Consumer Behavior

is defined as the study of the buying

units and the exchange processes
involved in acquiring, consuming, and
disposing of goods, services,
experiences, and ideas.
Why Study Consumer Behavior?
1. Foundation of Marketing Management
2. Public Policy and Consumer Behavior
3. Altruistic Marketing
4. Personal Value
Three Research Perspectives on
Consumer Behavior
1. The Decision-Making Perspective
2. The Experiential Perspective
3. The Behavioral Influence Perspective
The Decision-Making Perspective
Proposes that buying results from
consumers perceiving that they have a
problem and then they move through a
series of rational steps to solve the
problem

Exchange is the process that involves

the transfer of something tangible or
intangible, actual or symbolic, between
two or more social actors.
Prerequisites for Exchange:
1. Two or more parties must be present
2. Each party has something of value to
the other
3. Each party is capable of
communication and delivery
4. Each party must be free to accept or
reject the other's offer
5. Each party must believe that it is
appropriate or desirable to deal with the
other.
Six Types of Resources Are
Exchanged:
1. Goods
4. Information
2. Service
5. Status
3. Money
6. Feelings
Relational exchange is currently a
hot topic in marketing. Its
characteristics are :
1. Long term
2. Reciprocal obligations
3. Non-economic rewards: market
embedded ness--social ties between
buyer and seller increase perceived value
of exchange.

4. Extensive formal and informal

communications
5. High interdependence
6. Planning
Market Embedded ness is the social
ties between buyer and seller increase
the perceived value of the exchange. Its
examples are house parties of
Tupperware & Mary Kay Cosmetics

Ethical judgments deal with serious

human injuries and benefits.
Characteristics of ethical judgments:
1. It may, or may not, be laid down by
authority
2. Override self interest
3. Are based on impartial considerations
Ethical dilemma is a decision that
involves the trade-off between lowering
ones personal values in exchange for
increased organizational or personal
profits.
Characteristics of Ethical exchange:
1. Both parties know full nature of
agreement
2. Nothing intentionally misrepresented
or omitted
3. No undue influence takes place via
power.
An Organizing Model of Consumer
Behavior
The model has five primary components:
1. The Buying Unit
2. The Individual influencers
3. The Marketers Strategy
4. The Exchange Process
5. The Environment
Buying units are consumers, firms,
government, non-profits, etc.
Individual influencers
1. Information processing
2. Behavioral learning
3. Motivation and personality
4. Beliefs, attitudes & behaviors
5. Communications
6. Decision Making
Environmental Analysis is when the
marketer assesses the impact of each of
the below facets of the environment on
the firm.
1. Situations
2. Groups and families
3. Culture
4. Subculture
5. Cross cultural issues
6. Regulatory environment

Application Areas of Consumer

Behavior: PERMS
1. Environmental Analysis
2. Market Research
3. Segmentation of the Marketplace
4. Product Positioning and Product
Differentiation
5. Marketing-Mix Development
Product Positioning is influencing how
consumers perceive a brands
characteristics relative to those of
competitive offerings
Types of Product Positioning
Specific Positioning is positioning a
brand based creating linkages between
brand and key attributes and benefits.
E.g., acceleration of auto, reliability of
auto
Competitive Positioning is positioning
a brand in relation to competitors. E.g.,
Suburban is larger than an Expedition
Psychological Positioning is
positioning a brand based upon dominant
personality characteristic of target
market. E.g., we build excitement.
Product Differentiation is the process
of manipulating the marketing mix so as
to position a product in a manner that
allows consumers to perceive meaningful
differences between a brand and its
competitors
Environmental Analysis is the
assessment of the external forces that
act upon the firm and its customers, and
that create threats and opportunities
The Natural Environment includes the
types of raw materials available,
pollution, consumer fear of contracting
deadly diseases, the expansion of desert
regions around the globe, and various
weather phenomena, such as hurricanes
or drought
Components of the External
Environment
Demographic
Technological
Economic
Political
Natural
Cultural
The Economic Environment is a set of
factors involving monetary, natural, and
human resources that influence
firms/consumers.
Behavioral economics is the study of
economic decisions made by individual
consumers and the behavioral
determinants of those decisions.

MARKET RESEARCH is applied

consumer research designed to provide
management with information on factors
that impact consumers acquisition,
consumption, and disposition of goods,
services, and ideas
Marketing Mix Development involves
the development and coordination of
activities involving:
1. Product
3. Pricing
2. Promotion
4. Distribution
Promotional Strategy
1. Advertising
3. Sales
Promotion Application
2. Personal Selling
4. Public
Relations
Four Classifications of Segmentation
Variables:
1. Characteristics of the Person
2. Nature of the Situation in Which
the Product or Service May Be
Purchased
3. Geography
4. Culture and Subculture Adopted
by the Consumer
Characteristics of the Person
1. Demographic Characteristics
2. Behavioral Segmentation: price
elasticity, benefits sought,
usage rate, brand loyalty
3. Benefit Segmentation
4. Psychographic and Personality
Characteristics
Demographics is . . .the study of
population changes and sub cultural
values of various demographic groups
based on such factors as age, sex,
income, education, ethnicity, and
geography.
Examples of demographic variables:
1, Age
6.
Household size
2, Sex
7. Marital
status
3. Income
8. Religion
4. Ethnicity
9. Education
5. Nationality
10.
Occupation
Consumer Situations
consist of the temporary environmental
factors that form the context within
which a consumer activity occurs at a
particular time and place
Types of situations
Social
Task definition
Physical
Time

Culture is the way of life of the people of

a society
Subculture is a subdivision of a national
culture and is based on some unifying
characteristic, such as social status or
nationality
Information
. . . . . . is the content of what
is exchanged with the outer world as we
adjust to it and make our adjustment felt
upon it.
. . . allows us to adapt to and
even influence the world around us.
Information Processing . . .
Information Processing
. . . is the process through
which consumers are exposed to
information, attend to it, comprehend it,
place it in memory, and retrieve it for
later use.
Three Important Factors Influencing
Information Processing:
1. Perception
2. Involvement
3. Memory
Perceptionn is the process through
which individuals are exposed to
information, attend to the information,
and comprehend the information.
Three Stages of Perception
Exposure stage - consumers receive
information through their senses.
Attention stage - consumers allocate
processing capacity to a stimulus.
Comprehension stage - consumers
organize and interpret the information to
obtain meaning from it.
Consumer Involvement
is the perceived personal importance
and/or interest attached to the
acquisition, consumption, and disposition
of a good, service, or idea.
Several factors influencing the level
of the consumers involvement:
1. Type of product being considered;
2. Characteristics of the
communication received by the
consumer;
3. Characteristics of the situation
within which the consumers is
operating;
4. Personality of the consumer.
Two Main Types of Consumer
Involvement
1. Situational - Occurs over a short
time period and is associated with
a specific situation, such as a need

to replace a product that has

broken.
2. Enduring - Occurs when consumers
show a consistent high-level of
interest in a product and frequently
spend time thinking about the
product.
Involvement Has Multiple
Dimensions:
Hedonic importance
Practical relevance
Self-expressive importance
Purchase risk
As Involvement Levels Increase:
1. Consumers tend to process more
in-depth information
2. General increase in arousal levels
3. Consumers are likely to give more
diligent consideration to
information relevant to the
particular decision
4. More likely to be an extended
decision-making process
Bottom Line on Involvement
1. You must know the level of
involvement of your customers.
2. Measure the level of enduring
involvement.
3. May identify multiple consumer
segments. High involvement
versus low involvement segments.
Will target with different
promotions.
4. High involvement segments may
be early adopters.
Zapping or channel surfing, with the
television remote control is a problem for
advertisers.
Consumer Adaptation is the amount
or level of the stimulus to which the
consumer has become accustomed.
.
The Butterfly Curve
is the idea that something slightly
different may be perceived more
positively.
The Attention Stage
Before consumers can comprehend and
remember information, they must first
attend to it.
Types of Attention
Pre attention is an unconscious process
in which consumers automatically scan
the features of the environment.
Selective attention is voluntarily
selectively focusing on relevant
information.
Orientation reflex is the involuntary
reflex of when something surprising or

novel is presented one turns toward and

allocates attention to it.
The Comprehension Stage
is the process in which individuals
organize and interpret information
Perceptual Organization
Psychologists attempted to identify the
rules that govern how people take
disjointed stimuli and make sense out of
them.
Interpretation
is trying to gain an understanding of
something garnering our attention
Semiotics
is the analysis of how people obtain
meaning from signs

MEMORY AND COGNITIVE

LEARNING
Memory
affects the exposure, attention, and
comprehension stages. It allows
consumers to anticipate the stimuli they
might encounter
Three different types of memory
storage:
Sensory Memory
Short-Term Memory
Long-Term Memory
Sensory memory happens in the pre
attention stage where a stimulus is
briefly analyzed to determine if it will
receive additional processing.
Short-term memory is where
information is temporarily stored while
people are actively processing it. Is like
RAM in a computer.
Long-term memory is connected to
short-term memory through encoding
and retrieval processes. Is like the disk
drive in a computer. Memory works like
parallel processors.
Encoding is the transfer of information
from short-term memory to long-term
memory for permanent storage.
Retrieval is the process of accessing
information stored in long-term memory
so that it can be utilized in short-term
memory. Retrieval is a constructive
process. Information in ads received
after product experience can change the
perception of the experience.
Sensory Memory

Consists of firing of nerve cells, shortterm in duration, usually less than a

second.
Short-Term Memory
is the site where information is
temporarily stored while being
processed. Is also called working
memory.
Recognition and Recall
Recognition task is when information is
placed before the consumer. The goal is
to determine if the information has been
seen before.
Recall task is when the consumer must
retrieve the information from long-term
memory without any prompting
Clutter is when there are too many
stimuli making recall more difficult.
Long-Term Memory
has essentially unlimited capacity to
store information permanently.
Relative Superiority of Picture
Versus Word Memory
Visual images or pictures
Words
Words and pictures
Verbal
Memory-Control Process
is the method of handling information
which may operate consciously or
unconsciously to influence the encoding,
placement, and retrieval of information.
Response generation is when a person
develops a response by actively
reconstructing the stimulus.
Retrieval cues create a response by
providing a means of assisting the active
reconstruction of the stimulus.
Consumer Knowledge
is the amount of experience with and
information a person has about particular
products or services
Three Types of Knowledge:
Objective knowledge is the correct
information about a product class that a
consumer has stored in long-term
memory
Subjective knowledge is the consumers
perception of what or how much he or
she knows about a product class.
Knowledge of others is what information
a consumer knows about another.
Law of Contiguity
Stimuli that are experienced
together become associated in memory

e.g., Nike-Tiger Woods. Called paired

associate learning
Semantic Memory Networks
refers to how people store the meanings
of verbal material in long-term memory.
5 Types of Information Stored in
Nodes
Types of information
Brand names
Ads about brand
Brands characteristics/attributes
Product category
Evaluative (affective) reactions to the
brand and the ad.
Schemas
are organized sets of expectations and
associations about an objects.
Forgetting
People forget because even though
information has been placed in long-term
memory, it may be extremely difficult to
retrieve. This is called a retrieval
failure.

Interference Processes
Retroactive interference occurs when
later learned material interferes with the
recall of information learned earlier.
1. Proactive interference occurs
when earlier learned material
interferes with learning and recall
of information learned later.
Time and Forgetting
The recall of verbal information
decreases over time. Rapid forgetting
that occurs immediately after learning
has been shown to occur in advertising
as well.
Affect and Memory
People are better able to recall
information that has the same affective
quality as their mood state.
Affect refers to the feelings,
emotions, and moods that consumers
may experience.