chap 5 consumer markets & consumer behavior (1)

M. Usman Aleem

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Consumer Markets & Consumer Buyer Behavior

Chapter # 05

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Consumer Buyer Behavior• Consumer behavior is the study of how people buy, what they

buy, when they buy and why they buy.

• It blends elements from psychology, sociology, sociopsychology, anthropology and economics.

• It attempts to understand the buyer decision processes/buyer decision making process, both individually and in groups.

• It studies characteristics of individual consumers such as demographics, psychographics, and behavioral variables in an attempt to understand people's wants.

• It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general.

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Consumer Buyer Behavior

• The process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires'.

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Customer Purchase Decision Process

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Basic Model of Consumer Decision MakingStage Brief description

Problem recognition

The consumer perceives a need and becomes motivated to solve a problem.

Motivation

Information search

The consumer searches for information required to make a purchase decision

Perception

Information evaluation

The consumer compares various brands and products

Attitude formation

Decision The consumer decides which brand to purchase Integration

Post-purchase evaluation

The consumer evaluates their purchase decision Learning

The basic model of consumer decision making, also referred to as EKB model (Engel, Kollat & Blackwell, 1969):

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Problem recognition • Problem recognition is that result when there is a difference

between one's desired state and one's actual state.

• Consumers are motivated to address this discrepancy and therefore they commence the buying process.

Sources of problem recognition include:

• An item is out of stock • Dissatisfaction with a current product or service • Consumer needs and wants • Related products/purchases • Marketer-induced • New products

• The relevant internal psychological process that is associated with problem recognition is motivation. A motive is a factor that compels action. Belch and Belch (2007) provide an explanation of motivation based on Maslow's hierarchy of needs and Freud's psychoanalytic theory.

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Information Search • Once the consumer has recognized a problem, they search

for information on products and services that can solve that problem. Belch and Belch (2007) explain that consumers undertake both an internal (memory) and an external search.

Sources of information include:• Personal sources • Commercial sources • Public sources • Personal experience

• The relevant internal psychological process that is associated with information search is perception.

• Perception is defined as 'the process by which an individual receives, selects, organizes, and interprets information to create a meaningful picture of the world'

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Information Search • The selective perception process Stage Description Selective

exposure consumers select which promotional messages they will expose themselves to.

• Selective attention consumers select which promotional messages they will pay attention to Selective comprehension consumer interpret messages in line with their beliefs, attitudes, motives and experiences Selective retention consumers remember messages that are more meaningful or important to them

• You should consider the implications of this process on the development of an effective promotional strategy.

• First, which sources of information are more effective for the brand and second, what type of message and media strategy will increase the likelihood that consumers are exposed to our message, that they will pay attention to the message, that they will understand the message, and remember our message.

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Information evaluation • At this time the consumer compares the brands

and products that are in their evoked set.

• Consumers evaluate alternatives in terms of the functional and psychological benefits that they offer.

• The marketing organization needs to understand what benefits consumers are seeking and therefore which attributes are most important in terms of making a decision.

• The relevant internal psychological process that is associated with the alternative evaluation stage is attitude formation.

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Information evaluation

• Belch and Belch (2007, p.117) note that attitudes are 'learned predispositions' towards an object.

• Attitudes comprise both cognitive and affective elements - that is both what you think and how you feel about something.

• The multi-attribute attitude model explains how consumers evaluate alternatives on a range of attributes.

• Belch and Belch (2007) identify a number of strategies that can be used to influence the process (attitude change strategies).

• Finally, there are a range of ways that consumers apply criteria to make decisions.

• Belch and Belch (2007) explain how information is integrated and how decision rules are made including the use of heuristics.

• The marketing organization should know how consumers evaluate alternatives on salient or important attributes and make their buying.

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Purchase decision • Once the alternatives have been evaluated, the

consumer is ready to make a purchase decision.

• Sometimes purchase intention does not result in an actual purchase.

• The marketing organization must facilitate the consumer to act on their purchase intention.

• The provision of credit or payment terms may encourage purchase, or a sales promotion such as the opportunity to receive a premium or enter a competition may provide an incentive to buy now.

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Post purchase evaluation

• The EKB model was further developed by Rice (1993) which suggested there should be a feedback loop, Foxall (2005) further suggests the important of the post purchase evaulation and that the post purchase evaluation is key due to its influences on future purchase patterns.

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Internal influences Consumer behavior is influenced by:

• Demographics,

• Psychographics (lifestyle),

• Personality,

• Motivation,

• Knowledge,

• Attitudes,

• Beliefs, and

• Feelings.

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External influences

Consumer behavior is influenced by:

• Culture,

• Ethnicity,

• Family,

• Social class,

• Reference groups, and

• Market mix factors.

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Model of Consumer Behavior What is relationship between marketing stimuli & consumer response ?

• Marketing stimuli : 4 P's

• other stimuli

• Buyers characteristics

• Buyer's decision process

• Buyer's decision

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Model of Consumer Buyer Behavior

Consumer purchases are influenced strongly by:

– Cultural

– Social

– Personal

– Psychological characteristics

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The Buyer Decision Process- Buying a Flat-Screen TV

• Problem recognition

• Search for alternatives

• Evaluation of alternatives

• Purchase decision

• Postpurchase behavior

• Perceiving a need:– Internal stimuli

• Normal needs become strong enough to drive behavior

– External stimuli• Advertisements• Friends of friends

StagesStages

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The Buyer Decision Process

• Need recognition• Search for alternatives

• Evaluation of alternatives

• Purchase decision

• Post purchase behavior

• Consumers exhibit heightened attention or actively search for information.

• Sources of information:– Personal (relatives, friends)

– Commercial (ads, catalog)

– Public

– Experiential

StagesStages

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• Need recognition• Information search• Evaluation of

alternatives• Purchase decision• Postpurchase behavior

• Evaluation alternatives in evoked set.

• Most buyers evaluate multiple attributes, each of which is weighted differently.

• At the end of the evaluation stage, purchase intentions are formed.

StagesStages

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• Influences:– Your attitude, purchase intent– Attitudes of others– Unexpected situational factors

• Decision:– What?– Which brand?– How much? – When?– Where?– How?

StagesStages

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• Actual product experience versus expectations

• Manage expectations• Satisfaction/delight is key

– Spread the gospel (flipside)– Repurchase– Loyal– Cost of retention versus

attracting new customers• Cognitive dissonance –

postpurchase tension

StagesStages

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Beliefs & Attitudes

• Attribute belief = consumer’s thought (perception) of how well a product or brand performs on a given attributes

• Attitude = person’s overall evaluation & feelings towards an object or idea – compensatory model

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• Motivation - A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction

– Sigmund Freud - suggested that a person does not fully understand his or her motivation

– Abraham Maslow -human needs are arranged in a hierarchy from the most pressing at the bottom to the least pressing at the top

• physiological needs• safety needs• social needs• esteem needs• self-actualization needs

• Perception - the process by which people select, organize, and interpret information to form a meaningful picture of the world

– three perceptual processes: selective attention, selective distortion, and selective retention

Terminology

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Maslow’s Heirarchy of Needs

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Terminology

Learning - changes in an individual's behavior arising from experience drives, stimuli, cues, responses, and reinforcement.

Beliefs - descriptive thought that a person has about something based on real knowledge, opinion, or faith.

Attitudes - a person's relatively consistent evaluations, feelings, and tendencies toward an object or idea puts people into a frame of mind of liking or disliking things, of moving toward or away from them difficult to change.

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Hierarchy of Needs

• Physiological– “It really quenches your thirst” (Gatorade)

• Safety– “Because so much is riding on your tires” (Michelin)

• Social– “When you care enough to send the very best” (Hallmark)

• Self-esteem– “So it costs a bit more. But I’m worth it!” (L’Oreal hair color)

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Major Factors Influencing Consumer Behavior • Cultural : - set of values, perceptions, preferences, & behaviors.

subculture - includes nationalities, religions, racial groups, & geographical regions social class - reflects income, occupation, education, & residence (uppers, middle, working, lowers).

• Social: reference groups - all groups that influence consumer, family - orientation (past), procreation (future) And roles & status.

• Personal: age and life cycle - family and psychological life cycle, occupation economic circumstances, Lifestyle - person's pattern of living as expressed in activities, interests, & opinions. Personality - psychological characteristics that lead to consistent and enduring responses and Self-concept - self image

• Psychological: motivation - Freud, Maslow, Herzberg perception - process by which person selects, organizes, and interprets information to create meaningful picture of world learning - change by experience beliefs - thought that person hold about something attitudes - enduring evaluations, feelings, and tendencies toward object or idea

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Model of Consumer Buyer Behavior

The basic stimulus-response model (the “black box”

model)

Marketing

Product

Price

Place

Promotion

OtherEconomicTechnologicalPolitical Cultural

Buyer’s Black Box

Buyer CharacteristicsBuyer: Decision Process

Buyer Responses

Product Choice

Brand Choice

Dealer Choice

Purchase Timing

Purchase Amount

Describe a food buying decision that you made recently

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• Stimulus Response Model

– Marketing and other stimuli enter the buyer’s “black box” and produce certain choice / purchase responses.

– Marketers must figure out what is inside of the buyer’s “black box” and how stimuli are changed to responses.

Model of Consumer Behavior

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4 Types of Buying Behavior

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Buying Behavior

• Buying behavior differs greatly depending on what is being bought. More complex decisions usually involve more buying participants and more buyer deliberations.

The are 4 types of buying behavior:

1.Complex – Occurs when consumers are highly involved in a purchase and perceive significant differences among brands…consumers may be highly involved when the product is expensive, risky, purchased infrequently, and highly self-expressive.

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Buying Behavior• 2. Dissonance-Reducing Buying Behavior –

• This happens when consumers are highly involved with expensive, infrequent, or risky purchases, but see little difference among brands

– After the purchase it is not uncommon to experience post-purchase dissonance (after-sale discomfort)

• Notice certain disadvantages• Hear about favorable things about brands not purchased

– Counter dissonance occurs after-sale communications to support claims and make consumers feel better about purchases

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Buying Behavior• 3. Habitual Buying Behavior -

• Occurs under conditions of low consumer involvement and little significant brand difference (i.e., cereal, soap, soda):

– consumer behavior does not pass through the usual belief-attitude-behavior sequence.

– Consumers do not search extensively for information about the brands, evaluate brand characteristics, and make weighty decisions about which brands to buy.

– the buying process involves brand beliefs formed by passive learning, followed by purchase behavior, which may or may not be followed by evaluation.

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Buying Behavior• 4. Variety Seeking Buying Behavior-

• Low consumer involvement but significant perceived brand differences (i.e., soup, cookies, bread)

– consumers often do a lot of brand switching.

– Usually involves low consumer involvement.

– Behavior does not pass through the usual belier-attitude-behavior sequence. Ad repetition creates brand familiarity rather than brand conviction.

– marketing strategy may differ for the market leader and minor brands.

• market leader - try to encourage habitual buying behavior by dominating shelf space, keeping shelves fully stocked, and running frequent reminder advertising.

• Challenger firms - will encourage variety seeking by offering lower prices, special deals, coupons, free samples, and advertising that presents reasons for trying something new

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Stages in The Adoption Process• An individual is assumed to pass through five stages in his new product

adoption process:

• (1) Awareness: Aware of New Product, but lack information about the product.

• (2) Interest: Consumer seeks information about New Product.

• (3) Evaluation: Consumer considers whether trying the new product makes sense.

• (4) Trial: Consumer tries the New Product on a small scale.

• (5) Adoption: Consumer decided to make full and regular use of the New Product.

• Class Exercise: These stages are sequential in the sense that the individual would have to be aware of the new product before he / she purchases it, and he / she would have to purchase the new product before he can use it. Given this structure, What will You Do Being a Buyer.

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Why is it so important to satisfy the customer?

• sales come from two basic groups• new customers• retained customers

– It usually costs more to attract new customers than to retain current ones

– the best way to retain current customers is to keep them satisfied– Customer satisfaction is a key to building lasting relationships

with consumers—to keeping and growing consumers and reaping their customer lifetime value

• a satisfied customer tells 3 people about a good product experience

• a dissatisfied customer gripes to 11 people (one study showed that 13 percent of the people who had a problem with an organization complained about the company to more than 20 people)

chap 5 consumer markets & consumer behavior (1)

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