2Consumer BehaviorProcesses 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 product useHow - consumers make purchase decisions- consumers use and dispose of products
3Importance of Understanding Consumer Behavior Consumer product & service preferences are constantly changingIn order to address this constant state of flux and to create a proper marketing mix for a well- defined market, marketing managers must have a thorough knowledge of consumer behavior
4Types of Buying Decisions Extended problem solving: occurs when consumers devote considerable time and effort to analyze alternatives (high risk)Limited problem solving: occurs when a purchase decision calls for a moderate amount of effort and time. (moderate risk)Impulse buying: buying decision made by customer on spot when they see merchandiseHabitual decision making: occurs when consumers engage with little conscious effort (low risk)
5In-class Assignment (individual) Describe your buying decision process on mobile phone that you boughtHow many steps?What are they?
6Consumer Decision-Making Process 5-step process used by consumers when buying goods or services12345Need RecognitionInformation SearchEvaluation of AlternativesPurchase DecisionPostpurchase Behavior
7Consumer Decision-Making Process Need Recognition: result of an imbalance between actual and desired statesExternal Stimulus e.g. when you have seen TV commercials for a new sport car and wanted to buy itInternal Stimulus e.g. when you hear your stomach growl and then realize that you are hungry
8Materials Perceive as Functionally Superior Gore-Tex is a waterproof/breathable fabric, and a registered trademark of W.L. Gore & Associates.Thinsulate is a trademark of the 3M Corporation, for a type of synthetic fiber thermal insulation used in clothing.Polartec is a trademark for a fabric innovation for performance apparel and accessories e.g. odor resistance, durable water repellency, sun protect technology, and flame resistance.
10Consumer Decision-Making Process (con’t) Need RecognitionInformation Search: after recognizing a need or want, consumer search for information about the various alternatives available to satisfy itInternal information search: the process of recalling past information stored in the memoryExternal information search: the process of seeking information in the outside environment
11Search for OptionsWhich one will I choose for my hair…
12Factors Affecting Consumers’ Search Processes The perceived benefits VS. perceived costs of search: Is it worth the time & effort to search for info. about product/service?The locus of control:Internal = people who believe they have some control over the outcomes of their actions = search more for info.External = people who believe the fate or external factors control all outcomes = search less for info.
13Factors Affecting Consumers’ Search Processes (con’t) Actual or perceived risk: higher risk = do more searching for info.Performance risk = involves the perceived danger inherent in poorly performing product/serviceFinancial risk = is associated with money both initial cost of purchase and costs of using product/servicePsychological risks = are associated with the way people will feel if product/service doesn’t convey the right image
14Factors Affecting Consumers’ Search Processes (con’t) Type of product or service: main types of products/servicesSpecialty = products/services toward which customers show a strong preference = they will expend considerable effort to search for the best suppliersShopping = products/services consumers will spend time comparing alternativesConvenience = products/services consumers are not willing to spend any effort to evaluate prior to purchase
15Consumer Decision-Making Process (con’t) Need RecognitionInformation SearchEvaluation of Alternatives:Attribute sets = sets of alternative choicesUniversal sets = all possible choices for the product categoryRetrieval sets = brands/stores can be readily brought forth from memoryEvoked sets = alternative brands/stores consumers states he/she would consider when making purchase decision
16Consumer Decision-Making Process (con’t) Need RecognitionInformation SearchEvaluation of Alternatives (con’t):Determinant attributes = product/service features that are important to buyer and other choices are perceived to differConsumer decision rules = set of criteria consumers use to quickly & efficiently select from among alternatives
17Consumer Decision-Making Process (con’t) Need RecognitionInformation SearchEvaluation of Alternatives (con’t):Consumer decision rules (con’t)Compensatory = good characteristics compensate for bad characteristics when consumer evaluating alternatives (based on overall features of concerns)Noncompensatory = consumers choose product/service on basis of subset of its characteristics, regardless of values of other attributes (based on specific feature of concern)Decision heuristics = consumers choose based on their self preferences e.g. price, brand, or product presentation
18Consumer Decision-Making Process (con’t) Need RecognitionInformation SearchEvaluation of AlternativesPurchase Decision: consumer purchase product/service that they believe provide them with the best value
19Consumer Decision-Making Process (con’t) Need RecognitionInformation SearchEvaluation of AlternativesPurchase DecisionPostpurchase Evaluation:3 possible positive postpurchase outcomes:Increased customer satisfactionDecreased postpurchase cognitive dissonance (buyers’ disappointment or discomfort)Increased loyaltyThe negative outcomes can be no repeated purchase or recommend product to others and more serious can be negative word of mouth and rumors
20Summary: Consumer Decision-Making Process Consumers take further action after purchase, based on their satisfaction or dissatisfaction.Consumer uses information to evaluate alternative brands in the choice set.Consumer recognizes a problem or need.135Need RecognitionInformation SearchEvaluation of AlternativesPurchase DecisionPostpurchase Behavior24Consumer is aroused to search for more information; the consumer may simply have heightened attention or may go into an active information search.The buyer’s decision about which brand to purchase.
21Factors Influencing the Consumer Decision Process Psychological FactorsMarketing Mix (4Ps)Social FactorsSituational Factors
22Psychological Factors VS.Psychological FactorsMotive (drive): a need or want that strong enough to cause the person seek satisfactionAttitude: a person’s consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or ideaExample = Your attitude toward Tops supermarket is better than BigC supercenter as Tops offers more variety of imported food ingredients and snacks that you like.Perception: the process by which we select, organize, and interpret info. to form a meaningful picture of the world.Example = You perceive that shopping in Tops supermarket is more expensive, in most items, than shopping in BigC supercenter.Learning: changes in an individual’s behavior arising from experience
23Maslow Hierarchy of Needs lowesthighestPhysiological needsbasic to survivalSafety needsself-preservationphysical well-beingSocial needslovefriendshipachievementstatusprestigeself-respectSelf-actualization (personal) needspersonal fulfillment
24Social Factors Family: family-members needs/wants Reference Groups: one or more persons whom individual uses as a basis for comparison regarding beliefs, feelings, friends, co-workers, or famous people the consumer would like to emulateOpinion leader = person within ref. group who exerts social influenceon others by his/her special skills, knowledge, personality = brand ambassadorsCulture: the shared meanings, beliefs, morals, values, and customs of group of people influence consumer behaviorSubculture = a group of people with shared value systems based on common life experiences and situationsSocial Class: relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors. It can be determined by many factors: income, occupation, education, wealth, and etc.It can be categorized by Social Economic Status (SES) as examples:Upper Class, Middle Class, and Lower ClassUpper-Upper, Lower-Upper, Upper-Middle, Middle class, Working Class, Upper-Lower, Lower-LowerThailand: A (Upper), B (Upper-Middle), C (Middle Class), D (Lower Class)
25Situational FactorsPurchase situation: the purpose of purchase (for what, whom)Shopping situation: store atmosphere, salespeople, crowding, in-store demonstration, promotions, packagingTemporal state: state of mind at any particular time or mood swing
26Personal Factors Age & life-cycle stage Occupation Economic situation Lifestyle: a person’s pattern of living as expressed in his/her activities, interests, and opinionPersonality & self concept i.e. honest, intelligent, imaginative, up-to-date, successful, upper class, outdoorsy, reliable, and etc.