ppt_ch03.ppt

Copyright 2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen WebbSlides prepared by Sarah Fletcher and Morena Dobrowolski

CONSUMER DECISION-MAKING PROCESS 3


3-2

Consumer decision-making process

At the end of this session, you should understand:

• The concept of consumers as decision makers• Media and production consumption trends in Australia and be

able to describe and explain a model of consumer decision making

• The influences on the decision-making process• How the concept of involvement influences buying behaviour• The impact of customer relationship marketing strategies and

loyalty schemes on behaviour• The Internet revolution and its influence on buyer behaviour


3-3

Decisions, decisions

• You have a wedding to attend and you have to buy a present and an outfit

• Write down the steps that you think you would go through to make these two purchases

• Discuss this with a partner and note any differences between the processes you identified and perhaps some of the factors influencing your decision making


3-4

Decisions and problems

• Decision - choice between alternatives that can potentially solve a problem

• Problem - the difference between the consumer’s actual state and their desired state

See EXHIBIT 3.2 Another problem-solving product from Tontine, page 58

PowerPoint slides supplied on the Instructor Resource CD to accompany Consumer Behaviour include advertisement images.


3-5

The problem recognition process


3-6

Needs

• A need is a feeling that something is missing - may be emotional or physical in nature

• Utilitarian needs are based on the functional use

• Hedonic needs are based on emotional benefits

See EXHIBIT 3.4 Palmolive Spa offers the hedonic benefit of relaxation, page 60.



3-7

Consumption trends

• Relaxation time is important and products or services to enhance this are sought

• Increased demand for one-stop shopping, particularly with aged market

• Intense competition between major retailers for FMCG market

• Increased consumer choice and frustration with amount of choice

• Information bombardment at all levels

• Consumers seeking more information before making purchases


3-8

Consumption trends (contd.)

• 18-35 year old males more informed about technology than other consumers

• Women still perform the majority of domestic duties, despite increased participation in the workforce

• Phone and Internet banking becoming increasingly popular

• Increased demand for cleaning, gardening and domestic services, particularly for 35-54 age group

• Uncertainty about the future encouraging a ‘spend now’ mentality, leading to increased household debt

• Suspicion of large corporations, making ‘trusted spokespersons’ more important to consumers


3-9

Media consumption trends and marketing communication

• Communication clutter is making the message of the marketer more difficult to notice or understand

• Strategies such as the use of ‘reality’ television is giving new success to related industries

– e.g. Backyard Blitz and DIY Rescue prompting the sales of landscaping, gardening, building and decorating products and services

• Increased use of the Internet for communicating to markets, particularly the younger consumers


3-10

‘The Internet persuaders’ - Activity

• Case in point 3.1• Read the above case study and discuss the

associated questions

Discuss


3-11

The decision-making process

• Types of decisions– Extended search decisions

Likely to involve a high level of time and effort in information search, expense and risk

Product or brand substitution is unlikely – e.g. house, car– Limited search decisions

Involves some search but the buyer may settle for a substitute

These purchase items are known as shopping goods – e.g. digital camera

– Habitual or routine decisions Everyday purchases that are difficult to influence or change

– e.g. milk or bread


3-12

Types of consumer decisions and extent of problem solving


3-13

Marketing tactics

• High-involvement decisions– Ensure information is readily available

• Low-involvement decisions– Plan point of purchase reminders and in store promotions– Link the low involvement situation, e.g. tissues, with an

emotional appeal to create an association with the product

• Marketing stimuli are more noticeable if they:– Fit with an individual's existing beliefs and values– Are trustworthy and believable– Are related to current needs– Do not create risk– Are easy to understand


3-14

The complex process of consumer decision making


3-15

Appealing to needs

See EXHIBIT 3.5 Jeep appeals to the need for freedom on page 70 and EXHIBIT 3.8 Appealing to an unmet need for migraine relief, page 71.



3-16

Search and involvement

• Involvement– The amount of physical and mental effort and search

that a consumer puts into a decision– This effort is influenced by the level of importance of the

decision – e.g. emotional or financial risk

• Types of involvement– Situational – e.g. wedding outfit– Enduring involvement, a more permanent involvement

reflected across a range of decisions – e.g. a consumer’s self perception as a fashionable wealthy person will influence all purchase decisions


3-17

Involvement

• Factors influencing involvement:– Personal involvement– Situation involved in at the time of purchase– Social visibility– Perceived risk of negative consequences– Previous experience

• As decision making becomes more complex, consumers rely more on previous experience, knowledge, attitudes and the advice of others and less on available information


3-18

Searching• Searching

– May take months or less than a second• Factors that influence additional search include:

– Belief that current known brands are inadequate– More information on known brands is required– Friends or other information sources provide messages that conflict

with current knowledge– A high degree of risk is involved and consumers require confirmation

of their decisions• Internal search

– Memory – e.g. past purchases• External search

– Internet, printed media, advertising, friends and others• Market mavens

– Actively seek information on topics of interest


3-19

The internal search process and decision alternatives


3-20

Costs and benefits influence commitment to search


3-21

Evaluation

• Evaluation – Consumers try to determine how well a product or

service satisfies a particular need – Marketers determine what is important to consumers

to ensure their products are different, distinct and best satisfy the need

– Critical attributes The product attributes that the consumer perceives as

most important – Compensatory evaluation

When alternatives exist, consumers decide the benefits of all offerings in order to make a decision

– Non-compensatory evaluation Comparison of alternatives against specific criteria


3-22

Purchase and post purchase behaviour

• Where to spend?– Retailer vs supplier – Increased use of Internet and catalogue direct mail

shopping– Personal shopping as an experience

• Happy or unhappy with purchase?– Post-cognitive dissonance

The uncomfortable post-purchase state that may exist when a choice between alternatives has been made

Increases with the level of financial or emotional risk involved in the decision

Marketers can provide information to satisfy consumers seeking post-decision reinforcement


3-23

Customer relationship management• Gaining maximum value from marketing relationships with

customers • Profitability is higher with long-term existing customers as

opposed to constantly seeking new customers with marketing efforts

• For example:– Regular car wash customers are encouraged by personal

contact with car wash manager or staff to upgrade to a regular wax and vacuum for a discounted price

– Relationships can also be built with the cleaning products suppliers, to ensure good prices, and the staff, to ensure they are friendly and efficient

– Alternatively, the firm could increase advertising but may not increase sales enough to cover the cost of the advertising


3-24

Loyalty marketing schemes

• Loyalty schemes are designed to obtain repeat business from customers – e.g. FlyBuys and Frequent Flyers programs

• Loyalty may or may not be obtained in the long run• Rather than loyalty, a scheme may result only in

short-term repeat business• Carefully targeted direct marketing is often a more

effective means of building relationships with consumers


3-25

The Internet revolution and buyer behaviour

• It is generally accepted that the Internet makes life easier for consumers

• The Internet is still in the introduction phase of the Product Life Cycle

• Internet sites must work to reinforce the consumer’s decision• Personal shopping experiences such as personal attention

must be recreated in the online environment • Emotional and functional needs must be met by online

shopping• Security and the ability to seek further information are still

issues• A personal presence, such as the direct sales representative

contact telephone numbers or email address, are important


3-26

Six segments of Internet users

• Simplifiers– Do not spend long online and want quick, reliable transactions

• Surfers– A small group who spend a lot of time online, enjoy searching, but

are not particularly loyal• Bargainers

– This group are after the best deal they can get online• Connectors

– A segment of consumers who are new to the Internet, investigate ways to purchase, but prefer the security of offline purchasing

• Routiners– Do not visit many sites, preferring to use only a small number

• Sporters– Use a small number of sport and entertainment sites


3-27

Quiz time

• What is meant by:– Market mavens– Utilitarian needs– Hedonic needs– External searches– Compensatory evaluation– Post-cognitive dissonance– Problems– Needs– Limited search decisions– High involvement decisions– Critical attributes– Surfers

ppt_ch03.ppt

Documents

decision makersmedia

decision makinguse

consumer behaviour

powerpoint slides

natureutilitarian needs

hedonistic needs

future wedding

functional usehedonic