1. CHAPTER 4: UNDERSTANDING CUSTOMERS: BUSINESS TO CONSUMER MARKETS Part 2: Use Information to Drive Marketing Decisions McGraw-Hill Education 1 Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

2. LEARNING OBJECTIVES  Understand the value of knowing the consumer  Consider the role of personal and psychological factors in consumer decision making  Appreciate the critical and complex role of cultural, situational, and social factors in a consumer purchase decision  Understand the consumer decision making process 2

3. THE POWER OF THE CONSUMER  Marketers are interested in learning about the process people use to make purchase decisions.  A company can only deliver value with an accurate and timely understanding of the customer.  Complex forces influence consumer choices and these forces change over time. 3

4. CHAPTER 01 MODEL OF THE CONSUMER DECISION PROCESSEXHIBIT 4.1 Marketing Activities Affect Consumer Decision Process: Value Proposition Distribution Marketing Communications Environmental Forces Affect Consumer Decision Process: Economic Technology Political Post-Purchase Assessment Search for Information Product Choice Decision Evaluation of Alternative Solution Problem Recognition Internal Forces: Personal Characteristics Psychological Attributes External Factors Cultural Situational Social

5. Personal Characteristics Life Cycle Stage OccupationLifestyle Gender Roles 5

6. Psychological Attributes Motivation Attitude PerceptionLearning Personality 6

7. Psychological Attributes  Motivation: The stimulating power that induces and then directs behavior.  Attitude: A learned disposition to respond to an object or class of objects in a consistently favorable or unfavorable way. 7

8. CHAPTER 01 CONTEMPORARY THEORIES OF MOTIVATIONEXHIBIT 4.5 Theory Key Elements Marketing Implications Maslow’s Hierarchy of Needs Theory Humans have wants and needs which influence their behavior. People advance only to the next level if the lower needs are meet. 1.Physiological 2.Safety 3.Love/Social 4.Self Esteem 5.Self Actualization Individuals are not interested in luxuries until they have had basic needs (food, shelter) met Herzberg’s Two Factor Theory Certain factors in the workplace result in job satisfaction. 1.Motivators: challenging work, recognition, and responsibility 2.Hygiene factors: status, job security, salary, and benefits Satisfying hygiene factors does not create a loyal employee or customer. For a company to really create really satisfied employees it is important to focus on motivators Aldelfer’s ERG TheoryExpansion on Maslow’s Hierarchy placing needs in three categories. 1.Existence 2.Relatedness 3.Growth People need a sense of belonging and social interaction. Creating a relationship with the customers extends the customers satisfaction with the product McClelland’s Achievement Motivation Theory There are three categories of needs and people differ in the degree in which the various needs influence their behavior 1.Need for Achievement 2.Need for Power 3.Need For Affiliation Companies can be successful targeting one of three basic needs.

9. Psychological Attributes  Perception Selective Retention Selective Distortion Selective Awareness 9

10. Psychological Attributes  Learning: Any change in the content or organization of long-term memory or behavior.  Conditioning creates an association between two stimuli. Classical conditioning promotes learning through stimulus and response. Operant conditioning rewards desirable behavior.  Cognitive learning is more active and requires information to work through problems and life situations. 10

11. Psychological Attributes  Personality  Each person has a set of consistent, enduring personal characteristics.  Those characteristics can be measured to identify differences between individuals. 11

12. Psychological Attributes  Brand personality Sincerity Down-to- Earth, Honest, Wholesome, Cheerful Excitement Daring, Spirited, Imaginative, And Current Competence Reliable, Intelligence, And Successful Sophistication Upper Class And Charming Ruggedness Outdoorsy And Tough 12

13. EXTERNAL FACTORS SHAPE CONSUMER CHOICES  Cultural Factors Language ValuesSubculture 13

14. CHAPTER 01 SUBCULTURE GROUPS IN THE UNITED STATESEXHIBIT 4.7 Source: U.S. Census Bureau, www.census.gov, accessed August 4, 2008.

15. EXTERNAL FACTORS SHAPE CONSUMER CHOICES  Situational Factors Physical Surroundings Personal Circumstances Time 15

16. EXTERNAL FACTORS SHAPE CONSUMER CHOICES  Social Factors 16 Family Household Life Cycle Social Class Opinion Leaders Reference Groups

17. THE LEVEL OF INVOLVEMENT INFLUENCES THE PROCESS  Involvement activated by  A person’s background  The aspirational focus  Environment at decision-making time  High Involvement Learning  People spend time more time in the decision-making process and report higher satisfaction.  Low Involvement Learning  Routine or relatively unimportant decision-making 17

18. CHAPTER 01 CONSUMER DECISION MAKING PROCESSEXHIBIT 4.10

19. THE CONSUMER DECISION MAKING PROCESS Problem Recognition Real StatePreferred State 19

20. THE CONSUMER DECISION MAKING PROCESS Search for Information Minimal Information Search Limited Information Search Extensive Information Search 20

21. THE CONSUMER DECISION MAKING PROCESS Search for Information Information Sources Internal Information Search External Information Sources 21

22. THE CONSUMER DECISION MAKING PROCESS Search for Information Defining the Set of Alternatives Complete SetAwareness Set Consideration (Evoked) Set 22

23. THE CONSUMER DECISION MAKING PROCESS Evaluation of Alternatives Emotional Choice Attitude based Choice Attribute based Choice 23

24. THE CONSUMER DECISION MAKING PROCESS Product Choice Decision Physical Surroundings Social Circumstances TimeState of Mind 24

25. THE CONSUMER DECISION MAKING PROCESS Product Choice Decision WhatWhereHow MuchWhenPayment 25

26. THE CONSUMER DECISION MAKING PROCESS Post Purchase Assessment DissonanceUse/Non UseDisposal Satisfaction Dissatisfaction Instrumental Performance Symbolic Performance 26

27. Photo Credits  Slide 4-7: Floresco Productions/age fotostock  Slide 4-11: #1 love images/Getty Images; #2 Paul Bradbury/age fotostock 27