1. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 1 1. Explain why marketing managers should understand consumer behavior 2. Analyze the components of the consumer decision-making process 3.Explain the consumer’s postpurchase evaluation process 4. Identify the types of consumer buying decisions and discuss the significance of consumer involvement 5. Identify and understand the cultural factors that affect consumer buying decisions 6.Identify and understand the social factors that affect consumer buying decisions 7. Identify and understand the individual factors that affect consumer buying decisions 8. Identify and understand the psychological factors that affect consumer buying decisions Chapter 5 Learning Outcomes/Objectives

2. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 2 LO 1 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.

3. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 3 Understanding Consumer Behavior Is Important because it Tells Us How and Why consumers purchase and consume products LO 1 Consumer behavior consumers make purchase decisions consumers use and dispose of product = HOW

4. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 4 Consumer Decision-Making Process LO 2 A five-step process used by consumers when buying goods or services. Consumer Decision-Making Process

5. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 5 Consumer Decision-Making Process LO 2 5. Postpurchase Behavior 5. Postpurchase Behavior 4. Purchase 3. Evaluation of Alternatives 3. Evaluation of Alternatives 2. Information Search 1. Need Recognition Cultural, Social, Individual and Psychological Factors affect all steps Cultural, Social, Individual and Psychological Factors affect all steps

6. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 6 Stimulus causes [1] step one need recognition LO 2 Any unit of input affecting one or more of the five senses: LIKE: Sight smell taste touch hearing, seeing Stimulus Internal stimulus – thinking, feeling et. External stimulus – any aspect of the marketing mix, such as product package, advertising, special price, window display in a retail store.

7. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 7 LO 2 Step 2 Information Search Internal Information Search  Recall information in memory External Information search  Seek information in outside environment  Non-marketing controlled talk to a friend  Marketing controlled – the marketing mix

8. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 8 LO 2 Step 3. Evaluation of Alternatives and Purchase Evoked Set Purchase! Analyze product attributes Analyze product attributes Rank attributes by importance Rank attributes by importance Use cutoff criteria

9. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 9 LO 2 Step 4 Purchase To buy or not to buy... Determines which attributes are most important in influencing a consumer’s choice

10. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 10 Step 5 Postpurchase Behavior LO 3 In the purchasing or consumer decision marketing process many Consumers experience cognitive dissonance. Ways to reduce it are:  Seeking information that reinforces positive ideas about the purchase  Avoiding information that contradicts the purchase decision  Revoking the original decision by returning the product Marketing can minimize through: Effective Communication Follow-up Guarantees Warranties

11. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 11 LO 3 Five Factors Influencing Decisions 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

12. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 12 Lo 4 Identify the types of consumer buying decisions and discuss the significance a of consumer involvement – factor 1 to consider in the process More Involvement Less Involvement Routine Response Behavior Routine Response Behavior Limited Decision Making Limited Decision Making Extensive Decision Making Extensive Decision Making

13. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 13 LO 4 Continuum of Consumer Buying Decisions

14. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 14 LO 4 Factors Determining the Level of Consumer Involvement Situation Social Visibility Interest Perceived Risk of Negative Consequences Previous Experience

15. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 15 Four External Factors Affecting Consumer Buying Decisions  Cultural Factors- learning outcome 5  Social Factors – learning outcome 6  Individual Factors – learning outcome 7  Psychological Factors – learning outcome 8

16. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 16 Culture LO5 Culture Set 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.

17. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 17 Components of Culture LO 5 Myths Language Values Customs Rituals Laws Material artifacts

18. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 18 Culture is... LO 5 Learned Functional Pervasive Dynamic

19. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 19 Value LO 5 Value Enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct.

20. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 20 Core American Values. LO5 Success Materialism Freedom Progress Youth Capitalism Enduring beliefs that a specific mode of conduct is personally or socially preferable to another mode of conduct. Core American values are

21. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 21 Subculture LO 5 Subculture A homogeneous group of people who share elements of the overall culture as well as unique elements of their own group. http://www.dead.net Online

22. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 22 Social Class LO 6 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.

23. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 23 Social Class Measurements LO6 Wealth Other Variables Income Education Occupation

24. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 24 The Impact of Social Class on Marketing LO6 Indicates which medium to use for advertising Helps determine the best distribution for products

25. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 25 Social Influences LO 6 Reference Groups Opinion Leaders Family Members

26. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 26 Relationships among Purchasers and Consumers in the Family LO 5

27. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 27 Individual Influences LO7 Gender Age Life Cycle Personality Self-Concept Lifestyle Personality Self-Concept Lifestyle

28. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 28 Psychological Influences LO8 Perception Motivation Learning Beliefs & Attitudes

29. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 29 Perception - Process by which people select, organize, and interpret stimuli into a meaningful and coherent picture. LO 7 Selective Exposure Selective Distortion Selective Retention Consumer notices certain stimuli and ignores others Consumer notices certain stimuli and ignores others Consumer changes or distorts information that conflicts with feelings or beliefs Consumer changes or distorts information that conflicts with feelings or beliefs Consumer remembers only that information that supports personal beliefs Consumer remembers only that information that supports personal beliefs

30. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 30 Marketing Implications of Perception LO8  Important and strong attributes and stimuli  Price that get attention  Brand names to remember  Quality and reliability of products  Threshold level of perception  Product or repositioning changes  Foreign consumer perception “made in USA”

31. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 31 Maslow’s Hierarchy of Needs LO 7

32. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 32 Types of Learning LO 8 Experiential Conceptual An experience changes behavior Not learned through direct experience

33. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 33 Beliefs and Attitudes LO8 Belief Attitude An organized pattern of knowledge that an individual holds as true about his or her world. A learned tendency to respond consistently toward a given object.

34. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 34 A unique positioning designed to create a positive attitude toward this German wine.

35. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 35 Positioning Foster Beer Billboard

36. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 36 1. Why marketing managers should understand consumer behavior 2. The components of the consumer decision-making process 3. The consumer’s postpurchase evaluation process 4. Types of consumer buying decisions and discuss the significance of consumer involvement 5. Cultural factors that affect consumer buying decisions 6. The social factors that affect consumer buying decisions 7. Individual factors that affect consumer buying decisions 8. The psychological factors that affect consumer buying decisions In Summary – We are Familiar with

37. Chapter 5Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 37 Now Go to  www.mktg4me.com www.mktg4me.com  At this website, study and review the flash cards  Take the practice quiz on chapter 5  Explore other aspects of this site for chapter 5  Take the chapter 5 quiz in the allocated time on WebCt