2. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Culture, Subcultures, Social Class, Reference Groups and Families, Product, Price, Promotion, and Place Influences, Situational Influences, Product Knowledge, Product Involvement, Extensive, Limited, and Routine Decision Making, Need Recognition, Internal, Group, Marketing, Public, and Experiential Sources, Perception of Risk, Cognitive Dissonance, Disconfirmation Paradigm Consumer Behavior Chapter 3 Key Terms

3. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Understanding Consumer Behavior  An understanding of consumers, their needs and purchasing behaviors shapes successful marketing  No single theory of consumer behavior can totally explain why consumers’ behave the way they do

4. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved An Overview of the Buying Process

5. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Social Influences on Consumer Decision Making  In terms of consumer behavior, culture, social class, and reference groups can have both direct and indirect effects on the buying process  Direct effect – Refers to direct communication between the individual and other members of society  Indirect influence – Refers to influence of society on an individual’s basic values and attitudes

6. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Social Influences on Consumer Decision Making A Summary of American Cultural Values

7. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Understanding Cultural Impact On Consumer Behavior  Culture – One of the most basic influences on an individual’s needs  Cultural values are transmitted through three basic organizations  Family  Religious organizations  Educational institutions  Marketing managers should  Adapt the marketing mix to cultural values  Constantly monitor value changes and differences in both domestic and global markets

8. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Understanding Cultural Impact On Consumer Behavior  Subcultures – Exist when people have more frequent interactions than with the population at large and thus tend to think and act alike in some respects  Age groups are increasingly becoming important  Teen market  Baby boomers  Mature market

9. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Social Classes  Upper Americans  14 percent of the population  High income – Seek high quality, high prestige brands  Middle class  34 percent of the population  Concerned with following media recommendations and what peers say is popular  Increased incomes have generated interest in “worthwhile experiences”  Emulates upper Americans

10. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Social Classes  Working Classes  38 percent of the population  “Family folk” – depend heavily on relatives for financial and emotional support  Pursue ease of labor and leisure  Lower Americans  16 percent of the population  Very diversified, from frugality to instant gratification

11. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Reference Groups and Families  Primary reference groups – Include family and close friends  Secondary reference groups – Include fraternal and professional organizations  Family constitutes an important reference group – The household rather than individual is the relevant unit  Family life cycle – Useful way of classifying and segmenting individuals and families  Combines trends in earning power with demands placed on income

12. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Marketing Influences  Product influences – As a key task, marketers differentiate their products from their competitors and create perception of a worthwhile product purchase  Price Influence – Today’s value-conscious consumers may buy products more on the basis of price than other attributes  Promotion Influence – Marketing communications plays a critical role in informing consumers about products and services

13. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Marketing Influences  Place influences  Convenience increases probability of consumers finding and buying certain products  Products sold in exclusive outlets increase brand equity  Nonstore methods create perceptions of innovativeness, exclusiveness, and/or tailored to specific markets

14. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Situational Influences  Physical features – Most readily apparent features of a situation  Social features – Provide additional depth to a description of a situation  Time – A dimension of situations that may be specified in units  Task features – Include intent or requirement to select, shop for, or obtain information about a purchase  Current conditions – Are momentary moods or conditions rather than chronic individual traits

15. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Psychological Influences  Product knowledge – Refers to the amount of information a consumer has stored in his or her memory about a product  Group, marketing, and situational influences determine level of product knowledge  Product involvement – A consumer’s perception of the importance or personal relevance of an item

16. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Consumer Decision Making The Consumer Decision-Making Process

17. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Consumer Decision Making  Extensive decision making – Requires high degrees of time and effort as the purchase is complex, high priced or has high importance to the consumer  Limited decision making – Moderate time and effort, but may involve some time and effort to search for and compare alternatives  Routine decision making – Most common type, and the way people purchase most packaged goods  Products are simple, inexpensive and familiar  Consumers may develop favorite brands

18. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Need Recognition  Activation and recognition of needs and wants can be through internal or external stimuli  Maslow’s Hierarchy of Needs  Physiological needs – Primary needs of the human body  Safety needs – Protection from physical harm, ill health, economic disaster and avoidance of the unexpected  Belongingness – Related to social and gregarious nature of humans and need for companionship  Esteem needs – Consists of need for both self-esteem and actual esteem from others  Self-actualization needs – Desire to become everything one is capable of becoming

19. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Alternative Search: Consumer Data Sources  Internal sources – Experience with, and stored information about products  Group sources – Communication from other people  Marketing sources – Advertising, salespeople, dealers, packaging and displays  Public sources – Publicity from article, independent ratings  Experiential sources – Handling, examining and perhaps trying the actual product

20. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Alternative Search: Information Processing  Exact nature individuals processing information is not fully understood  In general, it is viewed as a four-step process  Exposed to information  Becomes attentive to the information  Understands the information  Retains the information

21. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Factors Affecting Information Search by Customers

22. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Alternative Evaluation  Consumer has information about a number of brands in a product class  Some brands in a product class perceived as viable alternatives for satisfying a recognized need  Each of these brands has a set of attributes  A set of these attributes is relevant to the consumer, and consumer perceives differences in attributes in different product brands  Consumer will like best the brand perceived as offering greatest number of desired attributes in desired amounts and desired order  Consumer will intend to purchase the brand liked best

23. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Purchase Decision  Traditional risk theorists believe that consumers tend to make risk-minimizing decisions based on their perception of risk associated with a particular purchase  Perceived risk may be functional or psychological  Consumers generally try to reduce their risk by  Reducing negative consequences  Reducing perceived uncertainty

24. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Postpurchase Evaluation  Cognitive dissonance – Inconsistency or disharmony with cognitions, or attitudes and beliefs after decision  Anxiety will be greater when  Decision is important psychologically, financially, or both  Number of foregone alternatives appear plentiful  Forgone alternatives have many favorable features  Disconfirmation paradigm – Satisfaction with products and brands as a result of  Prepurchase product expectations  Difference between these expectations and postpurchase perception of product performance

25. McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Ethical Conduct toward Customers