Understanding Consumer

Behavior

Co hav
gn t &
on

Be
ns i or
Co fec
iti

um
Af

er
Part 1 of 3

Consumer
Environment

The exchange processes by which

consumers conduct their lives.
 Objectives
 To conceptualize basic models of
consumer behavior
 Simplified Model

Target
Marketing
Black Box Audience
Stimuli
Response
Multiple Stimuli Black
Box

Marketing Environmental
Mix Events
Product Economic

Price Technology

Place Political

Promotion Cultural
 Expanding the Black Box”
Intra-Personal, Situational Inter-Personal,
psychological Influences social
Influences Occasion, Influences
usage

Mediated by
audience : social
class,culture,motive
perception.

Decision Process
 Multiple Responses
Black
Box Potential
Buyer Responses

Product choice

Brand choice

Retailer choice

Purchase timing

Need Satisfaction
Why Study Consumer Behavior?
 To implement the Marketing Concept . . a plan to
influence buyer – seller exchanges to meet organizational
goals
• To understand complex influences on consumption
processes

• To increase a manager’s confidence to

predict consumer responses to their
marketing strategy
• To avoid “the Self-Reference Criterion”
 Information Gaps:
Listen to Your Customer(s)
Self Reference: Home Builders construct what they think
customers needed (Presumptuous)
RESULT: Cookie Cutter designs, mass production for
economies of scale and sales pressure
SURPRISE!!! A home builder
(Finally) Surveys Buyers (1996)
 Consumer Decision
Processes
Objectives
• To understand the types of consumer
decision processes
• To understand the steps in the
consumer’s decision process.
• To discover how buyers learn about
and buy products.
 Multiple Participants in the
Consumer’s Decision Process

Initiators

Users Deciders

Influencers
(Gatekeeper)
 Simplified Linear Model of the
Consumer Decision Process

Problem Information Evaluation of

Recognition Search Alternatives

Purchase Post Purchase

Decision Behavior
Expectations
 Major Influences in the Consumer’s
“Black Box”

SITUATIONAL PSYCHOLOGICAL SOCIAL

INFLUENCES INFLUENCES INFLUENCES
• Perception
• Physical and • Roles
• Motives • Family
• Social Surroundings • Learning
• Time • Reference Groups
• Attitudes
• Purchase Use Social Classes
• Personality • Culture
• Buyer’s Condition

Consumer Decision Process

Problem Post
Recognition Purchase
 Buying Process

Problem or need
recognition

Increase
Existent Gap Desired
State Size State

Increase Intensity of (Need) Want

 Major Causes of Problem
Recognition or Opportunity
 Science and Technology Advancements
– new products
– new information
 Changing Consumer Circumstances & Expectations
– improved education
– family life cycle
– income adjustments
 Psychology of
Simplification/Complication
• Consumers try to simplify decision making by reducing
the amount of information processing

High

Information
Amount

Low
Simple Decision Complex
 Psychology of Complication
• Gum - color…crème w/blue spec’s
– sugar…or…sugar free?
– Flavor/taste (Cool Mint,?)
– Chewable ness…
– bubble blowing…or not?
– liquid center…or not ?
– Shape, chick let casing
– Family package or individual?
– Stick to your teeth or not?
– Length of chew time ?
Buying Process

Information
Search

Information
Is knowledge
 Information Sources
1. Internal Sources (Psychological)
– experience
– memory storage/retrieval
– mental processing

2. External Sources (Social)

1. family
2. friends
3. professionals
Personal interaction
 Information Sources
3. Public Sources
– government studies
– product testing magazines
– media stories

4. Commercial Sources
– advertising
– sales people
– product pamphlets
 Information Source Comparisons
Effort
Source Believability
Required

#1 Internal (experience) Low High

Experiential (examining High High
or testing the product)
#2 Personal (friends, relatives) Low High

#3 Public (consumer reports) High High

#4 Commercial (Promotions) Low Low

 Applied
Marketing Picking Physicians
Surveyed consumers said the most
frequent sources for selecting a doctor are:
Referral from friend
24%
Referral from another doctor
14%
Referral from family member
10%
General word of mouth
9%
 Principles:
Information Search
 Consumers seek to simplify decision making via time,
energy & costs.
 Consumers seek Information credibility & predictive ness

• Tactics: Identify the information

sources & importance to assure
processing of your brand’s
information.
 Applied
Marketing Information Gaps
Examples of Dell’s Customer Feedback

- Where’s the power button?

- Won’t work after I washed the
keyboard
- Where’s the any key? (Click any
key to continue)
- fax won’t work
- I refuse to read manual
 Principle:
Information Overload
 With greater amounts of information available, Consumers
make poorer choices
• Tactic:
– focus on product information (features) that is important
(salient) to consumers
 Principle:
Information Wear out
• Repetition increases consumer learning
• Too much repetition = wear out
(consumers decrease attention over time)
Tactic: Change information and/or format
 Pictures are better than words
 Buying Process

Evaluation of
Alternatives

• Utility Theory - Consumers perform rational,

quantitative calculations to maximize personal
utilities .. economic, behavioral ,societal.
 3 Major Evaluation Criteria
• Economic: cost/performance
• Behavioral: prestige/status/peer influence/lifestyle

• Societal: product externalities Lots of storage

• environmental effects
Performance
– society’s long run welfare

Safety

Variety of
colors
 Evaluation Criteria

• Principle: Evaluation criteria change over time and among

market segments.

 Promotions “frame”
certain product attributes
(evaluation criteria) to
influence their perceived
relative importance
 Supermarket Selection Criteria Change
over time
1974 1981 1985
Cleanliness Product Quality Low prices
#1 attractive

location Low prices Location

Labeling of Product variety Product Variety

Products

Cleanliness Courteous
attractive employees
 Law of Diminishing Returns
(Marginal Utility)

28
24
Utility
20
Satisfaction
15
10

1 2 3 4 5 6
Beer
 Applying Evaluative Criteria
(Behavioral,Societal,Economic)
Toothpaste

Decay Prevention Economic Attributes

and Price

Taste and Flavor Behavioral Attributes

Packaging Societal Attributes

(safety, recyclable, resources)
 Evaluation criteria are the basis of product
attitudes

• Retailer Attributes - • Product Attributes - Price

location, - credit (value), - Quality,
terms, - return - style, etc.
policies,etc. • + relative importance
• + relative importance (utility) (utility)
• = Attitude toward • = Attitude toward Product
Retailer (Image)
 Product Attitude

• Product Beliefs x Evaluations = Attitude

• An overall evaluation of a good, service or idea . .
.with a predisposition to purchase the type of
product or specific brand
 Buying Process

Purchase
Decision(s)

WHO BUYS?
WHAT?
WHEN?
WHERE?
AND WHY?
Influences on Purchase Decisions

• Purchase Situation(s)
• Usage (Social or Private)
• Time Perspective (long or short)
• Resource Capabilities
• Level of personal control
 Purchase Decisions
• Principle: Consumers dislike making
decisions/choices
• Tactic: Show satisfied customers
– ordinary people
– experts
– celebrities
 Buying Process

Post-Purchase
Behavior

• Cognitive dissonance: post-purchase tension .

 Post Purchase Behavior
Product Experience

Actual Actual
Benefits Expectations
Gap
Size
Satisfied Dissatisfied
 Post Purchase Behavior

• Principle: Dissatisfied customers communicate

more negative word of mouth than satisfied
customers communicating positive word of
mouth
 Post Purchase Behavior
• Cognitive Dissonance
• Lack of confidence (doubts)
about the correctness of a
prior purchase decision and
efforts to reconcile doubts
Did I Do the Right
Thing?
 Cognitive Dissonance
• Causes: Perceived Risk
– Performance risk
– Physical risk (wear-out)
– High financial commitment
– High involvement level
– Information Overload
 Cognitive Dissonance
• Potential Reactions
– Return product
– Seek confirming information

• Marketing Tactic
– Provide post decision positive
information
Cognitive Dissonance
 A Model of Consumer Decision Making
Information in the
environment

Interpretation
Exposure,attention,
and comprehension

Memory Consumer
Product Knowledge, meanings decision
knowledge and and beliefs making
involvement

Integration
Attitudes and
intentions

Decision/Behavior
Questions?