? What benefits and features do they want? How do they go about making their buying decisions? Who is involved in the buying decision? What influences their buying decisions? Where do they want to purchase the product? How will consumers respond to our marketing mix?

9. 2 Consumer decision making

10. Cultural, social, individual and psychological factors affect all steps: –need recognition –information search –evaluation of alternatives –purchase –post-purchase behaviour. 2The consumer decision making-process

11. 2 The consumer decision process Consumers complete a step-by- step process when making purchase decisions –High-involvement purchase decisions are those with high levels of potential social or economic consequences –Low-involvement decisions are routine purchases that pose little risk to the consumer Information search Evaluation of alternative Purchase decision Purchase act Post- purchase evaluation Need recognition

12. 2Need recognition Marketing helps consumers recognise an imbalance between present status and preferred state. Internal stimuli and external stimuli

13. 2Stimulus Any unit of input affecting one or more of the five senses –sight –smell –taste –touch –hearing.

14. 2 Wants Once differences between desired and actual states exists then a demand is created. Want = recognition of an unfulfilled need and a product that will satisfy it

15. 2 Information search Once the need and want have been recognised an information search takes place Internal information search External information search Non-marketing controlled information sorce Marketing controlled information source

16. 2Evoked set Group of brands, resulting from an information search, from which a buyer can choose.

17. All Brands All Brands Unknown Brands Unknown Brands Known Brands Known Brands Overlooked Brands Unacceptable Brands Acceptable Brands Rejected Brands Rejected Brands Purchased Brand Evoked Set Inert Set 2 Evoked Set Model

18. 2Evaluation of alternatives Purchase Evoked set Evaluation of products Analyse product attributes. Use cut-off criteria. Rank attributes by importance.

19. 2 Evaluation of alternatives What benefits will the product provide? What attributes (features) will deliver those benefits? Which attributes are most important? Does the brand have those attributes? How well does each brand perform on those attributes?

20. 2 Purchase Purchase intention –not actual purchase Might not act on intentions –attitudes of significant others –unexpected situational factors

21. 3 Explain the consumer’s post-purchase evaluation process Learning objective

22. 3Post-purchase behaviour Inner tension that a consumer experiences after recognising an inconsistency between behaviour and values or opinions.

23. 3Post-purchase behaviour (cont.) Cognitive dissonance: –Did I make a good decision? –Did I buy the right product? –Did I get a good value? Marketing can minimise through: –effective communication –follow-up –Guarantees –warranties.

24. 4 Identify the types of consumer buying decisions and explain how they relate to consumer involvement Learning objective

25. 4Types of consumer buying decisions

26. 4Factors affecting consumer decision-making process

27. 5 Identify and understand the cultural factors that affect consumer buying decisions Learning objective

28. 5Culture Set of values norms, attitudes and other meaningful symbols that shape human behaviour and the artifacts, or products of that behaviour, as they are transmitted from one generation to the next.

29. 5Culture (cont.) Culture is: –pervasive –functional –learned –dynamic.

30. 5Subculture A homogeneous group of people who share elements of the overall culture, as well as unique elements of their own group.

31. 5 Subculture (cont.) AA subgroup of culture with its own, distinct modes of behavior Cultures are not homogeneous entities with universal values. Subcultures can differ in: –Ethnicity –Nationality –Age –Religion –Geographic distribution

32. 5Value Enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct.

33. Young optimism Socially aware Something better Visible achievement Look at me Conventional family Traditional family Real conservatism A fairer deal Basic needs 5Roy Morgan Australian Value Segments™

34. A group of people in a society who –are considered nearly equal in status or community esteem –regularly socialise among themselves both formally and informally –share behavioural norms. 5Social class

35. 6 Identify and understand the social factors that affect consumer buying decisions Learning objective

36. Social influences on buying decisions: –reference groups –opinion leaders –family members. 6Social influences

37. A group in society that influences an individual’s purchasing behaviour. 6Reference group

38. 6Reference group (cont.)

39. 6 An example of aspirational groups

40. An individual who influences the opinion of others. 6Opinion leaders

41. 7 Identify and understand the individual factors that affect consumer buying decisions Learning objective

42. Gender Age and family life cycle Personality, self-concept and lifestyle 7Individual influences

43. 8 Identify and understand the psychological factors that affect consumer buying decisions Learning objective

44. Perception Motivation Learning Beliefs and attitudes 8Psychological influences

45. The meaning that a person attributes to incoming stimuli gathered through the five senses – sight, hearing, touch, taste, and smell. 8Perception

46. Selective exposure Selective retention Selective distortion 8Perception

47. Consumer remembers only the information that supports personal beliefs. Selective exposure Selective distortion Consumer notices certain stimuli and ignores others. Consumer changes or distorts information that conflicts with feelings or beliefs. Selective retention 8Perception (cont.)

48. 8Motivation Physiological Safety Social Esteem

49. A process that creates changes in behaviour, immediate or expected, through experience and practice. 8Learning

50. Belief –An organised pattern of knowledge that an individual holds as true about his or her world. Attitude –A learned tendency to respond consistently towards a given object. 8Beliefs and attitudes

51. Summary Five step consumer decision making process Types of consumer decision making and involvement External and internal factors that influence consumer behaviour –cultural and social –Individual and psychological