Consumer BehaviorConsumer Behavior Professor Chip Besio Cox School of Business Southern Methodist University

MASLOW’S HIERARCHY OF NEEDSMASLOW’S HIERARCHY OF NEEDS Self- Actualization Self-Esteem Love-Belonging Safety-Security Physiological Intense job challenge, full potential, full expression, creative expansion. Achievement, respect, recognition, responsi- bility, prestige, independence, attention, importance, appreciation. Belonging, acceptance, love, affection, family and group acceptance, friendships. Security, stability, dependency, protection, need for structure, order, law, tenure, pension, insurance. Hunger, thirst, reproduction, shelter, clothing, air, rest. Motivation and Personality, Abraham Maslow, 1939

Self- actualization in service to society Safety Physiological Affiliation (belonging) Chinese Culture Hierarchy of Needs

Model of Consumer BehaviorModel of Consumer Behavior Marketing and Other Stimuli Marketing and Other Stimuli Product Price Place Promotion Environmental Factors Buyer’s Decision Process Factors Affecting Consumer Behavior Buyer’s Decision Process Buyer’s Response Product Choice Brand Choice Store/Dealer Choice Purchase Timing Purchase Amount Source: Adapted from Prentice Hall

Consumer Purchase Process Awareness Trial Loyalty

The Buyer’s Decision ProcessThe Buyer’s Decision Process Need Recognition Information Search Evaluation of Alternatives Purchase Decision Post-Purchase Behavior Source: Prentice Hall

Buyer’s Decision Process NEED RECOGNITION External Stimuli 4 TV advertising 4 Magazine ad 4 Radio slogan 4 Other stimuli in the environment External Stimuli 4 TV advertising 4 Magazine ad 4 Radio slogan 4 Other stimuli in the environment Internal Stimuli 4 Hunger 4 Thirst 4 A person’s normal needs Internal Stimuli 4 Hunger 4 Thirst 4 A person’s normal needs Need Recognition Difference between current state and desired state Need Recognition Difference between current state and desired state Source: Adapted from Prentice Hall

Buyer’s Decision Process INFORMATION SEARCH Family, friends, neighbors Most influential source of information Advertising, salespeople Receives most information from these sources Mass Media Consumer-rating groups Handling the product Examining the product Using the product Personal Sources Commercial Sources Public Sources Experiential Sources Source: Adapted from Prentice Hall

Buyer’s Decision Process EVALUATION OF ALTERNATIVES Product Attributes Evaluation of Quality, Price, & Features Product Attributes Evaluation of Quality, Price, & Features Degree of Importance Which attributes matter most to me? Degree of Importance Which attributes matter most to me? Brand Beliefs What do I believe about each available brand? Brand Beliefs What do I believe about each available brand? Project Total Product Satisfaction Based on what I’m looking for, how satisfied would I be with each product? Project Total Product Satisfaction Based on what I’m looking for, how satisfied would I be with each product? Evaluation Procedures Choosing a product (and brand) based on one or more attributes. Evaluation Procedures Choosing a product (and brand) based on one or more attributes. Source: Prentice Hall

Buyer’s Decision Process PURCHASE DECISION Purchase Intention Desire to buy the most preferred brand/product Purchase Intention Desire to buy the most preferred brand/product Purchase Decision Choice of the store/brand/product Purchase Decision Choice of the store/brand/product Situational factors Attitudes of others Source: Adapted from Prentice Hall Intention to purchase does not always result in an actual purchase

Buyer’s Decision Process POST-PURCHASE BEHAVIOR Consumer’s Expectations of Product’s Performance Dissatisfied Customer Satisfied Customer! Satisfied Customer! Product’s Perceived Performance Cognitive Dissonance Source: Prentice Hall

Cognition Attitudes, Beliefs Attitudes, Beliefs Important Psychological FactorsImportant Psychological Factors Memory

THE HIERARCHY OF EFFECTSTHE HIERARCHY OF EFFECTS  AWARENESS: Consumers learn the brand name and product attributes.  INTEREST: Consumers relate the product benefits to their own needs.  EVALUATION: Consumers compare the goods with existing alternatives.  TRIAL: Consumers obtain direct or vicarious product experience.  ADOPTION: Consumers choose the innovation as a permanent solution

Selected Concepts in Consumer Behavior  Involvement and Buying Decisions  Consideration Set  How Preferences are Formed

Involvement The degree of importance the consumer accords to the product class or its purchase

Involvement High  Usually purchase is infrequent, significant perceived risk  Customer actively seeks information  Customized decision process High  Usually purchase is infrequent, significant perceived risk  Customer actively seeks information  Customized decision process Low  Usually purchase is familiar and / or inexpensive  Highly selective attention to information  Quick decision  Routine behavior Low  Usually purchase is familiar and / or inexpensive  Highly selective attention to information  Quick decision  Routine behavior

Types of Buying DecisionsTypes of Buying Decisions Complex Buying Behavior Dissonance- Reducing Buying Behavior Variety- Seeking Behavior Habitual Buying Behavior High Involvement Significant differences between brands Few differences between brands Low Involvement Source: Prentice Hall

How the Consideration Set Is FormedHow the Consideration Set Is Formed All brands in Product Class Brands found accidentally Brands found through search Recalled brands Unrecalled brands Unrecognized brands Recognized brands Consideration Set ? ? ? ?

Factors Affecting Inclusion in Consideration Set  Top-of-mind awareness - recall  experience - trial, previous purchase, habitual use  brand equity  Distribution  Shelf space and location  Shelf tags, displays and other attention-getting devices  Nature of the set  goal-driven  Taxonomic (classification of options)

How Preferences are FormedHow Preferences are Formed  Preference for a product reflects the customer’s expectation of its ability to satisfy important wants and needs Preference depends on … 4 the relative importance of each attribute (weight) 4 the evaluation of the product on each attribute (belief)