Consumer Behavior

Consumer Behavior

– The study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants

Model of Consumer Behavior

• Culture is often the most powerful cause of a person's needs, wants and behavior.

• Characteristics of Culture– Culture is learned– Cultural shifts create opportunities– Subcultures are often of greater interest to

marketers than cultures

Culture

• Society’s relatively permanent and ordered divisions

• Social Class Members share similar values, interests, and purchase behaviors

• Indentify by: income, occupation, education, wealth, and other variables

• Opportunity: “Social Mobility” products

Social Class

The Major American Social Classes

Social Factors

Reference groups

Cliques

Family

Roles and status

Reference Groups

• Membership groups– Primary vs. Secondary

• Aspirational groups

• Dissociative groups

• Opinion leaders

Family

• Family of Orientation• Family of Procreation

Toyota caters to family buying influences.

• Age and Life-Cycle Stage– Tastes and preferences change over time.

• Occupation / Roles / Status– Influences the purchase of clothing, cars, memberships, etc.

• Economic Situation– Income-sensitive goods– Counter-cyclical goods

Personal Factors

Personal Factors

• Lifestyle:– Pattern of living (AIO)

• Activities• Interests• Opinions

• VALS:– Classifies consumers with

respect to motivation and resources.

• Predicts purchase behavior

Key Psychological Processes

Motivation

Perception

LearningEmotions

Memory

Motivation

Freud’sTheory

Behavioris guided by subconsciousmotivations

Maslow’sHierarchyof Needs

Behavioris driven by

lowest, unmet need

Herzberg’sTwo-Factor

Theory

Behavior isguided by

dissatisfiersand

satisfiers

Maslow’s Hierarchy Of Needs

• Personality– One Definition: Unique psychological characteristics that lead to relatively consistent and

lasting responses to one’s environment.

• “Big 5” - OCEAN– Openness– Conscientiousness– Extraversion– Agreeableness– Neuroticism (Anxiousness)

• Brands as expressions of identity

• Ideal Self vs. Actual Self

Personality and Self-Concept

Perception

Process by which people select, organize, and

interpret information to form a meaningful picture of the

world.

People can form different perceptionsof the same stimulus.

Selective Attention

People screen out most stimuli.

Selective Distortion vs. Retention

• Selective Distortion– Interpreting information in a way that supports what you already

believe.

• Selective Retention– Remembering the good aspects of something you like and forgetting

the bad aspects of something you dislike.

• One Definition:– A relatively permanent change in behavior due to experience.

• Classical Conditioning: Stimulus-response chains

• Operant Conditioning: Consequences drive behavior– Behaviors with satisfying results are repeated.– Behaviors with unsatisfying results are avoided.– Stimulus Generalization and discrimination

• Different from Deliberation

Learning

Attitudes

• A person’s consistently favorable or unfavorable feelings, evaluations, and tendencies toward an object or idea.

• Attitudes have lots of staying power.– Cognitive economy/efficiency– Emotional anchors– Advertising may try to modify beliefs and

attitudes (“Got Milk” campaign)

The Buying Decision Process

Need Recognition

Buyers recognize a need or problem as a result of internal or external stimuli.

Marketing communications often stimulate need recognition.

Hungry yet?

Triggering Need Recognition

Information Search

• High vs. Low Involvement Purchases

• Cost vs. Benefit Model• Cognitive Economy• “Big-Ticket” Anomolies• Preference Reversals• Non-Linear Search Processes

Information Sources

– Personal• Family, friends, neighbors, and casual or work acquaintances

– Commercial• Advertising, salespeople, dealers, Web sites, packaging, and displays

– Public• Social Media, Mass media,

Internet searches, Consumer rating organizations

– Experiential• Using, handling, examining or

sampling the product

Which source is most influential?

• Elaboration Likelihood Model: Central vs. Peripheral Route processing

• Some Types of Evaluation Calculus:– Compensatory vs. Non-compensatory– Weighted Tally Processes (Fishbein Model)– Elimination-by-aspects– Lexicographic– “Checkbox Choice”– Affect Referral

Evaluation of Alternatives

Weighted Tally Process Example

Assume the consumer assigns importance weights to Memory, Graphics, Size/Weight and Price 30%, 20%, 40%, and 10%, respectively.

Computer A’s score would be: (30% x 8) + (20% x 9) + (40% x 6) + (10% x 4) = 7.4

Successive Sets

Purchase Decision

• Intentions to purchase are sometimes interrupted.

• Potential “Interrupters”:– Out of Stock– Attitudes & influences of others– Unexpected situational

factors– Buyer’s Remorse– Speed of decision

Postpurchase Behavior

• Consumer Satisfaction/Dissatisfaction results from gaps between expectations and perceived performance.

• Performance BELOW Expectations → Disappointment• Performance EQUALS Expectations → Satisfaction• Performance GREATER than Expectations → Delight• Performance MUCH GREATER than Expectations → Expectation Recalibration

• Cognitive Dissonance: “Did I make the right purchase? Should I have bought this?”

• Minimize dissonance by:– Offering mechanisms for making complaints

(Customer Service, Toll-Free Hotlines, E-mail, Chat, Social Media, etc.)– Being responsive to problems and questions– Advertising (remind consumer why choice made sense)– Minimizing the potential for product misuse (good product

instructions) and “Poke-Yoke”.

Cognitive Dissonance

Customer Product Use/Disposal

Question du Jour

Is this for real?

1. Awareness2. Interest3. Evaluation4. Trial5. Re-Trial6. Adoption

The Adoption Process

Not everyone adopts at the same pace.

• Innovators: venturesome, try new ideas at some risk.

• Early adopters: opinion leaders who adopt new ideas early, but carefully.

• Early majority: deliberate adopters, who adopt before the average person.

• Late majority: skeptical, adopt only after the majority of people have tried a product.

• Laggards: last to adopt, tradition bound, and skeptical of change.

Product Adopter Categories

Adopter Categorization Distribution

• Relative Advantage– Is the innovation perceived as superior to existing products?

• Compatibility– Does the innovation fit the values, behavior and experience of the

target market?

• Complexity– Is the innovation difficult to understand or use or perceived as such?

• Utility & Cost-Benefit– Can the innovation be used extensively or on a more limited basis?

• Communicability– Can results be easily observed and described to others?

Product Characteristics That Influence the Rate of Adoption

Question du Jour

Do consumers always know what they really want or need?

Other Consumer Behavior Models & Theories

Reactance

• Reactance is an emotional reaction in direct contradiction to rules or regulations that threaten or eliminate specific behavioral freedoms. - Wikipedia

Variety-Seeking vs. Habit Persistence

• Variety-Seeking– Often driven by need for arousal– Preference-testing utility– Consumers often overestimate their variety needs

• Habit Persistence– Different from “Loyalty”– Typically driven by risk aversion

Sunk Cost Bias

• Investing more resources in something you previously invested in, solely because you previously invested in it.

False Consensus Bias

• Not everyone thinks like you, expects what you expect, believes what you believe.

Very dangerous for marketers.

Decision Heuristics

• Anchoring & Adjustment– Reference Points

• Mood and Emotion– Mood Regulation

• Elevation• Maintenance

– Effects on Risk Taking

Prospect Theory

Mental Accounting

• The mental labeling of money• Consumers…

– Segregate gains– Integrate losses– Integrate smaller losses with larger gains– Segregate small gains from large losses

Implications for marketing strategy?

In-Class Activity – WHY WE BUY

Choose a product, product line, brand, or company and answer the following:

• What are the obvious (i.e. more superficial) reasons consumers buy these products? • What are the less obvious, more deep-seeded reasons consumers buy these products? • What are the obvious (i.e. more superficial) reasons consumers do not buy these

products? • What are the less obvious, more deep-seeded reasons consumers do not buy these

products?

• Choose one or more of the above reasons/motivations to buy or not buy and provide an appropriate implication for Marketing strategy.