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Understanding Consumer

Behavior

How is CB Different from different


from other disciplines Like?

Organizational Behavior:
How individuals act within organizations?
Psychology:
Study of mind and social behavior
Sociology:
Study of society (Groups)
Anthropology:
How are social relations among humans
organized?

How is CB Different from different


from other disciplines?
When situation clues lead people to perceive
themselves as customers, they interpret world
differently
Experiment:
Half class as students
Half class as Customers
Perception of being CUSTOMER-Activates
knowledge domain with behavior changing in
accordance to knowledge
Ownership: Controlling ones world, People use
their possessions to impress others

Consumer Behavior
Behavior consumers display in searching,
purchasing,
using,
evaluating
and
disposing off goods and services that they
expect to satisfy their needs
CB focuses on how consumers or families
take decision to spend available resources
(time, money, efforts) on consumption
related items

Consumer Behavior focuses onConsumers make buying decisions all the time. The
Marketing Task is to understand
What do they buy
Why do they buy

Product & Services


Motivation to
purchase
When do they buy
Timing of purchase
Where do they buy
Channel decisions
How do they buy
Decision process
How often do they buy
Purchase cycle
How do they evaluate it after purchase
How do they dispose it of

CB
Two Different Consuming Entities
Personal
(Own, Households)

Organizations
Profit Org
Non Profit Org.
Govt Agencies
Institutions

Evaluation of CB with Marketing


Concept
3 Business Orientations Product Orientation (1850-1920)
Gear up mfg skill to enhance production
Demand exceeded supply

Sales Orientation (1930-1960)


Sell more than what mfg dept can produce
Supply greater than demand

Evaluation of CB with Marketing


Concept
Marketing Orientation (1960s.)
Even in 1930s some companies realized that
Understanding of CB for future growth
Eg 1 (KFC)-Colonel Sanders (Road Side Restaurant,
recipes based on T & P. Popularity grew, Opened up a
motel, bad reputation (nice people avoided it). Decides
to overcome bad image, puts a sample clean,
comfortable, hygienic room.
Eg 2 (McDonalds-1950)-Brothers have to select
locations-Fly over towns and look for Churches Where
there were Churches, there were good American
Families

CHANGES IN CONSUMER
BEHAVIOR

1. Increasing shift towards


CONSUMERISM

Strong and Sustainable economy (8%)


1/5th of worlds citizens below 20 are
Joining ranks of Indian consumer
Youthful population waiting to explore

2. Getting more and more


materialistic
Work hard and get rich
More purchasing power
Findings of survey (Gallop)-Average work
week- Indian (50 hrs), American (42 hrs),
European (Less than 40 hrs)
Means- 1.5 hours extra every day, want to
get rewarded.
Admit we want money, but ready to work
to get that money-PURCHASING POWER

3. Consumerism becoming way of


life
Set aside money and show desire to buy
durables (Indicators of things to come)
Looking for life pleasures Here and now
PLEASURE
Difference between older gen and younger
generation.
Travel and Entertainment Industry
Multiplexes, Theme Parks, Resorts
Mobile-Growth 1600%, 3 mill subsribers in a
month
Lots of new customers entering market-BPO

4.Comfort of Indians in borrowing


Older generations-No one was
comfortable unless it was for survival
Desire for good life..
EMIs..(65 % of salaries)

5. Liking for foreign products


decreasing
Earlier-They dumped obsolete technology,
passed on products well pass date.
Now-MII Label has credibility
Survey
1996-34% expressed faith in Indian cos
2006-60% expressed faith in Indian cos

6.Changing role of women


I can and I will
Parallel role in running household
Influencing factors in purchase decision if not
deciding factors
Survey
83% surveyed approved working outside their
homes
74% approved their delaying marriage for
education and career
Trends of eating out-Convenience items

7.Comfort with technology

Mushrooming of call centers (BPO/ KPO)


E-Chaupal ITC
Consumer getting better deals
Cyber Grand Maas

CONSUMERISM AND CONSUMER


BEHAVIOR IN CONTEMPORARY
ENVIRONMENT

Consumerism
It is a social and economic order that is based on the
systematic creation and fostering of a desire to
purchase goods or services in ever greater amounts.
The term is often associated with criticisms of
consumption starting with Thorstein Veblen or, more
recently by a movement called Enoughism.
Veblen's subject of examination, the newly emergent
middle class arising at the turn of the twentieth century,
comes to full fruition by the end of the twentieth century
through the process of globalization.

Consumerism
The term "consumerism" is also used to refer
to the consumerist movement or consumer
activism, which seeks to protect and inform
consumers by requiring such practices as
honest packaging and advertising, product
guarantees, and improved safety standards.
In this sense it is a movement or a set of
policies aimed at regulating the products,
services, methods, and standards of
manufacturers, sellers, and advertisers in the
interests of the buyer.

Consumerism A Social
Phenomenon
Beginning in the 1990s, the most frequent
reason given for attending college had
changed to making a lot of money,
outranking reasons such as becoming an
authority in a field or helping others in
difficulty.
This correlates with the rise of materialism.
Businesses have realized that wealthy
consumers are the most attractive targets
of marketing.

Consumerism A Social
Phenomenon
Emulation is also a core component of
21st century consumerism. As a general
trend, regular consumers seek to emulate
those who are above them in the social
hierarchy.

Overall Model of Consumer


Behavior
Decision Process
(Situations)

Internal Influences

External
Influences

Culture
Subculture
Demographics
Social Status
Reference Groups
Family
Marketing
Activities

Perception
Learning
Memory
Motives
Personality
Emotions
Attitudes

Problem Recognition

Self-Concept
and
Lifestyle

Information
Search
Alternative
Evaluation
and Selection
Outlet Selection
and Purchase

Postpurchase

Consumer Needs and


Motivation

Needs and Motivation


Needs are the essence of the marketing
concept.
Motivation is the driving force within
individuals that impels them to action.

Consumer Motivation
Represents the drive to satisfy both
psychological and physiological needs
through product purchase and
consumption.
gives insights into why people buy certain
products.
stems from consumer needs: industries
have been built around basic human
needs.

Types of Consumer Needs


Physiological needsFundamental human needs, including
food, water and shelter
Safety and Health needsThreats to our safety and health motive
purchases for personal security and
protection.

Safety and Health needs


Protecting our personal information and
computers represents new types of safety
needs.
Businesses provide a variety of products
and services to appeal to safety and
health conscious consumers.

Types of Consumer needs


Need for love and companionshipHumans are social creatures who need
to experience and express love and
companionship.

Need for love and companionship


Services and products help individuals
find and attract others
products are often used as symbols of
love and caring

need for pleasure


products, services and consumption
activities provide fun and excitement.

need to possess
Consumers often acquire products simply
because of their need to own such
products such as collectors.

need for variety


marketers may introduce different
versions of original brands.
variety may become focus of product
positioning.

Motivational conflicts and need


priorities
satisfying a need often comes at the
expense of another need- this causes
motivational conflicts.

Types of motivational conflicts


Approach-approach: deciding between
two or more desirable options.
Avoidance-avoidance: deciding between
two or more desirable options.
Approach-avoidance: behavior has both
positive and negative consequences.

Motivational conflicts and need


priorities
resolving motivational conflicts requires
prioritizing needs.
Maslows hierarchy:
some needs take precedence over other
needs- physiological needs take top
priorities.
Differences in the importance attached to
various needs affects how consumers
evaluate products.

Motivational conflicts and need


priorities
Because of consumers' different
motivational priorities, companies use
benefit segmentation: dividing consumers
into different market segments based on
the benefits they seek from purchase and
consumption.

Maslows Hierarchy of Needs

Model of the Motivation Process

Goals
The sought-after results of motivated
behavior
Generic goals are general categories of
goals that consumers see as a way to
fulfill their needs
Product-specific goals are specifically
branded products or services that
consumers select as their goals

Goals Structure for Weight Control

The Selection of Goals


The goals selected by an individual
depend on their:
Personal experiences
Physical capacity
Prevailing cultural norms and values
Goals accessibility in the physical and social
environment

Motivations and Goals


Positive
Motivation
A driving force
toward some object
or condition
Approach Goal
A positive goal
toward which
behavior is directed

Negative
Motivation
A driving force away
from some object or
condition
Avoidance Goal
A negative goal from
which behavior is
directed away

Rational versus Emotional Motives


Rationality implies that consumers select
goals based on totally objective criteria
such as size, weight, price, or miles per
gallon
Emotional motives imply the selection of
goals according to personal or subjective
criteria

The Dynamic Nature of Motivation


Needs are never fully satisfied
New needs emerge as old needs are
satisfied
People who achieve their goals set new
and higher goals for themselves

Substitute Goals
Are used when a consumer cannot attain
a specific goal he/she anticipates will
satisfy a need
The substitute goal will dispel tension
Substitute goals may actually replace the
primary goal over time

Frustration
Failure to achieve a goal may result in
frustration.
Some adapt; others adopt defense
mechanisms to protect their ego.

Arousal of Motives

Physiological arousal
Emotional arousal
Cognitive arousal
Environmental arousal

Philosophies Concerned with


Arousal of Motives
Behaviorist School
Behavior is response to stimulus
Elements of conscious thoughts are to be ignored
Consumer does not act, but reacts

Cognitive School
Behavior is directed at goal achievement
Needs and past experiences are reasoned,
categorized, and transformed into attitudes and
beliefs

Murrays List of Psychogenic Needs

Needs Associated with Inanimate Objects:


Acquisition, Conservancy, Order, Retention, Construction
Needs Reflecting Ambition, Power,
Accomplishment, and Prestige:
Superiority, Achievement, Recognition, Exhibition, Infavoidance
Needs Connected with Human Power:
Dominance, Deferrence, Similance, Autonomy, Contrariance

Cont.
Murrays List of Psychogenic Needs
Sado-Masochistic Needs :
Aggression, Abasement
Needs Concerned with Affection between People:
Affiliation, Rejection, Nurturance, Succorance, Play

Needs Concerned with Social Intercourse:


Cognizance, Exposition

A Trio of Needs
Power
individuals desire to control environment

Affiliation
need for friendship, acceptance, and
belonging

Achievement
need for personal accomplishment
closely related to egoistic and selfactualization needs

Consumer Perception
Consumer Experience,
Learning and Knowledge

Perception
The process by which an individual
selects, organizes, and interprets stimuli
into a meaningful and coherent picture of
the world
How we see the world around us

Elements of Perception

Sensation
Absolute threshold
Differential threshold
Subliminal perception

Sensation
The immediate and direct response of the
sensory organs to stimuli
A stimulus is any unit of input to any of the
senses.
The absolute threshold is the lowest level
at which an individual can experience a
sensation.

Differential Threshold
Minimal difference that can be detected
between two similar stimuli
Also known as the just noticeable
difference

Subliminal Perception
Stimuli that are too weak or too brief to be
consciously seen or heard may be strong
enough to be perceived by one or more
receptor cells.

Is Subliminal Persuasion
Effective?
Extensive research has shown no
evidence that subliminal advertising can
cause behavior changes
Some evidence that subliminal stimuli may
influence affective reactions

Aspects of Perception

Selection
Organization

Interpretation

Perceptual Selection
Consumers subconsciously are selective as to
what they perceive.
Stimuli selected depends on two major factors
Consumers previous experience
Consumers motives

Selection depends on the


Nature of the stimulus
Expectations
Motives

Perceptual Selection
Concepts
Selective
Exposure
Selective
Attention
Perceptual
Defense
Perceptual
Blocking

Consumers seek out


messages which:
Are pleasant
They can sympathize
Reassure them of
good purchases

Perceptual Selection
Concepts
Selective
Exposure
Selective
Attention
Perceptual
Defense
Perceptual
Blocking

Heightened
awareness when
stimuli meet their
needs
Consumers prefer
different messages
and medium

Perceptual Selection
Concepts
Selective
Exposure
Selective
Attention
Perceptual
Defense
Perceptual
Blocking

Screening out of
stimuli which are
threatening

Perceptual Selection
Concepts
Selective
Exposure
Selective
Attention
Perceptual
Defense
Perceptual
Blocking

Consumers avoid
being bombarded by:
Tuning out
TiVo

Organization
Principles
Figure and
ground
Grouping
Closure

People tend to organize


perceptions into figureand-ground
relationships.
The ground is usually
hazy.
Marketers usually design
so the figure is the
noticed stimuli.

Organization
Principles
Figure and
ground
Grouping
Closure

People group stimuli


to form a unified
impression or
concept.
Grouping helps
memory and recall.

Organization
Principles
Figure and
ground
Grouping
Closure

People have a need for


closure and organize
perceptions to form a
complete picture.
Will often fill in missing
pieces
Incomplete messages
remembered more than
complete

Interpretation
Perceptual Distortion
Physical
Appearances
Stereotypes
First Impressions
Jumping to
Conclusions
Halo Effect

Positive attributes of
people they know to
those who resemble
them
Important for model
selection
Attractive models are
more persuasive for
some products

Doves campaign
stresses the
everyday
woman.

Interpretation
Perceptual Distortion
Physical
Appearances
Stereotypes
First Impressions
Jumping to
Conclusions
Halo Effect

People hold meanings


related to stimuli
Stereotypes influence
how stimuli are
perceived

Interpretation
Perceptual Distortion
Physical
Appearances
Stereotypes
First Impressions
Jumping to
Conclusions
Halo Effect

First impressions are


lasting
The perceiver is trying
to determine which
stimuli are relevant,
important, or
predictive

Interpretation
Perceptual Distortion
Physical
Appearances
Stereotypes
First Impressions
Jumping to
Conclusions
Halo Effect

People tend not to


listen to all the
information before
making conclusion
Important to put
persuasive arguments
first in advertising

Interpretation
Perceptual Distortion
Physical
Appearances
Stereotypes
First Impressions
Jumping to
Conclusions
Halo Effect

Consumers perceive
and evaluate multiple
objects based on just
one dimension
Used in licensing of
names
Important with
spokesperson choice

Positioning
Establishing a specific image for a brand
in the consumers mind
Product is positioned in relation to
competing brands
Conveys the concept, or meaning, of the
product in terms of how it fulfills a
consumer need
Result of successful positioning is a
distinctive, positive brand image

Positioning Techniques
Umbrella Positioning
Positioning against
Competition
Positioning Based on
a Specific Benefit

Finding an Unowned
Position
Filling Several
Positions
Repositioning

Perceived Quality
Perceived Quality of Products
Intrinsic vs. Extrinsic Cues

Perceived Quality of Services


Price/Quality Relationship

Perceived Risk
The degree of uncertainty perceived by the
consumer as to the consequences (outcome) of
a specific purchase decision
Types

Functional Risk
Physical Risk
Financial Risk
Psychological Risk
Time Risk

How Consumers Handle Risk

Seek Information
Stay Brand Loyal
Select by Brand Image
Rely on Store Image
Buy the Most Expensive Model
Seek Reassurance

Personality and Consumer


Behavior

What Is Personality
The inner psychological characteristics
that both determine and reflect how a
person responds to his or her environment

The Nature of Personality


Personality reflects individual differences
Personality is consistent and enduring
Personality can change

Theories of Personality
Freudian theory
Unconscious needs or drives are at the heart
of human motivation

Neo-Freudian personality theory


Social relationships are fundamental to the
formation and development of personality

Trait theory
Quantitative approach to personality as a set
of psychological traits

Freudian Theory
Id
Warehouse of primitive or instinctual needs for which
individual seeks immediate satisfaction

Superego
Individuals internal expression of societys moral and
ethical codes of conduct

Ego
Individuals conscious control that balances the
demands of the id and superego

A Representation of the Interrelationships


Among
the Id, Ego, and Superego

Freudian Theory and


Product Personality
Consumer researchers using Freuds
personality theory see consumer
purchases as a reflection and extension of
the consumers own personality

Neo-Freudian Personality Theory


We seek goals to overcome feelings of inferiority
We continually attempt to establish relationships
with others to reduce tensions
Karen Horney was interested in child-parent
relationships and desires to conquer feelings of
anxiety. Proposed three personality groups
Compliant move toward others, they desire to be
loved, wanted, and appreciated
Aggressive move against others
Detached move away from others

Trait Theory
Personality theory with a focus on
psychological characteristics
Trait - any distinguishing, relatively
enduring way in which one individual
differs from another
Personality is linked to how consumers
make their choices or to consumption of a
broad product category - not a specific
brand

Trait Theory
Consumer Innovators
And Noninnovators

Innovativeness
Dogmatism
Social character
Need for uniqueness
Optimum stimulation
level
Variety-novelty
seeking

The degree to which


consumers are
receptive to new
products, new
services, or new
practices

Trait Theory
Consumer Innovators
And Noninnovators

Innovativeness
Dogmatism
Social character
Need for uniqueness
Optimum stimulation
level
Variety-novelty
seeking

A personality trait that


reflects the degree of
rigidity a person
displays toward the
unfamiliar and toward
information that is
contrary to his or her
own established beliefs

Trait Theory
Consumer Innovators
And Noninnovators

Innovativeness
Dogmatism
Social character
Need for uniqueness
Optimum stimulation level
Variety-novelty seeking

Ranges on a continuum for


inner-directedness to otherdirectedness
Inner-directedness
rely on own values when
evaluating products
Innovators

Other-directedness
look to others
less likely to be innovators

Trait Theory
Consumer Innovators
And Noninnovators

Innovativeness
Dogmatism
Social character
Need for uniqueness
Optimum stimulation
level
Variety-novelty
seeking

Consumers who
avoid appearing to
conform to
expectations or
standards of others

Trait Theory
Consumer Innovators
And Noninnovators

Innovativeness
Dogmatism
Social character
Need for uniqueness
Optimum stimulation level
Variety-novelty seeking

A personality trait that


measures the level or
amount of novelty or
complexity that individuals
seek in their personal
experiences
High OSL consumers tend
to accept risky and novel
products more readily than
low OSL consumers.

Cognitive Personality Factors


Need for cognition (NC)
A persons craving for enjoyment of thinking
Individual with high NC more likely to respond
to ads rich in product information

Visualizers versus verbalizers


A persons preference for information
presented visually or verbally
Verbalizers prefer written information over
graphics and images.

From Consumer Materialism to


Compulsive Consumption
Consumer materialism
The extent to which a person is considered
materialistic

Fixated consumption behavior


Consumers fixated on certain products or
categories of products

Compulsive consumption behavior


Addicted or out-of-control consumers

Consumer Ethnocentrism
Ethnocentric consumers feel it is wrong to
purchase foreign-made products
They can be targeted by stressing
nationalistic themes

Brand Personality
Personality-like traits associated with brands
Examples

Fa and freshness
Nike and athlete
BMW is performance driven
Levis 501 jeans are dependable and rugged

Brand personality which is strong and favorable


will strengthen a brand but not necessarily
demand a price premium

A Brand Personality Framework

Product Personality Issues


Gender
Often used for brand personalities
Some product perceived as masculine (coffee and toothpaste)
while others as feminine (bath soap and shampoo)

Geography
Actual locations like Philadelphia cream cheese and Arizona
iced tea
Fictitious names also used such as Hidden Valley and Bear
Creek

Color
Color combinations in packaging and products denotes
personality

Self and Self-Image


Consumers have a variety of enduring
images of themselves
These images are associated with
personality in that individuals consumption
relates to self-image

Different Self-Images
Actual SelfImage

Ideal Self-Image

Ideal Social
Self-Image

Social Self-Image

Expected
Self-Image

CONSUMER LEARNING

Learning
The process by which individuals acquire
the purchase and consumption knowledge
and experience that they apply to future
related behavior
Marketers must teach consumers:
where to buy
how to use
how to maintain
how to dispose of products

Learning Theories
Behavioral Theories

Cognitive Theories

Based on observable
behaviors (responses)
that occur as the result
of exposure to stimuli

Learning based on
mental information
processing
Often in response to
problem solving

Elements of
Learning Theories

Motivation
Cues
Response
Reinforcement

Models of Classical Conditioning

Strategic Applications of Classical


Conditioning
Basic Concepts
Repetition
Stimulus
generalization
Stimulus
discrimination

Increases the
association between
the conditioned and
unconditioned
stimulus
Slows the pace of
forgetting
Advertising wearout is
a problem

Strategic Applications of Classical


Conditioning
Basic Concepts
Repetition
Stimulus
generalization
Stimulus
discrimination

Having the same


response to slightly
different stimuli
Helps me-too
products to succeed
Useful in product
extensions

Strategic Applications of Classical


Conditioning
Basic Concepts
Repetition
Stimulus
generalization
Stimulus
discrimination

Selection of a specific
stimulus from similar
stimuli
This discrimination is
the basis of
positioning which
looks for unique ways
to fill needs

Instrumental
(Operant)
Conditioning

A behavioral theory of
learning based on a
trial-and-error process,
with habits forced as
the result of positive
experiences
(reinforcement)
resulting from certain
responses or
behaviors.

Types of Reinforcement

Positive
Negative
Forgetting
Extinction

A Model of Instrumental Conditioning

Instrumental Conditioning and


Marketing

Customer Satisfaction (Reinforcement)


Reinforcement Schedules
Shaping
Massed versus Distributed Learning

Cognitive
Learning
Theory

Holds that the kind


of learning most
characteristic of
human beings is
problem solving,
which enables
individuals to gain
some control over
their environment.

Information Processing
Relates to cognitive ability and the
complexity of the information
Individuals differ in imagery their ability
to form mental images which influences
recall

Information Processing and Memory


Stores

Information Processing
Movement from short-term to long-term
storage depends on
Rehearsal
Encoding

Retention
Information is stored in
long-term memory
Episodically: by the order
in which it is acquired
Semantically: according
to significant concepts

Total package of
associations is called a
schema

Models of Cognitive Learning

Promotional Tricompetent
Model
Model
Sequential
Stages
of
Processing

Attention
Interest
Desire
Action

Cognitive
Affective
Conative

DecisionMaking
Model

Innovation
Adoption
Model

Awareness
Knowledge

Awareness

Innovation
Decision
Process

Knowledge

Interest
Evaluation Evaluation Persuasion
Purchase
Trial
Decision
Postpurchase Adoption Confirmation
Evaluation

Consumer Relevance
Involvement depends on degree of
personal relevance.
High involvement is:
Very important to the consumer
Provokes extensive problem solving

Measures of Consumer Learning


Recognition and Recall Measures
Aided and Unaided Recall

Cognitive Responses to Advertising


Attitudinal and Behavioral Measures of
Brand Loyalty

Brand Loyalty
Function of three groups of influences
Consumer drivers
Brand drivers
Social drivers

Four types of loyalty


No loyalty
Covetous loyalty
Inertia loyalty
Premium loyalty

Brand Equity
Refers to the value inherent in a wellknown brand name
Value stems from consumers perception
of brand superiority
Brand equity reflects learned brand loyalty
Brand loyalty and brand equity lead to
increased market share and greater profits

CONSUMER ATTITUDE
FORMATION AND CHANGE

Attitude

A learned
predisposition to
behave in a
consistently
favorable or
unfavorable manner
with respect to a
given object.

What Are Attitudes?

The attitude object


Attitudes are a learned predisposition
Attitudes have consistency
Attitudes occur within a situation

Structural Models of Attitudes


Tricomponent Attitude Model
Multiattribute Attitude Model

A Simple Representation of the Tricomponent


Attitude Model

Cognition

The Tricomponent Model


Components

Cognitive
Affective
Conative

The knowledge and


perceptions that are
acquired by a
combination of direct
experience with the
attitude object and
related information
from various sources

The Tricomponent Model


Components

Cognitive
Affective
Conative

A consumers
emotions or feelings
about a particular
product or brand

Starbucks Coffee

The Tricomponent Model


Components

Cognitive
Affective
Conative

The likelihood or
tendency that an
individual will
undertake a specific
action or behave in a
particular way with
regard to the attitude
object

Multiattribute
Attitude
Models

Attitude models that


examine the
composition of
consumer attitudes
in terms of selected
product attributes or
beliefs.

Multiattribute Attitude Models


Types
The attitude-towardobject model
The attitude-towardbehavior model
Theory-ofreasoned-action
model

Attitude is function of
evaluation of productspecific beliefs and
evaluations
Useful to measure
attitudes toward
brands

Multiattribute Attitude Models


Types
The attitude-towardobject model
The attitude-towardbehavior model
Theory-ofreasoned-action
model

Is the attitude toward


behaving or acting
with respect to an
object, rather than the
attitude toward the
object itself
Corresponds closely
to actual behavior

Multiattribute Attitude Models


Types
The attitude-towardobject model
The attitude-towardbehavior model
Theory-ofreasoned-action
model

Includes cognitive,
affective, and
conative components
Includes subjective
norms in addition to
attitude

Strategies of Attitude Change


1. Changing the Basic Motivational
Function
2. Associating the Product with an Admired
Group or Event
3. Resolving Two Conflicting Attitudes
4. Altering Components of the Multiattribute
Model
5. Changing Beliefs about Competitors
Brands

Consumer Decision Making

Levels of Consumer Decision


Making
Extensive Problem Solving
A lot of information needed
Must establish a set of criteria for evaluation

Limited Problem Solving


Criteria for evaluation established
Fine tuning with additional information

Routinized Response Behavior


Usually review what they already know

Models of Consumers: Four Views of


Consumer Decision Making

An Economic View
A Passive View
A Cognitive View
An Emotional View

Goal Setting and Pursuit

A Simple
Model of
Consumer
Decision
Making

The Process of Consumer Decision


Making
Need Recognition
Prepurchase Search
Evaluation of Alternatives

Need Recognition
Usually occurs when consumer has a
problem
Need recognition styles
Actual state
Desired state

Prepurchase Search
Begins with internal search and then
moves to external search
The impact of the Internet
Search may be personal or impersonal

Issues in Alternative Evaluation


Evoked set
Criteria used for evaluating brands
Consumer decision rules and their
application
Decisions by functionally illiterate population
Going online for decision-making assistance
Lifestyles as a consumer decision strategy
Incomplete information
Series of decisions
Decision rules and marketing strategy

The Evoked Set

Issues in Alternative Evaluation


Evoked Set
Criteria used for evaluating brands
Consumer decision rules and their
application
Decisions by functionally illiterate population
Going online for decision-making assistance
Lifestyles as a consumer decision strategy
Incomplete information
Series of decisions
Decision rules and marketing strategy

Consumer Decision Rules


Compensatory
Noncompensatory
Conjunctive Decision Rule
Disjunctive Decision Rule
Lexicographic Rule

Compensatory
Decision Rules

A type of decision
rule in which a
consumer evaluates
each brand in terms
of each relevant
attribute and then
selects the brand
with the highest
weighted score.

Noncompensatory
Decision
Rules

A type of consumer
decision rule by which
positive evaluation of
a brand attribute does
not compensate for a
negative evaluation of
the same brand on
some other attribute.

Conjunctive
Decision
Rule

A noncompensatory
decision rule in which
consumers establish a
minimally acceptable
cutoff point for each
attribute evaluated.
Brands that fall below
the cutoff point on any
one attribute are
eliminated from further
consideration.

Disjunctive
Rule

A noncompensatory
decision rule in which
consumers establish a
minimally acceptable
cutoff point for each
relevant product
attribute.

Lexicographic
Rule

A noncompensatory
decision rule consumers first rank
product attributes in
terms of importance,
then compare brands
in terms of the
attribute considered
most important.

Affect
Referral
Decision
Rule

A simplified decision
rule by which consumers
make a product choice
on the basis of their
previously established
overall ratings of the
brands considered, rather
than on specific
attributes.

The Decision Process for Functionally


Illiterate Consumers

A Purchase Can Involve a Number of


Decisions.
When purchasing car, the buyer is
involved in a number of decisions the
make, model, country of origin, the
dealer, the financing, and different
options.

Output of Consumer Decision


Making
Purchase behavior
Postpurchase evaluation

Postpurchase Evaluation
Actual Performance Matches Expectations
Neutral Feeling

Actual Performance Exceeds Expectations


Positive Disconfirmation of Expectations

Performance Is Below Expectations


Negative Disconfirmation of Expectations

Gifting Behavior
Gifting is an act of symbolic
communication, with explicit and implicit
meanings ranging from congratulations
and love, to regret, obligation, and
dominance.

Reported Circumstances and Motivations for


Self-Gift Behavior
CIRCUMSTANCES

MOTIVATIONS

Personal accomplishment
Feeling down
Holiday
Feeling stressed
Have some extra money
Need
Had not bought for self in a while
Attainment of a desired goal
Others

To reward oneself
To be nice to oneself
To cheer up oneself
To fulfill a need
To celebrate
To relieve stress
To maintain a good feeling
To provide an incentive toward a goal
Others

Gifting Relationships
GIFTING
RELATIONSHIP

DEFINITION

EXAMPLE

Intergroup

A group giving a gift to


another group

A Christmas gift from one


family to another family

Intercategory

An individual giving a gift to a


group or a group giving a gift
to an individual

A group of friends chips in


to buy a new mother a baby
gift

Intragroup

A group giving a gift to itself


or its members

A family buys a VCR for


itself as a Christmas gift

Interpersonal

An individual giving a gift to


another individual

Valentines Day chocolates


presented from a boyfriend
to a girlfriend

Intrapersonal

Self-gift

A woman buys herself


jewelry to cheer herself up

A Simple Model of Consumption

Relationship
Marketing

Marketing aimed at
creating strong,
lasting relationships
with a core group of
customers by making
them feel good about
the company and by
giving them some
kind of personal
connection with the
business.

Reference Group and Opinion


Leadership

Reference Groups
Reference group: an actual or imaginary
individual/group conceived of having significant
relevance upon an individuals evaluations,
aspirations, or behavior
Influences consumers in three ways:
Informational
Utilitarian
Value-expressive

When Reference Groups Are


Important
Social power: capacity to alter the actions of
others
Referent power

Information power

Legitimate power

Expert power

Reward power

Coercive power

Types of Reference Groups


Any external influence that provides social clues
can be a reference group
Cultural figure
Parents
Large, formal organization
Small and informal groups
Exert a more powerful influence on individual
consumers
A part of our day-to-day lives: normative
influence

Brand Communities and Consumer


Tribes
A group of consumers who share a set of social
relationships based upon usage or interest in a
product
Consumer tribes share emotions, moral beliefs,
styles of life, and affiliated product
Brandfests celebrated by community

Membership versus
Aspirational Reference Groups
Membership reference groups
People the consumer actually knows
Advertisers use ordinary people

Aspirational reference groups


People the consumer doesnt know but
admire
Advertisers use celebrity spokespeople

Factors Predicting
Reference Group Membership
Propinquity

Mere exposure

Group cohesiveness

Positive versus
Negative Reference Groups
Avoidance groups: motivation to distance
oneself from other people/groups
Antibrand communities: coalesce around a
celebrity, store, or brandbut in this case
theyre united by their disdain for it

Consumers Do It in Groups
Deindividuation: individual identities become
submerged within a group
Social loafing: people dont devote as much to a
task when their contribution is part of a larger
group
Risky shift: group members show a greater
willingness to consider riskier alternatives
following group discussion than if members
made their own decisions

Factors Influencing Conformity

Cultural pressures
Fear of deviance
Commitment
Group characteristics
unanimity
size
expertise
Susceptibility to
interpersonal influence

Opinion Leadership
Opinion leaders influence others attitudes and
behaviors
Experts
Unbiased evaluation
Socially active
Similar to the consumer
Among the first to buy

Opinion Leaders
Is there a generalized opinion leader whose
recommendations we seek for all types of
purchases?
Experts may be monomorphic or polymorphic

Old and New Social Networks

The Market Maven


Market maven: actively involved in transmitting
marketplace information of all types
Just into shopping and aware of whats
happening in the marketplace
Overall knowledge of how and where to get
products

The Surrogate Consumer


Surrogate consumer: a marketing intermediary
hired to provide input into purchase decisions
Interior decorators, stockbrokers, professional
shoppers, college consultants
Consumer relinquishes control over decisionmaking functions
Marketers should not overlook influence of
surrogates!

How Do We Find Opinion


Leaders?
The self-designating method
Simply ask individuals whether they consider
themselves to be opinion leaders
Easy to apply to large group of potential
opinion leaders
Inflation or unawareness of own
importance/influence
Key informant method
Key informants identify opinion leaders

Sociometric Methods
Sociometric methods: trace communication
patterns among group members
Systematic map of group interactions
Most precise method of identifying productinformation sources, but is very
difficult/expensive to implement
Network analysis
Referral behavior/network, tie strength
Bridging function, strength of weak ties

Word-of-Mouth Communication
WOM is product information transmitted by
individuals to individuals
More reliable form of marketing
Social pressure to conform
Influences two-thirds of all sales
We rely upon WOM in later stages of product
adoption
Powerful when we are unfamiliar with product
category

Negative WOM and Power of


Rumors
We weigh negative WOM more heavily
than we do positive comments!
Negative WOM is easy to spread, especially
online
Determined detractors
Information/rumor distortion

There are 3 themes to complaint Web


sites
Injustice
Identity

Cutting-Edge WOM Influences


Social Networking
Crowd Power

Guerilla Marketing

Viral Marketing

Cultural Influence on
Consumer Behavior

Culture

The sum total of learned


beliefs, values, and
customs that serve to
regulate the consumer
behavior of members of
a particular society.

A Theoretical Model of Cultures


Influence on Behavior

The Invisible Hand of Culture


Each individual perceives the world through
his own cultural lens

Lifestyle Matrix for Global Youth

188

Culture Satisfies Needs


Food and
Clothing
Needs vs.
Luxury

Culture Is Learned
Issues
Enculturation and
acculturation
Language and
symbols
Ritual
Sharing of culture

Enculturation
The learning of ones
own culture

Acculturation
The learning of a new
or foreign culture

190

Culture Is Learned
Issues
Enculturation and
acculturation
Language and
symbols
Ritual
Sharing of culture

Without a common
language, shared
meaning could not exist
Marketers must choose
appropriate symbols in
advertising
Marketers can use
known symbols for
associations

Culture Is Learned
Issues
Enculturation and
acculturation
Language and
symbols
Ritual
Sharing of culture

A ritual is a type of
symbolic activity
consisting of a series of
steps
Rituals extend over the
human life cycle
Marketers realize that
rituals often involve
products (artifacts)

Selected Rituals and Associated


Artifacts
SELECTED RITUALS

TYPICAL ARTIFACTS

Wedding

Bridal make-up (dresses are mostly red for


brides in large parts of India); Grooms
wear sherwani.

Birth of child

Savings Bond, silver baby spoon

Birthday

Card, present, cake with candles

50th Wedding anniversary

Catered party, card and gift, display of


photos of the couples life together

Graduation

Pen, card, wristwatch

Valentines Day

Candy, card, flowers

New Years Eve

Champagne, party, fancy dress

Culture Is Learned
Issues
Enculturation and
acculturation
Language and
symbols
Ritual
Sharing of Culture

To be a cultural
characteristic, a belief,
value, or practice must
be shared by a
significant portion of the
society
Culture is transferred
through family, schools,
houses of worship, and
media
194

Culture is Dynamic
Evolves because it fills needs
Certain factors change culture
Technology
Population shifts
Resource shortages
Wars
Changing values
Customs from other countries

The Measurement of Culture


Content Analysis
Consumer Fieldwork
Value Measurement Instruments

Content
Analysis

A method for
systematically analyzing
the content of verbal
and/or pictorial
communication. The
method is frequently
used to determine
prevailing social values
of a society.

Consumer Fieldwork
Field Observation
Natural setting
Subject unaware
Focus on observation of behavior

Participant Observation

Value Measurement Survey


Instruments
Rokeach Value Survey
(RVS)

A selfadministered
inventory
consisting of
eighteen
terminal values
(i.e., personal
goals) and
eighteen
instrumental
values (i.e., ways
of reaching
personal goals)

List of Values (LOV)


A value measurement
instrument that asks
consumers to identify
their two most
important values from
a nine-value list that
is based on the
terminal values of the
Rokeach Value
Survey

Values and Lifestyles


(VALS)
A value measurement
based on two
categories: selfdefinition and
resources

Scale to Measure Attitude


Toward Helping Others
Attitude toward helping others (AHO)
People should be willing to help others who
are less fortunate
Helping troubled people with their problems
is very important to me
People should be more charitable toward
others in society
People in need should receive support from
others

Toward a Shopping Culture


Is shopping what we do to create value in
our lives?
The younger generation is shopping more
This has an effect on credit card debt