1. CONSUMER BEHAVIOR CONSUMER BEHAVIOR

2. 5-Step Problem Solving Process A. Problem Recognition B. Information Search C. Evaluation of Alternatives D. Purchase Decision E. Post-purchase evaluation *Are human beings rational or irrational in their decision making?

3. Problem Recognition Marketers create “need arousal” Marketers create “need arousal” Look at motives: Look at motives: Physiological (snack foods, sports drinks)Physiological (snack foods, sports drinks) Safety (Michelin tires, insurance)Safety (Michelin tires, insurance) Social (text messaging, Facebook, beer ads)Social (text messaging, Facebook, beer ads) Personal (gourmet coffee, music, art)Personal (gourmet coffee, music, art)

4. Maslow’s Hierarchy of Needs Personal Social Safety Physiological

5. Information Search Internal search: based on knowledge, past experience. Internal search: based on knowledge, past experience. External search: External search: “in store”“in store” interpersonal sourcesinterpersonal sources neutral sources (Consumer Reports)neutral sources (Consumer Reports) Media (newspaper, radio, TV, internet)Media (newspaper, radio, TV, internet) salesperson advicesalesperson advice internetinternet * Provide information when, where it is needed

6. Evaluation of Alternatives Marketers can try to: Marketers can try to: influence which criteria, attributes are used to evaluate competing productsinfluence which criteria, attributes are used to evaluate competing products influence importance of each criteriainfluence importance of each criteria introduce new attributesintroduce new attributes

7. Example (1=worst rating, 7 = best rating) StylingMileage Comfort Price Total Car1: 7 4 7 3 21 Car1: 7 4 7 3 21 Car2: 5 5 5 5 20 Car2: 5 5 5 5 20 Car3: 2 7 3 6 18 Car3: 2 7 3 6 18 Again: Again: Which criteria will be used?Which criteria will be used? Are all criteria equally important?Are all criteria equally important? Does our product introduce a new attribute?Does our product introduce a new attribute?

8. Purchase Make it easy to buy Make it easy to buy locationslocations timestimes creditcredit deliverydelivery catalogs and brochurescatalogs and brochures internetinternet toll-free customer servicetoll-free customer service

9. Reduce the Risk Reduce the Risk Functional (ex: laptop, car)Functional (ex: laptop, car) PhysicalPhysical FinancialFinancial Social (ex: clothes)Social (ex: clothes) Depends on public vs private consumption Depends on public vs private consumption PsychologicalPsychological TimeTime

10. Post-Purchase Evaluation Cognitive Dissonance: customer not sure if did the right thing. Cognitive Dissonance: customer not sure if did the right thing. Regret, so customer returns itemRegret, so customer returns item So, provide Positive Reinforcement after the sale So, provide Positive Reinforcement after the sale contact customer after major purchasecontact customer after major purchase give coupon for next purchasegive coupon for next purchase remind about warranty, guaranteesremind about warranty, guarantees provide toll-free number or website for customer serviceprovide toll-free number or website for customer service

11. Buying Situations Extensive problem solving Extensive problem solving Need to first educate consumer about attributes. Influence criteria used to make decision. Critical for “revolutionary products, or “breakthroughs”. High involvement.Need to first educate consumer about attributes. Influence criteria used to make decision. Critical for “revolutionary products, or “breakthroughs”. High involvement. Limited problem solving Limited problem solving Customers have some experience with product class. So focus on benefits of your brand. Influence beliefs, attitudes.Customers have some experience with product class. So focus on benefits of your brand. Influence beliefs, attitudes. Routinized decision making: Routinized decision making: Most purchases are routine, need little thought. Low involvement. Tough for new brand to break through. Might want to use free samples or coupons. Repetition is key in advertising. Make product widely available.Most purchases are routine, need little thought. Low involvement. Tough for new brand to break through. Might want to use free samples or coupons. Repetition is key in advertising. Make product widely available.

12. Other Factors That Influence Consumer Decision Making Culture and subculture Culture and subculture Different values, customsDifferent values, customs Reference groups Reference groups in-group vs out-groupin-group vs out-group Example: Mountain Dew Example: Mountain Dew opinion leadershipopinion leadership Social class Social class Family decision making Family decision making