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McGraw-Hill/Irwin Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved. Marketing Dhruv Grewal Michael Levy Chapter 5 Consumer Behavior.

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Presentation on theme: "McGraw-Hill/Irwin Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved. Marketing Dhruv Grewal Michael Levy Chapter 5 Consumer Behavior."— Presentation transcript:

1 McGraw-Hill/Irwin Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved. Marketing Dhruv Grewal Michael Levy Chapter 5 Consumer Behavior

2 5-2 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Netflix 1.5 million subscriber households 18,000 titles 25 strategically located distribution centers Changing in store to in home selection Key partnership promotions

3 5-3 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Consumer Behavior Use principles and theories from sociology and psychology Understand consumer actions Develop basic strategies to deal with those actions Understand why people buy products or services

4 5-4 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Meet Eva Alternative Solutions: 1.Join local movie rental (i.e. Blockbuster store) 2.Subscribe to premium cable 3.Subscribe to online movie rental (i.e. Netflix) Problem: Getting access to the latest video releases and movies.

5 5-5 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Evas Questions Which alternative is more likely to attract friends over to watch movies? Which alternative gives me the best overall value?

6 5-6 The Consumer Decision Process

7 5-7 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Types of Buying Decisions

8 5-8 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Types of Buying Decisions Limited Problem Solving Habitual Decision Making Extended Problem Solving Impulse Buying

9 5-9 Test Your Knowledge What type of buying decision requires the least amount of time and effort? A)limited problem solving B)habitual decision making C)extended problem solving D)impulse buying

10 5-10 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Need Recognition Functional needs Psychological needs

11 5-11 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Search for Information Internal Search for Information External Search for Information

12 5-12 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Factors Affecting Consumers Search Process Perceived Benefits versus Perceived Costs Discussion question What is the difference in search time between the following: A wedding gift for a) coworker, b) your brother, c) your best friend?

13 5-13 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Locus of Control Internal Locus of Control Control = more search activities External Locus of Control Fate, external factors = why bother

14 5-14 Actual or Perceived Risk Financial risk Performance risk Psychological risk

15 5-15 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Type of Product or Service Specialty goods/services Shopping goods/services Convenience goods/services

16 5-16 Test Your Knowledge Consumers can spend considerable time searching for both specialty and shopping goods or services; the difference lies in _______________. A)the amount of time they have B)the amount of money they have budgeted C)the psychological risk D)the kind of search

17 5-17 Evaluation of Alternatives: Attribute Sets Universal Set Choice Retrieval Set Evoked Set

18 5-18 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Evaluation of Alternatives: Evaluate Criteria Evaluative Criteria Determinant Attributes Discussion question What are some of the features of a vacation that would be in your evaluative criteria?

19 5-19 How do consumers begin to evaluate different alternatives, and what important attributes and criteria do they use? Evaluative Criteria

20 5-20 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Case in Point: Carnival Connections Carnival Connections Challenge Answer Results To encourage small groups to travel together and understand the preferences of these groups. Establish a social networking site that allows small groups to plan and coordinate a cruise vacation as well as invite others to participate in the cruise. A soft launch in Jan, 2006 to better understand consumers use and needs from the site.

21 5-21 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Evaluation of Alternatives: Consumer Decision Rules EntertainmentNumber of Days MealsPrice Importance Weights Carnival Holland America Celebrity

22 5-22 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Evaluation of Alternatives: Decision Heuristics ? Product Presentation Price Brand

23 5-23 Test Your Knowledge Decision heuristics are ________ that help a consumer narrow down his or her choices. A)mental shortcuts B)breathing exercises C)logical steps D)compensatory decision rules

24 5-24 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Purchase and Consumption Ritual consumption

25 5-25 Understanding Rituals How does someone plan a ritual event that they have never planned before?

26 5-26 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Case in Point: Grooms Guide to WeddingsGrooms Guide to Weddings Challenge Answer Results To involve the future groom in the wedding planning. The Knot is a one stop shop for the 2.4 million couples preparing for a wedding in the U.S. The site includes information about customs, traditions and products for any wedding. 3.2 million unique visitors each a month, 3,000 new members per day and growing.

27 5-27 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Postpurchase: Customer Satisfaction Customer contact Encourage feedback Provide money back guarantee Build realistic expectations Demonstrate correct product use

28 5-28 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Postpurchase: Dissonance Firms attempt to reduce dissonance by reinforcing the decision Thank you letters, congratulations letters, quality ratings Discussion question What other ways do firms reinforce purchase decisions?

29 5-29 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Ethical Dilemma 5.1: Dissatisfied Customers Use ihate____.com Customer complaint system Customer service failure leads to consumers seeking other means Effective means of raising complaints The Complaint Station - tribe.net

30 5-30 Factors Influencing the Consumer Decision Process Consumer Decision Process Social Factors Marketing Mix Elements Psychological Factors Situational Factors

31 5-31 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Psychological Factors

32 5-32 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Psychological Factors: Motives

33 5-33 Test Your Knowledge What psychological factor is a need or want that is strong enough to cause the person to seek satisfaction? A)learning B)perception C)motive D)attitude

34 5-34 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Psychological Factors: Attitude Attitude Behavioral Cognitive Affective

35 5-35 Psychological Factors: Perception © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Discussion question How has societys perception of people with tattoos changed in recent years?

36 5-36 Psychological Factors: Learning Affects both attitudes and perceptions Affected by social experiences

37 5-37 Social Factors: Family © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Decision makers Influencers

38 5-38 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Social Factors: Reference Groups Family Friends Coworkers Famous people Offer information Provide rewards for specific purchasing behaviors Enhance consumers self- image

39 5-39 Test Your Knowledge Which of the following is a way in which reference groups might provide information to consumers? A)Leading by example B)Indirectly, through observation C)Contacting the seller D)Web research

40 5-40 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Social Factors: Culture Gathering Ritual Vows Celebration Example: Weddings

41 5-41 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Situational Factors

42 5-42 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Entrepreneurial Marketing 5.1: Zipcar – The Urban Rent-a-car Zipcar – The Urban Rent-a-car Discussion question What situational factors led to the creation of Zipcar?

43 5-43 Extended problem solving: Occurs when a buyer devotes considerable time and effort to analyzing alternatives; common when the customer perceives that the purchase decision entails a lot of risk. External search for information: The buyer seeks information outside his or her personal knowledge base to help make the buying decision. Functional needs: Needs that pertain to the performance of a product or service. Habitual decision making: A purchase decision process in which consumers engage with little conscious effort. Impulse buying: A buying decision made by customers on the spot when they see the merchandise. Internal search for information: The buyer examines his or her own memory and knowledge about the product or service, gathered through past experiences. Limited problem solving: Occurs during a purchase decision that calls for, at most, a moderate amount of effort and time. Psychological needs: Needs that pertain to the personal gratification consumers associate with a product and/or service. Ritual consumption: Refers to a pattern of behaviors tied to life events that affect what and how we consume. Chapter 5 Glossary


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