Chapter 1 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 6 Consumer Decision Making © Nonstock/Jupiterimages © 2013 by Cengage Learning Inc. All Rights Reserved. 1 © iStockphoto.com/iStock Inhouse

Explain why marketing managers should understand consumer behavior Analyze the components of the consumer decision- making process Explain the consumer’s post-purchase evaluation process Identify the types of consumer buying decisions and discuss the significance of consumer involvement Learning Outcomes

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 Learning Outcomes

Explain why marketing managers should understand consumer behavior 1 The Importance of Understanding Consumer Behavior 4

5 Understanding Consumer Behavior What is it? The processes a consumer uses to make decisions when purchasing goods or services Why understand consumer behavior? Helps marketing managers…  redesign products to meet consumer needs  promote products in an effort to change decisions  and helps the government shape public policy by educating consumers

Analyze the components of the consumer decision-making process 6 The Consumer Decision-Making Process 2

Consumer Decision-Making Process A five-step process used by consumers when buying goods or services. Consumer Decision-Making Process 7 2 How the consumer goes about addressing needs

8 Exhibit 6.1 Consumer Decision-Making Process

Step 1-Need Recognition Result of an imbalance between actual and desired states. Need Recognition Need Recognition 9 2

10 Needs versus Wants Needs: Will trigger the decision-making process Needs: Result from an imbalance between actual and desired states  Internal stimuli (ex. hunger)  External stimuli (ex. peers) Wants: Recognition of an unfulfilled need and a product that will satisfy that need

Step 2-Information Search Internal Information Search  Recall information in memory External Information search  Seek information in outside environment  Non-marketing controlled-ex. Friends  Marketing controlled-ex. Radio, TV, Internet 11 2

Step 3-Evaluation of Alternatives Evoked Set Purchase! Analyze product attributes Analyze product attributes Rank attributes by importance Rank attributes by importance Use cutoff criteria 12 2 The consideration set, or the consumer’s preferred alternatives

Step 4-Purchase To buy or not to buy... Determines which attributes are most important in influencing a consumer’s choice 13 2

Step 5-Postpurchase Behavior Consumers can reduce dissonance by:  Seeking information that reinforces positive ideas about the purchase  Avoiding information that contradicts the purchase decision  Returning the product and revoking the original decision Marketing managers can minimize dissonance through effective communication with purchasers 14 3

Cognitive Dissonance Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions. 15 3

Identify the types of consumer buying decisions and discuss the significance of consumer involvement 16 4 Types of Consumer Buying Decisions and Consumer Involvement

More Involvement Less Involvement Routine Response Behavior Routine Response Behavior Limited Decision Making Limited Decision Making Extensive Decision Making Extensive Decision Making Consumer Buying Decisions and Consumer Involvement 17 4 Involvement: The amount of time and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior.

Routine Response Behavior  Little involvement in selection process  Frequently purchased low cost goods  May stick with one brand  Buy first/evaluate later  Quick decision 18 4

Limited Decision Making  Low levels of involvement  Low to moderate cost goods  Evaluation of a few alternative brands  Short to moderate time to decide 19 4

Extensive Decision Making  High levels of involvement  High cost goods  Evaluation of many brands  Long time to decide  May experience cognitive dissonance 20 4

Factors Determining the Level of Consumer Involvement Situation Social Visibility Interest Perceived Risk of Negative Consequences Previous Experience 21 4

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, cents-off, 2-for-1 offers 22 4

Identify and understand the cultural factors that affect consumer buying decisions Cultural Influences on Consumer Buying Decisions

Culture is... Learned: From others Functional: Rules & laws Pervasive: Everywhere Dynamic: Always changing 24 5

Components of Culture Myths Language Values Customs Rituals Laws Material artifacts 25 5

Subculture A homogeneous group of people who share elements of the overall culture as well as cultural elements unique to their own group. 26 5

Factors Influencing Buying Decisions Social Factors Individual Factors Psycho- logical Factors Cultural Factors CONSUMER DECISION- MAKING PROCESS BUY / DON’T BUY 27 5

Social Class and Marketing  Social class: Measured as a combination of occupation, income, education & wealth  Indicates which medium to use for advertising (radio, TV, magazines, internet)  Helps determine the best distribution for products (MBZ vs. Honda) 28 5

Identify and understand the social factors that affect consumer buying decisions Social Influences on Consumer Buying Decisions

Social Influences Reference Groups Opinion Leaders Family Members 30 6

Reference Groups  They serve as information sources and influence perceptions.  They affect an individual’s aspiration levels.  Their norms either constrain or stimulate consumer behavior. 31 6

…are the first to try new products and services out of pure curiosity …can be challenging to locate Marketers are increasingly using blogs, social networking, and other online media to determine and attract opinion leaders Opinion Leaders

Family Members  Initiators  Influencers  Decision Makers  Purchasers  Consumers Purchase Process Roles in the Family 33 6

Identify and understand the individual factors that affect consumer buying decisions Individual Influences on Consumer Buying Decisions

Gender Age Life Cycle Personality Self-Concept Lifestyle Personality Self-Concept Lifestyle 35 7 Individual Influences

Age & Family Life Cycle Stage Consumer tastes in food, clothing, cars, furniture, and recreation are often age related Marketers define target markets according to life cycle stages such as –Young singles –Young married with children –Middle-aged married w/o children –Non-traditional households 36 7

Personality and Self-Concept Personality: a broad concept –How a person reacts to situations –Combines psychological makeup and environmental forces Human behavior: depends on self-concept Self-concept: how consumers perceive themselves –Ideal self-image versus real self-image –How an individual really wants to be viewed. –How LO

Identify and understand the psychological factors that affect consumer buying decisions Psychological Influences on Consumer Buying Decisions

Psychological Influences Perception Motivation Learning Beliefs & Attitudes 39 8

Perception Selective Exposure Selective Distortion Selective Retention 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 Consumer remembers only that information that supports personal beliefs Consumer remembers only that information that supports personal beliefs 40 8

Motivation A method of classifying human needs and motivations into five categories in ascending order of importance. Maslow’s Hierarchy of Needs Maslow’s Hierarchy of Needs 41 8 As a person fulfills one need, a higher level need becomes more important.

Exhibit 6.6 Maslow’s Hierarchy of Needs 42