Consumer Behavior: How and Why People Buy

Chapter Objectives Define consumer behavior and explain why consumers buy what they buy Describe the prepurchase, purchase, and postpurchase activities that consumers engage in when making decisions Explain how internal factors influence consumers’ decision-making processes Show how situational factors at the time and place of purchase influence consumer behavior Explain how consumers’ relationships with other people influence their decision-making processes Show how the Internet offers consumers opportunities to participate in consumer-to-consumer marketing

Real People, Real Choices Meet Daniel Grossman at Wild Planet Creating brands/products that parents endorse and kids find cool Future direction of Room Gear product line Option 1: acknowledge that Wild Planet missed the mark and drop the line Option 2: retain line concept and develop products similar to those already selling Option 3: reposition the line toward either boys or girls WILD PLANET

Decisions, Decisions Consumer behavior: The process we use to select, purchase, use, and dispose of goods, services, ideas, or experiences to satisfy needs/desires Internal, situational, and social influences

Steps in Consumer Decision Process Extended problem-solving versus habitual decision-making Involvement: relative importance of perceived consequences of the purchase Perceived risk: choice of product has potentially negative consequences

Decision-Making Process Brandon is fed up with driving old clunker Brandon talks to friends, visits car showrooms, etc. Brandon chooses one car based on feature/image Brandon looks at 3 models with good/bad features Brandon drives car and is happy with choice Figure 5.1 (Abridged) Problem Recognition Information Search Evaluation of Alternatives Product Choice Postpurchase Evaluation

Step 1: Problem Recognition Occurs when consumer sees a significant difference between current state and ideal state Marketers can develop ads that stimulate problem recognition

Group Activity Marketing activities can create problem recognition, by showing consumers benefits of a new product or pointing out problems with products they already own For the following, suggest a creative way to stimulate problem recognition through marketing : Videogames An airline A hamburger Furniture

Step 2: Information Search Consumers need adequate information to make a reasonable decision Search memory and the environment for information Internet: search engines, portals, or “shopping robots” Behavioral targeting: Marketers deliver ads for products consumers look for, by watching what they do

Internet Options for Information Search Shopping portals Search engines “Shop-bots” YAHOO! EXCITE.COM MYSIMON.COM

Step 3: Evaluation of Alternatives Consumers are interested in a small number of products, then narrow choices and compare pros/cons Evaluative criteria: product characteristics consumers use to compare competing alternatives Marketers point out their brand’s superiority on most important evaluative criteria.

Discussion Do you agree that having too many choices is a bigger problem than not having enough choices? Is it possible to have too much of a good thing?

Step 4: Product Choice Deciding on one product and acting on choice Heuristic: a mental rule of thumb used for a speedy decision, such as: Price equals quality Brand loyalty Country of origin

Step 5: Postpurchase Evaluation Consumer satisfaction/dissatisfaction after purchase of product Expectations of product quality are met/exceeded or not Ads/communications must create accurate expectations of product

Discussion How important is it to be able to voice your satisfaction with a product? How about dissatisfaction? What are the effects of such voicing? PLANETFEEDBACK.COM

Figure 5.4: Influences on Consumer Decision Making

Internal Influences on Consumer Behavior Factors that cause us each to interpret information about the outside world differently: Perception Motivation Learning Attitudes Personality Age group The family life cycle Lifestyle

Perception Process by which we select, organize, and interpret information from outside world Necessary for perception to occur Exposure: capable of registering a stimulus Attention: mental processing activity Interpretation: assigning meaning to a stimulus

Discussion Most researchers believe subliminal techniques are not much use in marketing. Assuming some forms of subliminal persuasion may influence consumers, do you think their use is ethical? Why or why not?

Motivation Internal state that drives us to satisfy needs by activating goal-oriented behavior SOLOFLEX.COM

Figure 5.5: Maslow’s Hierarchy of Needs and Related Products

Learning A change in behavior caused by information or experience Behavioral learning Classical conditioning Operant conditioning Stimulus generalization Cognitive learning Observational learning American Express Video

Discussion Some fans were upset when the Rolling Stones sold Microsoft rights to “Start Me Up” for $4 million, to promote its Windows 95 launch. Other rock legends refuse to play the commercial game. What’s your take on this issue? How do you react when one of your favorite songs turns up in a commercial? Is this use of nostalgia an effective way to market a product? Why or why not?

Attitudes Lasting evaluations of a person, object, or issue Three attitude components Affect (feeling): emotional response Cognition (knowing): beliefs or knowledge Behavior (doing): intention to do something Marketers must decide which attitude component will drive consumer preferences

Personality The set of unique psychological characteristics that consistently influences the way a person responds to situations in the environment Personality traits: Innovativeness, materialism, self-confidence, sociability, need for cognition Self-concept

Discussion/Group Activity Brands and stores are thought to have their own particular “personalities” Pick a brand or store of interest and come up with a description of its “personality”

Age Group and Family Life Cycle Goods/services appeal to specific age group Family Life Cycle: The stages through which family members pass as they grow older

Lifestyle Lifestyle: A pattern of living that determines how people choose to spend their time, money, and energy Psychographics: group consumers according to psychological and behavioral similarities

Situational Influences on Consumer Decisions Physical environment dimensions such as décor, smells, and lighting Arousal and pleasure determine consumers’ reaction to store environment Time as a situational factor

Group Activity/Discussion Break into groups. Each group should select a familiar store and brainstorm 10-15 elements of the store’s physical environment Read your list aloud to the class (and write it on the board) without naming the store After all lists are on the board, everyone writes down the name of each brand/store Tally correct answers and discuss implications/insights of results

Social Influences on Consumer Decisions We are members of many groups that influence our buying decisions: Culture/subcultures Social class Group memberships Opinion leaders Sex roles

Culture The values, beliefs, customs, and tastes produced or practiced by a group of people Rituals such as weddings and funerals Cultural values: deeply held beliefs about right and wrong ways to live

Subcultures A group within a society whose members share a distinctive set of beliefs, characteristics, or common experiences Subcultures important to marketers are racial and ethnic groups.

Social Class The overall rank or social standing of groups of people within a society, according to factors such as family background, education, occupation, and income. Status symbols such as luxury products provide a way for people to flaunt their membership in higher social classes.

Group Memberships Reference group: a set of people a consumer wants to please or imitate and that thus has an effect on an individual’s evaluations, aspirations, or behavior Conformity means people change behavior due to group pressure. TUPPERWARE.COM

Opinion Leaders People who influence others’ attitudes or behaviors because others perceive them as possessing expertise about the product Have high interest in product category Update knowledge by reading, talking with salespeople, etc. Impart both positive and negative product information Are among the first to buy new products

Individual Activity Think about a friend, associate, family member, or celebrity who is an opinion leader List and briefly explain the characteristics that relate to this person’s opinion leadership. For what products is this person an opinion leader? What are some ways a business might use this person to help sell its products?

Gender Roles Society’s expectations regarding appropriate attitudes, behaviors, and appearance for men and women Consumers often associate “sex-typed” products with one gender or the other.

Group Activity Assume you’re an advertising account executive, and your current client is an auto maker. You know automobile purchases are often influenced by a variety of social or “other people” factors. List these social influences, explain why each is important, and outline how you might use them in developing an advertising campaign.

Consumer-to-Consumer E-Commerce Online communications and purchases that occur among individuals without directly involving the manufacturer or retailer Groups of “netizens” around the world with similar interests, united via the Internet Popular online C2C formats Gaming Chat rooms, rings, and lists Boards Blogs eBay

Discussion The Internet provides a unique opportunity for consumers to communicate and make purchases from each other. What do you think the future of C2C e-commerce is? How do you think it will affect traditional marketing firms?

Real People, Real Choices Wild Planet (Daniel Grossman) Daniel chose option 3: reposition the line toward either boys or girls The firm renamed the line Girls Livin’ in Style (GLS), which has had moderate success.

Marketing Plan Exercise Marketers must understand consumers and how they select products. Pick a good or service you like and have purchased in the past. As part of developing a marketing plan for this product: List what you need to know about consumers of your product and how they make product decisions. How might you gather that information? How could you use that information in developing successful marketing strategies?

Marketing in Action Case: You Make the Call What decision must Facebook.com make? What factors are important in understanding this decision situation? What are the alternatives? What decision(s) do you recommend? What are some ways to implement your recommendation?

Keeping It Real: Fast Forward to Next Class Decision Time at PPG Industries Meet Vicki Holt, Senior VP, Glass & Fiber Glass for PPG Industries, Inc. PPG’s Insulating Glazing Unit, or IGU, has an aggressive competitor marketing a complete IGU unit. The decision: How to react to the competition.