Marketing Chapter 5 - Consumer Behaviour

CONSUMER DECISION PROCESS MODEL - Step 5: Postpurchase - Three Postpurchase Outcomes

1) Customer Satisfaction: Setting unrealistically high consumer expectations of the product through promotion may lead to higher initial sales, but it eventually will result in dissatisfaction when the product fails to achieve these high performance expectations -> dissatisfied customers o But setting customer expectations too low is an equally dangerous strategy. No matter how good their service may be, if the store is not appealing, customers are not likely to enter. o Build realistic expectations—not too high and not too low—and deliver on those expectations. o Demonstrate correct product use; improper usage can cause dissatisfaction. o Stand behind the product or service by providing money-back guarantees and warranties. o Encourage customer feedback; cuts down on negative word of mouth, helps marketers adjust o Periodically make contact with customers and thank them for their support -> reminds customers the marketer cares about their business and wants them to be satisfied. 2) Postpurchase Cognitive Dissonance (buyer's remorse): internal conflict that arises from an inconsistency between 2 beliefs, or between beliefs and behaviour. o Ex: you might have buyer's remorse after purchasing an expensive TV because you question whether a high-priced TV has appreciably better quality than a similar-size TV at a lower price. o feeling of regret, guilt, or grave uneasiness, which generally occurs when a consumer questions the appropriateness of a purchase after his decision has been made. o occurs when consumers feel they made the purchase without all the info, they were persuaded by a salesperson, they liked the good features but do not like the negative aspects, or if immediately following the purchase they see it advertised elsewhere at a better value. o Likely for products that are expensive, infrequently purchased, highly expressive, and high risk. o marketers direct efforts at consumers after they have made the purchase to address the issue. o you yourself can prevent yourself from feeling guilty by looking ad bad reviews of other products and good reviews of the one you bought 3) Customer loyalty develops over time with multiple repeat purchases of the product or brand from the same marketer. In the postpurchase stage, marketers attempt to build and nurture a loyal relationship with their customers from the very first purchase and with each subsequent purchase. Loyal customers will only buy certain brands and shop at certain stores -> very valuable to firms -> marketers have designed customer relationship management (CRM) programs • Undesirable Consumer Behaviour: negative word of mouth and rumours. Negative word of mouth occurs when consumers spread negative info about a product, service, or store. When customers' expectations are met or even exceeded, they often don't tell anyone about it. But when consumers believe that they have been treated unfairly, they usually complain to many people. The Internet has provided an effective method of spreading negative word of mouth. o To lessen the impact, firms provide customer service representatives to respond to complaints. If the customer believes that positive action will be taken, he is less likely to complain • Passive consumers don't repeat purchase or fail to recommend the product to others.

CONSUMER DECISION PROCESS MODEL - Step 2 - Info Search - 4 Factors Affecting Consumers' Search Processes

Factors Affecting Consumers' Search Processes 1. Perceived benefits vs. perceived costs of search. Is it worth the time and effort to search for info about a product or service? -> is it an important life-changing expensive item or just eggs? 2. The locus of control. Those with an internal locus of control believe they have some control over the outcomes of their actions, in which case they generally engage in more search activities. With an external locus of control, consumers believe that fate or other external factors control all outcomes so it doesn't matter how much information they gather. If they make a wise decision, it isn't to their credit, and if they make a poor one, it isn't their fault. 3. Actual or perceived risk. 5 types of risk associated with purchase decisions can delay/discourage a purchase. The higher the risk, the more likely the consumer is to engage in an extended search. o Performance risk: perceived danger inherent in a poorly performing product/ service. o Financial risk: risk associated with a monetary outlay and includes the initial cost of the purchase, as well as the costs of using the item or service. o Social risk: when consumers worry others might not regard their purchases positively. o Physiological risk (safety risk): Whereas performance risk involves what might happen if a product does not perform as expected, physiological (or safety) risk refers to the fear of an actual harm should the product not perform properly. o Psychological risks: how people will feel if the product/service does not convey the right image. 4. Type of product or service. Whether it is a specialty, shopping, or convenience product. o Specialty goods/services: customer shows a strong preference and for which he will expend considerable effort to search for the best suppliers. o Shopping goods/services: apparel, fragrances, and appliances; consumers will spend a fair amount of time comparing alternatives. o Convenience goods/services: consumer is not willing to spend any effort to evaluate prior to purchase. They are commodity items, frequently purchased, usually with very little thought. o Consumers can spend time searching for both specialty and shopping goods or services; the difference lies in the kind of search. the consumer's specific perceptions and needs help define the kind of search and the type of product -> haircut probably means more to girls than for guys o Knowing that consumers go through various levels of information search, marketers must try to understand the sources of info that customers use and the importance of each source. o implement various tactics, including providing info about their products or even educating customers about their product in general or a product category to build trust/credibility o tactics aimed at reducing the various risks should be communicated to customers -> showing consumers that others have purchased the product and are proud owners or users

FACTORS INFLUENCING CONSUMER BUYING DECISIONS - Psychological Factors

Psychological Factors • examine how such psychological factors can influence the consumer decision process. • Motives: need or want that is strong enough to cause the person to seek satisfaction. o Maslow categorized five groups of needs, esteem o The pyramid demonstrates the theoretical progression of those needs. 1) Physiological needs: basic biological necessities of life (food, drink, rest, shelter). Although most people in developed countries have these basic needs met, there are those in both developed and less-developed countries who are less fortunate. -> these needs are everyone's concern 2) Safety needs: protection and physical well-being. The marketplace is full of products and services that are designed to make you safer, such as airbags in cars. -> secure jobs, health 3) Love or social needs: our interactions with others. Haircuts and makeup make you look more attractive. Greeting cards help you express your feelings toward others. -> friendship, family 4) Esteem needs allow people to satisfy their inner desires. Yoga, meditation, and many books appeal to desires to grow or maintain a happy, satisfied outlook on life -> confidence, respect 5) Self-actualization: when you feel completely satisfied with your life and how you live. You don't care what others think. You engage in personal growth activities and attempt to meet their intellectual, aesthetic, creative, and other such needs. o Good marketers add value to their products or services by nudging people up the needs hierarchy and offering information on as many of the pyramid needs as they can. • Attitude: person's enduring evaluation of his or her feelings about and behavioural tendencies toward an object or idea. An attitude consists of three components. 1) The cognitive component reflects what we believe to be true 2) Affective component: what we feel about the issue at hand—our like or dislike of something 3) Behavioural component comprises the action(s) we take based on what we know and feel. o We have attitudes about almost everything. Attitudes are learned and long-lasting and they might develop over a long period of time, though they can also abruptly change. o One thing we all have in common is that our attitudes have the ability to influence our decisions o Ideally, agreement exists among these components. When there is incongruence among the three however, cognitive dissonance might occur -> you might experience remorse o Although attitudes are pervasive and usually slow to change, they can be influenced and changed through persuasive communications and personal experience. o Marketing communication can attempt to change what people believe to be true about a product/service (cognitive) or how they feel toward it (affective). If the marketer is successful, the cognitive and affective components work in concert to affect behaviour. • Perception: process by which we select, organize, and interpret info to form a meaningful picture of the world. Perception influences our acquisition and consumption of goods/services through our tendency to assign meaning to such things as colour, symbols, taste, and packaging. o Culture, tradition, and our overall upbringing determine our perceptual view of the world. o In trying to influence perceptions, marketers must understand and focus on the four components of perception: selective exposure, selective attention, selective comprehension, and selective retention. For example: Selective exposure: you choose to expose yourself to only certain sections of a newspaper Selective attention: only listen to messages that are consistent with their beliefs, os only watch basketball shows even though other shows appear on the channels you watch Selective comprehension: consumers interpret a marketing message in a way that is different from what the marketer intends. -> marketers can target their communications in those media that maximize exposure to their target market and create messages that are consistent with their beliefs so that they will pay attention and interpret them properly. Selective retention: consumers do not remember all the information they see, read or hear. Marketers can provide the information in various other forms such as print, online, and other displays to reinforce their message. • Learning: change in a person's thought process/behaviour that arises from experience and takes place throughout the consumer decision process. o Ex: experiencing a good salesperson when making a purchase = you learned o Researching is learning o Learning affects both attitudes and perceptions -> can change cognitive component for example • Lifestyle: the way consumers spend their time and money to live. o does the product or service fits with their actual lifestyle? o consumers' changing attitudes and lifestyles are influencing the types of foods they buy o Organic agriculture is registering rapid growth due to various food scares o "pesticide free" and "hormone free," with "no chemicals," "no pollutants," "no antibiotics," o mainly women buy organic foods in larger quantities o age is not an important factor, younger consumers show a higher willingness to buy organic because of their greater environmental concerns but cannot always afford to. o For Canadians, health motivation is more an avoidance motivation (e.g., to avoid ingesting chemicals) than an approach motivation (e.g., to acquire nutritional benefits). o Drawbacks: high price, their lack of wide availability, their unsatisfactory quality, consumer satisfaction with current purchases, consumers' lack of familiarity with organic foods, consumer mistrust of organic labels, limited choice, and lack of perceived value. o Encourage consumers to trust the brand, label and partners. Consumer awareness is important in the organic foods market: a segment of the potential market is not yet informed about them, and those consumers who have general knowledge do not have enough detailed info to differentiate the food's unique attributes.

INVOLVEMENT and CONSUMER BUYING DECISIONS

• Consumers engage in two types of buying process/decisions depending on level of involvement: (1) extended problem solving for high-priced, risky, infrequent, or highly expressive purchases (2) limited problem solving, which includes impulse buying and habitual purchases/decision making • Involvement: consumer's degree of interest/concern in the product or service -> may have different levels of involvement for the same type of product. • One consumer behaviour theory= elaboration likelihood model: high- and low-involvement consumers process different aspects of a marketing message or advertisement o If both types of consumers viewed ads for hybrids produced by Toyota and Ford... o The high-involvement consumer will scrutinize all the info provided (e.g., gas savings, eco-friendly) and process the key elements of the message deeply. -> likely to either end up judging the ad to be truthful and form a favourable impression of the product OR superficial and develop negative product impressions o In contrast, a low-involvement consumer will likely process the same advertisement in a less thorough manner -> pay less attention to the key elements of the message (e.g., gas savings, eco-friendly) and focus on heuristic elements such as brand name (Toyota), price, and the presence of a celebrity endorser. The impressions are likely to be more superficial.

CONSUMER DECISION PROCESS MODEL - Step 1: Need Recognition

• Consumers recognize they have an unsatisfied need and want to go from their actual, needy state to a different, desired state -> greater discrepancy between these states = greater need recognition • Consumer needs like these can be classified as functional, psychological, or both. • Functional needs: the performance of a product or service. • Psychological needs: personal gratification consumers associate with a product/service. • Shoes provide a functional need: to keep protected. So why would anyone pay $500 for? Because that consumer is seeking a way to satisfy psychological needs. • Products/services are likely to satisfy both functional and psychological needs, in different degrees. • A key to successful marketing is determining the correct balance of functional and psychological needs that best appeals to the firm's target markets. • So, what can marketers do at the need recognition stage to influence consumer purchase decisions? Marketers use numerous tactics to either remind customers of a need or create new needs. • Common tactics marketers employ include using reminder advertising for their products, creating awareness about a new product and its capabilities, showing how a product could enhance consumers' image, and even altering the physical layout of a store or where products are placed.

CONSUMER DECISION PROCESS MODEL - Step 5: Postpurchase

• Marketers are interested in postpurchase behaviour because entails actual (vs. potential) customers. • Create satisfied customers who become loyal, purchase again, and spread positive word of mouth.

INVOLVEMENT and CONSUMER BUYING DECISIONS - Limited Problem Solving

• Occurs during a purchase decision that calls for, at most, a moderate amount of effort and time. • Customers engage in this type of buying process when they have had some prior experience with the product or service and the perceived risk is moderate. • Limited problem solving usually relies on past experience more than on external information. • Impulse buying: buying decision made by customers on the spot when they see the merchandise. • Habitual decision making: purchase decision process in which consumers engage with little conscious effort. -> even less thought than impulse buying • Ex: On her way home from the grocery store, for example, Katie drove past a Tim Hortons and swung into the drive-through for a maple pecan Danish and an Iced Capp. She did not ponder the potential benefits of going to Second Cup or Starbucks; rather, she simply reacted to the cue provided by the sign and engaged in habitual decision making. • Marketers strive to attract and maintain habitual purchasers by creating strong brands and store loyalty because these customers don't even consider alternative brands or stores. • Marketers trying to get consumers to switch to their brands use tactics that require greater involvement in the purchase decisions. -> make them question whether what they buy without thinking about (ex: toothpaste) actually doesn't have all the great qualities toothpaste should have (ex: whitening) and maybe they should consider switching to one that WHITENS THEIR TEETH

FACTORS INFLUENCING CONSUMER BUYING DECISIONS - Situational Factors

• Psychological and social factors typically influence the consumer decision process the same way each time. But situational factors override (or at least influence) psychological and social issues. • Purchase Situation: Customers may be predisposed to purchase certain products/services because of some underlying psychological/social factor, but these factors may change in certain purchase situations. ->ex: you buy more expensive things for special gifts • Shopping Situation Consumers might be ready to purchase a product/service but be completely derailed once they arrive in the store. Marketers use several techniques to influence consumers at this choice stage of the decision process: o Store atmosphere. Some retailers/service providers have unique images that are based at least in part on their internal environment (atmospherics). If used in concert with other aspects of a retailer's strategy, music, scent, lighting, and colour can positively influence the decision process. o Salespeople influence the sale at the point of purchase by pointing out the advantages of one item over another and by encouraging multiple purchases. o Crowding. There are too many people, too much merchandise, or lines that are too long. If there are too many people in a store, some people become distracted and may leave. Others have difficulty if the merchandise is packed too closely together. o In-store demonstrations. The taste and smell of new food items may attract people to try something they normally wouldn't. During these well-advertised events, customers are often enticed to purchase that day because they get special assistance from the salespeople. o Promotions: influence customers once they have arrived in store. An unadvertised price promotion can alter a preconceived buying plan. Multi-item discounts, such as "buy one, get one free" sales, are popular means to get people to buy more than they normally would. o Packaging: difficult to make a product stand out when it competes for shelf space with several other brands. -> Especially for consumer packaged goods, such as groceries. Marketers therefore spend millions of dollars designing packages to be more eye-catching • Temporal State: state of mind can alter our preconceived notions of what we are going to purchase. Purchase situation may have different appeal levels depending on the time of day and the type of person the consumer is. Mood swings can also alter consumer behaviour. • Lives are lived in different contexts and consumer decisions are made in unique contexts.

CONSUMER DECISION PROCESS MODEL 5 Steps

• represents the steps that consumers go through before, during, and after making purchases. Step 1: Need Recognition Step 2: Info Search Step 3: Alternative Evaluation Step 4: Purchase Decision Step 5: Postpurchase

CONSUMER DECISION PROCESS MODEL - Step 3: Alternative Evaluation

• sift through the choices available and evaluate the alternatives. Alternative evaluation often occurs while consumers are engaged in the process of information search. • Ex: vegetarian consumer might learn about a new brand of yogourt that he or she can immediately rule out as a viable alternative because it contains some animal by-products.

CONSUMER DECISION PROCESS MODEL - Step 2: Info Search

• Search for info about the various options that exist to satisfy that need. • The length and intensity of the search are based on several factors 1) degree of perceived risk associated with purchasing the product/service 2) Importance of the product to the consumer. • Regardless of the required search level, there are two key types of info: internal and external. a) In an internal search for information, the buyer examines his own memory/knowledge about the product/service, gathered through experiences. b) in an external search for information, the buyer seeks information outside his personal knowledge base to help make the buying decision -> talk with friends, family, or a salesperson. They can also scour commercial media, the Internet for information in real time, etc. • Today's consumers increasingly make use of and rely on social media for information to buy stuff o The information available—be it complimentary or unsolicited—can alter the buying process. o Fast exchange of information to aid in the decision-making process. o Where social media has had the biggest impact is the "Twitterati" effect: when famous stars and Twitter celebrities share feedback about a product. These messages reach such a large audience so quickly that they can be a real public relations crisis for companies. o Even companies with a low level of commitment to social media can find themselves caught in the middle of a flurry, since it is consumers who start these discussions o essential to address consumer inquiries and concerns quickly and effectively

CONSUMER DECISION PROCESS MODEL - Step 4: Purchase Decision

• Value is a strong driver of consumers' purchase decisions. Customers seek out and purchase the products and services that they believe provide them with the best value. • After consumers purchase the product or service, they usually consume it, or "put it to the test." A special type of consumption is called ritual consumption: pattern of behaviours tied to life events that affect what and how we consume. These behaviours have symbolic meanings and vary greatly by culture. They might take the form of everyday rituals, such as going to Tim Hortons for his daily morning coffee, or they can be reserved for special occasions, such as holiday rituals. • try to tie products to ritual consumption; just imagine, where would Hallmark be without holidays? • Several situational factors help facilitate purchases: o having the merchandise in stock that customers want o offering multiple payment options (e.g., cash, cheque, credit card, debit card) o Having many checkout lanes open and placing the checkouts conveniently in the store o Installing digital displays to entertain customers waiting in line o Offering delivery, price-match guarantee, a warranty, or a simple return policy. • Additional factors that affect whether the purchase decision is made immediately or later: atmospherics, shopping situation, and temporal states

CONSUMER DECISION PROCESS MODEL - Step 3: Alternative Evaluation -evaluate different alternatives

• When consumers evaluate different alternatives, they base their evaluations on a set of: o Evaluative criteria: set of salient/important attributes about a particular product -> used to compare alternative products. At times, however, it becomes difficult to evaluate different brands or stores because there are so many choices. To simplify the decision process, consumers use shortcuts such as determinant attributes and consumer decision rules. o Determinant attributes: product/service features that are important to the buyer and on which competing brands or stores are perceived to differ. Because many important and desirable attributes are equal among the various choices, consumers look for something special—a determinant attribute—to differentiate one brand or store from another and on which to base their choice. -> may appear perfectly rational, such as low gas consumption per mileage, or they may be more subtle and psychologically based, such as the shapes, colour, and look of the car. o Consumer decision rules: set of criteria that consumers consciously/subconsciously use to quickly select from among several alternatives -> several different forms: A) A compensatory decision rule assumes that the consumer trades off one characteristic against another, such that good characteristics compensate for bad characteristics. (ex: the features offset the high price). -> Assign a weight to each factor depending on their importance. These weights must add to 1. Then rank each alternative for each factor, then score each alternative by multiplying the ranks with the weights. B) noncompensatory decision rule: consumers choose a product or service on the basis of a subset of its characteristics, regardless of the values of its other attributes. (ex: choosing based on price only, regardless of awesome features) C) Decision heuristics: mental shortcuts that help narrow down choices. Some examples: Price. Consumers can choose the more expensive option, thinking they are getting better quality along with the higher price ("You get what you pay for"), or they might buy the product priced in the middle of the alternatives, thinking that it is a good compromise. Brand. Allows some consumers to feel safe with their choices. Product presentation. Manner in which a product is presented can influence the decision process. Consumers want to see that some effort has been put into the selling process, and just the way the product is presented can make or break a sale.

INVOLVEMENT and CONSUMER BUYING DECISIONS - Extended Problem Solving

• buying process begins when consumers recognize that they have an unsatisfied need. • Extended problem solving: common when the customer perceives that the purchase decision entails a great deal of risk -> do a lot of research • Ex: The potential risks associated with decision include financial (Did I pay too much?), physiological (Will it keep me safe in an accident?), social (Will my friends think I look cool?), performance (Will the car perform as expected?), and psychological (Will the car convey the right image of me?) risks. • To reduce her perceived risk, spend effort searching for information before making purchase

FACTORS INFLUENCING CONSUMER BUYING DECISIONS - Social Factors

• external, social environment affects consumer decision making process • family: Many purchase decisions are made about products or services that the entire family will consume or use. Thus, firms must consider how families make purchase decisions and understand how various family members might influence these decisions. o families often consider the needs of all the family members when buying stuff o different members of the family may take on different roles (ex: who makes final decision) o children play an increasingly important role in family buying decisions. -> tween segment in Canada spends > $3 billion per year on personal items )snacks, soft drinks, electronics) o Influencing a group that holds this much spending power is vitally important. o Getting this group to prefer one store, chain, or product over another can make a o difference in the bottom line, as well as in the chances for survival in a difficult marketplace • Reference group: one or more persons an individual uses as a basis for comparison regarding beliefs, feelings, and behaviours. A consumer might have various reference groups, including family, friends, co-workers, or famous people. These groups affect buying decisions by doing all 3: (1) offering information (2) providing rewards for specific purchasing behaviours (3) enhancing a consumer's self-image o they provide info to consumers directly through conversation or indirectly through observation. o Some reference groups influence behaviours by rewarding behaviour that meets with their approval or chastising those who engage in behaviour that doesn't. o Consumers can affiliate with reference groups to create, enhance, maintain their self-image. • Culture: shared meanings, beliefs, morals, values, and customs of a group of people. o One of the most pervasive factors influencing consumer behaviour. o Marketers must understand how it is different in those countries to which they plan to market o Marketing strategies should differ in different countries. o Even within Canada, there are cultural differences between various subgroups or subcultures. o Subculture: group; beliefs and values are different from the rest of the larger society in which they live. -> French-Canadian subculture, Chinese- Canadian subculture, South-Asian subculture,

FACTORS INFLUENCING CONSUMER BUYING DECISIONS

• psychological factors: internal to the customer; motives, attitudes, perceptions, learning, lifestyles • social factors: family, reference groups, and culture, • situational factors: specific purchase situation, a particular shopping situation, and temporal states (the time of day), affect the decision process