1. 2 Consumer Behaviour and Target Audience Decisions

2. © 2005 McGraw-Hill Ryerson Limited Chapter Objectives To understand the role consumer behaviour plays in the development and implementation of advertising and promotional programs. To understand the consumer decision-making process and how it varies for different types of purchases. To understand various internal psychological processes, their influence on consumer decision making, and implications for advertising and promotion. To understand the similarities and differences of target market and target audience. To understand the various options for making a target audience decision for marketing communications.

3. © 2005 McGraw-Hill Ryerson Limited Consumer Behaviour Processes and activities which people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services to satisfy needs and desires.

4. © 2005 McGraw-Hill Ryerson Limited A Basic Model of Consumer Decision Making Figure 2-1

5. © 2005 McGraw-Hill Ryerson Limited Consumer Decision Making Information SearchPerceptionPostpurchase EvaluationLearningPurchase DecisionIntegrationAlternative EvaluationAttitude Formation Need RecognitionMotivation Purchase DecisionIntegration Decision Stage Psychological Process Alternative EvaluationAttitude FormationInformation SearchPerception Need RecognitionMotivation

6. © 2005 McGraw-Hill Ryerson Limited Consumer Decision Making Need RecognitionMotivation Decision Stage Psychological Process

7. © 2005 McGraw-Hill Ryerson Limited Sources of Need Recognition Out of Stock Dissatisfaction New Needs or Wants New Needs or Wants Related Product Purchase Related Product Purchase Market-Induced Recognition Market-Induced Recognition New Products New Products

8. © 2005 McGraw-Hill Ryerson Limited Ads Help Consumers Recognize Needs

9. © 2005 McGraw-Hill Ryerson Limited Hierarchy of Human Needs: Love, Nurturance, Belonging

10. © 2005 McGraw-Hill Ryerson Limited Sexy Ads May Motivate Consumers

11. © 2005 McGraw-Hill Ryerson Limited Sexy Ads Get Noticed

12. © 2005 McGraw-Hill Ryerson Limited Consumer Decision Making Information SearchPerception Need RecognitionMotivation © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Decision Stage Psychological Process Need RecognitionMotivation

13. © 2005 McGraw-Hill Ryerson Limited Information Search Internal Search External Search Undertaken if internal search does not yield enough information. Scan memory to recall experiences and knowledge about past purchase alternatives.

14. © 2005 McGraw-Hill Ryerson Limited External Sources of Information Personal Sources Market Sources Public Sources Personal Experience

15. © 2005 McGraw-Hill Ryerson Limited Perception The process by which an individual receives, attends to, interprets, and stores information to create a meaningful picture of the world. Marketers can formulate communication strategies based upon how consumers acquire and use information from external sources.

16. © 2005 McGraw-Hill Ryerson Limited The Selective Perception Process Selective Retention Selective Comprehension Selective Attention Selective Exposure Selective Comprehension Selective Attention Selective Exposure

17. © 2005 McGraw-Hill Ryerson Limited Selective Exposure Occurs as consumers choose whether or not to make themselves available to information. –TV viewers may change channels or leave the room during commercial breaks.

18. © 2005 McGraw-Hill Ryerson Limited Selective Attention Occurs when consumer chooses to focus on certain stimuli while excluding others. For example, combining colour with black and white grabs attention.

19. © 2005 McGraw-Hill Ryerson Limited Selective Comprehension Consumers may interpret information based on their own attitudes, beliefs, motives, and experiences. An ad disparaging a consumer’s favourite product may be interpreted as biased or untruthful.

20. © 2005 McGraw-Hill Ryerson Limited Selective Retention Consumers do not remember all the information they see, hear, or read – even after attending and comprehending it.

21. © 2005 McGraw-Hill Ryerson Limited Advertisers Attempt to Help Consumers Retain Information Mnemonics (symbols, rhymes, associations, and images) can assist in consumers’ learning and memory processes. Example: A telephone number spelling out the company’s name.

22. © 2005 McGraw-Hill Ryerson Limited Consumer Decision Making Information SearchPerceptionAlternative EvaluationAttitude Formation Need RecognitionMotivation Decision Stage Psychological Process Information SearchPerception Need RecognitionMotivation

23. © 2005 McGraw-Hill Ryerson Limited Attitude Formation is Based on Evaluation of Alternatives 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

24. © 2005 McGraw-Hill Ryerson Limited Consumers Must Evaluate Their Brand Choices Objective Evaluative Criteria Price Warranty Service Price Warranty Service Style Appearance Image Style Appearance Image Subjective

25. © 2005 McGraw-Hill Ryerson Limited Evaluative Criteria Consumer View Product or service viewed in terms of its consequences. Consumer View Product or service viewed in terms of its consequences. Marketer View Products are viewed as bundles of attributes. Marketer View Products are viewed as bundles of attributes.

26. © 2005 McGraw-Hill Ryerson Limited Different Perspectives: The Consumer’s View Product Is Seen As A Set of Outcomes Functional Functional Consequences How does it cut the taller grass? How close can I get to the shrubs? Will the neighbors 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? Psychosocial Consequences

27. © 2005 McGraw-Hill Ryerson Limited Attitude “Attitudes are learned predispositions to respond to an object.” –Gordon Allport A summary construct representing an individual’s overall feelings toward an object or its evaluation.

28. © 2005 McGraw-Hill Ryerson Limited Consumer Attitudes Focus on Objects Individuals Products Brands Companies Organizations Retailers Media Retailers Organizations Companies Brands Products Individuals Ads Attitudes Toward:

29. © 2005 McGraw-Hill Ryerson Limited Advertising, Promotion, and Attitudes Advertising and promotion are used to create favourable attitudes, and/or change negative attitudes. Here, the ad attempts to change attitudes by highlighting added attributes.

30. © 2005 McGraw-Hill Ryerson Limited Consumer Decision Making Information SearchPerceptionPurchase DecisionIntegrationAlternative EvaluationAttitude Formation Need RecognitionMotivation Decision Stage Psychological Process Alternative EvaluationAttitude FormationInformation SearchPerception Need RecognitionMotivation

31. © 2005 McGraw-Hill Ryerson Limited Purchase Decision At some point in the buying process, the consumer makes a purchase decision. –Consumer stops searching for and evaluating alternative brands in the evoked set. The purchase decision starts with a purchase intention. –Predisposition to buy a certain brand.

32. © 2005 McGraw-Hill Ryerson Limited Purchase Decision The purchase decision is not the actual purchase. –Consumer must implement decision and make purchase. –Additional decisions may be needed. –Time delay often exists between making a purchase decision and purchase itself. –The time delay affects the marketing strategy, and depends on: Type of purchase to be made Risk involved in purchase

33. © 2005 McGraw-Hill Ryerson Limited Brand Loyalty May Affect Purchase Decision Consumers may have a preference for a certain brand, which will result in its repeated purchase.

34. © 2005 McGraw-Hill Ryerson Limited Integration Processes The ways in which product knowledge, meanings, and beliefs are combined to evaluate two or more alternatives. Analysis of the integration process focuses on the different types of integration rules or strategies used by consumers to decide among purchase alternatives.

35. © 2005 McGraw-Hill Ryerson Limited Types of Integration Strategies Integration Strategies Formal Decision Rules Require examination and comparison of alternatives on specific attributes. Formal Decision Rules Require examination and comparison of alternatives on specific attributes. Simplified Decision Rules or Heuristics Easy to use and adapt to environmental situations. Price- or promotion- based Simplified Decision Rules or Heuristics Easy to use and adapt to environmental situations. Price- or promotion- based

36. © 2005 McGraw-Hill Ryerson Limited Consumer Decision Making Information SearchPerceptionPostpurchase EvaluationLearningPurchase DecisionIntegrationAlternative EvaluationAttitude Formation Need RecognitionMotivation Purchase DecisionIntegration Decision Stage Psychological Process Alternative EvaluationAttitude FormationInformation SearchPerception Need RecognitionMotivation

37. © 2005 McGraw-Hill Ryerson Limited Postpurchase Evaluation After purchase, consumer assesses the level of performance of product or service. Provides feedback from actual use of product to influence the likelihood of future purchases.

38. © 2005 McGraw-Hill Ryerson Limited Satisfaction “A judgment that consumers make with respect to the pleasurable level of consumption-related fulfillment.” Cognitive dissonance: –A feeling of psychological tension or postpurchase doubt a consumer experiences after making a difficult purchase choice. –More likely to occur when consumer has to choose between two close alternatives.

39. © 2005 McGraw-Hill Ryerson Limited Variations in Consumer Decision Making Types of Decision Making Extended Problem Solving Limited Problem Solving Routine Problem Solving

40. © 2005 McGraw-Hill Ryerson Limited Variations in Consumer Decision Making Group Decision Making Group situations constitute many purchase decisions. Reference group –“A group whose presumed perspectives or values are used by an individual as the basis for his or her judgments, opinions, and actions.” –Used to guide consumers’ purchase decisions even when the group is not present. –Marketers use aspirational or dissociative reference group influences in developing ads and promotional strategies.

41. © 2005 McGraw-Hill Ryerson Limited Variations in Consumer Decision Making Group Decision Making Figure 2-4

42. © 2005 McGraw-Hill Ryerson Limited Target Audience Decision Consumer understanding is the key to the success of any IMC plan, program, or ad. The goal of an IMC plan, program or ad is to influence the behaviour of a target audience.

43. © 2005 McGraw-Hill Ryerson Limited Marketing and Promotions Process Model Figure 2-5

44. © 2005 McGraw-Hill Ryerson Limited Target Market Process Select Market To Target Determine Market Segmentation Identify Markets With Unfulfilled Needs Determine Market Segmentation Identify Markets With Unfulfilled Needs

45. © 2005 McGraw-Hill Ryerson Limited Target Market and Target Audience Target market –The group of consumers toward which an overall marketing program is directed. Target audience –A group of consumers within the target market for which the advertising campaign, for example, is directed.

46. © 2005 McGraw-Hill Ryerson Limited Target Market Process Identify Markets With Unfulfilled Needs

47. © 2005 McGraw-Hill Ryerson Limited Market Segmentation Marketer identifies a target market by: –Identifying the specific needs of groups of people, or segments –Selects one or more segments as a target –Develops marketing programs directed to each.

48. © 2005 McGraw-Hill Ryerson Limited Beer is Beer? Not really!

49. © 2005 McGraw-Hill Ryerson Limited A Product for Every Segment

50. © 2005 McGraw-Hill Ryerson Limited A Package is More Than a Container

51. © 2005 McGraw-Hill Ryerson Limited The Marketing Segmentation Process Take Marketing Actions To Reach Target Segments. Select the Product Segments Toward Which the Firm Directs Its Marketing Actions. Develop a Market/Product Grid To Relate the Market Segments To the Firm’s Products and Actions. Find Ways To Group Marketing Actions - Usually the Products Offered - Available To the Organization. Find Ways To Group Consumers According To Their Needs. Select the Product Segments Toward Which the Firm Directs Its Marketing Actions. Develop a Market/Product Grid To Relate the Market Segments To the Firm’s Products and Actions. Find Ways To Group Marketing Actions - Usually the Products Offered - Available To the Organization. Find Ways To Group Consumers According To Their Needs.

52. © 2005 McGraw-Hill Ryerson Limited Bases for Segmentation behaviour Benefits Outlets Benefits Outlets Behaviour Psychographic Geographic Demographic Psychographic Demographic Geographic Customer Characteristics Customer Characteristics Socioeconomic Buying Situation Buying Situation Usage Socioeconomic

53. © 2005 McGraw-Hill Ryerson Limited Psychographic Segmentation Dividing the market on the basis of lifestyle, personality, culture, and social class. Criteria include: –Lifestyle VALS VALS 2 –Personality –Culture –Social class

54. © 2005 McGraw-Hill Ryerson Limited Marketing to a Lifestyle

55. © 2005 McGraw-Hill Ryerson Limited Abercrombie & Fitch Targets Echo Boomers

56. © 2005 McGraw-Hill Ryerson Limited Benefit Segmentation The grouping of consumers on the basis of attributes sought in a product.

57. © 2005 McGraw-Hill Ryerson Limited Behaviouristic Segmentation Grouping customers according to their usage, loyalties, or buying responses to a product. –Product or brand usage. –Degree of use. –Brand loyalty. Can be used in combination with demographic and/or psychographic criteria to develop profiles of market segments.

58. © 2005 McGraw-Hill Ryerson Limited Target Audience Options: Rossiter and Percy Perspective Brand Loyal Customers Non- Customers Favourable Brand Switchers Regularly buy the firm’s product. Buy focal brand but also buy others. New category users Other brand switchers Other brand loyals Customers not purchasing within a product category. Not consistently purchasing focal brand. Loyal to another brand.