1. Dr. Close

2. Purchase Situation by Gender

3. Importance of Consumer Behavior  Why study consumer behavior?  Complex: personality is a poor predictor of purchasing.  Purchasing agent is variable (no longer wife, husband, etc…)  May have + attitude without intent to buy (I like Jennifer Anniston v.s. I plan to see Anniston’s new movie; Mercedes)  Routine or involved decisions

4. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved An Overview of the Buying Process

5. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Social Influences on Consumer Decision Making  In terms of consumer behavior, culture, social class, and reference groups can have both direct and indirect effects on the buying process  Direct effect – Refers to direct communication between the individual and other members of society  Indirect influence – Refers to influence of society on an individual’s basic values and attitudes

6. Social Factors Reference groups  Those you look to for guidance. What are some reference groups that you can think of??  Marketers: opinion leaders, influence others, usually type of product  Most influential for visible products (car vs mattress – function)

7. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Social Influences on Consumer Decision Making A Summary of American Cultural Values

8. Cultural Influences  Family, Religion, Education  Social Class is defined as people with the same status in a society.  It is NOT simply a function of income a.Factors U.S.: usually measured i.Occupation ii.Education iii.Housing b.U.S. is fluid (change) c.People over rank themselves  Adapt the marketing mix to values  Constantly monitor value change

9. Social Classes  Upper Americans  14 percent of the population  High income – Seek high quality, high prestige brands  Middle class  34 percent of the population  Concerned with following media recommendations and what peers say is popular  Increased incomes have generated interest in “worthwhile experiences”  Emulates upper Americans

10. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Social Classes-cont.  Working Classes  38 percent of the population  “Family folk” – depend heavily on relatives for financial and emotional support  Pursue ease of labor and leisure  Lower Americans  16 percent of the population  Very diversified, from frugality to instant gratification

11. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Understanding Cultural Impact On Consumer Behavior  Subcultures – Exist when people have more frequent interactions than with the population at large and thus tend to think and act alike in some respects  Age groups are increasingly becoming important  Teen market  Baby boomers  Mature market

12. Other Influences  Social factors (reference groups, opinion leaders, family)  Cultural factors (values, subcultures, class)  Individual factors (demographics, psychographics)  Psychological factors (perception, motivation, learning, and beliefs)

13. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Reference Groups and Families  Primary reference groups – Include family and close friends  Secondary reference groups – Include fraternal and professional organizations  Family constitutes an important reference group – The household rather than individual is the relevant unit  Family life cycle – Useful way of classifying and segmenting individuals and families  Combines trends in earning power with demands placed on income

14. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Marketing Influences  Product influences – As a key task, marketers differentiate their products from their competitors and create perception of a worthwhile product purchase  Price Influence – Today’s value-conscious consumers may buy products more on the basis of price than other attributes  Promotion Influence – Marketing communications plays a critical role in informing consumers about products and services

15. Individual Influences 1936 current 1965 1972 1980 1986 Betty Crocker pictures change as consumer attitudes and lifestyles also change. Demographic change Change in lifestyles and attitudes

16. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Marketing Influences  Place influences  Convenience increases probability of consumers finding and buying certain products  Products sold in exclusive outlets increase brand equity  Nonstore methods create perceptions of innovativeness, exclusiveness, and/or tailored to specific markets

17. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Situational Influences  Physical features – Most readily apparent features of a situation  Social features – Provide additional depth to a description of a situation  Time – A dimension of situations that may be specified in units  Task features – Include intent or requirement to select, shop for, or obtain information about a purchase  Current conditions – Are momentary moods or conditions rather than chronic individual traits  Advertising/packaging

18. Oil of Olay Ads After Before People did not see the positive association between oil and beauty. As such, the second logo for Olay was changed and oil was taken out.

19. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Psychological Influences  Product knowledge – Refers to the amount of information a consumer has stored in his or her memory about a product  Group, marketing, and situational influences determine level of product knowledge  Product involvement – A consumer’s perception of the importance or personal relevance of an item

20. An Involved Choice? 1. Time (convenience stores a good value vs grocery?) 3. Atmospherics (how stores makes you feel)  What are some of the other things that makes you purchase a particular product? 2. Reason for purchase (gift vs personal use; restaurant choice) Previous experience, interest, risk, social visibility and purchase situation Purchase situation includes:

21. Decision Making Process  Need recognition (vs want)  Information search (internal/external)  Evaluation of alternatives (evoked set)  Purchase (or not)  Post purchase behavior (cognitive dissonance)

22. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Consumer Decision Making The Consumer Decision-Making Process

23. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Consumer Decision Making  Extensive decision making – Requires high degrees of time and effort as the purchase is complex, high priced or has high importance to the consumer  Limited decision making – Moderate time and effort, but may involve some time and effort to search for and compare alternatives  Routine decision making – Most common type, and the way people purchase most packaged goods  Products are simple, inexpensive and familiar  Consumers may develop favorite brands

24. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Need Recognition  Activation and recognition of needs and wants can be through internal or external stimuli  Maslow’s Hierarchy of Needs  Physiological needs – Primary needs of the human body  Safety needs – Protection from physical harm, ill health, economic disaster and avoidance of the unexpected  Belongingness – Related to social and gregarious nature of humans and need for companionship  Esteem needs – Consists of need for both self-esteem and actual esteem from others  Self-actualization needs – Desire to become everything one is capable of becoming

25. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Alternative Search: Consumer Data Sources  Internal sources – Experience with, and stored information about products  Group sources – Communication from other people  Marketing sources – Advertising, salespeople, dealers, packaging and displays  Public sources – Publicity from article, independent ratings  Experiential sources – Handling, examining and perhaps trying the actual product

26. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Alternative Search: Information Processing  Exact nature individuals processing information is not fully understood  In general, it is viewed as a four-step process  Exposed to information  Becomes attentive to the information  Understands the information  Retains the information

27. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Factors Affecting Information Search by Customers

28. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Alternative Evaluation  Consumer has information about a number of brands in a product class  Some brands in a product class perceived as viable alternatives for satisfying a recognized need  Each of these brands has a set of attributes  A set of these attributes is relevant to the consumer, and consumer perceives differences in attributes in different product brands  Consumer will like best the brand perceived as offering greatest number of desired attributes in desired amounts and desired order  Consumer will intend to purchase the brand liked best

29. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Purchase Decision  Traditional risk theorists believe that consumers tend to make risk-minimizing decisions based on their perception of risk associated with a particular purchase  Perceived risk may be functional or psychological  Consumers generally try to reduce their risk by  Reducing negative consequences  Reducing perceived uncertainty

30. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Postpurchase Evaluation  Cognitive dissonance – Inconsistency or disharmony with cognitions, or attitudes and beliefs after decision  Anxiety will be greater when  Decision is important psychologically, financially, or both  Number of foregone alternatives appear plentiful  Forgone alternatives have many favorable features  Disconfirmation paradigm – Satisfaction with products and brands as a result of  Prepurchase product expectations  Difference between these expectations and postpurchase perception of product performance

31. Cognitive Dissonance Dissonance Buyer’s remorse Ex: Neiman Marcus, United Airlines, and what else??

32. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Ethical Conduct toward Customers

33. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Consumer Behavior Culture, Subcultures, Social Class, Reference Groups and Families, Product, Price, Promotion, and Place Influences, Situational Influences, Product Knowledge, Product Involvement, Extensive, Limited, and Routine Decision Making, Need Recognition, Internal, Group, Marketing, Public, and Experiential Sources, Perception of Risk, Cognitive Dissonance, Disconfirmation Paradigm 3 Key Terms