CONSUMER BEHAVIOR

CONSUMER BEHAVIOR BUAD 307 MARKETING FUNDAMENTALS

Why does Staples sell Starbucks coffee?

Learning Outcome Objectives • Understand how consumer cognitive (thinking) processes and limitations, affect, beliefs, social influences, and other contextual factors influence consumer decision making, choices, and behavior • Appreciate how these insights can be used to design and implement effective marketing strategies • Appreciate individual and segment differences in process and outcome

Influences on and of Consumer Behavior PERCEPTION/ SENSATION MARKET RESEARCH INFO SEARCH COGNITION CHOICES STRATEGY AFFECT PREFERENCES BELIEFS CONSUMER COMMUNICATION SOCIAL AND OTHER INFLUENCE

True or False? • If you have bad breath, you cannot smell it yourself. • If you eat a balanced diet, you do not need vitamin supplements. • Using a razor with five blades will reduce the likelihood of cutting yourself and will result in less skin irritation. • Dell Computers tend to be of higher quality than those made by HP and Sony. • 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/ BEHAVIORS Theory Complications

Post Purchase Behavior

Approaches to Search for Problem Solutions INTERNAL Memory Thinking EXTERNAL Word of mouth, media, store visits, trial

Options Identified and Considered UNIVERSAL SET All possible options RETRIEVED SET Options that readily come to mind EVOKED/ CONSIDERATION SET Options that will be considered by the consumer Note: Retrieved and evoked sets will vary among different consumers. Brand awareness is important since this is required for the brand to be in the evoked and retrieved sets.

REMINDER • For low involvement products, efforts aimed at affecting internal search tend to be more effective—the consumer is usually not willing to expend energy on external search. • External search is more likely for higher involvement products.

Decision Making Issues • Involvement level • Temporary • Enduring • Consumer locus of control • Internal • External • Product category complexity • Consumer knowledge

Evaluation Type • 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 IMPORTANT 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)

Note: This is a simplified conceptual model that should not be taken too literally. The boundaries between the steps are actually rather “blurry.” Consumer Information Processing ATTENTION LIMITED—SUBJECT TO PRIORITY DIVIDED BEHAVIOR PERCEPTION CONSCIOUS PRE-CONSCIOUS ELABORATION (THINKING BRINGS ABOUT NEW LINKS AND THOUGHTS) COMPREHENSION CORRECT OR INCORRECT ELABORATE OR SHALLOW LINKS TO OTHER ITEMS IN MEMORY  ASSOCIATION RETRIEVAL (ACTIVATION) TRIGGERS (“REMINDERS” TO ACTIVATE MEMORY) STORAGE (IN MEMORY) No “guaranteed” arrow—triggers may or may not happen.

Associate Network of Knowledge SANDWICH MITT ROMNEY PEANUT BUTTER FAT PEANUTS REPUBICAN PARTY ELEPHANT 7 BLIND MEN TRUNK ZOO GIRAFFE MEDICINE TIGER

TRAVEL iTUNES E-MAIL TEXTING CASKET PORTABLE FUNERAL DEAD STEVE JOBS GOSSIP iPHONE iPAD INNO- VATION LAPTOP FRUIT APPLE HEALTHY PEAR SPREAD-SHEET REPORT TV MONITOR FINANCE DESKTOP SOAP OPERAS JUICY GRANDMA PRINTER

Attitudes―components BELIEFS AFFECT (FEELING) BEHAVIORAL INTENTIONS

Attitude Components • Beliefs • Can be positive, negative, or neutral • May or may not be accurate • May contradict other beliefs held by the other person • Affect • May be positive or negative • May take on specific dimension (e.g., pleasure, disgust) • Behavioral Intentions • An individual’s plan or expectations of what he or she will do • May appear inconsistent with beliefs • May not predict well what the individual will do in reality

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)

Multiattribute Models of Attitude • Attitude computed as a function of multiple attributes weighted for importance: Ab= attitude toward brand b Wi: weight of attribute I Xib: belief about brand b’s performance on attribute I • Model assumes rationality Calculations will not be required on the exam. You should know conceptually what this involves conceptually—i.e., weighing importance and intensity of feeling.

Multiattribute Models • Caveats • Different segments exist that will weight factors differently—thus, overall averages can be misleading. Separate analyses should be done for different segments of interest. (Segments can be identified by certain statistical techniques). • Individual differences exist in scale intensity—for some, it is much “easier” to be extremely good or extremely bad. • Prior research may be needed to identify issues (dimensions) to be weighted. • Some factors may be intangible—What are the substantive differences between Windows and Apple computers? • Non-compensatory factors—“must-haves”—may determine final result. • Applications • Determining • Overall performance • Areas of strength and weakness • Comparison to competitors • Overall • Areas of strength and weakness REMINDER: PERCEPTIONS ARE NOT NECESSARILY ACCURATE. We are looking to work with what consumers believe.

Affect • Based on • past emotional associations of product • emotional effect of beliefs

Attitude Change Strategies, Part I • Changing Affect • Classical conditioning: “Pairing” the brand or product with desired stimulus—e.g., a car with a beautiful woman • Attitude toward the ad: A likable ad for a brand in a mundane product category—e.g., • Energizer Bunny • Snuggles (fabric softener) • Mere exposure: Items (e.g., advertisements) that have been seen before tend to be better liked

Attitude Change Strategies II • Changing behavior (e.g., sampling): Consumers tend to infer attitudes from behavior (e.g., I buy the product  I must like it or It must be good) • Changing a belief component • Changing existing beliefs • Difficult • Advertiser’s motives are suspect • Changing the importance of attributes • Adding beliefs • Changing the ideal (fashion—used infrequently)

Adding Beliefs (True or Not): Examples • Brushing and flossing do not reach all areas of the mouth • People under stress need more vitamins • Baking soda will reduce odor of refrigerators • Fragmented hard drives may cause computer errors

REMINDER • Changing currently held beliefs tends to be difficult—people know the marketer has an ulterior motive • Adding new beliefs that are not inconsistent with what is already believed may be more effective

One-sided vs. two sided appeals • One-sided: only saying what favors your side • Two-sided: stating your case but also admitting points favoring the other side • Why is this effective?

Potential Family Life Cycle Stages YOUNG COUPLE YOUNG SINGLE EMPTY NEST I/II FULL NEST I/II/III SINGLE PARENT OLDER SINGLE BLENDED

Income tends to increase with time But children/ obligations add cost Divorce increases costs may change income distribution marriage Product demand due to singles with low expenses new couples divorced families children empty nesters --> more income Economic/Marketing Implications of Household Cycles

Roles/influence Information gatherers/holders Influencers Decision makers Purchasers Users Household Decision Making

The Means-End Chain Promotion/ positioning should be aimed at higher levels of chain! Self-esteem Values Feeling of power Consequences Performance Attributes Fast acceleration Note additional details on the handout. Large engine

Subliminal Perception: A Diabolical Marketing Tool? • Subliminal messages in ads are illegal in U.S. • Some research support for modest effects • Probably limited to one syllable words • Complex messages can probably not be processed subliminally • Highly publicized Coke and popcorn “studies” never actually took place

Message Framing • Many tradeoffs can be stated in two, mathematically equivalent ways—e.g., • “80% lean” vs. “20% fat” • $49.00 per person per night based on double occupancy

Priming • Influencing consumer judgment by making certain information salient • E.g., subjects asked to estimate the price of a car after being “primed” with an anagram of high priced cars estimated a higher price of a new car than did those primed with lower priced cars even though the price estimate was for the same car brand and specifications

Some Consumer Behavior Issues That Will Come Up Elsewhere in the Course • Demographics (segmentation) • Lifestyle (segmentation) • Culture/subculture (segmentation, international marketing) • Diffusion of innovation (product) • Attention (promotion)

Types Industrial Reseller Government and non-profit organizations Purchase types Straight rebuy Limited decision making Extended decision making Characteristics Greater involvement Bureaucracy Long term relationships Price is important but may not be the most important factor Organizational Buyers

CONSUMER BEHAVIOR