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PERCEPTION/ MARKET
SENSATION RESEARCH INFO
SEARCH
COGNITION
STRATEGY CHOICES
AFFECT
PREFERENCES
BELIEFS
CONSUMER
COMMUNICATION
SOCIAL AND
OTHER INFLUENCE
True or False?
1. If you have bad breath, you cannot smell it
yourself.
2. If you eat a balanced diet, you do not need
vitamin supplements.
3. Using a razor with five blades will reduce the
likelihood of cutting yourself and will result in less
skin irritation.
4. Dell Computers tend to be of higher quality than
those made by HP and Sony.
5. Rust stains on clothes can be removed with the
use of lemon juice. Bleach actually makes these
stains worse.
Questions Faced By Consumers
• Are veggie burgers actually healthy?
• What makeup should you use to get an “even”
skin tone?
• Do I get any useful benefits from spending
more than $125 on a digital camera?
• Should I get a “make-over?” What am I
looking for? What should I do?
• Is my mechanic honest?
• Which tie should I wear for a job interview?
• Should I give my wife roses, chocolate, or
software?
Consumer Problems and
Recognition
• Consumer problem:
Discrepancy between ideal and
actual state--e.g., consumer:
– Has insufficient hair
– Is hungry
– Has run out of ink in his or her
inkjet cartridge
• Problems can be solved in
several ways--e.g., stress reduction
<----- vacation, movie, hot bath,
medication
CONSUMER DECISIONS:
Theory and Reality in Consumer Buying
PROBLEM
RECOGNITION
INFORMATION
SEARCH
EVALUATION OF
ALTERNATIVES
PURCHASE
POSTPURCHASE
EVALUATION/ Theory
BEHAVIORS
Complications
Approaches to Search for
Problem Solutions
INTERNAL
Memory
Thinking
EXTERNAL
Word of mouth, media,
store visits, trial CATALOG
Options Identified and Considered
UNIVERSAL SET
All possible options
RETRIEVED SET
Options that readily
come to mind
EVOKED SET
Options that will be
considered by the
consumer
• Involvement level
– Temporary
– Enduring
• Consumer locus of control
– Internal
– External
• Product category complexity
• Consumer knowledge
Evaluation Type
IMPORTANT
– Compensatory: Decision based on overall value
of alternatives (good attribute can outweigh bad
ones)
– Non-compensatory: Absolutely must meet at
least one important criterion (e.g., car must have
automatic transmission)
– Hybrid: Combination of the two (e.g., one non-
compensatory measure, then compensatory
tradeoffs on other attributes
– Abandoned strategy: Consumer finds initial
criteria unrealistic and proceeds to less desirable
solution
LESS
IMPORTANT
Heuristics—Low Involvement Decision
Rules
• If either Coke or Pepsi is on
sale, buy that brand;
otherwise, buy Coke
• The larger the navels, the
better the orange
• The larger package is likely to
offer a lower unit price (not
true in reality)
Attitudes―components
AFFECT
BELIEFS
(FEELING)
BEHAVIORAL
INTENTIONS
Attitude Components
• Beliefs • Behavioral
– Can be positive, negative, Intentions
or neutral
– An individual’s plan or
– May or may not be expectations of what he or
accurate she will do
– May contradict other – May appear inconsistent
beliefs held by the other with beliefs
person
– May not predict well what
• Affect the individual will do in
reality
– May be positive or negative
– May take on specific
dimension (e.g., pleasure,
disgust)
Generating Beliefs Through Advertising
• Statements must be
– Perceived
– Comprehended
– Remembered
– Believed (at least in part)
Positioning Through Creating Beliefs
• “It’s not delivery; it’s De Journo!”
• “Wal-Mart. Always low prices.
Always.”
• “I just saved a bunch of money on
my auto insurance.”
• “U-um Good!” (Campbell’s Soup)
Consumer Behaviour
1-18
Development of the Marketing
Concept
Production
Concept
Product Concept
Selling Concept
Marketing
Concept
1-19
The Production Concept
1-20
The Product Concept
• Assumes that consumers will buy the
product that offers them the highest
quality, the best performance, and the
most features
• Marketing objectives:
– Quality improvement
– Addition of features
• Tendency toward Marketing Myopia
1-21
The Selling Concept
• Assumes that consumers are unlikely to
buy a product unless they are
aggressively persuaded to do so
• Marketing objectives:
– Sell, sell, sell
• Lack of concern for customer needs and
satisfaction
1-22
The Marketing Concept
• Assumes that to be successful, a
company must determine the needs and
wants of specific target markets and
deliver the desired satisfactions better
than the competition
• Marketing objectives:
– Profits through customer satisfaction
1-23
Business Leaders Who Understood
Consumer Behaviour
• Alfred Sloan, General Motors
• Colonel Sanders, KFC
• Ray Kroc, McDonald’s
1-24
Implementing the Marketing Concept
• Consumer Research
• Segmentation
• Targeting
• Positioning
1-25
Segmentation, Targeting, and Positioning
1-27
The Marketing Mix
• Product
• Price
• Place
• Promotion
1-28
The Societal Marketing Concept
• All companies prosper when society
prospers.
• Companies, as well as individuals,
would be better off if social
responsibility was an integral
component of every marketing decision.
• Requires all marketers adhere to
principles of social responsibility.
1-29
Digital Revolution in the Marketplace
1-30
Digital Revolution in the Marketplace -
Continued
• The exchange between consumers and
marketers has become more interactive
• May affect the way marketing is done
1-31
Why study consumer behaviour?
• Understanding consumer behaviour will
help you become better marketers as it is
the foundation for
Segmenting markets
Positioning products
Developing an appropriate marketing
continued
1-32
Why study consumer behaviour?
• Knowledge of consumer behaviour is
essential for non-profit organizations
– Non profits have different customers to
please
– Donors, users, volunteers, general public,
government
» continued
1-33
Why study consumer behaviour?
• Public service initiatives have to be
based on an understanding of
consumer behaviour
– Canada’s largest advertiser is the federal
government
– Most government initiatives (e.g.,
antismoking campaigns) need a
knowledge of consumer behaviour to
succeed
» continued
1-34
Why study consumer behaviour?
1-35
SIMPLE MODEL FOR CONSUMER BEHAVIOUR
Motives
Attitudes
Needs Consumer
Purchase
Decision Learning
Business
Family
Perception
Personality
Economic
MODELS OF CONSUMER
BEHAVIOUR
Important models of consumer
behaviour:
• The Economic Model
• Learning Model
• Psychological Model
• The Sociological Model
• The Howard Sheth Model of buying behaviour
• The Nicosia Model
• The Engle-Kollat-Blackwell Model
• Engle, Blackwell and Miniard (EBM) Model
• Webstar and Wind Model of organizational buying
behaviour
• The Sheth Model of Industrial buying
Traditional Models Contemporary Models
• The Economic Model • The Howard Sheth
• Learning Model Model of buying
• Psychological Model behaviour
• The Sociological Model • The Nicosia Model
• The Engle-Kollat-
Blackwell Model
• Engle, Blackwell and
Miniard (EBM) Model
• Webstar and Wind
Model of organizational
buying behaviour
• The Sheth Model of
Economic Model:
This model assumes that with limited purchasing power and
a set of needs and tastes, a consumer will allocate his/ her
expenditure over different products at a given prices so as
to maximize utility.
Bases for Economic Model:
– Price Effect
– Substitution Effect
– Income Effect
Criticism:
• Fails to explain how does the consumer actually behave.
• Incompleteness in the Model.
• Lack of broader perspective.
Learning Model:
This model help marketers to promote association of products
with strong drivers and cues, which would lead to positive
reinforcement from the consumers.
The model suggests that message from the first influences the
predisposition of the consumer towards the product or services.
Based on the situation, the consumer will have a certain attitude
towards the product. This may result in a search for the product
or an evaluation of the product attributes by the consumer.
Field 3:- it explains how the consumer actually buys the product.
• Hispanics
– 35 million consumers
purchase $425 billion worth
of goods and services.
– Expected to grow 64% in 20
years.
– Spanish media makes group
easy to reach.
– Brand loyal group.
6 - 71
Sears uses the Fiesta mobile to visit
Hispanic neighborhoods regularly
Characteristics Affecting Consumer
Behavior
• African Americans
– 35 million consumers purchase
$527 billion worth of goods and
services.
– Growing more affluent /
sophisticated.
– Price and brand name
conscious; quality and selection
are important.
– Certain media target this group.
6 - 73
Hallmark offers an Afrocentric line of greeting cards called
Mahogany. What other brands have been targeted specifically to
African Americans?
Characteristics Affecting Consumer
Behavior
• Asian Americans
– 10 million consumers
purchase $229 billion worth
of goods and services.
– Fastest growing, most
affluent subculture.
– Many nationalities comprise
this group.
– Consumer packaged goods
firms now target this group
more heavily.
6 - 75
Characteristics Affecting Consumer
Behavior
• Mature Consumers
– 75 million consumers age 50+will grow to 115 million
within 25 years.
– Mature consumers
control 50% of all
discretionary income.
– Attractive market for
travel, restaurant, and
cosmetics products,
among others.
6 - 76
Characteristics Affecting Consumer
Behavior
What other
types of images
could be used
to appeal to this
lifestyle?
Think about Tide
detergent.
What brand
personality
seems to
describe Tide
best?
Can you think of
examples of
brands that fit
each personality
type?
Characteristics Affecting Consumer
Behavior
• Motivation
Key Factors – Needs provide motives
– Motivation research
– Maslow’s hierarchy of needs
Cultural • Perception
– Selective attention, selective
distortion, selective retention
Social • Learning
– Drives, stimuli, cues, responses
Personal and reinforcement
• Beliefs and attitudes
Psychological
6 - 81
SOURCES OF EXTERNAL INFLUENCES ON CONSUMER
BEHAVIOUR-Wilkie (1990)
SCOPE – the sweep or reach of the impact
STRENGTH- the power to impact behaviour
IMMEDIACY – direct or focused influence on behaviour; the impact
is felt with no or little influence coming into play.
6 - 84
Attempt to stimulate need recognition
Need or Problem Recognition
• The realization that there is a difference
between actual and desired states
– The higher the gap, the stronger the need (or
bigger the problem)
Types of Problems
• Active Versus Inactive problems
– Active: those you are aware of
– Inactive: those that you are not yet aware of (but
exist)
• Those that require immediate solutions and
those that do not require immediate solutions
14-87
Problem Recognition and Marketing
Strategy
• Identify existing consumer problems and find
solutions for these
• Lower the actual state
• Increase the desired state
• Increase the importance of the gap between actual
and desired states
• Convert inactive problems to active problems
• Convert problems into ones requiring an immediate
solution
14-88
Pre-Purchase Search
• Types of Information Sources
• Types of Information Sought
• Factors Affecting Extent of Information Search
14-89
The Buyer Decision Process
6 - 90
Figure 14-3: Types of Information
Sources
PERSONAL IMPERSONAL
14-91
Types of Information Sought
• Brands or alternatives available
• Evaluative criteria to be used
– Generally, product features
• Ratings of brands on evaluative criteria
14-92
The Buyer Decision Process
6 - 93
The Buyer Decision Process
Step 3. Evaluation of Alternatives
Product Attributes
Evaluation of Quality, Price, & Features
Degree of Importance
Which attributes matter most to me?
Brand Beliefs
What do I believe about each available brand?
Evaluation Procedures
Choosing a product (and brand) based on one
or more attributes.
The Buyer Decision Process
6 - 95
The Buyer Decision Process
Step 4. Purchase Decision
Purchase Intention
Desire to buy the most preferred brand
Attitudes Unexpected
of others situational
factors
Purchase Decision
The Buyer Decision Process
Consumer’s Expectations of
Product’s Performance
Product’s Perceived
Performance
Satisfied Dissatisfied
Customer! Customer
Cognitive Dissonance
BUYER ROLES
INITIATOR
• First individual who suggests product/service should be
evaluated/purchased.
INFLUENCER
• Provides view and advice which are valued by others and can
subsequently influence the final decision.
DECIDER
• The individual who will take the decision in the buying process
at what, how , when and where to buy (store choice), etc.
BUYER
• The individual who actually makes the purchase
USER
• The individual who consumes or users the service/product.
FACTORS INFLUENCING SHOPPERS’
STORE CHOICE
Kelly and Stephenson ( 1967) identified 8 factors ;
1. General store characteristics-reputation, no of stores
2. Physical characteristics – décor,cleanliness, checkout
services.
3. Convenience –time, parking etc.
4. Products – variety, dependability, quality.
5. Prices charged – value special sales.
6. Personnel – courteous, helpful, friendly.
7. Advertising –informative, aggressive, believable.
8. Friends’ perception of the store- well known, liked,
reccommended.
ASSUMPTION ON CONSUMER BEHAVIOUR-
Behavioural versus Cognitivists view
BEHAVIOURIST
COGNITIVIST
BEHAVIOURIST VERSUS
COGNITIVIST APPROACHES
BEHAVIOURIST COGNITIVIST
• Observed behaviour is all • What goes on in a person’s
mind is the key to
important comprehension.
• People are info transmitters • Behaviour is not predictable
• People are all alike • People are info generators
• Behaviour is rational • Each person is unique
• Human characteristics can • Behaviour is irrational
be studied independently. • People must be studied as a
• Emphasis is on what a whole
• Emphasis is on what a person can
person is and does. be.
• Behaviour can be • Behaviour can never be
understood completely understood.
THEORIES OF CONSUMER BEHAVIOUR
Self
Actualization
(Self-development)
Esteem Needs
(self-esteem)
Social Needs
(sense of belonging, love)
Safety Needs
(security, protection)
Physiological Needs
(hunger, thirst)
The milk
moustache
campaign
changed
attitudes
toward milk.
Buyer Decision Process for New
Products
• New Products
– Good, service or idea
that is perceived by
customers as new.
6 - 112
Buyer Decision Process for New
Products
6 - 113
Buyer Decision Process
for New Products
Stages in the Adoption Process
Awareness Evaluation
Interest Trial
Adoption
6 - 114
Buyer Decision Process for New
Products
• Individual Differences
in Innovativeness
– Consumers can be classified
into five adopter categories,
each of which behaves
differently toward new
products.
6 - 115
Figure 6-7:
Adopter Categories Based
on Relative Time of Adoption
Buyer Decision Process for New
Products
6 - 117
Buyer Decision Process
for New Products
Product Characteristics
Relative Advantage
Compatibility
Complexity
Divisibility
Communicability
6 - 118
Factors That Affect the Type of
Decision Making Process Used
• Importance of the decision
• Extent of previous experience
• Existence of well-established decision
criteria
• Amount of information at hand about each
alternative
• The number of alternatives available
• Model of consumption being followed
14-119
14-120
Factors that Increase the Level of Pre-
purchase Search
• Product Factors: Higher search when
– It is a long-lasting or infrequently used product
– There are frequent changes in product styling
– Large volume is purchased
– The price is high
– There are many alternative brands
– There is much variation in features
» continued
14-121
Factors that Increase the Level of Pre-
purchase Search
• Situational Factors: Higher search when:
– Experience is lower
– Previous experience was unsatisfactory
• Social Acceptability: Higher search when:
– Purchase is a gift
– Product is socially visible in use
» continued
14-122
Factors that Increase the Level of Pre-
purchase Search
• Value-Related Factors: Higher search when:
– Purchase is discretionary
– All alternatives have both positive and negative
qualities
– No agreement among users exists
– Conflicting information is available
– Other considerations exist
» continued
14-123
Factors that Increase the Level of Pre-
purchase Search
• Consumer Factors: Higher search when:
– Consumers are well-educated, have higher
income levels and are younger
– Consumers are low in dogmatism and risk
perception
– Level of involvement is high
– Shopping is seen as an enjoyable activity
» continued
14-124
Evaluation of Alternatives – Types of
Consumer Choice Processes
• Affective choices
– More holistic; an overall evaluation
– based on how one feels about a purchase
• Attribute-based choices
– Have pre-determined evaluative criteria
– May require both external and internal search
– Complicated decision rules may be used
14-125
Nature of Evaluative Criteria
• Can be tangible or intangible
• Include surrogate indicators
– Attributes that are used as indicators of another
attribute
• Are often ranked in order of importance
14-126
Consumer Decision Rules
• Procedures used by consumers to facilitate
brand or other consumption-related choices
14-127
Consumer Decision Rules
• Compensatory
– Brands evaluated in terms of each relevant criteria
and the best brand (or one with the highest score)
is chosen
• Non-compensatory
– Positive evaluations do not compensate for
negative evaluations
14-128
Non-Compensatory Consumer
Decision Rules
• Conjunctive Decision Rule
– Product attributes are identified
– a minimally acceptable cutoff point is
established for each attribute
– brands that fall below the cutoff point on
any one attribute are eliminated from
further consideration.
» continued
14-129
Non-Compensatory Consumer
Decision Rules
• Disjunctive Decision Rule
– consumers identify product attributes
– establish a minimally acceptable cutoff
point for each attribute
– accept the brand that meets or exceeds the
cutoff for any one attribute
» continued
14-130
Non-Compensatory Consumer Decision
Rules
• Lexicographic Decision Rule
– Product attributes are identified
– Product attributes are ranked in terms of
importance
– brands are compared in terms of the attribute
considered most important
– Brand that scores highest on the first attribute
is chosen
– If there is a tie, the scores on the next attribute
are considered
14-131
Information Search and Marketing
Strategy
• Get products into consumers’ evoked set
• Limit information search if your brand is the
preferred brand
• Increase information search if your alternative
is not the preferred brand
• Use point-of-purchase advertising effectively
14-132
Alternative Evaluation and Marketing
Strategy
• Identify decision rule used by target market and use
suitable promotional messages
• Influence the choice of evaluative criteria
• Influence the rating of your product on evaluative
criteria used
• Use surrogate indicators effectively
• Use ‘consumption vision’
14-133
CONSUMER BEHAVIOR IN RURAL
MARKET
RURAL CONSUMER BEHAVIOR
Tractor/Jeep/Car Car
Land Airconditioning
First hand information from TV, Information search First hand information from a
Internet, Newspaper Ads/ fellow owner and nearby dealer at
Consults a fellow owner before district town.
dealer visit
Normally buyer makes final Purchase decision Collective decision by buyer, adult
decision. Family influences color son, mechanic and progressive
and looks,. Drives new car home village farmer.
with family.
Contd.
Higher satisfaction or Post-purchase behavior Higher satisfaction, lower
dissonance because of dissonance. Because risk-
greater risk factor. taking is lower and
Higher risk taking ability, expectation level is low.
because of wanting Low risk-taking ability
experimentation. After because life-attached
sales service no issue product, lack of technical
know how, low confidence
on after sales service.
Organizational Buying Behavior
Organizational Buyers
• Types • Characteristics
– Industrial – Greater involvement
– Reseller – Bureaucracy
– Government and non- – Long term relationships
profit organizations – Price is important but
• Purchase types may not be the most
important factor
– Straight rebuy
– Limited decision
making
– Extended decision
making
Supplier-Buyer Relationship
• Why work closely?
• How?
2. General
1. Problem 3. Product
Description
Recognition Specifications
of Need
5. Acquisition
4. Supplier Organizational and Analysis
Search Buying Process of Proposals
7. Selection
6. Supplier 8. Performance
of
Selection Review
Order Routine
Three Buying Situations
1. New task
2. Modified rebuy
3. Straight rebuy
Three Buying Situations
1. New Task
Clues for
Identifying
Powerful
Buying
Center
Members