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CHAPTER FOUR. CONSUMER DECISION MAKING. Prepared by Jack Gifford Miami University (Ohio). THE IMPORTANCE OF UNDERSTANDING CONSUMER BEHAVIOR. CONSUMER BEHAVIOR describes how consumers make purchase decisions and how they use and dispose of the purchased goods and services

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CHAPTER FOUR

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Chapter four

CHAPTER FOUR

CONSUMER DECISION MAKING

Prepared by

Jack Gifford

Miami University (Ohio)

2001 South-Western College Publishing


The importance of understanding consumer behavior

THE IMPORTANCE OF UNDERSTANDING CONSUMER BEHAVIOR

  • CONSUMER BEHAVIOR describes how consumers make purchase decisions and how they use and dispose of the purchased goods and services

  • Knowing how consumers make decisions helps marketers have the right product or service at the right place at the right price using the right promotion

2001 South-Western College Publishing


The consumer decision making process

THE CONSUMER DECISION-MAKING PROCESS

Cultural, social, individual, and psychological context

NEED

RECOGNITION

INFORMATION

SEARCH

EVALUATION OF

ALTERNATIVES

POSTPURCHASE

BEHAVIOR

PURCHASE

2001 South-Western College Publishing


Step one need recognition

STEP ONE: NEED RECOGNITION

  • Occurs when consumers are faced with an imbalance between actual and desired physical or mental states

  • Is always triggered by an internal or external stimulus

  • A WANT exists when someone has an unfulfilled need and has determined that a particular good or service will satisfy it.

  • Marketers try to provide these stimuli to fulfill these wants with their products or services

ONE HUNGRY STUDENT PLUS ONE HAMBURGER COMMERCIAL = ONE MORE FAST FOOD SALE!

+

=

2001 South-Western College Publishing


Step two information search

STEP TWO: INFORMATION SEARCH

  • Can occur internally, externally, or both

    • Internal = memory

    • External from marketing-controlled sources (promotion) or non-marketing controlled (family/friends) sources

    • The extent of external search depends upon:

      • Perceived risk (Performance, Financial, Physical, Social, Psychological, Time-loss)

      • Knowledge

      • Prior experience

      • Level of interest in the good or service

      • Confidence level in internal decision-making ability

2001 South-Western College Publishing


Step two information search continued

STEP TWO: INFORMATION SEARCH (continued)

  • INTERNAL SEARCH

  • Memory

  • Physiological needs

  • All past experiences

  • Values, attitudes and beliefs

EXTERNAL SEARCH

Marketing-controlled sources

Non-marketing controlled sources

EVOKED

SET

2001 South-Western College Publishing


Step two information search continued1

STEP TWO: INFORMATION SEARCH (continued)

  • CONSIDERATION SET

  • Establish minimum and maximum cutoffs

  • Limiting parameters, based upon knowledge, importance, risk, and confidence level

EVOKED

SET

2001 South-Western College Publishing


Step three evaualtion of alternatives

STEP THREE: EVAUALTION OF ALTERNATIVES

  • Key attributes required

  • Minimum levels of need satisfaction

  • Importance of brand name

  • Possible limitations to selection [availability, price, physical limits (headroom in a car)]

  • Weigh internal and external information against purchase decision criteria

2001 South-Western College Publishing


Step four purchase decision

STEP FOUR: PURCHASE DECISION

  • ACQUIRE THE USE OR OWNERSHIP OF THE PRODUCT OR SERVICE

    • Ability to buy

    • Willingness to buy

    • Authority to buy

2001 South-Western College Publishing


Step five postpurchase behavior

STEP FIVE:POSTPURCHASE BEHAVIOR

  • Depends upon the quality of match between expectations and outcomes

    • A positive match reinforces the correctness of the decision and provides future motivation to repeat the purchase decision under similar circumstances.

    • A negative match between expectations and actual outcomes will result in cognitive dissonance; if strong, they are unlikely to make the same “mistake” in the future.

      • Marketers try to reduce cognitive dissonance by producing products and service expectations that will be met by their offerings

      • Marketers also send follow up letters to reduce any lingering dissonance

2001 South-Western College Publishing


Continuum of consumer buying decisions

CONTINUUM OF CONSUMER BUYING DECISIONS

2001 South-Western College Publishing


Factors determining the level of consumer involvement

FACTORS DETERMINING THE LEVEL OF CONSUMER INVOLVEMENT

  • Previous experience

  • Level of interest

  • Perceived risk of negative consequences

  • Specific situation

  • Social visibility of outcome

MARKETING IMPLICATIONS ???

2001 South-Western College Publishing


Factors influencing consumer buying decisions

FACTORS INFLUENCING CONSUMER BUYING DECISIONS

  • CULTURAL FACTORS

  • Culture & values

  • Subculture

  • Social class

  • INDIVIDUAL FACTORS

  • Gender

  • Age / Family Life Cycle

  • Personality, self-concept, lifestyle

  • SOCIAL FACTORS

  • Reference groups

  • Opinion leaders

  • Family

  • PSYCHOLOGICAL FACTORS

  • Perception

  • Motivation

  • Learning

  • Benefits & Attitudes

2001 South-Western College Publishing


Cultural influences on consumer buying decisions

CULTURAL INFLUENCES ON CONSUMER BUYING DECISIONS

  • Values

  • Language

  • Myths

  • Customs

  • Rituals

  • Laws

  • Material artifacts

  • Exert the broadest influence over a person’s consumer behavior

  • The underlying elements of every culture include…

2001 South-Western College Publishing


Cultural influences on consumer buying decisions1

CULTURAL INFLUENCES ON CONSUMER BUYING DECISIONS

  • What people eat, how they dress, what they think and feel, what language they speak, are all dimensions of culture

  • Culture gives order to society

  • Marketer’s actions must be consistent with the culture and values of its target customers to be successful

2001 South-Western College Publishing


Cultural influences on consumer buying decisions2

CULTURAL INFLUENCES ON CONSUMER BUYING DECISIONS

  • Culture is learned

  • Culture is dynamic, not static

  • The most important element of a culture is its shared values

  • Culture gives order to society

  • Examples of shared American values include...

  • Success

  • Materialism

  • Freedom

  • Progress

  • Youth

  • Capitalism

2001 South-Western College Publishing


Cultural influences on consumer buying decisions3

CULTURAL INFLUENCES ON CONSUMER BUYING DECISIONS

  • As more companies expand their operations globally, the need to understand the cultures of foreign countries becomes increasingly important.

BECAUSE OF RELIGIOUS BELIEFS, MOST INDIANS DO NOT EAT BEEF

HAMBURGER IN U.S.A. MADE WITH BEEF

2001 South-Western College Publishing


Cultural influences on consumer buying decisions subcultures

CULTURAL INFLUENCES ON CONSUMER BUYING DECISIONS: SUBCULTURES

  • A SUBCULTURE is a homogeneous group of people who share elements of the overall culture as well as cultural elements unique to their own group

  • Subculture may be based upon any meaningful commonality, such as geographic regions, political or religious beliefs, national or ethnic background, use of leisure time, etc.

  • Membership may greatly influence what and how you consume, something of vital interest to marketers

2001 South-Western College Publishing


Cultural influences on consumer buying decisions social class

A social class is a group of people who:

are nearly equal in status

regularly socialize among themselves

share behavioral norms

…and most importantly for marketers, consume similar goods and services for similar reasons

Upper classes

Upper middle class

Middle classes

Working class

Working poor

Underclass

Defined partially by occupation, income, education, and wealth

CULTURAL INFLUENCES ON CONSUMER BUYING DECISIONS: SOCIAL CLASS

2001 South-Western College Publishing


Social influences on consumer behavior

SOCIAL INFLUENCES ON CONSUMER BEHAVIOR

  • Consumer interact with reference groups, opinion leaders and family members to obtain product information and decision approval to..

    • Reduce risk of making a “wrong” decision

    • Reduce search time

    • Reduce uncertainty

    • To conform to subculture

“Right” brand of tennis racket, shoes and tennis apparel.

2001 South-Western College Publishing


Social influences on consumer behavior reference groups

All formal or informal groups that influence the buying behavior of an individual are that person’s reference groups

SOCIAL INFLUENCES ON CONSUMER BEHAVIOR: REFERENCE GROUPS

2001 South-Western College Publishing


Social influences on consumer behavior reference groups1

Direct Primary Groups

Family

Friends

Coworkers

Direct Secondary Groups

Clubs

Professional groups

Religious groups

Indirect reference groups

Aspirational reference groups

Nonaspirational, disassociative reference groups

SOCIAL INFLUENCES ON CONSUMER BEHAVIOR: REFERENCE GROUPS

“I want to be like Mike”

“If I buy one of those cars, people will think I’m a yuppie”

2001 South-Western College Publishing


Social influences on consumer behavior opinion leaders

SOCIAL INFLUENCES ON CONSUMER BEHAVIOR: OPINION LEADERS

  • Opinion leaders are persons who try “new things” first; if they are part of our positive reference group, we then may emulate their behavior.

“That new two finger graphite bowling ball certainly works for Marti. Maybe I should buy one.”

2001 South-Western College Publishing


Individual influences on consumer buying decisions

Gender differences

Physiological

Roles

Psychological

Shopping behavior

Age and Family Life Cycle differences

Tastes in food, clothing, cars, furniture, and recreation often change with age

Consumption patterns of single and married individuals are different. The presence of young children again influences consumption patterns

INDIVIDUAL INFLUENCES ON CONSUMER BUYING DECISIONS

2001 South-Western College Publishing


Individual influences on consumer buying decisions1

INDIVIDUAL INFLUENCES ON CONSUMER BUYING DECISIONS

  • Personality, self-concept and lifestyle

    • Personality: underling disposition, dominant characteristics, and how people react in interact

    • Self-concept: how consumers perceive themselves (ideal or real self image)

    • Lifestyle: a mode of living, as identified by a person’s activities, interests, and opinions

2001 South-Western College Publishing


Individual influences on consumer buying decisions2

INDIVIDUAL INFLUENCES ON CONSUMER BUYING DECISIONS

  • Psychological dimensions include those factors that consumers use to interact with their world, to recognize their feelings, gather and analyze information, formulate thoughts and opinions, and take action.

  • Psychological dimensions are individual, environment and situation specific.

2001 South-Western College Publishing


Individual influences on consumer buying decisions perception

INDIVIDUAL INFLUENCES ON CONSUMER BUYING DECISIONS: PERCEPTION

  • The process by which we select, organize, and interpret stimuli into a meaningful and coherent picture is called perception

    • Selective exposure?

    • Cues?

    • Selective distortion?

    • Selective retention?

    • Subliminal perception?

2001 South-Western College Publishing


Individual influences on consumer buying decisions motivation

INDIVIDUAL INFLUENCES ON CONSUMER BUYING DECISIONS: MOTIVATION

SELF ACTUALIZATION NEEDS

  • MOTIVES are the driving forces that cause a person to take action to satisfy specific needs.

  • One popular theory is Maslow’s Hierarchy of needs

ESTEEM NEEDS

SOCIAL NEEDS

SAFETY NEEDS

PHYSIOLOGICAL NEEDS

DISCUSS

2001 South-Western College Publishing


Individual influences on consumer buying decisions learning benefits and attitudes

LEARNING

Experiential

Conceptual

Reinforcement and repetition boost learning

Concept of stimulus generalization and discrimination

BELIEFS & ATTITUDES

A BELIEF is an organized pattern of knowledge that an individual holds to be true

An ATTITUDE is a learned tendency to respond consistently toward a given event

INDIVIDUAL INFLUENCES ON CONSUMER BUYING DECISIONS: LEARNING, BENEFITS AND ATTITUDES

MARKETER’S OBJECTIVES?

2001 South-Western College Publishing


Chapter four

  • CULTURAL FACTORS

  • Culture & values

  • Subculture

  • Social class

  • INDIVIDUAL FACTORS

  • Gender

  • Age / Family Life Cycle

  • Personality, self-concept, lifestyle

  • SOCIAL FACTORS

  • Reference groups

  • Opinion leaders

  • Family

  • PSYCHOLOGICAL FACTORS

  • Perception

  • Motivation

  • Learning

  • Benefits & Attitudes

An understanding of consumer behavior and the factors that influence it will help marketers successfully identify target markets and design effective marketing mixes!

2001 South-Western College Publishing


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