Consumer Decision Making

Consumer Decision Making
Chapter 6 Consumer Decision Making Chapter 6 Consumer Decision Making MKTG10 Lamb, Hair, and McDaniel © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved.
Chapter 6 Consumer Decision Making LEARNING OUTCOMES 6-1 Explain why marketing managers should understand consumer behavior 6-2 Analyze the components of the consumer decision-making process 6-3 Explain the consumer’s postpurchase evaluation process 6-4 Identify the types of consumer buying decisions and discuss the significance of consumer involvement © 2016 Cengage Learning. All Rights Reserved.

Chapter 6 Consumer Decision Making LEARNING OUTCOMES 6-5 Identify and understand the cultural factors that affect consumer buying decisions 6-6 Identify and understand the social factors that affect consumer buying decisions 6-7 Identify and understand the individual factors that affect consumer buying decisions 6-8 Identify and understand the psychological factors that affect consumer buying decisions © 2016 Cengage Learning. All Rights Reserved.

Explain why marketing managers should understand consumer behavior
Chapter 6 Consumer Decision Making The Importance of Understanding Consumer Behavior 6-1 Explain why marketing managers should understand consumer behavior © 2016 Cengage Learning. All Rights Reserved.

Understanding Consumer Behavior
Chapter 6 Consumer Decision Making Understanding 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. © 2016 Cengage Learning. All Rights Reserved.

Chapter 6 Consumer Decision Making Value Value is a personal assessment of the net worth one obtains from making a purchase. What you get minus what you give. Purchases are made based upon perceived value, which is what you expect to get. The Actual value may be more or less than you expected. Utilitarian value is derived from a product or service that helps the consumer solve problems and accomplish tasks. Hedonic value is an end in itself rather than as a means to an end. Its emotional – good feelings, happiness and satisfaction. © 2016 Cengage Learning. All Rights Reserved.

Analyze the components of the consumer decision-making process
Chapter 6 Consumer Decision Making The Consumer Decision-Making Process 6-2 Analyze the components of the consumer decision-making process © 2016 Cengage Learning. All Rights Reserved.

Consumer Decision-Making Process
Chapter 6 Consumer Decision Making Consumer Decision-Making Process A five-step process used by consumers when buying goods or services. Notes: The consumer decision-making process represents a general five-step process that moves the consumer from recognition of a need to the evaluation of a purchase decision. It is a guideline for studying how consumers make decisions. Note that consumer decisions may not proceed in order through all the processes, and in fact, may end at any time without a purchase decision. © 2016 Cengage Learning. All Rights Reserved.

6.1 The Consumer Decision-Making Process
Chapter 6 Consumer Decision Making Notes: The consumer decision-making process is shown here and described on subsequent slides. © 2016 Cengage Learning. All Rights Reserved.

Chapter 6 Consumer Decision Making
Need Recognition Result of an imbalance between actual and desired states. Need recognition is the first stage in the decision-making process Notes: The first stage in the decision-making process is need recognition. © 2016 Cengage Learning. All Rights Reserved.

Need Recognition Chapter 6 Consumer Decision Making Marketing helps consumers recognize an imbalance between present status and preferred state. Present Status Preferred State Internal Stimuli External Notes: A marketing manager’s objective is to get consumers to recognize an imbalance between their present status and their preferred state. Advertising and sales promotion often provide this stimulus. The imbalance between actual and desired states is sometimes referred to as the “want-got gap.” Discussion/Team Activity List products and services that have been purchased recently. Indicate the types of internal and/or external stimuli that influenced the decision. © 2016 Cengage Learning. All Rights Reserved.

Chapter 6 Consumer Decision Making Information Search Internal Information Search Recall information in memory External Information search Seek information in outside environment Nonmarketing-controlled Marketing-controlled Notes: An internal information search is the process of recalling information in memory. This includes prior experience or prior knowledge about a product. An external information search relies on information in the outside environment. This includes personal and public references, advertisements, and publicity. External information may be obtained from non-marketing controlled sources and/or marketing controlled sources. Nonmarketing-controlled sources include personal experience, personal sources, and public sources such as Underwriters Laboratories. Marketing-controlled information is biased toward a specific product because it originates with marketers promoting that product. These sources include mass-media advertising, sales promotion, salespeople, product labels and packaging, and the Internet. © 2016 Cengage Learning. All Rights Reserved.

External Information Searches
Chapter 6 Consumer Decision Making Need More Information More Risk Less knowledge Less product experience High level of interest Lack of confidence Less Risk More knowledge More product experience Low level of interest Confidence in decision Need Less Information Notes: The extent to which an individual conducts an external source depends on such factors as the perceived risk of purchasing a product, knowledge, prior experience, and level of interest in the good or service. The external search is also influenced by the consumer’s confidence in her decision-making ability. If a consumer has prior experience, he/she will spend less time searching. Discussion/Team Activity: Discuss information searches conducted for products or services recently evaluated or purchased. Characterize this discussion based on the factors described on this slide. © 2016 Cengage Learning. All Rights Reserved.

Evoked Set (Consideration set)
Chapter 6 Consumer Decision Making Evoked Set (Consideration set) Group of brands, resulting from an information search, from which a buyer can choose Notes: The information search should yield a group of brands, or evoked set, which are the consumer’s preferred alternatives. From this set, consumers will further evaluate the alternatives and make a choice. Discussion/Team Activity: Describe the evoked set derived from information searches previously conducted. What were the characteristics that made these products the preferred alternatives? © 2016 Cengage Learning. All Rights Reserved.

Evaluation of Alternatives and Purchase
Chapter 6 Consumer Decision Making Evoked Set Purchase! Analyze product attributes Rank attributes by importance Use cutoff criteria Notes: Once the evoked set is constructed, the consumer is ready to make a decision. One way to make a choice is to pick product attributes that are important to him/her, then exclude all products in the set that do not have that attribute. Another way to narrow the number of choices is to use cutoffs, or minimum or maximum levels of an attribute that an alternative must have. Many times, price is an important cutoff attribute. The goal of the marketing manager is to determine which attributes have the most influence on a consumer’s choice, and design a marketing mix that stresses those attributes to the consumer. A single attribute, such as price, may not always explain a consumer’s evaluation of products. Attributes that the marketer may consider important are not always important to the consumer. Brand names, such as Johnson & Johnson, have a significant impact over the choice of products. © 2016 Cengage Learning. All Rights Reserved.

Purchase To buy or not to buy... Ultimately, the consumer has to decide whether to buy or not to buy. Notes: Following the evaluation of alternatives, the consumer decides which product to buy or decides not to buy at all. Ultimately, the consumer must specifically decide: • Whether to buy • When to buy • What to buy (product type and brand) • Where to buy (type of retailer, specific retailer, online or in store) • How to pay © 2016 Cengage Learning. All Rights Reserved.

Explain the consumer’s postpurchase evaluation process
Chapter 6 Consumer Decision Making Postpurchase Behavior 6-3 Explain the consumer’s postpurchase evaluation process © 2016 Cengage Learning. All Rights Reserved.

Chapter 6 Consumer Decision Making Cognitive Dissonance Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions. Notes: When buying products, consumers expect certain outcomes from the purchase. Once a purchase decision is made, the next step in the process is the evaluation of the product after purchase. Consumers expect certain outcomes from the purchase, and how well these expectations are met determines the level of customer satisfaction. For the marketer, an important element of any postpurchase evaluation is reducing any lingering doubts that the decision was sound. Consumers try to reduce dissonance by justifying their decision. © 2016 Cengage Learning. All Rights Reserved.

Postpurchase Behavior
Chapter 6 Consumer Decision Making Postpurchase Behavior 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. Marketing can minimize dissonance through effective communication with purchasers. © 2016 Cengage Learning. All Rights Reserved.

Types of Consumer Buying Decisions and Consumer Involvement 6-4 Identify the types of consumer buying decisions and discuss the significance of consumer involvement © 2016 Cengage Learning. 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. © 2016 Cengage Learning. All Rights Reserved.

Chapter 6 Consumer Decision Making Involvement The amount of time and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior. © 2016 Cengage Learning. All Rights Reserved.

6.2 Continuum of Consumer Buying Decisions Routine Limited Extensive
Chapter 6 Consumer Decision Making 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. © 2016 Cengage Learning. 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 © 2016 Cengage Learning. 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 © 2016 Cengage Learning. 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 © 2016 Cengage Learning. 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. © 2016 Cengage Learning. All Rights Reserved.

Cultural Influences on Consumer Buying Decisions
Chapter 6 Consumer Decision Making Cultural Influences on Consumer Buying Decisions 6-5 Identify and understand the cultural factors that affect consumer buying decisions © 2016 Cengage Learning. All Rights Reserved.

Factors Influencing Buying Decisions
Chapter 6 Consumer Decision Making Social Factors Individual Factors Psycho-logical Factors Cultural Factors CONSUMER DECISION- MAKING PROCESS BUY or DON’T BUY Notes: The consumer decision-making process is strongly influenced by cultural, social, individual, and psychological factors. © 2016 Cengage Learning. All Rights Reserved.

Chapter 6 Consumer Decision Making Culture It is the set of values, norms, attitudes, and other meaningful symbols that shape human behavior. It is the essential character of a society that distinguishes it from other cultural groups. Components of culture The underlying elements of every culture are the: values, language, myths, customs, rituals, and laws Notes: 1. This list contains the defining components of culture. Push students to think about American cultural elements for each category. These components guide the behavior of the people. © 2016 Cengage Learning. All Rights Reserved.

Chapter 6 Consumer Decision Making Culture is. . . Learned Functional Pervasive Dynamic Notes: Culture is: Pervasive: Cultural values influence individual life, yet most are completely unaware of its presence. What people eat, how they dress, and what language they speak are all cultural dimensions. Functional: By establishing expectations, culture gives order to society, such as laws. Learned: Culture is not genetic. Instead, consumers must learn what is acceptable from family and friends. Dynamic: It adapts to changing needs and an evolving environment. The rapid growth of technology has accelerated the rate of cultural change. © 2016 Cengage Learning. All Rights Reserved.

Chapter 6 Consumer Decision Making Subculture A homogeneous group of people who share elements of the overall culture as well as cultural elements unique to their own group. Notes: In the United States alone, countless subcultures can be identified, and many are concentrated geographically. The United States’ growing Hispanic population has made South and Central American subcultures a prime focus for many companies with large marketing budgets. © 2016 Cengage Learning. All Rights Reserved.

Chapter 6 Consumer Decision Making Social Class A group of people in a society who are considered nearly equal in status or community esteem, who regularly socialize among themselves both formally and informally, and who share behavioral norms. Notes: One view of contemporary U.S. status structure is shown in Exhibit 6.4. © 2016 Cengage Learning. All Rights Reserved.

Social Class Measurements
Chapter 6 Consumer Decision Making Social Class Measurements Wealth Other Variables Income Education Occupation © 2016 Cengage Learning. All Rights Reserved.

The Impact of Social Class on Marketing
Chapter 6 Consumer Decision Making The Impact of Social Class on Marketing Indicates which medium to use for advertising Helps determine the best distribution for products Notes: Marketers are interested in social class for the reasons of determining which medium to use for advertising, and for determining where best to distribute their products. © 2016 Cengage Learning. All Rights Reserved.

Social Influences on Consumer Buying Decisions
Chapter 6 Consumer Decision Making Social Influences on Consumer Buying Decisions 6-6 Identify and understand the social factors that affect consumer buying decisions © 2016 Cengage Learning. All Rights Reserved.

Social Influences on consumer buying decisions
Chapter 6 Consumer Decision Making Social Influences on consumer buying decisions Many consumers seek out the opinions of others to reduce their search and evaluation effort or uncertainty, especially as the perceived risk of the decision increases. Consumers interact socially with: Reference Groups Opinion Leaders Family Members To obtain product information and decision approval. Notes: Consumers interact socially with reference groups, opinion leaders, and family members to obtain product information and decision approval. © 2016 Cengage Learning. All Rights Reserved.

Influences of Reference Groups
Chapter 6 Consumer Decision Making Influences of 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. Notes: For marketers, reference groups have three implications, as stated on this slide. However, marketers must also consider that people with well-formed networks of somewhat overlapping reference groups and those with strong personal values are less susceptible to reference group influences. © 2016 Cengage Learning. All Rights Reserved.

Opinion Leaders May be challenging to locate.
Chapter 6 Consumer Decision Making Opinion Leaders An individual who influences others. They are often the most influential, informed, plugged in, and vocal members of society. The first to try new products and services out of pure curiosity. May be challenging to locate. Marketers are increasingly using social 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. © 2016 Cengage Learning. All Rights Reserved.

Chapter 6 Consumer Decision Making Family The family is the most important social institution for many consumers, influencing values, attitudes, and buying behavior. 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. © 2016 Cengage Learning. All Rights Reserved.

Individual Influences on Consumer Buying Decisions
Chapter 6 Consumer Decision Making Individual Influences on Consumer Buying Decisions 6-7 Identify and understand the individual factors that affect consumer buying decisions © 2016 Cengage Learning. All Rights Reserved.

Individual Influences on consumer buying decisions
Chapter 6 Consumer Decision Making Individual Influences on consumer buying decisions A person’s buying decisions are also influenced by unique personal characteristics, such as gender; age and life cycle stage; and personality, self-concept, and lifestyle. Notes: A person’s buying decisions are also influenced by unique personal characteristics, such as gender; age and life cycle stage; and personality, self-concept, and lifestyle. The physiological differences in men and women result in the need for different products. Trends in gender marketing are influenced by the changing roles of men and women. The age and family life cycle can have a significant impact on consumer behavior. Consumer tastes in clothes, food, cars, and recreation are often age related. Related to age is the family life cycle, an orderly series of stages through which consumers’ attitudes and behavior evolve through maturity, experience, and changing income and status. Personality is a broad concept combining psychological makeup and environmental forces. Self-concept combines the ideal self-image and the real self-image. Consumers seldom buy products that jeopardize their self-image. A lifestyle is a mode of living as identified by a person’s activities, interests, and opinions. © 2016 Cengage Learning. All Rights Reserved.

Psychological Influences on Consumer Buying Decisions
Chapter 6 Consumer Decision Making Psychological Influences on Consumer Buying Decisions 6-8 Identify and understand the psychological factors that affect consumer buying decisions © 2016 Cengage Learning. All Rights Reserved.

Psychological Influences
Chapter 6 Consumer Decision Making Psychological Influences The psychological influences are the factors consumers use to interact with their world. They are the tools used to recognize feelings, gather and analyze information, formulate thoughts and opinions, and take action. The three psychological factors that influence buyer behavior are: Perception Motivation Learning Notes: The psychological influences are the factors consumers use to interact with their world. They are the tools used to recognize feelings, gather and analyze information, formulate thoughts and opinions, and take action. © 2016 Cengage Learning. All Rights Reserved.

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. © 2016 Cengage Learning. All Rights Reserved.

Marketing Implications of Perception
Chapter 6 Consumer Decision Making Marketing Implications of Perception Important attributes Price Brand names Quality and reliability Threshold level of perception Product or repositioning changes Foreign consumer perception Subliminal perception Notes: Marketers must recognize the importance of cues or signals in a consumers perception of products. Marketing managers first identify the important attributes such as those listed on this slide, then design signals to communicate these attributes to consumers. © 2016 Cengage Learning. All Rights Reserved.

Chapter 6 Consumer Decision Making Motivation A motive is the driving force that causes a person to take action to satisfy specific needs Physiological Safety Social Esteem Self-actualization © 2016 Cengage Learning. All Rights Reserved.

6.6 Maslow’s Hierarchy of Needs Chapter 6 Consumer Decision Making
Notes: Maslow’s Hierarchy of Needs: A method of classifying human needs and motivations into five categories in ascending order of importance. Maslow’s Hierarchy of Needs, shown in Exhibit 6.6 and here, arranges needs in ascending order of importance. By studying motivation, marketers can analyze the major forces influencing consumers’ purchase decisions. When a product is purchased a need is usually fulfilled. These needs become motives when aroused sufficiently. Motives are the driving forces that cause a person to take action to satisfy those needs. © 2016 Cengage Learning. All Rights Reserved.

Learning An experience changes behavior Experiential
Chapter 6 Consumer Decision Making Learning Experiential Conceptual An experience changes behavior Not learned through direct experience Online: Center for Science in the Public Interest (CSPI) The CSPI regularly campaigns to change consumers’ beliefs about products it perceives as dangerous or harmful. What products are of interest to the CSPI at present? How should companies respond if their products become targets of the CSPI? Notes: Almost all consumer behavior results from learning, the process that creates changes in behavior through experience and practice. There are two types of learning: experiential and conceptual. Reinforcement and repetition boost learning. This is a key strategy in promotional campaigns because it can lead to increased learning. Generally, to enhance learning, advertising messages should be spread over time rather than clustered together. © 2016 Cengage Learning. All Rights Reserved.

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