Chapter 6: Consumer Decision Making Prepared by David Ferrell, B-books, Ltd. Designed by Eric Brengle, B-books, Ltd. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 1 Learning Outcomes LO1 Explain why marketing managers should understand consumer behavior LO2 Analyze the components of the consumer decision-making process LO3 Explain the consumer’s postpurchase evaluation process Copyright 2012 by Cengage Learning Inc. All Rights Reserved 2 Learning Outcomes LO4 Identify the types of consumer buying decisions and discuss the significance of consumer involvement LO5 Identify and understand the cultural factors that affect consumer buying decisions LO6 Identify and understand the social factors that affect consumer buying decisions Copyright 2012 by Cengage Learning Inc. All Rights Reserved 3 Learning Outcomes LO7 Identify and understand the individual factors that affect consumer buying decisions LO8 Identify and understand the psychological factors that affect consumer buying decisions Copyright 2012 by Cengage Learning Inc. All Rights Reserved 4 The Importance of Understanding Consumer Behavior LO1 Explain why marketing managers should understand consumer behavior. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 5 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. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 6 LO1 Review Learning Outcome Understanding Consumer Behavior consumers make purchase decisions Consumer behavior = HOW consumers use and dispose of product Copyright 2012 by Cengage Learning Inc. All Rights Reserved 7 The Consumer Decision-Making Process LO2 Analyze the components of the consumer decision-making process. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 8 Consumer Decision-Making Process A five-step process used by consumers when buying goods or services. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 9 Consumer Decision-Making Process Need Recognition Information Search Cultural, Social, Individual and Psychological Factors affect all steps Evaluation of Alternatives Purchase Postpurchase Behavior 10 Copyright 2012 by Cengage Learning Inc. All Rights Reserved Need Recognition Result of imbalance between actual and desire states. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 11 Need Recognition Present Status Preferred State Marketing helps consumers recognize an imbalance between present status and preferred state. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 12 Stimulus Any unit of input affecting one or more of the five senses: sight smell taste touch hearing Copyright 2012 by Cengage Learning Inc. All Rights Reserved 13 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 14 Copyright 2012 by Cengage Learning Inc. All Rights Reserved Information Search Internal Information Search Recall information in memory External Information search Seek information in outside environment Nonmarketing controlled Marketing controlled 15 Copyright 2012 by Cengage Learning Inc. All Rights Reserved External Information Searches Need Less Information Less Risk More knowledge More product experience Low level of interest Confidence in decision Need More Information More Risk Less knowledge Less product experience High level of interest Lack of confidence Copyright 2012 by Cengage Learning Inc. All Rights Reserved 16 Evoked Set Group of brands resulting from an information search, from which a buyer can choose. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 17 Evaluation of Alternatives and Purchase Evoked Set Analyze product attributes Use cutoff criteria Rank attributes by importance Purchase! 18 Copyright 2012 by Cengage Learning Inc. All Rights Reserved Purchase To buy or not to buy... Determines which attributes are most important in influencing a consumer’s choice Copyright 2012 by Cengage Learning Inc. All Rights Reserved 19 LO2 Review Learning Outcome Consumer Decision-Making Process Need 1 Recognition Information Search 2 Evaluate 3 Alternatives Purchase 4 PSYCHOLOGICAL Copyright 2012 by Cengage Learning Inc. All Rights Reserved 20 SOCIAL CULTURAL INDIVIDUAL Postpurchase Behavior LO3 Explain the consumer’s postpurchase evaluation process. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 21 Cognitive Dissonance Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 22 Postpurchase Behavior 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 Marketers can minimize through: Effective Communication Follow-up Guarantees Warranties Service during and after the sale Copyright 2012 by Cengage Learning Inc. All Rights Reserved 23 LO3 Review Learning Outcome Consumer postpurchase evaluation process Copyright 2012 by Cengage Learning Inc. All Rights Reserved 24 Consumer Buying Decisions and Consumer Involvement LO4 Identify the types of consumer buying decisions and discuss the significance of consumer involvement. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 25 Consumer Buying Decisions and Consumer Involvement Routine Response Behavior Limited Decision Making Extensive Decision Making Less Involvement More Involvement 26 Copyright 2012 by Cengage Learning Inc. All Rights Reserved Five Factors of Consumer Involvement 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 Copyright 2012 by Cengage Learning Inc. All Rights Reserved 27 Continuum of Consumer Buying Decisions 28 Copyright 2012 by Cengage Learning Inc. All Rights Reserved Routine Response Behavior • Little involvement in selection process • Frequently purchased low cost goods • May stick with one brand • Buy first/evaluate later • Quick decision Copyright 2012 by Cengage Learning Inc. All Rights Reserved 29 Limited Decision Making • Low levels of involvement • Low to moderate cost goods • Evaluation of a few alternative brands • Short to moderate time to decide Copyright 2012 by Cengage Learning Inc. All Rights Reserved 30 Extensive Decision Making • High levels of involvement • High cost goods • Evaluation of many brands • Long time to decide • May experience cognitive dissonance Copyright 2012 by Cengage Learning Inc. All Rights Reserved 31 Factors Determining the Level of Consumer Involvement Previous Experience Interest Perceived Risk of Negative Consequences Situation Social Visibility 32 Copyright 2012 by Cengage Learning Inc. All Rights Reserved 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 33 Copyright 2012 by Cengage Learning Inc. All Rights Reserved Factors Influencing Buying Decisions Cultural Factors Individual Factors Social Factors Psychological Factors CONSUMER DECISIONMAKING PROCESS BUY / DON’T BUY 34 Copyright 2012 by Cengage Learning Inc. All Rights Reserved LO4 Review Learning Outcome Consumer Buying Decisions and Consumer Involvement Previous experience Interest Perceived risk of negative consequences Situation Social visibility Extensive Limited Routine Copyright 2012 by Cengage Learning Inc. All Rights Reserved 35 Cultural Influences on Consumer Buying Decisions LO5 Identify and understand the cultural factors that affect consumer buying decisions. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 36 Culture Sets 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. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 37 Components of Culture Values Language Myths Customs Rituals Laws Material artifacts Copyright 2012 by Cengage Learning Inc. All Rights Reserved 38 Culture is. . . Pervasive Functional Learned Dynamic Copyright 2012 by Cengage Learning Inc. All Rights Reserved 39 Value Enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 40 Core American Values Success Materialism Freedom Progress Youth Capitalism Copyright 2012 by Cengage Learning Inc. All Rights Reserved 41 Subculture Subculture- A homogeneous group of people who share elements of the overall culture as well as unique elements of their own group. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 42 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. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 43 Social Class Measurements Occupation Income Education Wealth Other Variables Copyright 2012 by Cengage Learning Inc. All Rights Reserved 44 Social Class and Education Source: U.S. Census, available at http://www.pbs.org/peoplelikeus/resources/stats.html, May 2005. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 45 The Impact of Social Class on Marketing 1. Indicates which medium to use for advertising 2. Helps determine the best distribution for products 46 Copyright 2012 by Cengage Learning Inc. All Rights Reserved LO5 Review Learning Outcome Cultural Factors Copyright 2012 by Cengage Learning Inc. All Rights Reserved 47 Social Influences on Consumer Buying Decisions LO6 Identify and understand the social factors that affect consumer buying decisions. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 48 Social Influences Reference Groups Opinion Leaders Family Members 49 Copyright 2012 by Cengage Learning Inc. All Rights Reserved Reference Group A group in society that influences an individual’s purchasing behavior. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 50 Reference Groups Primary Direct Secondary Reference Groups Aspirational Indirect Nonaspirational 51 Copyright 2012 by Cengage Learning Inc. All Rights Reserved Influences of Reference Groups 1. They serve as information sources and influence perceptions. 2. They affect an individual’s aspiration levels. 3. Their norms either constrain or stimulate consumer behavior. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 52 Opinion Leaders An individual who influences the opinion of others. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 53 Opinion Leaders Marketers are looking to Web logs, or blogs, to find opinion leaders Teenagers Movie stars Sports figures Celebrities Copyright 2012 by Cengage Learning Inc. All Rights Reserved 54 Family Purchase Process Roles in the Family Initiators Influencers Decision Makers Purchasers Consumers Copyright 2012 by Cengage Learning Inc. All Rights Reserved 55 Relationships among Purchasers and Consumers in the Family 56 Copyright 2012 by Cengage Learning Inc. All Rights Reserved LO6 Review Learning Outcome Social Factors Direct Reference Groups Opinion Leaders Primary Indirect Secondary Aspirational People you know Nonaspirational Celebrities Socialization Process Family Initiators Decision Makers Influencers Consumers Purchasers Copyright 2012 by Cengage Learning Inc. All Rights Reserved 57 Individual Influences on Consumer Buying Decisions LO7 Identify and understand the individual factors that affect consumer buying decisions. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 58 Individual Influences Gender Age Life Cycle Personality Self-Concept Lifestyle 59 Copyright 2012 by Cengage Learning Inc. All Rights Reserved Psychological Influences on Consumer Buying Decisions LO8 Identify and understand the psychological factors that affect consumer buying decisions. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 60 Psychological Influences Perception Motivation Learning Beliefs & Attitudes Copyright 2012 by Cengage Learning Inc. All Rights Reserved Perception The process by which people select, organize, and interpret stimuli into a meaningful and coherent picture. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 62 Perception Selective Exposure Selective Distortion Selective Retention Copyright 2012 by Cengage Learning Inc. All Rights Reserved Perception Selective Exposure Consumer notices certain stimuli and ignores others Selective Distortion Consumer changes or distorts information that conflicts with feelings or beliefs Selective Retention Consumer remembers only that information that supports personal beliefs 64 Copyright 2012 by Cengage Learning Inc. All Rights Reserved Marketing Implications of Perception • Important attributes • Price • Brand names • Quality and reliability • Threshold level of perception • Product or repositioning changes • Foreign consumer perception • Subliminal perception Copyright 2012 by Cengage Learning Inc. All Rights Reserved 65 Motivation Maslow’s Hierarchy of NeedsA method of classifying human needs and motivations into five categories in ascending order of importance. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 66 Maslow’s Hierarchy of Needs 67 Copyright 2012 by Cengage Learning Inc. All Rights Reserved Types of Learning Experiential An experience changes behavior Conceptual Not learned through direct experience http://www.cspinet.org Online Copyright 2012 by Cengage Learning Inc. All Rights Reserved 68 Stimulus Generation and Discrimination Stimulus Generalization Stimulus Discrimination A form of learning that occurs when one response is extended to a second stimulus similar to the first. A learned ability to differentiate among similar products. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 69 Beliefs and Attitudes Belief An organized pattern of knowledge that an individual holds as true about his or her world. Attitude A learned tendency to respond consistently toward a given object. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 70 Changing Attitudes Change beliefs about the brand’s attributes Change the relative importance of these beliefs Add new beliefs 71 Copyright 2012 by Cengage Learning Inc. All Rights Reserved LO8 Review Learning Outcome Psychological Factors Selective Exposure Perception Selective Retention Selective Exposure Needs Motivation Learning Beliefs & Attitudes Psychological Safety Social Esteem Stimulus Generalization Changing Beliefs about Attributes SelfActualization Stimulus Discrimination Changing Importance of Beliefs Copyright 2012 by Cengage Learning Inc. All Rights Reserved Adding New Beliefs 72