Consumer Behavior Process

Core concepts

Psychological Processes

• How people– Think– Feel– Reason– Choose

• How marketers use that knowledge to achieve goals• Influence vs

trickery

Safety

Achievement

Control

Basic Purchase Process

1. Problem recognition2. Information search3. Evaluation of

alternatives4. Purchase decision5. Postpurchase

behavior

• Lipstick 1-2-3-4-5

• Cookies 4-3-5

• An evening MBA program

• A stereo• Surgical

correction of myopia 1 2 3 2 3 2 3 2 3…

“Hierarchy of effects”

Problem RecognitionYour stereo is damaged during a party

Your neighbor’s new stereo is kind of nice

Cues that might stimulate the search process

Information Search

• Sources– Commercial

• Where do you look for information on– Lipstick? Mulch? Car battery? Wine? A programmable logic controller?

One of these thingies?

– Personal• Who do you listen to, and about what?

– Public• Mavens, experts, kid w/ ponytail

– Experiential• Active or passive search? How much effort, over how

much time?

Information Evaluation• A Real Big Deal: Bounded rationality

– We cannot process all the information we receive

– Heuristics (rules of thumb) – The role of the brand– Filtering– Useful references

• Simon: Models of Bounded Rationality• Newell and Simon: Human Problem Solving• Bell, Raiffa, and Tversky: Decision Making• Kahneman and Tversky: Choices, Values, and

Frames• Russo: Decision Traps• Gilovich: How We Know What Isn’t So

Not every piece of information gets through alive• Selective

perception• Selective

distortion• Selective

retention

Information Evaluation

How do you get into the awareness set? The consideration set? The choice set?

Total setAwareness set (

Unaided vs aided awareness)

Consideration set (What brands would you think about)

Choice set (Psychological, budgetary constraints)

Decision

Concept Car• Benchmarks:

– Mercedes S-Class ($88,000 to $194,000)– Lexus LS 460 ($65,000 to $75,000)– Audi A8 ($79,000 to $90,000)

• Features– 8-speed automatic by ZF Friedrichschafen (identical to BMW transmission)– NHTSA 5-star crash rating in every category– Equivalent interior package to Mercedes S-Class, e.g., suede headliner, French stitching on

leather portions of dash, glove leather seats, …– 4.6L V8, 375 hp, 333 lb-ft of torque, 0-60 in 5.3 sec– Standard: Everything you’ve ever heard of, plus lane departure warning system, vehicle

stability management system, 17-speaker Lexicon sound system (identical to BMW 7-series), massaging seats, iDrive-like driver interface for climate and entertainment controls.

– Free iPad w preloaded owner’s manual• Review: “All the toys are present…impressive looking and stinks of quality…the real

deal.” • Price: $48,000 to $58,000

$5

$17

$1.50

$29

$34

$62,000

Lipstick

Purchase

• What exactly is it one purchases when one buys…– A pair of jogging shoes at Wal-Mart?– A pair of jogging shoes at Fleet Feet?– A Guerlain Kiss-Kiss Gold lipstick for $62,000?

• What are facilitators and limiters of a desire to purchase? Are they opposites?

Postpurchase evaluation

• PPE is a feedback loop affecting customer acquisition and retention

• 17:1—What are actions a car dealer can take to avoid negative buyer experience?

Related concepts:Consumer heterogeneity, segmentation,

targeting, and positioningWhy don’t n competitors each have market

shares equal to 1/n?Consider a set of identical products offered by a

set of possible vendors. – What would cause perception of their products by

potential clients to vary?– Will preferences among the consumer base vary

more or less than perceptions?

Segmentation, Targeting, and Positioning

• Positioning exists in a customer’s mind. It’s something that’s going to happen whether you try to influence it or not.

• You can’t influence positioning in a meaningful way until you know who you want to influence.

• Segments are groups of people who behave the same way when we tweak a marketing mix variable, and who behave differently from other groups of people in that way.

• Useful target segments are substantial groups you can identify, reach, and serve profitably.

Positioning statement

This is a useful form for a positioning statement. It will help you think about what you are doing for whom, what’s important to them, and what it is that makes you, your product, or your service special and better.

For [target market], our product is the [frame of reference] that [key benefit], because unlike [alternative], we have [credible, demonstrable capabilities].