1. © 2013 by Cengage Learning Inc. All Rights Reserved. 1 Lamb, Hair, McDaniel Unit 4 Consumer Decision Making 2012-2013

2. Explain why marketing managers should understand consumer behavior Analyze the components of the consumer decision- making process Explain the consumer’s postpurchase evaluation process Identify the types of consumer buying decisions and discuss the significance of consumer involvement © 2013 by Cengage Learning Inc. All Rights Reserved. 2 1234

3. Identify and understand the cultural factors that affect consumer buying decisions Identify and understand the social factors that affect consumer buying decisions Identify and understand the individual factors that affect consumer buying decisions Identify and understand the psychological factors that affect consumer buying decisions © 2013 by Cengage Learning Inc. All Rights Reserved. 3 5678

4. Explain why marketing managers should understand consumer behavior The Importance of Understanding Consumer Behavior © 2013 by Cengage Learning Inc. All Rights Reserved. 4 1

5. 5 Understanding Consumer Behavior Consumer behavior consumers make purchase decisions consumers use and dispose of product = HOW 1

6. Analyze the components of the consumer decision-making process © 2013 by Cengage Learning Inc. All Rights Reserved. 6 The Consumer Decision-Making Process 2

7. © 2013 by Cengage Learning Inc. All Rights Reserved. 7 Consumer Decision-Making Process A five-step process used by consumers when buying goods or services. 2

8. © 2013 by Cengage Learning Inc. All Rights Reserved. 8 Exhibit 6.1 Consumer Decision-Making Process 2

9. © 2013 by Cengage Learning Inc. All Rights Reserved. 9 Need Recognition Result of an imbalance between actual and desired states. Need recognition is the first stage in the decision-making process 2

10. When “Need” Turns to Greed In 2011, a woman allegedly pepper sprayed a crowd of shoppers reaching for discounted Xbox 360s. Black Friday: Retailers offer their best bargains of the year Consumers camp out for days at stores’ front doors Violent incidents were reported in at least seven states during the 2011 Black Friday sales, most occurring at or near Walmart stores. Michael Martinez, “Woman Surrenders in Black Friday Pepper Spray Incident,” CNN, November 26, 2011, http://articles.cnn.com/2011-11- 26/us/us_california-pepper-spray-suspect_1_pepper-spray-woman-surrenders-video-game?_s=PM:US (Accessed May 3, 2012). © 2013 by Cengage Learning Inc. All Rights Reserved. 10

11. © 2013 by Cengage Learning Inc. All Rights Reserved. 11 Need Recognition Marketing helps consumers recognize an imbalance between present status and preferred state. Present Status Present Status Preferred State Internal Stimuli External Stimuli 2

12. © 2013 by Cengage Learning Inc. All Rights Reserved. 12 Stimulus Any unit of input affecting one or more of the five senses: sight smell taste touch hearing 2

13. © 2013 by Cengage Learning Inc. All Rights Reserved. 13 Recognition of Unfulfilled Wants When a current product isn’t performing properly When the consumer is running out of a product When another product seems superior to the one currently used 2

14. © 2013 by Cengage Learning Inc. All Rights Reserved. 14 Information Search Internal Information Search Recall information in memory External Information search Seek information in outside environment Nonmarketing controlled Marketing controlled 2

15. © 2013 by Cengage Learning Inc. All Rights Reserved. 15 External Information Searches 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 2

16. © 2013 by Cengage Learning Inc. All Rights Reserved. 16 Evoked Set Group of brands, resulting from an information search, from which a buyer can choose 2

17. © 2013 by Cengage Learning Inc. All Rights Reserved. 17 Evaluation of Alternatives and Purchase Evoked Set Purchase! Analyze product attributes Analyze product attributes Rank attributes by importance Rank attributes by importance Use cutoff criteria 2

18. © 2013 by Cengage Learning Inc. All Rights Reserved. 18 Purchase To buy or not to buy... Determines which Attributes are most in influencing a consumer’s choice 2

19. Explain the consumer’s postpurchase evaluation process © 2013 by Cengage Learning Inc. All Rights Reserved. 19 Postpurchase Behavior 3

20. © 2013 by Cengage Learning Inc. All Rights Reserved. 20 Cognitive Dissonance Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions. 3

21. © 2013 by Cengage Learning Inc. All Rights Reserved. 21 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 Marketing can minimize dissonance through effective communication with purchasers. 3

22. Identify the types of consumer buying decisions and discuss the significance of consumer involvement © 2013 by Cengage Learning Inc. All Rights Reserved. 22 Types of Consumer Buying Decisions and Consumer Involvement 4

23. More Involvement Less Involvement Routine Response Behavior Routine Response Behavior Limited Decision Making Limited Decision Making Extensive Decision Making Extensive Decision Making © 2013 by Cengage Learning Inc. All Rights Reserved. 23 Consumer Buying Decisions and Consumer Involvement 4

24. the amount of time and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior. Involvement © 2013 by Cengage Learning Inc. All Rights Reserved. 24 4

25. © 2013 by Cengage Learning Inc. All Rights Reserved. 25 Exhibit 6.2 Continuum of Consumer Buying Decisions RoutineLimitedExtensive InvolvementLowLow to Moderate High TimeShortShort to Moderate Long CostLow Low to Moderate High Information Search Internal OnlyMostly Internal Internal and External Number of Alternatives OneFewMany 4

26. © 2013 by Cengage Learning Inc. All Rights Reserved. 26 Routine Response Behavior  Little involvement in selection process  Frequently purchased low cost goods  May stick with one brand  Buy first/evaluate later  Quick decision 4

27. © 2013 by Cengage Learning Inc. All Rights Reserved. 27 Limited Decision Making  Low levels of involvement  Low to moderate cost goods  Evaluation of a few alternative brands  Short to moderate time to decide 4

28. © 2013 by Cengage Learning Inc. All Rights Reserved. 28 Extensive Decision Making  High levels of involvement  High cost goods  Evaluation of many brands  Long time to decide  May experience cognitive dissonance 4

29. © 2013 by Cengage Learning Inc. All Rights Reserved. 29 Factors Determining the Level of Consumer Involvement Situation Social Visibility Interest Perceived Risk of Negative Consequences Previous Experience 4

30. Not All Involvement Is The Same © 2013 by Cengage Learning Inc. All Rights Reserved. 30 Enduring Involvement Emotional Involvement Situational Involvement Shopping Involvement Product Involvement 4

31. © 2013 by Cengage Learning Inc. All Rights Reserved. 31 Marketing Implications of Involvement High-involvement purchases require: Extensive and Informative promotion to target market Extensive and Informative promotion to target market Low-involvement purchases require: In-store promotion, eye-catching package design, and good displays. Coupons, cents-off, 2-for-1 offers In-store promotion, eye-catching package design, and good displays. Coupons, cents-off, 2-for-1 offers 4

32. Identify and understand the cultural factors that affect consumer buying decisions © 2013 by Cengage Learning Inc. All Rights Reserved. 32 Cultural Influences on Consumer Buying Decisions 5

33. © 2013 by Cengage Learning Inc. All Rights Reserved. 33 Factors Influencing Buying Decisions Social Factors Individual Factors Psycho- logical Factors Cultural Factors CONSUMER DECISION- MAKING PROCESS BUY / DON’T BUY 5

34. © 2013 by Cengage Learning Inc. All Rights Reserved. 34 Components of Culture Myths Language Values Customs Rituals Laws Material artifacts 5

35. © 2013 by Cengage Learning Inc. All Rights Reserved. 35 Culture is... Learned Functional Pervasive Dynamic 5

36. © 2013 by Cengage Learning Inc. All Rights Reserved. 36 Value Enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct. 5

37. © 2013 by Cengage Learning Inc. All Rights Reserved. 37 Subculture A homogeneous group of people who share elements of the overall culture as well as cultural elements unique to their own group. 5

38. © 2013 by Cengage Learning Inc. All Rights Reserved. 38 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. 5

39. Exhibit 6.4 U.S. Social Classes SOURCE: Adapted from Richard P. Coleman, “The Continuing Significance of Social Class to Marketing,” Journal ofConsumer Research, December 1983, 267; Dennis Gilbert and Joseph A. Kahl, The American Class Structure: A Synthesis(Homewood, IL: Dorsey Press, 1982), ch. 11. © 2013 by Cengage Learning Inc. All Rights Reserved. 39 Upper Classes Capitalist Class1%People whose investment decisions shape the national economy; income mostly from assets, earned or inherited; university connections Upper Middle Class 14%Upper-level managers, professionals, owners of medium-sized businesses; well-to-do, stay-at-home homemakers who decline occupational work by choice; college educated; family income well above national average Middle Classes Middle Class33%Middle-level white-collar, top-level blue-collar; education past high school typical; income somewhat above national average; loss of manufacturing jobs has reduced the population of this class Working Class32%Middle-level blue-collar, lower-level white-collar; income below national average; largely working in skilled or semi-skilled service jobs Lower Classes Working Poor11- 12% Low-paid service workers and operatives; some high school education; below mainstream in living standard; crime and hunger are daily threats Underclass8-9%People who are not regularly employed and who depend primarily on the welfare system for sustenance; little schooling; living standard below poverty line

40. © 2013 by Cengage Learning Inc. All Rights Reserved. 40 Social Class Measurements Wealth Other Variables Income Education Occupation 5

41. © 2013 by Cengage Learning Inc. All Rights Reserved. 41 The Impact of Social Class on Marketing  Indicates which medium to use for advertising  Helps determine the best distribution for products 5

42. Identify and understand the social factors that affect consumer buying decisions © 2013 by Cengage Learning Inc. All Rights Reserved. 42 Social Influences on Consumer Buying Decisions 6

43. © 2013 by Cengage Learning Inc. All Rights Reserved. 43 Social Influences Reference Groups Opinion Leaders Family Members 6

44. Exhibit 6.5 Types of Reference Groups © 2013 by Cengage Learning Inc. All Rights Reserved. 44 Reference Groups Direct Face-to-Face membership Primary: small, informal group Secondary: large, formal group Indirect Nonmembership Aspirational Group that someone would like to join Nonaspirational Group with which someone wants to avoid being identified 6

45. © 2013 by Cengage Learning Inc. All Rights Reserved. 45 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. 6

46. The first to try new products and services out of pure curiosity. May be challenging to locate. Marketers are increasingly using blogs, social networking, and other online media to determine and attract opinion leaders. © 2013 by Cengage Learning Inc. All Rights Reserved. 46 Opinion Leaders 6

47. © 2013 by Cengage Learning Inc. All Rights Reserved. 47 Family Initiators Influencers Decision Makers Purchasers Consumers Purchase Process Roles in the Family 6

48. Identify and understand the individual factors that affect consumer buying decisions © 2013 by Cengage Learning Inc. All Rights Reserved. 48 Individual Influences on Consumer Buying Decisions 7

49. Individual Influences Gender Age Life Cycle Personality Self-Concept Lifestyle Personality Self-Concept Lifestyle © 2013 by Cengage Learning Inc. All Rights Reserved. 49 7

50. © 2013 by Cengage Learning Inc. All Rights Reserved. 50 Age and Family Life Cycle Stage Consumer tastes in food, clothing, cars, furniture, and recreation are often age related. Marketers define target markets according to life cycle stages such as “young singles” or “young married with children.” 7

51. © 2013 by Cengage Learning Inc. All Rights Reserved. 51 Personality, Self-Concept, and Lifestyle Personality combines psychological makeup and environmental forces. Human behavior depends largely on self-concept. Self-concept combines ideal self- image and real self-image. 7

52. Identify and understand the psychological factors that affect consumer buying decisions © 2013 by Cengage Learning Inc. All Rights Reserved. 52 Psychological Influences on Consumer Buying Decisions 8

53. Psychological Influences Perception Motivation Learning Beliefs & Attitudes © 2013 by Cengage Learning Inc. All Rights Reserved. 53 8

54. 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 changes or distorts information that conflicts with feelings or beliefs Consumer remembers only that information that supports personal beliefs Consumer remembers only that information that supports personal beliefs © 2013 by Cengage Learning Inc. All Rights Reserved. 54 8

55. Marketing Implications of Perception © 2013 by Cengage Learning Inc. All Rights Reserved. 55  Important attributes  Price  Brand names  Quality and reliability  Threshold level of perception  Product or repositioning changes  Foreign consumer perception  Subliminal perception 8

56. Exhibit 6.6 Maslow’s Hierarchy of Needs © 2013 by Cengage Learning Inc. All Rights Reserved. 56 8

57. Types of Learning Experiential Conceptual An experience changes behavior Not learned through direct experience © 2013 by Cengage Learning Inc. All Rights Reserved. 57 8

58. Belief Attitude An organized pattern of knowledge that an individual holds as true about his or her world. A learned tendency to respond consistently toward a given object. Beliefs and Attitudes © 2013 by Cengage Learning Inc. All Rights Reserved. 58 8

59. Changing Beliefs Change beliefs about the brand’s attributes Change the relative importance of these beliefs Add new beliefs © 2013 by Cengage Learning Inc. All Rights Reserved. 59 8

60. © 2013 by Cengage Learning Inc. All Rights Reserved. 60 Lamb, Hair, McDaniel Chapter 7 2012-2013 Business Marketing

61. Describe business marketing Describe the role of the Internet in business marketing Discuss the role of relationship marketing and strategic alliances in business marketing Identify the four major categories of business market customers © 2013 by Cengage Learning Inc. All Rights Reserved. 61 1234

62. Explain the North American Industry Classification System Explain the major differences between business and consumer markets Describe the seven types of business goods and services Discuss the unique aspects of business buying behavior © 2013 by Cengage Learning Inc. All Rights Reserved. 62 5678

63. Describe business marketing What Is Business Marketing? © 2013 by Cengage Learning Inc. All Rights Reserved. 63 1

64. © 2013 by Cengage Learning Inc. All Rights Reserved. 64 What Is Business Marketing? The marketing of goods and services to individuals and organizations for purposes other than personal consumption. 1

65. Business Products Are used to manufacture other products Become part of another product Aid the normal operations of an organization Are acquired for resale without change in form © 2013 by Cengage Learning Inc. All Rights Reserved. 65 …The key is intended use 1

66. Describe the role of the Internet in business marketing Business Marketing on the Internet © 2013 by Cengage Learning Inc. All Rights Reserved. 66 2

67. the use of the Internet to facilitate the exchange of goods, services, and information between organizations. Business-to-Business Electronic Commerce © 2013 by Cengage Learning Inc. All Rights Reserved. 67 2

68. © 2013 by Cengage Learning Inc. All Rights Reserved. 68 Measuring Online Success Stickiness A measure of a Web site’s effectiveness; calculated by multiplying the frequency of visits by the duration of a visit by the number of pages viewed during each visit. Stickiness = Frequency x Duration x Site Reach 2

69. © 2013 by Cengage Learning Inc. All Rights Reserved. 69  http://www.allbusiness.com AllBusiness provides entrepreneurs with the knowledge and tools to start, manage, and grow their business. The site links to hundreds of how-to articles and provides expert answers to questions.  http://www.microsoft.com/business Microsoft Business offers small business solutions from security to enterprise content management to cloud services. The site also contains practical tips, advice, and links to how-to articles.  http://www.quicken.com/small_business This site offers information on starting, running, and growing a small business. It also provides links to a variety of other Quicken sites that are useful to small-business owners and managers. Internet Sites for Small Businesses

70. Exhibit 7.2 Evolution of E-Business Initiatives 70 2

71. Discuss the role of relationship marketing and strategic alliances in business marketing Relationship Marketing and Strategic Alliances © 2013 by Cengage Learning Inc. All Rights Reserved. 71 3

72. © 2013 by Cengage Learning Inc. All Rights Reserved. 72 Relationship Marketing  Loyal customers are more profitable than price-sensitive customers with little brand loyalty  Long-term relationships build competitive advantage 3

73. © 2013 by Cengage Learning Inc. All Rights Reserved. 73 Strategic Alliances Licensing or distribution agreements Joint ventures Research and development consortia Partnerships Alliances succeed with commitment and trust. 3

74. © 2013 by Cengage Learning Inc. All Rights Reserved. 74 Relationships in Other Cultures Keiretsu relationships are highly integrated: Companies have executives sitting on each others’ boards Maintain dedicated trade efforts Joint development, finance, and marketing 3

75. Identify the four major categories of business market customers Major Categories of Business Customers © 2013 by Cengage Learning Inc. All Rights Reserved. 75 4

76. © 2013 by Cengage Learning Inc. All Rights Reserved. 76 Major Categories of Business Customers Producers Resellers Governments Institutions OEMs Wholesalers Retailers Federal State Local Schools Hospitals Colleges Churches Unions Fraternal Civic Clubs Foundations groups Nonbusiness organizations 4

77. Explain the North American Industry Classification System © 2013 by Cengage Learning Inc. All Rights Reserved. 77 North American Industry Classification System 5