1. Consumer Behavior: How and Why We Buy Chapter Five © 2012 Pearson Education, Inc. publishing as Prentice-Hall

2. 5-2 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Chapter Objectives  Define consumer behavior and explain the purchase decision-making process  Explain how internal factors influence consumers’ decision-making processes  Show how situational factors and consumers’ relationships with other people influence consumer behavior

3. 5-3 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Real People, Real Choices: Decision Time at (RED)  What is the optimal way to generate the most money for the Global Fund? Option 1: Expand the (RED) model based on what the research revealed about the teen market Option 1: Expand the (RED) model based on what the research revealed about the teen market Option 2: Stick with the existing (RED) model Option 2: Stick with the existing (RED) model Option 3: Expand the (RED) model to include more traditional non-profit features Option 3: Expand the (RED) model to include more traditional non-profit features

4. 5-4 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Consumer Decision-Making Process  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 factors influence consumer behavior

5. 5-5 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Not All Decisions Are the Same  The amount of effort expended in decision-making varies according to the nature of the task: Extended problem-solving Extended problem-solving Limited problem solving Limited problem solving Habitual decision-making Habitual decision-making

6. 5-6 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Step 1: Problem Recognition  Occurs whenever the consumer sees a significant difference between his/her current state and the desired/ideal state  Marketers can develop ads that stimulate problem recognition Example: radio ads promoting restaurants which are played at lunchtime Example: radio ads promoting restaurants which are played at lunchtime Example: TV ad showing excitement of owning a new car Example: TV ad showing excitement of owning a new car

7. 5-7 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Step 2: Information Search  Consumers need adequate information to make a reasonable decision: Consumers search memory and the environment for information Consumers search memory and the environment for information Internet search engines, portals, and shopbots are being increasingly relied upon Internet search engines, portals, and shopbots are being increasingly relied upon  Behavioral targeting: Marketers deliver ads for products consumers look for by watching what they do online Marketers deliver ads for products consumers look for by watching what they do online

8. 5-8 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Step 3: Evaluation of Alternatives  A consumer identifies a small number of product interests, then narrow choices and compare the pros and cons associated with the purchase Evaluative criteria: Product characteristics consumers use to compare competing alternatives Evaluative criteria: Product characteristics consumers use to compare competing alternatives Marketers identify and communicate important evaluative criteria to buyers Marketers identify and communicate important evaluative criteria to buyers

9. 5-9 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Step 4: Product Choice  Consumers often rely on heuristics to make decisions Heuristics: A mental rule of thumb used for a speedy decision, such as... Heuristics: A mental rule of thumb used for a speedy decision, such as...  Price equals quality  Brand loyalty  Country of origin

10. 5-10 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Step 5: Post-purchase Evaluation  Consumer satisfaction/dissatisfaction after purchase of product is critical: Degree of satisfaction is influenced by whether or not expectations of product quality are met/exceeded Degree of satisfaction is influenced by whether or not expectations of product quality are met/exceeded Marketing communications must create accurate expectations for the product Marketing communications must create accurate expectations for the product Cognitive dissonance is common Cognitive dissonance is common

11. 5-11 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Internal Influences on Consumers’ Decisions  Multiple factors cause individual consumers to interpret information about the outside world differently: Personality Personality Age group Age group Lifestyle Lifestyle Perception Perception Motivation Motivation Learning Learning Attitudes Attitudes

12. 5-12 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Perception  Perception: Process we use to select, organize, and interpret information from outside world Process we use to select, organize, and interpret information from outside world  Three factors are necessary for perception to occur: Exposure: capable of registering a stimulus Exposure: capable of registering a stimulus Attention: mental processing activity Attention: mental processing activity Interpretation: assigning meaning to a stimulus Interpretation: assigning meaning to a stimulus

13. 5-13 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Motivation  Motivation Internal state that drives us to satisfy needs by activating goal-oriented behavior  The hierarchy of needs categorizes motivation as being related to five different types of needs Need types include physiological, safety, belongingness, ego, and self-actualization Need types include physiological, safety, belongingness, ego, and self-actualization

14. 5-14 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Learning  Learning: A relatively permanent change in behavior caused by information or experience  Behavioral learning theories: Classical conditioning Classical conditioning Operant conditioning Operant conditioning  Cognitive learning theory: Observational learning Observational learning

15. 5-15 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Attitudes  Attitude: Lasting evaluations of a person, object, or issue Three attitude components include: Three attitude components include:  Affect (feeling): emotional response  Cognition (knowing): beliefs or knowledge  Behavior (doing): intention to do something

16. 5-16 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Personality  Personality The set of unique psychological characteristics that consistently influences the way a person responds to situations in the environment Marketers create brands that appeal to different personalities Marketers create brands that appeal to different personalities  Self-concept: Can influence the products purchased by consumers Can influence the products purchased by consumers

17. 5-17 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Age  Age: Goods/services often appeal to a specific age group Goods/services often appeal to a specific age group Purchases are often associated with a particular stage in the family life cycle Purchases are often associated with a particular stage in the family life cycle

18. 5-18 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Lifestyle  Lifestyle: A pattern of living that determines how people choose to spend their time, money, and energy  Marketers describe people according to activities, interests, and opinions  Psychographics: Group consumers according to psychological and behavioral similarities

19. 5-19 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Situational and Social Influences on Consumers’ Decisions  Situational factors shape purchase choices: Physical environment: Physical environment:  Décor, smells, lighting, music and temperature influence consumption  Arousal and pleasure determine consumers’ reaction to store environment  Entertainment enhances shopping experiences Time poverty influences consumption Time poverty influences consumption  Social influences also affect the consumer decision-making process

20. 5-20 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Culture  Culture: The values, beliefs, customs, and tastes produced or practiced by a group of people Includes key rituals like weddings and funerals Includes key rituals like weddings and funerals Marketers tailor products to cultural values Marketers tailor products to cultural values  Subculture: A group within a society who share a distinctive set of beliefs, characteristics, or common experiences Microcultures Microcultures

21. 5-21 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Emerging Lifestyle Trends  Consumerism A social movement that attempts to protect consumers from harmful business practices A social movement that attempts to protect consumers from harmful business practices  Consumer Bill of Rights  Environmentalism Seeks conservation and improvement of the natural environment Seeks conservation and improvement of the natural environment  Kyoto Protocol  Environmental stewardship  Green marketing  Greenwashing

22. 5-22 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 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 Status symbols such as luxury products allow people to flaunt their social classes Mass-class consumers are targeted by many marketers Mass-class consumers are targeted by many marketers

23. 5-23 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Group Memberships  Reference group An actual or imaginary individual or group that has a significant effect on an individual’s evaluations, aspirations, or behavior Reference groups influence purchases among those who seek to imitate them Reference groups influence purchases among those who seek to imitate them

24. 5-24 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Opinion Leaders  Opinion leaders Are frequently able to influence others’ attitudes or behaviors Are frequently able to influence others’ attitudes or behaviors Have high interest in product category Have high interest in product category Update knowledge by reading, talking with salespeople, etc. Update knowledge by reading, talking with salespeople, etc. Impart both positive and negative product information Impart both positive and negative product information Are among the first to buy goods Are among the first to buy goods

25. 5-25 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 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 Consumers often associate “sex-typed” products with one gender or the other Sex roles are constantly evolving Sex roles are constantly evolving  Metrosexuals

26. 5-26 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Real People, Real Choices: Decision Made at (RED)  Julia chose option 1 Why did Julia choose to continue to seek major international brands to partner with, while complementing those partnerships with smaller special editions that appealed to a younger age group? Why did Julia choose to continue to seek major international brands to partner with, while complementing those partnerships with smaller special editions that appealed to a younger age group?

27. 5-27 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Keeping It Real: Fast-Forward to Next Class Decision Time at NCR  Meet Brad Tracy, VP of Americas Marketing Deployment for NCR  NCR recently released a new generation of point of sale (POS) workstations  The decision to be made: Should NCR continue to attend a particular trade show?

28. 5-28 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America