1. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 1 MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University Lamb, Hair, McDaniel 2007-2008 5 CHAPTER Consumer Decision Making

2. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 2 LO 1 Consumer Behavior Processes a consumer uses to make purchase decisions, as well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and the product use.

3. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 3 REVIEW LEARNING OUTCOME LO 1 Understanding Consumer Behavior Consumer behavior consumers make purchase decisions consumers use and dispose of product = HOW

4. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 4 Consumer Decision-Making Process LO 2 A five-step process used by consumers when buying goods or services. Consumer Decision-Making Process

5. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 5 Consumer Decision-Making Process LO 2 Postpurchase Behavior Postpurchase Behavior Purchase Evaluation of Alternatives Evaluation of Alternatives Information Search Need Recognition Cultural, Social, Individual and Psychological Factors affect all steps Cultural, Social, Individual and Psychological Factors affect all steps

6. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 6 Need Recognition LO 2 Result of an imbalance between actual and desired states. Need Recognition Need Recognition

7. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 7 Need Recognition LO 2 Marketing helps consumers recognize an imbalance between present status and preferred state. Present Status Present Status Preferre d State Internal Stimuli External Stimuli

8. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 8 Stimulus LO 2 Any unit of input affecting one or more of the five senses:  sight  smell  taste  touch  hearing Stimulus

9. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 9 LO 2 Recognition of Unfulfilled Wants  When a current product isn’t performing properly  When the consumer is running out of a product  When another product seems superior to the one currently used

10. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 10 LO 2 Information Search Internal Information Search  Recall information in memory External Information search  Seek information in outside environment  Nonmarketing controlled  Marketing controlled

11. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 11 LO 2 External Information Searches Need More Information More Risk Less knowledge Less product experience High level of interest Lack of confidence Less Risk More knowledge More product experience Low level of interest Confidence in decision Need Less Information

12. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 12 LO 2 Evoked Set Group of brands, resulting from an information search, from which a buyer can choose Evoked Set

13. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 13 LO 2 Evaluation of Alternatives and Purchase Evoked Set Purchase! Analyze product attributes Analyze product attributes Rank attributes by importance Rank attributes by importance Use cutoff criteria

14. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 14 LO 2 Purchase To buy or not to buy... Determines which attributes are most important in influencing a consumer’s choice

15. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 15 REVIEW LEARNING OUTCOME LO 2 Consumer Decision-Making Process CULTURAL SOCIAL PSYCHOLOGICAL INDIVIDUAL Need Recognition 1 Information Search 2 Evaluate Alternatives 3 Purchase 4

16. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 16 Cognitive Dissonance LO 3 Cognitive Dissonance Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions.

17. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 17 Postpurchase Behavior LO 3 Consumers can reduce dissonance by:  Seeking information that reinforces positive ideas about the purchase  Avoiding information that contradicts the purchase decision  Revoking the original decision by returning the product Marketing can minimize through: Effective Communication Follow-up Guarantees Warranties

18. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 18 LO3 Consumer Buying Decisions and Consumer Involvement More Involvement Less Involvement Routine Response Behavior Routine Response Behavior Limited Decision Making Limited Decision Making Extensive Decision Making Extensive Decision Making

19. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 19 LO 3 Five Factors Influencing Decisions 1. Level of consumer involvement 2. Length of time to make decision 3. Cost of good or service 4. Degree of information search 5. Number of alternatives considered

20. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 20 LO 3 Continuum of Consumer Buying Decisions

21. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 21 LO 3 Routine Response Behavior  Little involvement in selection process  Frequently purchased low cost goods  May stick with one brand  Buy first/evaluate later  Quick decision

22. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 22 LO 3 Limited Decision Making  Low levels of involvement  Low to moderate cost goods  Evaluation of a few alternative brands  Short to moderate time to decide

23. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 23 LO 3 Extensive Decision Making  High levels of involvement  High cost goods  Evaluation of many brands  Long time to decide  May experience cognitive dissonance

24. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 24 LO 3 Factors Determining the Level of Consumer Involvement Situation Social Visibility Interest Perceived Risk of Negative Consequences Previous Experience

25. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 25 LO 3 Marketing Implications of Involvement High-involvement purchases require: Extensive and informative promotion to target market Low-involvement purchases require: In-store promotion, eye-catching package design, and good displays. Coupons, cents-off, 2-for-1 offers

26. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 26 REVIEW LEARNING OUTCOME LO 3 Consumer Buying Decisions and Consumer Involvement Routine Limited Extensive Previous experience Interest Perceived risk of negative consequences Situation Social visibility

27. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 27 Factors Influencing Buying Decisions LO 4 Social Factors Individual Factors Psycho- logical Factors Cultural Factors CONSUMER DECISION- MAKING PROCESS BUY / DON’T BUY

28. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 28 Culture LO 4 Culture Set of values, norms, attitudes, and other meaningful symbols that shape human behavior and the artifacts, or products, of that behavior as they are transmitted from one generation to the next.

29. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 29 Components of Culture LO 4 Myths Language Values Customs Rituals Laws Material artifacts

30. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 30 Culture is... LO 4 Learned Functional Pervasive Dynamic

31. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 31 Value LO 4 Value Enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct.

32. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 32 Core American Values LO 4 Success Materialism Freedom Progress Youth Capitalism http://www.thesource.com Online

33. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 33 Subculture LO 4 Subculture A homogeneous group of people who share elements of the overall culture as well as unique elements of their own group. http://www.dead.net Online

34. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 34 Social Class LO 4 Social Class A group of people in a society who are considered nearly equal in status or community esteem, who regularly socialize among themselves both formally and informally, and who share behavioral norms.

35. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 35 Social Class Measurements LO 4 Wealth Other Variables Income Education Occupation

36. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 36 Social Class and Education LO 4

37. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 37 The Impact of Social Class on Marketing LO 4 Indicates which medium to use for advertising Helps determine the best distribution for products

38. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 38 REVIEW LEARNING OUTCOME LO 4 Cultural Factors

39. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 39 Social Influences LO 5 Reference Groups Opinion Leaders Family Members

40. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 40 Reference Group LO 5 A group in society that influences an individual’s purchasing behavior. Reference Group

41. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 41 LO 5 Beyond the Book Reference Groups Supplemental content – not in book Reference Groups Direct Indirect Primary Secondary Aspirational Nonaspirational

42. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 42 Influences of Reference Groups LO 5  They serve as information sources and influence perceptions.  They affect an individual’s aspiration levels.  Their norms either constrain or stimulate consumer behavior.

43. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 43 Opinion Leaders LO 5 An individual who influences the opinion of others. Opinion Leaders

44. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 44 Opinion Leaders LO 5  Teenagers  Movie stars  Sports figures  Celebrities Marketers are looking to Web logs, or blogs, to find opinion leaders

45. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 45 Family LO 5  Initiators  Influencers  Decision Makers  Purchasers  Consumers Purchase Process Roles in the Family

46. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 46 Relationships among Purchasers and Consumers in the Family LO 5

47. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 47 REVIEW LEARNING OUTCOME LO 6 Social Factors Opinion Leaders People You Know Socialization Process Family Celebrities InitiatorsDecision MakersConsumers InfluencersPurchasers Reference Groups Information sources Affect aspiration levels Constrain or stimulate consumer behavior

48. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 48 Individual Influences LO 6 Gender Age Life Cycle Personality Self-Concept Lifestyle Personality Self-Concept Lifestyle

49. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 49 Psychological Influences LO 7 Perception Motivation Learning Beliefs & Attitudes

50. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 50 Perception LO 7 Process by which people select, organize, and interpret stimuli into a meaningful and coherent picture. Perception

51. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 51 Perception LO 7SelectiveExposureSelectiveExposureSelectiveDistortionSelectiveDistortionSelectiveRetentionSelectiveRetention

52. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 52 Perception LO 7 Selective Exposure Selective Distortion Selective Retention Consumer notices certain stimuli and ignores others Consumer notices certain stimuli and ignores others Consumer changes or distorts information that conflicts with feelings or beliefs Consumer changes or distorts information that conflicts with feelings or beliefs Consumer remembers only that information that supports personal beliefs Consumer remembers only that information that supports personal beliefs

53. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 53 Marketing Implications of Perception LO 7  Important attributes  Price  Brand names  Quality and reliability  Threshold level of perception  Product or repositioning changes  Foreign consumer perception

54. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 54 Motivation LO 7 A method of classifying human needs and motivations into five categories in ascending order of importance. Maslow’s Hierarchy of Needs Maslow’s Hierarchy of Needs

55. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 55 Maslow’s Hierarchy of Needs LO 7

56. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 56 Types of Learning LO 7 Experiential Conceptual An experience changes behavior Not learned through direct experience http://www.cspinet.org Online

57. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 57 Beliefs and Attitudes LO 7 Belief Attitude An organized pattern of knowledge that an individual holds as true about his or her world. A learned tendency to respond consistently toward a given object.

58. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 58 Changing Attitudes LO 7  Change beliefs about the brand’s attributes  Change the relative importance of these beliefs  Add new beliefs

59. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 59 Biz Flix LO 7 Family Man

60. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 60 REVIEW LEARNING OUTCOME LO 7 Psychological Factors Learning ExperientialConceptual Selective Exposure Perception Selective RetentionSelective Exposure Needs Motivation PsychologicalEsteemSafetySocialEsteem Beliefs & Attitudes Changing Beliefs about Attributes Changing Importance of Beliefs Adding New Beliefs