1. Consumer Behavior: How and Why We Buy Chapter Five

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 aspects Option 3: Expand the (RED) model to include more traditional non-profit aspects

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. Figure 5.1 The Consumer Decision-Making Process

7. 5-7 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 5.2 Extended Problem Solving vs. Habitual Decision Making

8. 5-8 © 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 Examples?

9. 5-9 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Step 2: Information Search  Consumers need adequate information to make a decision Consumers search memory and the environment for information Consumers search memory and the environment for information

10. 5-10 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Step 2: Information Search  Consumers need adequate information to make a decision Internet search engines, portals, and shopbots are being increasingly relied upon Internet search engines, portals, and shopbots are being increasingly relied upon www.google.com www.google.comwww.google.com www.edmunds.com www.edmunds.comwww.edmunds.com www.shopzilla.com www.shopzilla.comwww.shopzilla.com

11. 5-11 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Step 2: Information Search  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 Audience Science’s Behavioral Targeting Audience Science’s Behavioral Targeting

12. 5-12 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. It’s Debatable Class Discussion Question Most consumers agree that using demographic information for targeting purposes is acceptable, but critics contend that tracking users browsing and surfing behavior crosses the line. What do you think? Should stronger controls be in place to protect consumers privacy?

13. 5-13 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Step 3: Evaluation of Alternatives  Identifying a small number of products for further consideration  Evaluating alternatives using evaluative criteria

14. 5-14 © 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

15. 5-15 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Step 5: Postpurchase 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 What actions can marketers take to alleviate cognitive dissonance? What actions can marketers take to alleviate cognitive dissonance?

16. 5-16 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 5.4 Influences on Consumer Decision Making

17. 5-17 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Perception  Perception: Process by which we select, organize, and interpret information from outside world Process by which we 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

18. 5-18 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Motivation  Motivation: Internal state that drives us to satisfy needs by activating goal-oriented behavior

19. 5-19 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 5.5 Maslow’s Hierarchy of Needs and Related Products

20. 5-20 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Learning  Learning: A relatively permanent change in behavior caused by information or experience  Learning theories Behavioral Behavioral Cognitive Cognitive

21. 5-21 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Attitudes  Attitude: Lasting evaluations of a person, object, or issue Three attitude components Three attitude components  Affect (feeling): emotional response  Cognition (knowing): beliefs or knowledge  Behavior (doing): intention to do something

22. 5-22 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Attitudes

23. 5-23 © 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  Self-concept

24. 5-24 © 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 Name some products that can be successfully marketed on the basis of age or stage in the family life cycle Name some products that can be successfully marketed on the basis of age or stage in the family life cycle

25. 5-25 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Lifestyle  Lifestyles reflect a pattern of living  Marketers seek to describe people according to activities, interests, and opinions  Psychographics: Group consumers according to psychological and behavioral similarities

26. 5-26 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Situational and Social Influences on Consumers’ Decisions  Situational factors shape purchase choices: Physical environment Physical environment  Sensory marketing Time poverty Time poverty

27. 5-27 © 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

28. 5-28 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Culture  Subculture: A group within a society who share a distinctive set of beliefs, characteristics, or common experiences Microcultures Microcultures What other examples of microcultures can you think of? What other examples of microcultures can you think of?

29. 5-29 © 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 Watchdog Consumer WatchdogConsumer WatchdogConsumer Watchdog The consumerist The consumeristconsumerist

30. 5-30 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. It’s Debatable Class Discussion Question Should cell phone companies and satellite television providers be allowed to require consumers to sign contracts for a minimum period of service? Should they be allowed to charge consumers for the cost of service on the remaining contract months in the case of early termination?

31. 5-31 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Emerging Lifestyle Trends  Environmentalism Seeks conservation and improvement of the natural environment Seeks conservation and improvement of the natural environment  Kyoto Protocol  Environmental stewardship  Green marketing GreenwashingIndex.com GreenwashingIndex.comGreenwashingIndex.com

32. 5-32 © 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

33. 5-33 © 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

34. 5-34 © 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

35. 5-35 © 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 other Consumers often associate “sex-typed” products with one gender or other Sex roles are constantly evolving Sex roles are constantly evolving

36. 5-36 © 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?

37. 5-37 © 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?

38. 5-38 © 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