Irwin/McGraw-Hill

1. C H A P T E R S I X CONSUMER BEHAVIOR Irwin/McGraw-Hill

2. The Female Automobile Customer Females: • will buy 60% of all new cars in 2001 • spend $81 billion+ on new & used cars • prefer inexpensive sporty vehicles • buy American 75% of the time • often utilize internet-based information • place a higher value on low price & safety than men • 2/3 of whom dislike the car-buying process • Note - women make 82% of all consumer purchases

3. Consumer Purchase Decision Process Problem recognition: Perceiving need Information search:Seeking value Alternative evaluation: Assessing value Purchase decision: Buying value Post-purchase behavior: Value in consumption of user

4. The Evoked Set The evoked set is the group of brands, based on one’s evaluative criteria, that a consumer would consider acceptable from all the brands in the product class which he or she is aware of.

5. Consumer Purchase Decision Process Problem recognition: Perceiving need Information search:Seeking value Alternative evaluation: Assessing value Purchase decision: Buying value Post-purchase behavior: Value in consumption of user

6. What New Car Buyers Consider Most Important in Deciding What New Car To Buy Factor Percent Saying Factor is Most Important Warranty/guarantee 64% Ease of maintenance/repair 61% Quality compared to other brands 61% Price compared to other brands 58% High-quality brand 54% Style/look of brand 46%

7. Consumer Purchase Decision Process Problem recognition: Perceiving need Information search:Seeking value Alternative evaluation: Assessing value Purchase decision: Buying value Post-purchase behavior: Value in consumption of user

8. Cognitive Dissonance Cognitive Dissonance is a feeling of post-purchase psychological tension or anxiety. To alleviate cognitive dissonance, consumers often search for information to reinforce their purchase decision.

9. High versus Low Involvement High Involvement purchase occasions can be expensive, have serious personal consequences, and/or reflect one’s social image. These occasions typically involve extensive information search, consideration of several product attributes and brands, the formation of attitudes, and word-of-mouth communication. An example would be the purchase of an automobile or stereo system. (continued)

10. High versus Low Involvement Low Involvement purchase occasions typically involve little information search or consideration of various brands, except on the basis of price. They usually don’t involve any personal consequences. They tend to be privately consumed. An example would be the purchase of soap or toothpaste.

11. Consumer involvement, knowledge & problem-solving variations Low Routine problem solving (e.g., milk and bread) Limited problem solving (e.g., small appliances) Consumer involvement Extended problem solving (e.g., stocks and bonds) Time Increases High High Low Consumer knowledge

12. High Low Characteristics of Extended Limited Routine purchase decision problem problem problem process solving solving solving Consumer Involvement Number of brands Many Several One examined Number of sellers Many Several Few concerned Number of productMany Moderate One attributes evaluated Number of external Many Few None information sources used Time spent searchingConsiderable Little Minimal Comparison of problem-solving variations

13. Perceived Risk - A Major Determinant Perceived Risk represents anxieties felt because the consumer cannot anticipate the outcomes of a purchase but believes that there may be negative consequences. Perceptions of greater perceived risk are usually accompanied by a more extensive external information search concerning a purchase. Types of Perceived Risk: • financial • physical • psychosocial

14. Perceived Risk Is Often Situation Specific Financial • Boom versus uncertain economic conditions • High dollar purchase relative to income Phyosocial • A socially visible gift • A birthday card for mom versus a “new” girl/boy friend Physical • Medication with side effects • Safety of children versus adults Products • Where the purchase is infrequent or new to the market

15. Influences on the consumer purchase decision process Marketing mix influences • Product • Price • Promotion • Place PsychologicalInfluences SocioculturalInfluences Consumer Decision Process • Motivation • Personality • Perception • Learning • Values, beliefsand attitude • Lifestyle Problem recognition Information search Alternative evaluation Purchase decision Postpurchase behavior • Personalinfluence • Reference groups • Family • Social class • Culture • Subculture Promotion Influences • Purchase task • Social surroundings • Physical surroundings • Temporal effects • Antecedent states

16. PP6-OO Sociocultural Influences Sociocultural influences, which evolve from a consumer’s formal and informal relationships with other people, can exert significant impact on consumer behavior. Sociocultural influences include: 1. Personal influence 2. Reference groups 3. The Family 4. Social Class 5. Culture 6. Subculture

17. PP6-QQ Reference Groups Reference groups are people to whom an individual looks as a basis for self-appraisal or as a source of personal standards. Three kinds of reference groups that have clear marketing implications are: 1. Membership group 2. Aspiration group 3. Dissociative group

18. PP6-RR The Family Life Cycle The family life cycle concept describes the distinct phases that a family progresses through from formation to retirement, each phase bringing with it identifiable purchasing behaviors.

19. Young single Young divorced without children Middle-aged divorced without children Young marriedwithout children Middle-aged married without children Young marriedwith children Middle-aged marriedwith children Young divorcedwith children Middle-aged married without dependent children Middle-aged divorcedwith children Older married Older unmarried Middle-aged divorced without dependent children Usual flow Recycled flow Traditional family flow Modern family life cycle

20. Social Class Social Class may be defined as the relatively permanent, homogeneous divisions in a society into which people sharing similar values, interests, and behavior can be grouped. Social class is determined by 1. Occupation 2. Source of income (not level) 3. Educational attainment

21. Culture & Subculture Culturerefers to the set of values, ideas, and attitudes that are accepted by a homogeneous group of people and transmitted to the next generation. Subcultures are subgroups within a larger, or national culture with unique values, ideas, and attitudes.

22. Ownership of consumer electronics among African- Americans, Hispanics, and Asian-Americans Percent owning among . . . . Product African- Americans Hispanics Asian- Americans VCR Answering machine Compact disk player Personal computer Camcorder Cellular telephone 73.5% 47.2 31.9 19.8 15.0 10.3 73.1% 27.5 26.7 9.6 17.1 6.7 89.4% 50.0 45.5 30.5 35.6 24.4

23. Lifestyle & VALS Lifestyle is a mode of living that is identified by how people spend their time and resources (activities), what they consider important in their environment (interests), and what they think of themselves and the world around them (opinions). Lifestyle analysis focuses on identifying consumer profiles. The most prominent example of this type of analysis is the Values and Lifestyles (VALS) Program developed by SRI International.

24. VALS2 Psychographic Segments ACTUALIZERS Most resources Enjoy the "finer things." Receptive to new products, technologies, distribution. Skeptical of advertising. Frequent readers of wide variety of publications Light TV viewers. Principle Oriented Status Oriented Action Oriented FULFILLEDS ACHIEVERS EXPERIENCERS Follow fashion and fads. Little interest in image or prestige Attracted to premium products Spend much of disposableincome on socializing. Prime target for variety of products Above-average consumers of products for the home Buy on impulse. Average TV watchers, read business, news, and self-help publications Like educational and public affairs programming Attend to advertising. Listen to rock music. Read widely and often MAKERS BELIEVERS STRIVERS Buy American. Image conscious. Shop for comfort,durability, value. Slow to change habits. Limited discretionary incomes, but carry credit balances. Unimpressed by luxuries. Look for bargains. Buy the basics, listen to radio. Watch TV more than average. Spend on clothing and personal care products. Read auto, home mechanics,fishing, outdoormagazines. Read retirement, home and garden, and general interest magazines. Prefer TV to reading. Least resources STRUGGLERS Brand loyal. Use coupons and watch for sales. Trust advertising. Watch TV often. Read tabloids and women’s magazines.

25. PP6-5 Hierarchy of Needs Self-Actualization Needs Self-Fulfillment Personal Needs Status, respect, prestige Social Needs Friendship, belonging, love Safety Needs Freedom from harm, financial security Physiological Needs Food, water, sex, oxygen

26. PP6-GG Psychological Influences on Consumer Behavior • motivation and personality • perception • learning • values, beliefs, and attitudes • lifestyle

27. Messages Selective exposure Selective comprehension Selective retention PP6-C Selective perception filters

28. PP6-HH Subliminal Perception Subliminal perception means that you see or hear messages without being aware of them. The presence and effect of subliminal perception on behavior is a hotly debated issue, with more popular appeal than scientific support. Evidence suggests that subliminal messages have some effect on behavior. If so, is their use an ethical practice? See the accompanying Ethics and Responsibility Alert.

29. PP6-JJ Learning Learning refers to those behaviors that result from: 1. repeated experience 2. thinking Behavioral Learning is the process of developing automatic responses to a situation built up through repeated exposure to it. Cognitive Learning is learning via thinking, reasoning, and mental problem solving without direct experience.

30. PP6-KK Brand Loyalty Brand Loyalty is a favorable attitude toward and consistent purchase of a single brand over time. • It results from positive reinforcement of previous actions. • There is evidence of brand loyalty in many commonly purchased products in the U.S. and the global marketplace. • However, the incidence of brand loyalty appears to be declining in North American, Mexico, European Union nations, and Japan.

31. PP6-D Brand loyalty tendency by product category (Percent of U.S. consumers with strong brand preference) 70 Mayonnaise Soft drinks Bar soap Canned soup Cigarettes Baked macaroni & cheese Dry cereals Spaghetti sauce Pain relievers Toilet paper Facial tissue Cold remedies Dog food Cake mix Paper towels Frozen vegetables Frozen entries Cat food 67 66 62 60 59 57 57 56 54 53 51 49 45 43 43 41 41 0 10 20 30 40 50 60 70 80

32. PP6-LL Attitudes, Values and Beliefs An attitude is a learned predisposition to respond to an object or class of objects in a consistently favorable or unfavorable way. Attitudes are shaped by our values and beliefs. Beliefs are a consumer’s subjective perception of how well a product or brand performs on different attributes. Beliefs are based on personal experience, advertising, and discussions with other people. Values are deeply held attitudes and beliefs, which are resistant to change, but which may change over time.

33. PP6-PP Personal Influence Personal Influence includes two aspects that are very important to marketers: 1. Opinion Leadership 2. Word of Mouth

34. 49% 50% 40% 30% 20% 10% 40% 39% 38% 28% 26% 24% Women 22% Men Women 15% Women Men 10% Women Women Men Men Car mechanic Where to eat out What movies to see What carto buy Where to get hair cut PP6-E Word of mouth influence (Percent of men and women who seek advice regarding selected products and services) Men

35. Where children between the ages of 4 and 12 spend spend their money 11% Other 8% Movies & sports 15% Clothes 6% Video arcades 33% Food and beverages 27% Play items