Consumer Decision Making Chapter 6 Consumer Decision Making Consumer Decision Making Chapter 6 Lamb, Hair, McDaniel 2014-2015 © Cengage Learning 2015. All Rights Reserved.

© 2015 by Cengage Learning Inc. All Rights Reserved. Chapter 6 Consumer Decision Making Explain why marketing managers should understand consumer behavior Analyze the components of the consumer decision-making process Explain the consumer’s postpurchase evaluation process Identify the types of consumer buying decisions and discuss the significance of consumer involvement Identify and understand the cultural factors that affect consumer buying decisions Identify and understand the social factors that affect consumer buying decisions Identify and understand the individual factors that affect consumer buying decisions Identify and understand the psychological factors that affect consumer buying decisions © 2015 by Cengage Learning Inc. All Rights Reserved.

Why a marketer should understand consumer behavior Chapter 6 Consumer Decision Making Why a marketer should understand consumer behavior Consumer behavior consumers make purchase decisions consumers use and dispose of product = HOW Notes: Understanding consumer behavior can help marketing managers adapt the marketing mix to influence consumer purchasing decisions. For example, if a manager knows through research that gas mileage is the most important attribute for a certain target market, the manufacturer can redesign the product, and create the appropriate marketing mix, to meet that criterion. 1 © 2015 by Cengage Learning Inc. All Rights Reserved.

Consumer Behavior Consumer Behavior Chapter 5 Consumer Decision Making Consumer Behavior Consumer Behavior is the Study of Consumer Decision Making Process 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. 4 4

Exhibit 6.1 Consumer Decision-Making Process Chapter 6 Consumer Decision Making Exhibit 6.1 Consumer Decision-Making Process Notes: The consumer decision-making process is shown here and described on subsequent slides. 2 © 2015 by Cengage Learning Inc. All Rights Reserved.

Consumer Decision Making Process 6

Situational Influences on the Buying Decision Process Factors that can influence a buyer’s purchase decision and may cause the buyer to shorten, lengthen, or terminate the process. Situational Factors Include Physical surroundings Social surroundings Time perspective Reason for purchase Buyer’s momentary mood and condition 7

Psychological Influences on the Buying Decision Process Factors that in part determine people’s general behavior, thus influencing their behavior as consumers Psychological Influences Include Perception Motives Learning Attitudes Personality and self concept Lifestyles 8

Social Influences on the Buying Decision Process The forces other people exert on one’s buying behavior Roles Family Reference groups Opinion leaders Social class Culture and subcultures 9

Cognitive Dissonance and Postpurchase Behavior Chapter 6 Consumer Decision Making Cognitive Dissonance and Postpurchase Behavior Cognitive Dissonance: Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions. Consumers can reduce dissonance by: Seeking information that reinforces positive ideas about the purchase Avoiding information that contradicts the purchase decision Revoking the original decision by returning the product Notes: In some instances, people deliberately seek contrary information in order to refute it and reduce dissonance. Discussion/Team Activity: Discuss any of your purchases that generated cognitive dissonance and what was done to address the situation. What role, if any, did marketing play in minimizing cognitive dissonance? What was the outcome? Discuss ways in which the provider of the products/services might have reduced this inner tension. 3 © 2015 by Cengage Learning Inc. All Rights Reserved.

Consumer Buying Decisions and Consumer Involvement Chapter 6 Consumer Decision Making Consumer Buying Decisions and Consumer Involvement More Involvement Less Routine Response Behavior Limited Decision Making Extensive Notes: Consumer buying decisions fall along a continuum of three broad categories: Routine response behavior, limited decision making, and extensive decision making. Routine response behavior: Frequently purchased, low-cost goods and services, with low involvement on search and decisions by consumers before making the purchase. Consumers buy first and evaluate later. Limited decision making: Consumer has previous product experience but is unfamiliar with the current brands available. A moderate effort is spent searching for information or in considering alternatives. Extensive decision making: Applies to unfamiliar, expensive products, or an infrequently bought item. The most complex type of consumer buying decisions, and is associated with high involvement on the part of the consumer. Discussion/Team Activity: Name products that fall into each of the decision making descriptions, and describe the decision making process for each. 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Exhibit 6.2 Continuum of Consumer Buying Decisions Chapter 6 Consumer Decision Making Exhibit 6.2 Continuum of Consumer Buying Decisions Routine Limited Extensive Involvement Low Low to Moderate High Time Short Short to Moderate Long Cost Information Search Internal Only Mostly Internal Internal and External Number of Alternatives One Few Many Notes: Exhibit 6.2 illustrates the continuum of consumer buying decisions. 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Routine Response Behavior Chapter 6 Consumer Decision Making Routine Response Behavior Little involvement in selection process Frequently purchased low cost goods May stick with one brand Buy first/evaluate later Quick decision 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Limited Decision Making Chapter 6 Consumer Decision Making Limited Decision Making Low levels of involvement Low to moderate cost goods Evaluation of a few alternative brands Short to moderate time to decide 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Extensive Decision Making Chapter 6 Consumer Decision Making Extensive Decision Making High levels of involvement High cost goods Evaluation of many brands Long time to decide May experience cognitive dissonance 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Marketing Implications of Involvement Chapter 6 Consumer Decision Making Marketing Implications of Involvement High-involvement purchases require: Extensive and Informative promotion to target market Low-involvement purchases require: In-store promotion, eye-catching package design, and good displays. Coupons, and two-for-one offers Notes: For high involvement products, a good ad gives consumers the information they need for making the purchase decision, as well as specifying the benefits and advantages of owning the product. For low-involvement purchases, customers may not recognize their wants until they are in the store. In-store promotion and package design are important tools for catching the customer’s attention. Good displays can help explain a product’s purpose and create recognition of a want. 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

© 2015 by Cengage Learning Inc. All Rights Reserved. Exhibit 6.4 U.S. Social Classes SOURCE: Adapted from Richard P. Coleman, “The Continuing Significance of Social Class to Marketing,” Journal of Consumer Research, December 1983, 267; Dennis Gilbert and Joseph A. Kahl, The American Class Structure: A Synthesis (Homewood, IL: Dorsey Press, 1982), ch. 11. Upper Classes Capitalist Class 1% People whose investment decisions shape the national economy; income mostly from assets, earned or inherited; university connections Upper Middle Class 14% Upper-level managers, professionals, owners of medium-sized businesses; well-to-do, stay-at-home homemakers who decline occupational work by choice; college educated; family income well above national average Middle Classes Middle Class 33% Middle-level white-collar, top-level blue-collar; education past high school typical; income somewhat above national average; loss of manufacturing jobs has reduced the population of this class Working Class 32% Middle-level blue-collar, lower-level white-collar; income below national average; largely working in skilled or semi-skilled service jobs Lower Classes Working Poor 11-12% Low-paid service workers and operatives; some high school education; below mainstream in living standard; crime and hunger are daily threats Underclass 8-9% People who are not regularly employed and who depend primarily on the welfare system for sustenance; little schooling; living standard below poverty line Notes: 1. As you can see from Exhibit 6.4, the upper and upper middle classes comprise the small segment of affluent and wealthy Americans. 2. In terms of consumer buying patterns, the affluent are more likely to own their own home and purchase new cars and trucks and are less likely to smoke. © 2015 by Cengage Learning Inc. All Rights Reserved.

Exhibit 6.5 Types of Reference Groups Chapter 6 Consumer Decision Making Exhibit 6.5 Types of Reference Groups Reference Groups Direct Face-to-Face membership Primary: small, informal group Secondary: large, formal group Indirect Nonmembership Aspirational Group that someone would like to join Nonaspirational Group with which someone wants to avoid being identified Notes: Reference groups are characterized as either direct or indirect. Direct reference groups may be primary or secondary. Primary membership groups include all groups with which people interact regularly in an informal way, such as family, friends, and coworkers. People associate with secondary membership groups less consistently and more formally. This includes clubs, professional groups, and religious groups. Indirect reference groups include aspirational reference groups, such as organizations that a person would like to join. On the other hand, a nonaspirational reference group is one that someone wants to avoid being identified with. 6 © 2015 by Cengage Learning Inc. All Rights Reserved.

Chapter 6 Consumer Decision Making Opinion Leaders The first to try new products and services out of pure curiosity. May be challenging to locate. Marketers are increasingly using blogs, social networking, and other online media to determine and attract opinion leaders. Notes: Opinion leaders are often the first to try new products. Technology companies have found that teenagers, because of their willingness to experiment, are key opinion leaders for the success of new technologies. Opinion leadership is a casual, face-to-face phenomenon. Locating opinion leaders can be a challenge. Marketers may try to create opinion leaders, such as cheerleaders or civic leaders. On a national level, companies sometimes use prominent public figures, such as movie stars, sports figures, and celebrities to promote products. Discussion/Team Activity: Name examples of opinion leaders, and the promoted products/services, in each of the categories shown on this slide. 6 © 2015 by Cengage Learning Inc. All Rights Reserved.

Purchase Process Roles in the Family Chapter 6 Consumer Decision Making Family Purchase Process Roles in the Family Initiators Influencers Decision Makers Purchasers Consumers Notes: The family is the most important social institution for many consumers, influencing values, attitudes, and buying behavior. Purchase decisions vary significantly among family members, who assume a variety of roles in the purchase process. Initiators are the ones who suggest or initiate the purchase process. Influencers are those members whose opinions are valued. Decision makers actually makes the decision to buy or not to buy. The purchaser is the one who exchanges money for the product. The consumer is the one who uses the product. Children can have great influence over the purchase decision. 6 © 2015 by Cengage Learning Inc. All Rights Reserved.

Personality, Self-Concept, and Lifestyle Chapter 6 Consumer Decision Making Personality, Self-Concept, and Lifestyle Personality combines psychological makeup and environmental forces Human behavior depends largely on self-concept Self-concept combines ideal self-image and real self-image. 7 © 2015 by Cengage Learning Inc. All Rights Reserved. 21

Perception Selective Exposure Selective Distortion Selective Retention Chapter 6 Consumer Decision Making Perception Selective Exposure Selective Distortion Selective Retention Consumer notices certain stimuli and ignores others Consumer changes or distorts information that conflicts with feelings or beliefs Consumer remembers only that information that supports personal beliefs Notes: People cannot perceive every stimulus in their environment. They use selective exposure, along with the closely related concepts of selective distortion and retention, to decide which stimuli to notice and which to ignore. Discussion/Team Activity: Discuss examples representing each of the described perception states. 8 © 2015 by Cengage Learning Inc. All Rights Reserved.

Ch 6 Discussion Questions What is consumer decision making process? Take automobile as an example and explain each step of the consumer decision making process. Explain the influence of Situational, Psychological and Social Influences on consumer decision making process. I may ask you to explain one of the Influences in consumer decision making process. What is culture and subculture? Why do marketing managers need to understand culture and subculture in a society? Explain level of consumer involvement in purchase and its relationship in consumer decision making. What is postpurchase cognitive dissonance? How a marketer can reduce cognitive dissonance? 23