Chapter 5: Consumer Behavior The process consumers use to select, purchase, use, and dispose of goods, services, ideas, or experiences to satisfy needs/desires Affected by internal, situational, and social influences 1

The Consumer Decision-Making Process Problem Recognition Information Search Evaluation of Alternatives Product Choice Energy/effort driven by– Involvement: relative importance of perceived consequences of the purchase Perceived risk: choice of product has potentially negative consequences Postpurchase Evaluation

Extended Problem Solving vs. Habitual Decision Making

Decision-Making Process: 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 Example: Radio ads promoting restaurants which are played at lunchtime Example: TV ad shows excitement of owning new car

Decision-Making Process: Step 2: Information Search Consumers need adequate information to make a reasonable decision Consumers search memory and the environment for information Search memory (prior knowledge/experience) Friends/opinion leaders Non-marketer information Consumer Reports Marketer information: Ads, Retailers Internet: search engines, review sites, social media

Figure 5.3, Part 1- Marketers’ Responses to Decision-Process States Many marketers believe that WOM is one of the most powerful influencers of consumer opinion, as the recent growth in social marketing and WOM marketing efforts demonstrates. The importance of gaining personal recommendations from friends, work acquaintances, opinion leaders, and family members is somewhat lost in the text’s discussion of the Information Search stage. Instructors could poll students to see what sources of information they used when researching which college to attend; at least some portion of students should mention friends, older brothers or sisters, or parents. An extended discussion of this topic might ask students to consider why personal information can be such a powerful influence on a given consumer’s behavior. The key points to be raised are that consumers value personal information more than many other forms because it is more credible (they know the person), and because personal opinions of individuals are often rooted in experience.

Behavioral Targeting Marketers deliver ads on the Internet for products consumers look for, by watching what they do online Supersmart, super-targeted display ads based on a person’s online behavior Cookies, web data, etc. These ads do superb job getting a surfer’s attention Can be placed and tracked with laser-like precision Google ads in right sidebar Facebook ads in right sidebar 7

Implications of Behavioral Targeting Ad strategy is based on an elaborate analysis of a user’s complete Internet behavior not merely a group of search terms Ads on sites that seemingly have nothing to do with the ad content can perform very well where the content seems irrelevant The benefit: a user profile that goes well beyond a particular search episode (what search string, for example) integrates the data with combined surfer behaviors 8

Marketers’ Responses to Decision-Process States

Step 3: Evaluation of Alternatives Identify a small number of products to consider “Evoked set”* Evaluative criteria: product characteristics consumers use to compare competing alternatives Useful tool for marketers: Multi-attribute model * 10

Uses of Multi-attribute Models Marketers point out their brand’s superiority on most important evaluative criteria Consumers have criteria for making a purchase Which benefits / features are most important? How they weigh one product vs. another Note: what consumers want and what company THINKS they want may not be same

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 Always buy low price Marketer influences at this step: * Sales promotion * Financial terms 12

Step 5: Post-purchase Evaluation Was it a good choice? Consumer satisfaction/dissatisfaction = expectations Ads/communications must create accurate expectations Customer word-of-mouth Other issues: Buyer’s remorse (cognitive dissonance; post-purchase regret) Service/follow-up Relationship marketing 13

Influences on Consumer Decision Making

Perception Perception: Process by which we select, organize, and interpret information from outside world Three factors are necessary for perception to occur Exposure: physically capable of registering a stimulus Attention: devote mental processing to the stimulus (marketing messages must break through the clutter) Interpretation: assign meaning to a stimulus; may or may not be interpreted as marketer intended it Many marketing tactics are geared toward enhancing opportunities for exposure, or grabbing attention. Example: The most successful billboards are those that use vivid imagery, with only a few (maximum of six) words, because this enhances the probability that people will actually be exposed to the message. After all, it’s easier to take in an image and brand name at 70 mph than it is a long sentence. Example: Successful advertising campaigns place messages in multiple media, during multiple time slots, on multiple days to enhance the likelihood of a target audience member being exposed. Example: Integrated marketing communication strategists seek to identify all of the various “touchpoints” where consumers could come into contact with messages (public restrooms, coffee drinking (wrappers and lids), at events or activities they enjoy, etc.) and then attempt to surround the consumer with the brand’s name or message, thereby enhancing the opportunity for exposure. Attention getting tactics can include using a foreign language with subtitles in a TV ad, using 3D images that break the rectangular frame in outdoor advertising, using cardboard “pop-ups” or sound chips in magazine advertising, or simply using novel creative approaches.

Motivation Motivation: Internal state that drives us to satisfy needs; once need is activated, creates tension to solve it The hierarchy of needs categorizes motivation as being related to five different types of needs

Maslow’s Hierarchy of Needs & Related Products

Learning Learning: Behavioral learning Cognitive learning theory A relatively permanent change in behavior caused by information or experience Behavioral learning Classical conditioning Operant conditioning Stimulus generalization Cognitive learning theory Observational learning

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 decide which attitude component will drive consumer preferences

Attitudes Affect Behavior Cognition A lasting evaluation of a person, object, or issue 3 components of attitudes: ABC model of attitudes Affect (feeling): emotional response Cognition (knowing): beliefs or knowledge Behavior (doing): intention to do something Affect Marketers must know which attitude component is dominant and will drive consumer preferences Behavior Cognition

Personality Personality: Personality traits: 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 Marketers create brand personalities

Lifestyle Lifestyle: A pattern of living that determines how people choose to spend their time, money, and energy Psychographics: Groups consumers according to psychological and behavioral similarities VALs AIO: Activities, interests, and opinions

Situational Influences on Consumers’ Decisions Many situational influences shape purchase choices: Important dimensions of the physical environment include décor, smells, and lighting Arousal and pleasure determine consumers’ reaction to store environment Retail experience & entertainment help enhance the shopping experience Time is a situational factor Physical Environment: Casinos control their physical environments very carefully to project the right mood and to encourage consumers to stay and play as long as possible. Most Las Vegas casinos located on the strip are “themed.” For example, the Luxor casino features Egyptian themed slot machines, Egyptian figurines, subdued lighting, flickering torches, and walls and floors that appear to be made from large blocks of stone. Other aspects of the physical environment include the fact that you won’t find windows or clocks on the walls of the gaming floor at the Luxor or any other casino—consumers are less likely to realize how much time has passed without these visible cues, and thus tend to stay and play longer.

Social Influences on Consumer Decisions We are members of many groups that influence our buying decisions: Culture/subcultures Social class Group memberships Opinion leaders Gender roles There are many aspects of culture which could be discussed. One in particular that students may find interesting relates to how different cultures form different ideas of what particular colors symbolize. For example, the color white is associated with death and mourning in China and some other nationalities, whereas Americans associate the color white with weddings, purity, and cleanliness. (For more in-depth information, see http://en.wikipedia.org/wiki/Color_symbolism and “Color by Numbers,” American Demographics, February 1, 2002.) How does this relate to consumer behavior? Clearly, color symbolism has a practical application with respect to packaging decisions—in America, we associate certain colors with flavors or positive product attributes (green = fresh; red = hot, etc.). Yet these associations may not hold true with recent immigrants or visiting tourists, who as a result, could form improper expectations of the product’s benefits or taste, which could lead to either dissatisfaction after the purchase, or influence the consumer not to purchase at all. Color symbolism can impact other managerial decisions as well. For example, it is common for casinos to send a limousine to pick up high rollers from the airport. Many high rollers are Asians, as “chance” and “fortune” are dominant aspects within the Asian culture. If a casino sends a white limousine to pick up a Chinese National, they stand the risk of losing that individual’s patronage—after all, who wants to take a ride in the “death mobile”?

Culture and Subcultures The values, beliefs, customs, and tastes produced or practiced by a group of people Includes key rituals like weddings and funerals Cultural values are important (recall Ch. 3) Subculture: A group within a society who share a distinctive set of beliefs, characteristics, or common experiences

Emerging Lifestyle Trends Social movements within society also influence consumer choices Consumerism A social movement that attempts to protect consumers from harmful business practices Resulted in the Consumer Bill of Rights: Right to be safe; right to be informed; right to be heard; right to choose freely Environmentalism

Social Class 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 allow people to flaunt their social classes Mass-class consumers are targeted by many marketers

Group Memberships Reference group: A set of people a consumer wants to please or imitate and that therefore has an effect on an individual’s evaluations, aspirations, or behavior Conformity means that people change behavior due to group pressure Referred to as the bandwagon effect

Reference Group Influence Product Strong Influence Weak influence Public Luxuries Public Necessities Brand Strong Influence Private Luxuries Private Necessities Weak influence 11

Opinion Leaders Opinion leaders Are 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 sales staff, etc. Impart both positive and negative product information Are among the first to buy goods Are a powerful marketing tool! Example: Bloggers, media, doctors, hospitality industry

Gender Roles 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 Gender roles are constantly evolving Metrosexuals

Consumer-to-Consumer E-Commerce (C2C) C2C E-Commerce: Online communications and purchases that occur among individuals without directly involving the manufacturer or retailer Popular online C2C formats include: Auctions and classified * Gaming Chat rooms, rings, lists, and boards Social networks Online brand communities Blogs One of the PPT author’s favorite blogs is called Strangenewproducts.com (www.strangenewproducts.com/). The blog site author looks for the “weirdest, funniest, stupidest, and ingenious new products entering the marketplace,” and often succeeds! Sample product listings as of this writing include the Climate Change Chocolate Bar, the Fizz Screw-on Ice Cream Float Cup, and Subtle Butt Fart Pads (you may not want to show that one class). It’s been interesting to watch the evolution of the blog over time—it now accepts advertising and sponsors that are listed on the home page. However, the site may be on the verge of folding, as of October 28, 2008 the last new posting to the site was made in January of 2008. Another interesting blog that students of marketing may value is Ryan Pitylak’s Viral Marketing blog, available at www.ryanpitylak.org/. Several directories exist which can help users find the blogs that interest them most, including: www.blogcatalog.com/ www.bloghub.com/ www.blogdirs.com/ www.bloggingfusion.com/