1. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-1 Chapter 5 Starting with the consumer: developing consumer insights

2. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-2 1.To understand the role consumer behaviour plays in the development and implementation of IMC programs. 2.To understand the consumer decision-making process and how it varies for different types of purchases. 3.To understand various internal psychological processes, their influence on consumer decision making, and implications for IMC. 4.To recognise the various approaches to studying the consumer learning process and their implications for IMC. 5.To recognise external factors such as culture, social class, group influences and situational determinants and how they affect consumer behaviour. 6.To understand alternative approaches to studying consumer behaviour Learning objectives

3. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-3 Motivation Learning Interpretive/ postmodern Situational determinants Studying Consumer Behaviour Behavioural Cognitive Attitudes Perceptions Consumer decision-making processes Influences on consumer decision processes Integration Consumer decision-making models Reference groups Subculture Culture

4. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-4 Neuroscience: mapping the mind In their never-ending quest to learn more about consumers, marketers have turned to other disciplines, including science, psychology, anthropology and medicine. Techniques, including PET scans and MRI are shedding new light on information processing and product preferences.

5. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-5 Consumer behaviour: definition Consumer behaviour refers to the processes and activities people engage in when searching for, selecting, purchasing and using, evaluating and disposing of products and services so as to satisfy their needs and desires.

6. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-6 Consumer decision making Decision stage Psychological process Postpurchase evaluationLearningPurchase decisionIntegration Alternative evaluationAttitude formation Information searchPerception Problem recognitionMotivation

7. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-7 Honda CR-V

8. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-8 Problem recognition Problem recognition represents the first stage in the consumer-decision process. Problem recognition motivates consumers to search for solutions. Problem recognition = Ideal state Ideal state Actual state Actual state Less

9. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-9 Sources of problem recognition Out of stock Dissatisfaction New needs or wants New needs or wants Related product purchase Related product purchase Marketer-induced recognition Marketer-induced recognition New products New products

10. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-10 Oxy

11. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-11 Problem-solution with Rexona

12. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-12 Sheridan’s new towel

13. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-13 Maslow’s hierarchy of needs

14. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-14 Quorn

15. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-15 Guardian Insurance

16. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-16 Psychoanalytic approach Strong inhibitions Strong inhibitions Symbolic meanings Symbolic meanings Surrogate behaviours Surrogate behaviours Complex and unclear motives Subconscious mind Subconscious mind

17. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-17 Motivation research In-depth interviews Association tests Focus groups Projective techniques

18. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-18 Problems and contributions of MR Highlights importance of symbolic factors Reveals hidden feelings, drives and fears Reveals hidden feelings, drives and fears Shifts attention from ‘what’ to ‘how’ and ‘why’ Varying, subjective interpretations Qualitative results from very small samples Difficult or impossible to verify or validate Motivation research Contributions Problems

19. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-19 Consumer information search Market sources Personal sources Public sources Personal experience

20. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-20 Perception Marketers are interested in: 1.how consumers sense external information 2.how consumers select and attend to a diverse range of information sources 3.how this information is interpreted and given meaning.

21. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-21 Perception involves three processes Sensation: direct response of the senses Selection of information: determines which inputs will receive attention Interpretation: organising, categorising and interpreting the information inputs Perception

22. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-22 The selective perception process Selective retention Selective comprehension Selective attention Selective exposure

23. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-23 Evaluation of alternatives  After gathering and selecting information, the consumer moves to evaluation of alternatives.  A set of brands with the potential to meet the consumer’s needs is identified.  The various brands identified as purchase options to be considered are known as the evoked set.  Consumers will evaluate these brands further before proceeding to a purchase decision.

24. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-24 Evaluation: the evoked set All available brands Brand ABrand BBrand CBrand DBrand E Brand FBrand GBrand HBrand IBrand J Brand KBrand LBrand MBrand NBrand O Evoked set of brands Brand BBrand E Brand I Brand M Brand F

25. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-25 Evaluation

26. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-26 Evaluative criteria  Evaluative criteria refers to the dimensions or attributes of a product or service used to make comparisons.  Many marketers view products and services as bundles of benefits.  Consumers tend to think about products and services as consequences.

27. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-27 Two types of consequence Consequences Concrete outcomes Examples Beverage—satisfies thirst Raincoat—keeps me dry Concrete outcomes Examples Beverage—satisfies thirst Raincoat—keeps me dry Intangible outcomes Example Sports car—cool appearance Intangible outcomes Example Sports car—cool appearance Functional Psychosocial

28. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-28 Evaluation and consequences

29. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-29 Different perspectives: marketer’s view Traction okay? Too pricy? Product is seen as a bundle of attributes or characteristics. Enough power?

30. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-30 Different perspectives: consumer’s view Product is seen as a set of outcomes How does it cut the taller grass? How close can I get to the shrubs? Will the neighbours be impressed with my lawn? Is it going to be as fun to use later this summer? Will I enjoy having more time for golf? Will it pull that little trailer I saw at the store? Psychological Functional

31. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-31 Consumer attitudes Individuals Products Brands Companies Organisations Retailers Media Ads © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Attitudes toward:

32. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-32 Attitudes  Attitudes summarise a consumer’s evaluation of an object (or brand or company).  Attitudes are strongly related to the consumer’s behavioural intentions.  A great deal of advertising attempts to create favourable attitudes, reinforce current positive attitudes and/or change negative attitudes.

33. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-33 Attitudes: multiattribute models  A multiattribute model views an attitude towards a brand as a composite of attitudes towards a number of brand attributes.  The model proposes that consumers attach different weights to specific attributes.  Consumers weigh up their beliefs about attributes alongside their subjective estimation of the attribute’s importance.  To predict attitudes, marketers must know how much importance is attached to given attributes.

34. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-34 Attitudes: multiattribute models (cont.) A b = ∑B i X E i Where A b = attitude towards brand B i = beliefs about the brand’s performance on attribute i E i = importance attached to attribute i n= the number of attributes considered n i=1

35. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-35  A multiattribute model views an attitude towards a brand as a composite of attitudes towards a number of brand attributes.  The model proposes that consumers attach different weights to specific attributes.  Consumers weigh up their beliefs about attributes alongside their subjective estimation of its importance. Attitudes: multiattribute models (cont.)

36. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-36 Attitude change strategies Change perceptions or belief ratings about a competing brand Add a new attribute to the attitude formation mix Change perceptions of the value of an attribute Change beliefs about an important attribute

37. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-37 Adding attributes changes attitudes

38. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-38 Changing perceptions of belief ratings for a competing brand

39. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-39 Purchase decision and evaluation Integration processes Pre- evaluation Heuristics Affect referral decision rule Decision Purchase intention Brand loyalty Post- evaluation Satisfaction Cognitive dissonance Dissatisfaction

40. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-40 Brand loyalty: faithful or fickle?

41. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-41 Post purchase

42. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-42 Variations in consumer decision making  The decision process provides a general framework for understanding consumers.  Not all consumers proceed through each of the steps in the purchase decision cycle.  Routine or habitual purchases—little effort or energy expended on information search and evaluation of alternatives.  Established brands are likely to be in the evoked set.  New products—complex decision making involving information search, learning and comparison of alternatives.

43. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-43 Extended problem-solving

44. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-44 Motivation Learning Interpretive/ postmodern Situational determinants Studying Consumer Behaviour Behavioural Cognitive Attitudes Perceptions Consumer decision-making processes Influences on consumer decision processes Integration Consumer decision-making models Reference groups Subculture Culture

45. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-45 Behavioural learning  Consumer learning refers to a process by which individuals acquire the purchase and consumption knowledge and experience they apply to future related behaviour.  Behavioural learning theories are based on the stimulus-response orientation. S—R

46. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-46 Classical conditioning process Unconditioned stimulus (grapes) Unconditioned stimulus (grapes) Conditioned stimulus (Lancôme moisturiser) Conditioned stimulus (Lancôme moisturiser) Unconditioned response (fresh and moist) Unconditioned response (fresh and moist) Association develops through contiguity and repetition Conditioned response (fresh and moist) Conditioned response (fresh and moist)

47. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-47 Classical conditioning

48. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-48 Operant conditioning process Increase or decrease in probability of repeat behaviour (purchase) Positive or negative consequences occur (reward or punishment) Positive or negative consequences occur (reward or punishment) Behaviour (consumer uses product or service) Behaviour (consumer uses product or service) Behaviour that is reinforced strengthens the bond between a stimulus and a response

49. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-49 Shaping procedures in marketing

50. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-50 Cognitive learning process Purposive behaviour Insight Goal achievement Goal

51. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-51 Motivation Attitudes Perceptions Integration Consumer Decision-Making Models Learning Behavioural Cognitive Consumer Decision-Making Processes Interpretive/ Post Modern Situational Determinants Studying CB Influences on Consumer Decision Processes Reference Groups Sub-Culture Culture

52. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-52 Environmental influences on consumer behaviour

53. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-53 Subcultures

54. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-54 Reference groups

55. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-55 Situational determinants Purchase situation Usage situation Types of structural determinants Communications situation

56. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-56 New methodologies in consumer research Traditional approach New approaches Psychology Sociology, anthropology, history, semiotics, linguistics Experimental design, surveys Field work, ethnographic studies

57. Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 5-57 Summary and conclusions  This presentation provides an overview of consumer behaviour and some of the methods used to conduct consumer research.  A five-stage model of consumer decision making consists of problem recognition, information search, alternative evaluation, purchase and post-purchase evaluation.  The consumer decision process model views consumer behaviour primarily as a cognitive orientation.  Behavioural learning can also shed light on consumer decision making and purchasing activity.