1. foundations of Chapter M A R K E T I N G Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Consumer Behaviour 8

2. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Objectives 1.Describe how consumer behaviour is affected by two main categories of influence: environmental & individual factors. 2.Explain the role of culture in consumer behaviour. 3.Consider the effects of reference groups on consumer behaviour. 4.Distinguish between needs and motives. 5.Explain perception. 6.Define attitude and its three main components, and explain how attitude influences behaviour. 7.Demonstrate how learning theory can be applied to marketing strategy. 8.Show the steps of the consumer decision process and how environmental and individual factors affect this process. 9.Differentiate among routinized response behaviour, limited problem solving, and extended problem solving. Consumer Behaviour 8 8-1

3. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Consumer Behaviour The activities of individuals in obtaining, using, and disposing of goods and services, including the decision processes that precede and follow these actions. Consumer Behaviour 8 8-2

4. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Determinants of Consumer Behaviour Consumer Behaviour Individual factors and psychological processes Environmental factors Consumer behaviour 8 8-3 Figure 8.1

5. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Environmental Factors That Affect Consumer Behaviour Cultural Influences Social Influences Group influences Reference groups Social class Family influences CUSTOMER DECISIONS Consumer Behaviour 8 Figure 8.2 8-4

6. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Culture The complex of values, ideas, attitudes, institutions, and other meaningful symbols created by people that shape human behaviour, and the artifacts of that behaviour, transmitted from one generation to the next. Consumer Behaviour 8 8-5

7. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Summary of Significant Canadian Characteristics Consumer Behaviour 8 Table 8.1 8-6 As a Function of Being a Part of the North American Reality Modern orientation Openness to new ideas Egalitarianism A rich, developing society with many needs and high materialistic expectations Growing, more diffuse middle class In Relation to the United States Conservative tendencies Traditional bias Greater confidence in bureaucratic institutions Collectivity orientation--reliance on institutions such as state, big business, and the church vs. personal risk taking Less achievement-oriented Lower optimism--less willing to take risks Greater acceptance of hierarchical order and stratification Tolerance for diversity--acceptance of cultural mosaic Family stability Selective emulation of the United States--resistance to some American characteristics and dominance, yet willingness to emulate Elitist and ascriptive tendencies

8. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Microculture A subgroup with its own distinguishing modes of behaviour. Consumer Behaviour 8 8-7

9. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Status Relative position in a group. Consumer Behaviour 8 8-8

10. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Role The rights and duties expected of an individual in a group by other members of the group. Consumer Behaviour 8 8-9

11. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Asch Phenomenon The impact that groups and group norms can exhibit on individual behaviour. Consumer Behaviour 8 8-10

12. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Reference Group A group whose value structures and standards influence a persons behaviour. Consumer Behaviour 8 8-11

13. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Membership Group A type of reference group to which individuals actually belong. Consumer Behaviour 8 8-12

14. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Aspirational Group A type of reference group with which individuals wish to associate. Consumer Behaviour 8 8-13

15. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Disassociative Group A type of reference group with which an individual does not want to be identified. Consumer Behaviour 8 8-14

16. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Group Influence as a Function of Product Type and Consumption Situation Consumer Behaviour 8 Figure 8.3 Product or Brand Weak reference group influence (-) Strong reference group influence (+) Strong reference group influence (+) Weak reference group influence (-) Public necessities Influence: Weak product and strong brand Examples: Wristwatch, automobile, mans suit Public luxuries Influence: Strong product and brand Examples: Golf clubs, snow, skis, sailboat Private necessities Influence: Weak product and brand Examples: Mattress, floor lamp, refrigerator Private luxuries Influence: Strong product and weak brand Examples: TV game, trash compactor, icemaker Source: William O. Bearden and Michaeli Etzei, Reference Group Influence on Product and Brand Purchase Decisions, Journal of Consumer Research 9 (September 1982), p. 185, published by the University of Chicago Press. Reprinted with permission. 8-15 NECESSITYLUXURY

17. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Social Class The relatively permanent divisions in a society into which individuals or families are categorized based on prestige and community status. Consumer Behaviour 8 8-16

18. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. PSTYE A geodemographic classification system that identifies lifestyle cluster profiles across Canada. Consumer Behaviour 8 8-17

19. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Consumer Behaviour 8 Table 8.2 8-18a PSYTE Cluster Profile, Estimated 1999 Canadian Households (1 of 2)

20. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Consumer Behaviour 8 Table 8.2 8-18b PSYTE Cluster Profile, Estimated 1999 Canadian Households (2 of 2)

21. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Opinion Leaders Trendsetters – individuals who are more likely to purchase new products early and to serve as information source for others in a group. Consumer Behaviour 8 8-19

22. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Consumer Behaviour 8 Figure 8.4 Relative Influence of Husbands and Wives in Decision Making 8-20

23. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Environmental and Individual Factors that Influence Behaviour Consumer Behaviour Customer Decisions 8 Figure 8.5 Environmental Cultural influences Social influences -group influences -reference groups -social class -family influences Psychological Processes Information processing Learning Attitude formation Perceptual screening Individual resources needs motives perceptions attitudes lifestage 8-21

24. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Need The perceived difference between the current state and a desired state. Consumer Behaviour 8 8-22

25. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Motive An inner state that directs us toward the goal of satisfying a felt need. Consumer Behaviour 8 8-23

26. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Perception The meaning that each person attributes to incoming stimuli received through the five senses. Consumer Behaviour 8 8-24

27. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Perceptual Screen The filter through which messages must pass. Consumer Behaviour 8 8-25

28. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Subliminal Perception A subconscious level of awareness. Consumer Behaviour 8 8-26

29. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Webers Law The higher the initial intensity of a stimulus, the greater the amount of the change in intensity that is necessary in order for a difference to be noticed. Consumer Behaviour 8 8-27

30. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Attitudes A persons enduring favourable or unfavourable evaluations of some object or idea. Consumer Behaviour 8 8-28

31. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Three Components of Attitude Consumer Behaviour Overall Attitude (overall orientation toward object or idea) 8 Figure 8.7 Cognitive component (knowledge and beliefs) Affective component (overall feelings) Conative component (behavioural tendencies) 8-29

32. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Cognitive Component The knowledge and beliefs one has about an object or concept. Consumer Behaviour 8 8-30

33. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Affective Component Ones feelings or emotional reactions. Consumer Behaviour 8 8-31

34. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Conative Component The way one tends to act or behave. Consumer Behaviour 8 8-32

35. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Learning Changes in knowledge, attitudes, and behaviour, as a result of experience. Consumer Behaviour 8 8-33

36. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Drive Any strong stimulus that impels action. Consumer Behaviour 8 8-34

37. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Cue Any object existing in the environment that determines the nature of the response to a drive. Consumer Behaviour 8 8-35

38. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Response The individuals reaction the cues and drives. Consumer Behaviour 8 8-36

39. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Reinforcement The reduction in drive that results from a proper response. Consumer Behaviour 8 8-37

40. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Shaping The process of applying a series of rewards and reinforcement so that more complex behaviour can evolve over time. Consumer Behaviour 8 8-38

41. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Shaping The process of applying a series of rewards and reinforcement so that more complex behaviour can evolve over time. Consumer Behaviour 8 8-39

42. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Application of Learning Theory and Shaping Procedure to Marketing Consumer Behaviour 8 Figure 8.8 Induce product trial Terminal Goal: Repeat Purchase Behaviour Free samples distributed, large discount coupons enclosed Product performance and coupon Approximation SequenceShaping Procedure Reinforcement Applied Induce purchase with financial obligation Discount coupon prompts purchase with little cost; coupon good for small discount on next purchase enclosed Product performance and coupon Induce purchase with moderate financial obligation Small discount coupon prompts purchase with moderate cost Product performance Induce purchase with full financial obligation Purchase occurs without coupon association Product performance Source: Adapted from Michael Le. Rothschild and William C. Gaidis, Behavioral Learning Theory: Its Relevance to Marketing and Promotion, Journal of Marketing ( Spring 1981), p. 72. Reprinted by Permission of the American Marketing Association. 8-40

43. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Consumer Decision Process Input Information Processing Decision Process Consumer Behaviour 8 Figure 8.9 Information search Problem recognition -from marketing activities -other stimuli Alternative evaluation Purchase decision and purchase act Postpurchase evaluation Environment Factors Cultural influences Social influences -group influences -needs -reference groups -social class -family influences Individual Factors -motives -perceptions -attitudes -learning 8-41

44. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Evoked Set The number of brands that a consumer actually considers in making a purchase decision. Consumer Behaviour 8 8-42

45. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Evaluative Criteria Features the consumer considers in making a choice among alternatives. Consumer Behaviour 8 8-43

46. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Cognitive Dissonance The postpurchase anxiety that occurs when there is a discrepancy between a persons knowledge and beliefs (cognitions). Consumer Behaviour 8 8-44

47. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Consumer Problem-Solving Categories Routinized response Limited problem solving (LPS) Extended problem solving (EPS) Consumer Behaviour 8 8-45

48. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Low-Involvement Products Products with little significance, either materially or emotionally, that a consumer may purchase first and evaluate later (while using them). Consumer Behaviour 8 8-46

49. Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. High-Involvement Products Products for which the purchaser is highly involved in making the purchase decision. Consumer Behaviour 8 8-47