Consumer Behavior

- Development of New Product - Pricing and Distribution

"Marketing mix development" or the theories and concepts of consumer behavior involved the initiation and coordination of activities concerning the development of its products, its promotion, it's pricing, and its distribution strategy.

The Concept of Consumer Incentives

- After buying the shirt under consideration in the last two topics, the consumer experiences the feeling of fulfillment which is the consumer incentives. - The products and services and even information that are perceived to satisfy the human needs. - It is connected and linked to the three other concepts where the consumer narrows the gap between the actual and desired state. - This is re-enforces that the consumer will direct their behavior to satisfy their felt need.

The Traditional Approach

- Based on theories from cognitive, social, and behavioral psychology and sociology. - Develop theories and methods to explain how consumer makes behavioral decisions about the product or service offered by marketing organization. - Experiments and surveys to uncover the buyers' decision making process involving customer information and how the social and peer group influence on consumer buying behavior

The Marketing Science Approach

- Based on theories from economics and statistics. -Testing hypothesis and mathematical models to predict the impact of the different marketing strategies in the development of consumer buying behavior. - Commonly used in consumer packaged goods because it uses computerized data based set in an efficient manner to help solve marketing problems of grade magnitude. - This process involves the services of statisticians and economic practitioners.

1. The Variation in Comprehension

- Comprehension can be unconscious and automatic in the mind of the consumer. The automatic comprehension is prevalent in the mind of the consumer when he is particularly exposed in the environment. The mere sign of Jollibee in the highway makes one think it is a fast food that serves chicken and burger. - On the opposite, comprehension with less familiar stimulate requires more conscious thoughts and understanding. Consumers need broad understanding of the product before they make comprehensive thoughts about the product as their stored knowledge is not enough to process the information. Consumers have to construct the meaning of the information and comprehension which is likely to be highly conscious and controlled, thereby interpretations may be difficult and uncertain.

Interpretive Approach

- Consumer behavior is a complex phenomenon and an eclectic field. - The interpretive approach is new in the field of marketing and was quite influential in shaping the attitude of consumers. - Based on theories and methods from cultural anthropology - Deep understanding of consumption and its relations to consumer behavior. - Research studies used focus groups to understand the consumer choice on the products. The research uncovers the process of decision-making that takes place in the preference for the product or service. - The interpretive approach is a vital component in the development of new marketing strategy that will influence the consumer buying behavior.

Decision making and the influence of groups

- Consumer's decision making process that will develop the total marketing strategy to meet customer demand. - The word of mouth among groups of consumers affects decision dominance. -It shall focus on the beliefs attitude and behavior of individuals and groups - It must pinpoint the segments and identify positioning and marketing mix strategy

Information processing and behavioral learning

- Customer's access exposure to various advertising media and the attention and comprehension on its messages. - Consumer's level of product involvement and their sensory perception of taste, smell, and other product attributes. - Behavioral learning has something to do with the factors that reinforce product acceptance or consumer's perception of rejections. It identifies the characteristic of the product that elicit favorable or unfavorable emotional reactions.

3. Elaboration

- Determines the amount of knowledge and the degree of meaning produced. - Refers further to the complexity of the interconnections between the meanings of the information stored in the long-term memory.

The interactive process of consumer behavior

- Environment plays a vital role on how people think, feel, and act towards new and innovative products. Marketers in the new environment need to understand what products appeal to new set of consumers in the new environment. - Understand the environmental factors that influence the buying behavior. - Knowledge base of the consuming society. - Income grouping.

Expressive Needs

- Higher social needs which can be seen in the third and fifth level on the Maslow's hierarchy of needs such as the need to belong, social needs and self actualization. - Consumers' desire to fulfill social and aesthetic requirements like promotions, new car, or beautiful house.

The Internet as a new marketing tool to reach the greater number of quality consumers.

- In the past, big marketing organizations have the resources to advertise their products through different media organizations. The competition has shifted to smaller organizations that produce quality products with reduced overhead expenses. - New marketing strategies have evolved that changed the consumer behavior and their buying habits.

Inferences During the Compression Process

- Inferences are created in the memory structure of the consumer when they involve in deeper and more elaborate comprehension process. -Are interpretation that produces knowledge or beliefs that go beyond the information given that might infer in consumers' knowledge that the product or brand is of higher quality due to its heavy exposure in the different media. - The products' concrete attributes and values as reference points or cues in making inferences which may be made automatically without much conscious awareness especially for product or brand that became too familiar in the mind of the consumer. - Advertising exposure and product packaging command better quality. - Consumers' inferences are dissuade by the physical appearance and design of the product or brand that stimulate positive reactions. -The comprehension stage is the stimulating process that influences positive influences about the product or brand.

Behavioral Economics

- It is the study of the economic decisions made by individual consumers and its behavioral determinants. - While the the law of supply and demand applies in the behavioral patterns of consumers, the changing attitudes, motives, and experiences can be drawn as predictable factors in consumer analysis. - It will determine the consumer's influence in the total aggregate economy of the country.

The implications of the theories of motivation to consumer behavior

- Marketers can enhance cultural behavior to process promotional materials by making the information as personally relevant and appealing to consumers' self-concept, values, and goals. - The underlying this reasons for making purchasing decisions and tailor fit the sales information toward those reasons. - Messages that stimulate positive processing in the long-term memory and assist the consumer with the development of self-concept. - Relevant information to boost their ego needs. - Extroverted consumers are stimulated with ads that portray a brand that develops their concepts, beliefs and high social values.

Competitive Positioning

- New brand of products is competing with the leading brand in the market. The goal is to position the product in terms of attributes and benefits that is perceived to be better of quality. Competitive advertising and promotion. The goal is to attempt for the product to stand above the competition and change the consumer buying behavior.

Pricing and Distribution

- One major application of consumer behavior principle is in the area of pricing. Price has a great impact in the switching of product patronage as it plays a perceptual on the economic advantage when the product is price lower than the prevailing brand in the market. - Price-quality relationship - Price and distributions are interrelated on how consumer makes their purchase decisions. The customer intensity search for the products has great impact on distribution strategy.

High Achievement Motivation

- People with higher achievement motivation seeks to get ahead strive for success, and take higher responsibility. - The needs for quality products goes with their position in the business industry. - Consumer has to satisfy the need of social acceptance and belonging.

The need for power

- Power is the need for control, self-esteem, and cognitive understanding. It may refer to the aesthetic needs of the person for recognition and dominate other people. - This need for power could have two dimensions: positive dimensions and negative dimensions.

Specific Positioning

- Product attributes, qualities, and benefits without comparing it with the competing brand. - The emphasis is to create in the mind of the target consumer a strong product image that links with the purchasing decision and develop favorable consumer behavior.

The Technological Environment.

- Technology is an important factor in the analysis of consumer behavior as it is the contributory component in the introduction of new and innovative product in the market. It can dramatically affect the lifestyle of the consumer. - The consumer analysis needs to anticipate the various changes in the process of product development and how this will influence the lifestyle and the consumption patterns of the consumer.

1. The Consumer's Existing Knowledge in Memory

- The ability of the consumer to comprehend marketing information that is stored in the long-term memory. The level and elaborateness of the product information is activated in a given compression process that the consumer gives meaning and beliefs about the product or brand attributes. -Consumer knowledge and beliefs are the driving forces that activated the comprehension process which could be termed as expertise or familiarity. Expert consumers are familiar with product forms and category and are aware of the declarative and procedural knowledge in the selection process. As the consumer knowledge is activated, their comprehension level is relatively deep and elaborate. - The new pioneering or novice consumer's level of comprehension is at low level and they tend to have poorly organized knowledge of the product or brand. Since their knowledge structure about the product contains shallow meanings and beliefs, they tend to comprehend product information at the superficial level. They need more attention and careful analyses of the product attributes and advantages when they see them in advertisements or brochures.

4. Remembering Process

- The ability of the consumer to remember both the level and elaborate comprehension processes that influence positive reactions toward the product or brand. - Deeper comprehension creates a higher level of recall and recognition than the shallow level of comprehension. - More elaborate comprehension creates greater number of meanings that tend to be well interconnected in the knowledge structure. - Memory is enhanced because the activation of one meaning can spread to the other connected meanings and bring them conscious awareness.

The Economic Environment

- The area of economics has particular relevance to consumer behavior. - Consists of the monetary, natural, and human resources. These factors influences the individual or groups in the buying patterns. - Money supply and economic conditions, and the income index of the population

Environment scanning and analysis

- The assessment of the external forces that act upon the marketing organization and its target consumer. - Threats and opportunities in the marketing of the product or service. - This process is performed by either the marketing research department or an independent marketing organization.

Advertising and Promotional Strategy

- The behavior of the consumer is enhanced and developed with effective advertising and promotional strategy. Advertising aims to instill certain beliefs in the consumer about the product attributes and benefits. - An understanding of attitude formation on consumer behavior must develop messages that will ensure effective development of favorable responses. - Sales incentives form part of favorable customer response.

The Motivation Drive State Concept

- The concept that consumer experiences are the driving force that makes them react positively to a particular stimulus in the environment. - Drive is an affective state in which consumer experiences emotions and psychological and arousal towards a particular product or brand in the market. - Product at marked down price - Consumer's reaction - Drive is the consumer's level of product involvement and affective state.

Utilitarian needs

- The consumer basic needs for food and other necessities to keep moving within the social environment. - Classified under the first two levels of Maslow's hierarchy of needs such basic needs and need for security at work.

The nature of consumer behavior

- The consumer behavior is dynamic as it involves the human process of thinking, feeling, and actions. - Marketing strategies may work in a market and fail in another set of consumers. - The present product cycle become shorter and consumers are looking for better and new products. These are the reasons why companies must completely innovate to create superior value for customer satisfaction. - People keep in touch with new information with the use of the Internet. - Develop marketing innovation and research strategies for customer satisfaction. - Creation of new products, new brand strategies, and marketing approach.

The consumer exhange process

- The consumer is satisfied in the exhange transaction and the seller gets the profit objective. - The prerequisite for exchange

2. The Level of Consumer Involvement

- The consumers' level of motivation to comprehend the level of marketing information at the time of exposure has a great influence on their favorable perception and understanding of the product attributes. - Consumers with high intrinsic self-relevance tend to associate their favorable consequences and values with a particular product or brand. The self-relevant knowledge structures are activated when the product information are process in the more conscious, intensive, and control manner. - The high level of consumer involvement to marketing information tends to form deeper and more elaborate meanings in their knowledge structures. The consumer makes favorable reactions about the products' advantages. - As their perception of the information is low, their attention requires produces low level of involvement and develops poor product comprehension.

Accessibility

- The distance of distribution. - The market that cannot be reached by advertisement or promotional activities and would have difficulty in the distribution system is not a visible market.

2. Levels of Comprehension

- The extent of specific meanings in the long-term memory that the consumer constructs to represent products and other marketing information during the processing stage. The comprehension could vary in intensity.

Measurability

- The factor that has to deal with the demographic, psychographic, and the personality and attitudes of a particular set of population. - The population index for a particular product or service must be known in terms of its size and the product that will serve their needs and wants.

The implications of the theories of motivation to consumer behavior

- The findings of Maslow's theory and that of the McClelland's theory on the need hierarchy are in agreement on the findings on consumer behavioral needs and wants and is related to the consumers' basic and secondary needs. - Maslow believes that need hierarchy is like a ladder that the consumer has to pass the basic needs, safety and security needs, and then move up to the secondary needs. The secondary needs are love and belonging, esteem needs, and self- actualization. - Consumer with higher value and a subsistent consumer. - A consumer with higher professional achievement to boost his ego needs and a lower income employee. - McClelland professes the idea that there are three basic needs that motivate people. The following theories are: high achievement motivation, the need for affliation, and the need for power.

The level of customer satisfaction

- The level of satisfaction in the use of product or service and its attendant perceived value. - It shall measure the behavioral responses and the tendencies to engage in compulsive consumptions of the product. - It must focus on the physical distribution and other factors that develop the emotional and behavioral responses.

Substantiality

- The market size must be substantial enough to make reasonable investments. - The income of the population that will be covered with must be within the price of the product. - Affordable and within the economic reach of the target customer.

3. Environmental Exposure

- The opportunity to comprehend marketing information in the consumer environment has great effect on the development of the level of involvement and perception. The level of product involvement of the consumers in the rural areas and in the urban areas. - These environmental factors affect the level of consumers' product comprehension

Product positioning and differentiation

- The organization's influence on how consumer perceived a brand characteristic relative to those in the market that is offered for sale to the same population segments. The goal of product positioning is to influence the demand by creating a product with specific characteristics and the clear difference from its competitors. - Product differentiation is the process of manipulating the marketing mix to position a brand. The customer must be able to differentiate a particular brand to the other in terms of packaging, uses, and effectiveness or usability. The manipulation process could be through promotion and market testing.

Positive dimensions

- The person with the need for power could be persuasive and inspirational. An extrovert person can deal with others due to his human knowledge of motivating people through cooperative and participative strategies. - Extroversion is the capacity of the person to relate to the persons needs and wants and win them to his side of leadership power.

Time pressure

A consumer who is busy with other matters at work or in hurry to finish important deadlines will not have the time to attend to product information especially when it is not appealing to their emotions and perceptual mind set.

Comprehension

- The process by which consumer understands or makes sense of their behavior on the interpretation of the relevant aspects of the environment. - During the comprehension process, the consumer constructs meanings and form knowledge structure about the products and events that give meaning to their life. - During the process, the consumer focuses attention on specific environmental stimuli that are activated in the long-term memory. - The stored knowledge provides a mental framework that guides the comprehension processing. - The consumer links old product knowledge base to the new product environment that was stimulated in the long-term memory. - Consumer processing goes through the cognitive learning phenomena and constructs new meanings about the product or brand. - The comprehension continues as long as the modified knowledge structures are activated in the long term memory.

The Need Recognition Concept

- The process in the mental set that occurs when the consumer perceives that there is discrepancy between the actual state of being and the desired state of being. Consumers are genetically programmed to have various psychological needs like food, clothing, and other basic needs for human survival.

Consumer information processing

- The process through which consumers are exposed to information and they become involved with it. Consumers attend to it and try to comprehend the information and retrieve it later when need arises.

The External Forces of the Environment

- The research analysis should cover all the external forces of the environmental aspects that interplay in the development of consumer behavior. - The research goal should be able to predict the changes in these environments and how it influences the consumer buying behaviour. - The research activities will determine the opportunities and liabilities of the marketing organization as it relates to the demographic, group, and situational environment

Motivation

- The state of the consumer that leads to goal-directed behavior. - It is the mental set of drives or desired that is initiated by the sequence of events leading to behavior change. - Many forces in the environment that causes them to be motivated towards a certain stimuli.

The Consumer Affective Concept

- The state where the consumer felt need produces drives that create affective reactions toward a product or service. - It is a class of mental phenomena that is uniquely characterized by the consumers' conscious feelings. - The experiences are commonly associated with emotions and moods. Emotion of the consumer differs with moods on the bases of the intensity felt within mental state of the individual. - The affective feeling is satisfied when the goal-driven needs are positively reenforced, and when it is thwarted, the individual experiences a negative feelings.

Negative dimensions

- The tendency of the person to control and dominate power and elicit others to submission to what he wants done. - Exercises autocratic tendencies that do not develop initiative and creativity. He thinks that power is the sole instruments for his group to follow in order to succeed. - Parents' power - The choice of the product in the home is the decision of the parents who exercise the power of negative dimensions.

The need for affiliation

- The tendency of the person to make friends of their interest and with the same vibration of needs and wants. It is state of one's desire to belong to a group and to associate with others. - While there exists an opposing view that people with higher need for affiliation will choose a friend or a close associate over one with higher competence in solving problems does not mean that he will choose a mediocre for a partner. The affiliation is still with people whom he thinks is within the same level of competence as he has.

The Goal-driven Behavior

- The third step in the motivation process that the consumer acted towards the desired goal after satisfying the two other concepts. - To relieve their need state. - The process where the consumer search the product from information and talk with other people about the product. - Buying the shirt of his choice brand is the ultimate process of the goal-driven behavior.

Product Development

- This phase comes when the idea was found to be feasible and profitable. - Developing the product, testing, labelling, and packaging the proto-type. The researcher must pay attention to the attitude formation process when testing the product and its packaging appeals. It must be favorable in the changes of perceptual process in consumer behavior.

Idea Generation

- This phase has the greatest impact on consumer behavior, as the proponents think of attitudes, lifestyle changes, situational factors, and the cultural influences in conceptualizing the product idea. In the concept testing, the product must appeal to the greater number of users against the competing brand in terms of use and benefit.

Market Testing

- This process involved placing the product in the market in limited distribution to identify the market potential and test the total marketing mix. The consumer behavior is tested on their affective reactions and determines their buying incentives. This could be done through post-purchase surveys. - The goal of the marketing organization is to determine that the marketing strategy points to customer satisfaction and the development of favorable consumer behavior.

Provide customers with value-laden products

- This shifting in the consumer demands need to be addressed with the development of lean organizational structure. - The development of production strategies for quality products requires new marketing strategies to satisfy the changing demand of the consuming public.

Market research

-An applied research design to provide marketing professionals with information that affects consumer's acquisition and disposition of goods and services. - The research issues must provide insights and information about the customer's attention on advertisements, promitional perceptions, attitudes, and the decision process in the buying of goods.

Information Processing

-Information in marketing is defined as the content of what consumers received from the outside world and the reactions that are generated. Consumer information is obtained through the different senses of vision, hearing, taste, smell, and touch. - There is an important distinction between raw stimuli and perception. Stimuli are composed of sound waves, light waves, and levels of temperature. Different people often assign divergent meanings to different information as their stimulus is influence by their different expectations

Personality and motivation

-Personality refers to the development of the measures of personal characteristics for product segmentation and the message design that will appeal to the particular type of consumer. -Motivation shall be measured in terms of reactions to advertisement and promotions and its appeal to satisfy human needs and wants. -Lifestyle of individual consumer affect the buying behavior.

Market segmentation

-The division of the market into distinct subsets of customers having similar needs and wants. - These segment could be reached with the different marketing mix strategies.

3. Elaboration

3a. Less elaborate or simpler comprehension - produces relatively few meanings in the mind of the consumer and requests little comprehension. - It requires little cognitive effort and conscious control. 3b. More elaborate comprehension - will require more cognitive capacity for understanding, effort, and control of thought. - Tends to be more organized as more complex knowledge structure is activated.

- The experimental perspective - Attitude formation - Information processing - Choice behavior of consumer - The communication process involved - The post purchase process - Situational influences

Areas of Application of the Affective Process in Consumer Behavior

- Utilitarian needs - Expressive needs

Classifications of Needs

Quality of consumer and marketing research

Consumer quality is determined by the advent of new technology and the information linkages of the marketing organization. Today, computer technology and scanners and other data sources can pinpoint who the customers are and what they wanted to buy.

Weather conditions such as typhoon and draught

Destruction of crops caused by typhoons and the planting season during the time of long summer season.

Pollution index of the area

Different pollutants in the air, garbage disposal system, and pollutants in rivers and waterways.

The structure of consumer emotions

Emotion like feelings is either positive or negative. Positive emotions is experienced by the consumer when he feels satisfied with the product purchased, and negative emotions if it is felt when a product did not meet the customer expectations. Pleasant emotion is the state where the consumer experiences the feeling of contentment about the product attributes, and on the other, the unpleasant feeling is felt when he mistakenly purchase the product out of false advertisement.

- Perception - Influence Information Processing - The Memory Functions

Factors that influence information processing

- The Need Recognition Concept - The Motivation Drive State Concept - The Goal Driven Behavior - The Concept of Consumer Incentives - The Consumer Affective Concept

Five Key Concepts of Consumer Motivation

1a. Comprehension can be automatic or unconscious and controlled. 1b. It may produce concrete or more abstract meaning. 1c. It may have few or multiple meanings. 1d. It may create weaker or stronger memory.

Four important ways in variation in comprehension

- High achievement motivation - The need for affliation - The need for power

Mcclelland professes the idea that there are three basic needs that motivate people. The following theories are:

- Feeling of joy and happiness - Fulfillment of one's interest and desire - Surprise gifts or good news

Pleasant or positive emotions

Availability of raw materials

Supply of important inputs to production like oil and natural products like wood, cements, and other natural products.

- Segment the product according to needs and social goals. - Create new needs and goals that appeal to higher order needs. - Identify unfulfilled needs and goals with satisfying offerings. - Manage conflicting needs and goals. - Appeal to the consumer's multiple needs and goals. - Develop effective communication linkages - Manage consumers' emotions through creative ads and products.

The Relevance of Consumer Needs and Goals

- Market research - Environmental scanning and analysis - Market segmentation - Product positioning and differentiation - Marketing mix development

The areas of consumer behavioral concepts

2a. Shallow comprehension - produces concrete and tangible level that is the consumer will interpret information in terms of the product attributes. 2b. Deep comprehension - produces more abstract meaning in the mind of the consumer. - The information is less tangible and more subjective. - Creates meanings about the functionality consequences of product use.

The comprehension in the levels of comprehension could vary in intensity

1. The Variation in Comprehension 2. Levels of Comprehension 3. Elaboration 4. Remembering Process

The compression process varies at a different state

Environmental distractions

The consumers who are pushing for the crowd to make a ride in the metropolitan transport system would not have time to listen to marketing information or make notice of advertisement in billboards.

Information in marketing

The content of what consumers received from the outside world and the reactions are generated.

- The External Forces of the Environment - The Economic Environment - Behavioral Economics - The Natural Environment - The Technological Environment

The different environmental scanning and analysis

- The nature of consumer behavior - The interactive process of consumer behavior - The consumer exhange process

The dynamics in understanding consumer behavior

1. Time pressure 2. Environmental distractions 3. Consumers' affective mental state

The factors in the environment affect the levels of comprehension and involvement

- Availability of raw materials - Pollution index of the area - Weather conditions such as typhoon and draught - Health and social conditions

The features of the natural environment are important determinants of consumer behaviour. These factors are:

- Provide customers with value laden products. - Focus on the quality of consumer and marketing research. - The Internet as a new marketing tool to the greater number of quality customers.

The following major strategies:

- Measurability - Accessibility - Substantiality

The following market characteristics should be present to properly identify the target market.

- Information processing and behavioral learning - Personality and motivation - Decision making and the influence of groups - The level of customer satisfaction

The impact of findings of the market research along the following areas

- Two or more parties must be present. - The parties must have something that is of value. - They must be capable of communication and delivery. - They are free to accept or reject the other offer. - The parties believe that transaction is appropriate and desirable.

The prerequisite for exhange

- Idea Generation - Product Development - Market Testing - Advertising and Promotional Strategy

The principles of consumer behavior can be applied into the four area of the new product development.

- Interpretive Approach - The Traditional Approach - The Marketing Science Approach

The role of research in consumer behavior

- Pleasant or positive emotions - Unpleasant or negative emotions

The state of consumer emotions

Marketing mix development

The theories and concepts of consumer behavior involved the initiation and coordination of activities concerning the development of its products, its promotion, it's pricing, and its distribution strategy.

- The Consumer's Existing Knowledge in Memory - The Level of Consumer Involvement - Environmental Exposure

Three distinct factors that influences consumer inferences or comprehension

- Positive dimensions - Negative dimensions

Two dimensions of the need for power

- Specific Positioning - Competitive Positioning

Two types of positioning strategies

- Feeling of anger - Distress and disgust - Fear and contempt - Shame and guilt

Unpleasant or negative emotions

Health and social conditions

Various diseases and the social and economic conditions both in the urban and rural areas.

Consumer Behavior

reflects the totality of consumers' decision process in the acquisition, consumption, and disposition of products and services. It involves the use of services, ideas, and activities that consumer's experience in their daily life. Our behavior as a consumer reflects the choice of the TV programs according to our preference and attends sports activity that is of our individual life style.