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Marketing Concepts Consumer Behavior

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1 Marketing Concepts Consumer Behavior
MKTG Spring 2014 Mrs. Tamara L. Cohen Marketing Concepts Consumer Behavior Classes #5-6

2 KEY TERMS Cognitive dissonance Motivation Personality Traits
Self-concept Perception Selective perception Subliminal perception Attitudes Beliefs Values Lifestyle Opinion leaders Word of mouth Subcultures Cognitive dissonance = feeling of post-purchase psychological tension or anxiety Motivation = the energizing force that stimulates behavior to satisfy a need Personality = the individual force that guides and directs behavior Traits = characteristics of personality Self-concept = the way people see themselves, and the way they believe others see them Perception = process by which a person selects, organizes, & interprets information to create his/her picture of the world Selective perception = filtering of exposure, comprehension, & retention Subliminal perception = seeing or hearing messages without being aware of receiving them Attitudes = learned predisposition to respond to a stimulus in a consistent way Beliefs = consumer’s subjective perception of how a product or brand performs on different attributes Values = society’s personally or socially preferred modes of conduct that tend to persist over time Lifestyle = way of living that reflects how people spend their time and other resources Opinion leaders = individuals who exert direct or indirect social influence over others Word of mouth = influence spread by people during conversations Subculture = subgroups within a larger culture, showing unique values, ideas and attitudes

3 KEY CONCEPTS Purchase decision process: Maslow’s Hierarchy of Needs
Problem recognition Information search Alternative evaluation Purchase decision Post-purchase behavior Maslow’s Hierarchy of Needs Brand loyalty Reference groups Family life cycle Social class Brand loyalty = favorable attitude toward & consistent purchase of brand over time Reference groups = people to whom others look for self-appraisal, a source of personal standards, or approval Family life cycle = distinct phases through which a family moves, showing distinctive purchasing behaviors Social class = relatively permanent, homogeneous divisions in society, into which people sharing similar values, interests and behavior, can be grouped

= the actions taken by an individual to purchase & use products & services Actions include mental & social processes that come before & after these actions. Behavioral sciences help explain WHY & HOW choices are made. Organizations use this knowledge to provide value to consumers, and to influence their choices. All aspects of consumer behavior are rooted in CULTURE.

5 It’s complicated … Consumers make many buying decisions every day. What? Where? How? How much? When? Why? How do consumers respond to various marketing efforts? Often, consumers themselves don’t know what influences their purchases. “Ninety-five percent of the thought, emotion, and learning [that drive our purchases] occur in the unconscious mind – that is, without our awareness.” consumer behavior expert, Brad Weiners, “Getting Inside – Way Inside – Your Customer’s Head” Business 2.0, April 2003, pp.54-55

6 Stimulus-Response Model
of Buyer Behavior Marketing & other stimuli Buyer’s ‘black box’ Buyer responses Marketing Other Product Economic Price Technological Place Political Promotion Cultural Buyer character-istics Buyer decision process Product choices Brand choices Dealer choices Purchase timing Purchase amount Model of Buyer Behavior - Philip Kotler ‘Black box’ - refers to a device or system that can be viewed only in terms of its input, output, and transfer characteristics, without having an understanding of its internal workings.

7 The purchase decision process
Kerin, Hartley, Rudelius

8 can be stimulated by marketing activity, or by simple observation
My phone fell into water OR Advertisement for new smart phone suggested need for new technology

9 Internal search relevant information in memory External search personal sources public sources marketer sources

10 Evaluative criteria Consideration set
objective & subjective attributes Consideration set group of brands consumer finds acceptable (i.e. short list) Evaluative criteria - represent objective attributes of brand (physical capabilities) + subjective attributes (prestige)

11 Where to buy? (i.e. from whom) When to buy?
Choice of seller depends on return policies, terms of sale, past experience, reputation When? Sale or rebate offer; shopping experience; sales pressure; financial considerations

12 Experience versus Expectations Cognitive dissonance
Customer satisfaction studies: satisfied - tell 3 people dissatisfied - tell 9 people

13 Cognitive Dissonance = feeling of post-purchase psychological tension or anxiety Consumers alleviate cognitive dissonance by seeking affirmation ask friends to applaud choice read ads of rejected brands to confirm why they were not chosen companies follow up with phone calls or ads to reinforce or confirm buyer’s good decision, e.g. “Aren’t you really glad you bought a Buick?”

14 Impact of “The Situation”
The purchase task reason for decision personal use or gift, i.e. social visibility Social surroundings others present during purchase, e.g. consumers with children buy 40% more than consumers shopping alone Physical surroundings ambiance; crowds Time time of day, e.g. grocery shoppers before lunch time buy more than when they are not hungry; time available Pre-existing conditions mood, e.g. “shopping therapy”; cash-on-hand, e.g. shoppers using credit cards buy more than those using debit cards or cash Situational Influences

15 Psychological Factors
Motivation & Personality Perception Learning Values, Beliefs & Attitudes Lifestyle Situational Influences

16 Psychological Factors 1. Motivation & Personality
NEEDS - biological & psychological MOTIVES Freud - believed people are largely unconscious of real psychological forces shaping their behavior. Buying decisions are affected by subconscious motivation. Maslow - wanted to explain why people are driven by particular needs at particular times. Human needs are arranged in a hierarchy, with most pressing at the bottom, and least pressing at the top. A person has many NEEDS at any given time. These needs may be biological (or physiological), e.g. arising from hunger, thirst, discomfort, or psychological, e.g. recognition, esteem, etc. As a need becomes intense, it transitions into a MOTIVE, or DRIVE, which spurs a person to seek satisfaction. Popular theories of motivation developed by psychologists: Sigmund Freud Abraham Maslow Freud: e.g. An aging baby boomer buys a sporty convertible. He explains that he likes the feel of the wind in his (thinning) hair. At a deeper level, he may be trying to impress others with his success, i.e. conspicuous consumption demonstrates that he has the money to buy this expensive car. At a still deeper level, he may be buying the car to feel young, independent and carefree again. He may even feel more virile and attractive in this car. Maslow: A person seeks to satisfy the most important need first. Once that need is satisfied, it will stop being a motivator. As each important need is satisfied, the next most important need will come into play. e.g. Starving people (physiological need) are focused on survival, and will not take an interest in the happenings of the art world (self-actualization need), nor in how they are seen or esteemed by others (social or esteem needs), nor even whether they are breathing clean air (safety needs).

17 Maslow’s Hierarchy of Needs
Satisfaction of needs Psychological needs Kerin, Hartley, Rudelius (Maslow’s basic triangle) [Remember, we first encountered Maslow’s Hierarchy in class #2, when we talked about NEEDS.] Examples of each level of needs: PHYSIOLOGICAL - food, water, sex, sleep (as in Maslow’s original work); restaurants, grocery stores SAFETY - self-preservation, physical & financial well-being; home security systems, insurance companies, retirement planning advisors SOCIAL - dating services, affinity groups PERSONAL - achievement, status, self-respect; preferential levels of service (e.g. AmEx platinum card) SELF-ACTUALIZATION - personal fulfillment; profound moments of love, happiness, understanding, rapture; e.g. “Be all you can be” (US Army recruiting advertisement) Physical needs

18 Psychological Factors 1. Motivation & Personality
Key traits = the unique psychological characteristics that lead to relatively consistent and enduring responses to an environment e.g. assertiveness, extroversion, compliance, dominance, aggression Traits are formed at a young age, & usually remain fairly intact. Self-concept - actual & ideal Personality = unique consistent pattern of thinking, feeling & acting Market research: Compliant people prefer known brand names, and use more mouthwash & toilet soaps. Aggressive types use razors rather than electric shavers; they apply more cologne & aftershave lotions, and buy status-brands (conspicuous consumption). Self-concept = the way people see themselves & the way they believe others see them John Holland developed a model of 6 personality types (diagram above), that is mostly used in career counseling. His 6 personality types are: Realistic, Investigative, Artistic, Social, Enterprising, and Conventional. There are many schematic illustrations of personality types; some overlap with motivation theories.

19 Psychological Factors
2. Perception = process by which people select , organize & interpret information, to form a meaningful picture of the world Selective perception = selective attention + selective distortion + selective retention Selective attention / exposure = tendency for people to screen out most information to which they are exposed Selective distortion / comprehension = tendency to interpret information in ways that support what a person already believes Selective retention = remember good features of preferred brands; forget good features about competing brands Selective attention / selective exposure = tendency for people to screen out most information to which they are exposed. The average American consumer is exposed to about 5,000 advertisements every day (Charles Pappas, “Ad Nauseam,” Advertising Age, July 10, 2000, pp ). It is impossible to pay attention to most of them, so people screen them out.

20 Perception - it’s all a matter of perspective
A stunning steel sculpture was created in honor of Nelson Mandela. Up close it looks like 50 rods of steel. Step back and it looks much different. Perception - it’s all a matter of perspective We’ll use this contemporary artwork as an example of different ways of looking at the same thing. A stunning steel sculpture has been created in honor of Nelson Mandela. Up close it appears there are only 50 rods of steel. The steel symbolizes the time he spent behind prison bars. The number recalls the years since he was arrested before the Treason Trial that left him incarcerated for 27 years. That alone would be powerful but the further you move away from the massive piece of art a surprise develops.  The art, called 'Release', was created by Marco Clanfanelli and sits on the exact spot where President Mandela was arrested in the village of Howick which is 90 miles west of Durban.

21 Subliminal Perception
= exposure to advertising messages without being aware of that exposure Consumer concern that subliminal advertising will affect them without their knowing it. Australia, Britain, Canada, California - banned subliminal advertising Subliminal advertising: - “eat popcorn” & “drink Coca-Cola” flashed on movie theater screen every 5 seconds for 1/300th of a second. Viewers did not consciously recognize these messages, but did absorb them subconsciously. They bought 58% more popcorn & 18% more Coke. Ultimately it came out that the market researcher made up the data. However, consumers and law-makers took up the issue of subliminal advertising, and several countries have outlawed the practice, including the US. Subliminal advertising means ‘below the threshold for conscious perception’. These messages are present for too little time for the brain to process them properly. Substantial research has shown that subliminal advertising does not produce lasting or strong changes in behavior. Examples of subliminal messages:

22 Psychological Factors
3. Learning changes in a person’s behavior resulting from experience + reasoning most human behavior is learned marketers can build up demand for a product by associating it with strong drives, using motivating cues, & providing positive reinforcement reduce perceived risk endorsement seals of approval free trial / sample Instructions warranty / guarantee e.g. A drive for self actualization might drive a consumer to look into buying a digital camera. The consumer’s response to the idea of buying a camera is conditioned by surrounding cues. Cues are minor stimuli that influence when, where, and how a person responds. So, our self-actualizer might see several digital camera brands in a shop window or in a newspaper advertisement. He may hear of a special sale price, or discuss cameras with a friend. These are all cues that can influence interest in the buying decision. The consumer makes his decision and buys a Nikon digital camera. If his experience is rewarding, he’ll probably use his camera more and more, and his response will be reinforced. He forms a positive impression of Nikon products, based on his experience. The next time this consumer shops for a camera, or binoculars, or some such similar product, the probability is greater that he will buy a Nikon product. This is brand loyalty. Strategies to reduce perceived risk: seek endorsements; seals of approval; free trials/samples; extensive instructions; warranties/guarantees ? brand loyalty

23 Psychological Factors 4. Values, Beliefs & Attitudes
These are all learned, beginning at a young age. Values – can be personal or group Beliefs – consumer’s subjective perception of product performance; beliefs affect buying behavior Attitudes – consumer’s consistent or inconsistent feelings & tendencies toward a product; hard to change e.g. MILK By 1994, milk consumption had been in decline for 20 years. The general public perception was that milk was unhealthy, outdated, just for kids, or good only for dunking cookies. The national Fluid Milk Processors Education Program (MilkPEP) launched its ad campaign featuring celebrities with milk mustaches, and the tag line “Got Milk?” The campaign has been wildly popular + very successful, and is still running. Milk consumption has increased. Initial target market was young women in their 20s. It expanded to other target markets. It now has cult status with teens. ‘Selected’ bus stops in California smell of choc chip cookies, which is supposed to prompt you to say, “Got milk?”

24 Psychological Factors
5. Lifestyles = mode of living identified by how people spend their time & resources, what they consider important in their environment, what they think of themselves & the world around them Psychographics = analysis of consumer lifestyles combines psychology, lifestyle & demographics useful for segmenting & targeting markets A prominent psychographic system is VALS classification system, which identifies 8 consumer segments, according to their levels of resources, and primary motivation for buying and possessing certain products and services.

25 Sociocultural Factors
Personal influence Reference groups Family Social class Culture & subculture Situational Influences

26 Sociocultural Factors
1. Personal Influence Consumer purchases are often influenced by others. Opinion leaders = people who exert direct or indirect social influence over others considered knowledgeable about particular products, services or brands often sports figures or celebrities Word-of-mouth = influence via communications between target buyers and their circle of acquaintance (friends, family, neighbors, associates) Opinion leadership – widespread in purchase of cars, entertainment, clothing, accessories, club membership, consumer electronics, vacations, food, financial services. About 10% of US adults are considered to be opinion leaders. We will address word-of-mouth influence again when we discuss Promotion, in the context of communication strategy. Word-of-mouth is recognized as a powerful influence, and many consumer product companies engage professional ‘chatters’ to promote their products in this manner, e.g. BzzAgent & Big Fat Promotions are companies promote this mode of communication in specific applications. BzzAgent has built a volunteer “network that will turn passionate customers into brand evangelists”. David Baiter, founder BzzAgent Royal wedding photos from The Telegraph

27 Sociocultural Factors
2. Reference groups = people to whom an individual looks for self-appraisal or as a source of personal standards - affect luxury product & brand choices, but not necessities Membership group - membership by choice or by birth; e.g. social clubs, fraternities/sororities; family Aspiration group - membership is desired in this group; e.g. professional society, professional sports team Dissociative group - membership is avoided, due to differences in values or behaviors

28 Sociocultural Factors
3. Family Family is most important buying organization in society. - buying roles change; consumer lifestyles evolve - family life cycle - in US, wife traditionally made majority of purchase decisions about food, household products, clothing; now men make 40% of food-shopping purchases - in US, women make almost % of all purchases; $6 trillion a year Family buying patterns consider roles of husband, wife, children. 70% of US women work outside the home, and men are much more willing (and able) to do more of family’s purchasing, role of woman/wife making majority of purchase decisions is changing. 40% of US drivers are women, but women influence > 80% of car-buying decisions. Children as young as 6 influence family car decisions. e.g. Within the last 5 years Toyota used a Sienna minivan campaign that was kid-focused; most other campaigns have focused on soccer moms. “Everything kids want. Everything you need.” In one spot, engineers in Toyota's design center anxiously await a visit from their consultants. Three little girls on bicycles rush in, offering advice and demanding features like “a hundred cup holders”. (“Is 14 all right?”)

29 Sociocultural Factors
4. Social Class UPPER = relatively permanent, homogeneous divisions of society into which people sharing similar values, interests & behavior can be grouped - determined by occupation, source (not size) of income, & education MIDDLE LOWER Companies use social class to identify & target good prospects. In some systems, members of different classes are raised for certain roles, and cannot change their social positions. In the US, class lines are not rigid, and people can move up and down, though not as easily as generally believed. Marketers are interested in social class because people within a given class tend to exhibit similar and sometimes predictable buying behavior. Social classes show distinct product and brand preferences in areas like clothing, home furnishings, leisure activities, cars. Downton Abbey (English ‘upper crust’) - almost everywhere in the world - media preferences differ: tabloids (lower & working); fashion, romance, celebrity (middle); literary, travel, news (upper) LOWER MIDDLE UPPER

30 Upper Uppers (1%) Lower Uppers (2%) Upper Middles (12%)
Social elite; live on inherited wealth; give large sums to charity; own more than one home; children go to finest schools Lower Uppers (2%) Earned high income or wealth through exceptional ability; active in civic affairs; buy expensive homes, education, cars Upper Middles (12%) Professionals, independent businesspeople, corporate managers with neither family status nor unusual wealth; believe in education, are joiners & highly civic-minded; want ‘better things in life’ Middle Class (32%) Average-pay white- & blue-collar workers; live on ‘the better side of town’; buy popular products to keep up with trends; better living means owning a nice home in a nice neighborhood with good schools Working Class (38%) ‘Working-class lifestyle’, whatever their income, school background or occupation; depend heavily on relatives for economic & emotional support, advice on purchases, assistance in times of trouble Upper Lowers (9%) The working poor. Living standard is just above poverty; strive toward higher class; often lack education; poorly paid for unskilled work Lower Lowers (7%) Visibly poor; often poorly educated unskilled laborers; often out of work; some depend on public assistance; tend to day-to-day existence Major American Social Classes - as reported by Philip Kotler & Gary Armstrong Social scientists have identified 7 American social classes. Income + Occupation + Education + Wealth INCREASE as you move up the continuum

31 Sociocultural Factors
5. Culture & Subculture Important American subcultures: Hispanic e.g. Cuban, Mexican, Puerto Rican, Latin American tend to buy more branded, higher-quality, not generics family shopping; brand loyal African American growing affluence & sophistication; more price conscious; quality & selection important; most fashion-conscious ethnic group; enjoy shopping Asian Americans e.g. Chinese Americans, Filipinos, Japanese Americans, Asian Indians, Korean Americans fastest-growing & most affluent segment; shop frequently; most brand conscious but least brand loyal; most tech savvy segment Mature consumers as the US population ages more time & money - leisure marketers; anti-aging products & services Culture is most basic cause of a person’s wants & behavior. Each culture contains subcultures = groups of people with shared value systems, based on common life experiences & situations e.g. nationalities, religions, racial groups, geographic regions

32 Next class (class #7): Services Preparation: Read Ch. 12 (pages below)
Read Ch. 12: pp p.311 Marketing dashboard Homework assignment DUE Feb.3: Super Bowl advertisement Whether or not you choose to watch the Super Bowl football game, as a marketer you should pay attention to the commercials. Choose one of those commercials advertising a service for this assignment. Who is the target market of this commercial? What need does this commercial address? How much did this commercial spot cost? Next class (class #7): Services Preparation: Read Ch. 12 (pages below) Homework: Super Bowl advertisement

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