1. ©2003 South-Western Chapter 4 Version 3e1 chapter Consumer Decision Making 4 4 Prepared by Deborah Baker Texas Christian University

2. ©2003 South-Western Chapter 4 Version 3e2 chapter Learning Objectives 4 4 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.

3. ©2003 South-Western Chapter 4 Version 3e3 chapter Learning Objectives (continued) 4 4 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.

4. ©2003 South-Western Chapter 4 Version 3e4 chapter Learning Objectives (continued) 4 4 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.

5. ©2003 South-Western Chapter 4 Version 3e5 Learning Objective 1 1 Explain why marketing managers should understand consumer behavior.

6. ©2003 South-Western Chapter 4 Version 3e6 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. 1 1

7. ©2003 South-Western Chapter 4 Version 3e7 Learning Objective 2 2 Analyze the components of the consumer decision-making process.

8. ©2003 South-Western Chapter 4 Version 3e8 Consumer Decision-Making Process A five-step process used by consumers when buying goods or services. 2 2

9. ©2003 South-Western Chapter 4 Version 3e9 Consumer Decision-Making Process Postpurchase Behavior Postpurchase Behavior Purchase Evaluation of Alternatives Evaluation of Alternatives Information Search Need Recognition Cultural, Social, Individual and Psychological Factors affect all steps Cultural, Social, Individual and Psychological Factors affect all steps 2 2

10. ©2003 South-Western Chapter 4 Version 3e10 Need Recognition Result of an imbalance between actual and desired states. 2 2

11. ©2003 South-Western Chapter 4 Version 3e11 Need Recognition Internal Stimuli and External Stimuli Present Status Preferred State Marketing helps consumers recognize an imbalance between present status and preferred state 2 2

12. ©2003 South-Western Chapter 4 Version 3e12 Stimulus Any unit of input affecting one or more of the five senses:  sight  smell  taste  touch  hearing 2 2

13. ©2003 South-Western Chapter 4 Version 3e13 Want Recognition of an unfulfilled need and a product (or attribute or feature) that will satisfy it. 2 2

14. ©2003 South-Western Chapter 4 Version 3e14 Recognition of Unfulfilled Wants  When a current product isn’t performing properly  When the consumer is running out of an product  When another product seems superior to the one currently used 2 2

15. ©2003 South-Western Chapter 4 Version 3e15 Information Searches Process of recalling past information stored in the memory. Internal Process of seeking information in the outside environment. External 2 2

16. ©2003 South-Western Chapter 4 Version 3e16 Information Search Internal Information Search  Recall information in memory External Information search  Seek information in outside environment  Non-marketing controlled  Marketing controlled 2 2

17. ©2003 South-Western Chapter 4 Version 3e17 External Information Searches Need More Information More Risk Less knowledge Less product experience High level of interest Less Risk More knowledge More product experience Low level of interest Need Less Information 2 2

18. ©2003 South-Western Chapter 4 Version 3e18 Evoked Set Group of brands, resulting from an information search, from which a buyer can choose. 2 2

19. ©2003 South-Western Chapter 4 Version 3e19 Evoked Set Purchase! Evaluation of Products Analyze product attributes Use cutoff criteria Rank attributes by importance Evaluation of Alternatives 2 2

20. ©2003 South-Western Chapter 4 Version 3e20 Purchase Determines which attributes are most important in influencing a consumer’s choice To buy or not to buy... 2 2

21. ©2003 South-Western Chapter 4 Version 3e21 Learning Objective Explain the consumer’s postpurchase evaluation process. 3 3

22. ©2003 South-Western Chapter 4 Version 3e22 Cognitive Dissonance Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions. 3 3

23. ©2003 South-Western Chapter 4 Version 3e23 Postpurchase Behavior 3 3 Can minimize through: Effective Communication Follow-up Guarantees Warranties Cognitive Dissonance ? ? Did I make a good decision? Did I buy the right product? Did I get a good value?

24. ©2003 South-Western Chapter 4 Version 3e24 Learning Objective Identify the types of consumer buying decisions and discuss the significance of consumer involvement. 4 4

25. ©2003 South-Western Chapter 4 Version 3e25 Types of Consumer Buying Decisions More Involvement Less Involvement Routine Response Behavior Routine Response Behavior Limited Decision Making Limited Decision Making Extensive Decision Making Extensive Decision Making 4 4

26. ©2003 South-Western Chapter 4 Version 3e26 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 4 4

27. ©2003 South-Western Chapter 4 Version 3e27 Routine Response Behavior 4 4  Little involvement in selection process  Frequently purchased low cost goods  May stick with one brand  Buy first/evaluate later  Quick decision

28. ©2003 South-Western Chapter 4 Version 3e28 Limited Decision Making 4 4  Low levels of involvement  Low to moderate cost goods  Evaluation of a few alternative brands  Short to moderate time to decide

29. ©2003 South-Western Chapter 4 Version 3e29 4 4 Extensive Decision Making  High levels of involvement  High cost goods  Evaluation of many brands  Long time to decide  May experience cognitive dissonance

30. ©2003 South-Western Chapter 4 Version 3e30 Level of Involvement Situation Social Visibility Interest Perceived Risk of Negative Consequences Previous Experience Factors Determining Level of Involvement 4 4

31. ©2003 South-Western Chapter 4 Version 3e31 Marketing Implications of Involvement 4 4 High-involvement purchases require: extensive promotion to target market and good advertisement Low-involvement purchases require: in-store promotion and eye-catching package design

32. ©2003 South-Western Chapter 4 Version 3e32 Factors Influencing Buying Decisions Social Factors Individual Factors Psycho- logical Factors Cultural Factors CONSUMER DECISION- MAKING PROCESS BUY / DON’T BUY 4 4

33. ©2003 South-Western Chapter 4 Version 3e33 Learning Objective Identify and understand the cultural factors that affect consumer buying decisions. 5 5

34. ©2003 South-Western Chapter 4 Version 3e34 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. 5 5

35. ©2003 South-Western Chapter 4 Version 3e35 Cultural Influences on Buying Decisions Values Language Myths Customs Rituals Laws Components of American Culture Culture Material Artifacts 5 5

36. ©2003 South-Western Chapter 4 Version 3e36 Culture is... Learned Functional Pervasive Dynamic 5 5

37. ©2003 South-Western Chapter 4 Version 3e37 Value Enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct. 5 5

38. ©2003 South-Western Chapter 4 Version 3e38 Core American Values Success Materialism Freedom Progress Youth Capitalism CoreAmericanValuesCoreAmericanValues 5 5

39. ©2003 South-Western Chapter 4 Version 3e39 Global Language Blunders 5 5  Chevrolet’s “Nova” translated to “No Go”  Coors “Turn it Loose” became “Suffer from Diarrhea”  Toyota’s MR2 sounded like a swearword in French  Coca-Cola in Chinese means “bite the wax tadpole”

40. ©2003 South-Western Chapter 4 Version 3e40 Subculture A homogeneous group of people who share elements of the overall culture as well as unique elements of their own group. 5 5

41. ©2003 South-Western Chapter 4 Version 3e41 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. 5 5

42. ©2003 South-Western Chapter 4 Version 3e42 Learning Objective 6 6 Identify and understand the social factors that affect consumer buying decisions.

43. ©2003 South-Western Chapter 4 Version 3e43 Social Influences Reference Groups Opinion Leaders Family Members Social Influences on Buying Decisions 6 6

44. ©2003 South-Western Chapter 4 Version 3e44 Reference Group A group in society that influences an individual’s purchasing behavior. 6 6

45. ©2003 South-Western Chapter 4 Version 3e45 Reference Groups Types of Reference Groups Direct Indirect Primary Secondary Aspirational Non-aspirational 6 6

46. ©2003 South-Western Chapter 4 Version 3e46 Implications of Reference Groups 6 6  They serve as information sources and influence perceptions  They affect an individual’s aspiration levels  Their norms either constrain or stimulate consumer behavior

47. ©2003 South-Western Chapter 4 Version 3e47 Opinion Leaders An individual who influences the opinion of others. 6 6

48. ©2003 South-Western Chapter 4 Version 3e48 Family Purchase Roles in the Family  Instigators  Influencers  Decision-Makers  Purchasers  Consumers ChildrenInfluencePurchaseDecisions 6 6

49. ©2003 South-Western Chapter 4 Version 3e49 Learning Objective Identify and understand the individual factors that affect consumer buying decisions. 7 7

50. ©2003 South-Western Chapter 4 Version 3e50 Individual Influences Gender Age Family Life Cycle Personality Self-Concept Lifestyle Personality Self-Concept Lifestyle Individual Influences 7 7

51. ©2003 South-Western Chapter 4 Version 3e51 Psychographics The analytical technique used to examine consumer lifestyles and to categorize consumers. 7 7

52. ©2003 South-Western Chapter 4 Version 3e52 “Types of Moms” 7 7 “Strong Shoulders” Moms “Tug-of-War” Moms “June Cleaver” Moms “Mothers of Invention” Moms

53. ©2003 South-Western Chapter 4 Version 3e53 Learning Objective Identify and understand the psychological factors that affect consumer buying decisions. 8 8

54. ©2003 South-Western Chapter 4 Version 3e54 Psychological Influences Psychological Influences on Buying Decisions Perception Motivation Learning Beliefs & Attitudes 8 8

55. ©2003 South-Western Chapter 4 Version 3e55 Perception Process by which people select, organize, and interpret stimuli into a meaningful and coherent picture. 8 8

56. ©2003 South-Western Chapter 4 Version 3e56 Perception SelectiveExposureSelectiveExposure SelectiveDistortionSelectiveDistortion SelectiveRetentionSelectiveRetention 8 8

57. ©2003 South-Western Chapter 4 Version 3e57 Perception Selective Exposure Selective Distortion 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 Selective Retention Consumer remembers only that information that supports personal beliefs Consumer remembers only that information that supports personal beliefs 8 8

58. ©2003 South-Western Chapter 4 Version 3e58 Notices only 11 to 20 ads Exposure to over 250 advertisement messages per day A Consumer’s Selective Exposure 8 8

59. ©2003 South-Western Chapter 4 Version 3e59 Marketing Implications of Perception  Important attributes  Higher price  Brand names  Quality and reliability  Threshold level of perception  Product changes 8 8

60. ©2003 South-Western Chapter 4 Version 3e60 Maslow’s Hierarchy of Needs A method of classifying human needs and motivations into five categories in ascending order of importance. 8 8

61. ©2003 South-Western Chapter 4 Version 3e61 Motivation 8 8 Maslow’s Hierarchy of Needs Physiological Safety Social Esteem Self- Actualization

62. ©2003 South-Western Chapter 4 Version 3e62 Learning A process that creates changes in behavior, immediate or expected, through experience and practice. 8 8

63. ©2003 South-Western Chapter 4 Version 3e63 Types of Learning Types of Learning LearningDescriptionDescription Experiential Conceptual An experience changes behavior Not learned through direct experience 8 8

64. ©2003 South-Western Chapter 4 Version 3e64 Stimulus Generalization A form of learning that occurs when one response is extended to a second stimulus similar to the first. 8 8

65. ©2003 South-Western Chapter 4 Version 3e65 Beliefs and Attitudes An organized pattern of knowledge that an individual holds as true about his or her world. 8 8 Belief Attitude A learned tendency to respond consistently toward a given object.