Marketing Chapter 6: Consumer Decision Making

Consumer decision-making process

-A five-step process used by consumers when buying goods or services -Guideline for studying how consumers make decisions -Consumer decisions may not proceed in order through all the processes, and in fact, may end at any time without a purchase decision

Social class

-A group of people in a society who are considered nearly equal in status or community esteem, who regularly socialize among themselves both formally and informally, and who share behavioral norms. -One way to identify a subculture -Majority of Americans today define themselves as middle class

Subculture

-A homogeneous group of people who share elements of the overall culture as well as cultural elements unique to their own group -Once marketers identify subcultures, they can design special marketing to serve their needs The United States' growing Hispanic population has made South and Central American subcultures a prime focus for many companies with large marketing budgets

Motivation

-A motive is the driving force that causes a person to take action to satisfy specific needs -Physiological -Safety -Social -Esteem -Self-actualization -By studying motivation, marketers can analyze the major forces influencing consumers' purchase decisions -When a product is purchased a need is usually fulfilled -These needs become motives when aroused sufficiently

Value

-A personal assessment of the net worth one obtains from making a purchase

Evaluation of alternatives and purchase

-Analyze product attributes -Pick product attributes that are important to him/her, then exclude all products in the set that do not have that attribute -Use cutoff criteria -Minimum or maximum levels of an attribute that an alternative must have. Many times, price is an important attribute -Rank attributes by importance -Then purchase!

Stimulus

-Any unit of input affecting one or more of the five senses (sight, smell, taste, touch, hearing) -Stimulates or triggers an imbalance

Perceived risk of negative consequences

-As the risk increases, so does the consumer level of involvement -Risks include financial risks, social risks, and psychological risk. -Price and involvement are directly related

Marketing controlled sources

-Biased toward a specific product because it originates with marketers promoting that product -These sources include mass-media advertising, sales promotion, salespeople, product labels and packaging, and the Internet

Information Search

-Can be internal or external

Reference groups

-Consists of all the formal and informal groups that influence the buying behavior of an individual -Either direct or indirect

Selective distortion

-Consumer changes or distorts information that conflicts with feelings or beliefs

Limited decision making

-Consumer has previous product experience but is unfamiliar with the current brands available -Low levels of involvement -Low to moderate cost goods -Evaluate of few alternative brands -A moderate effort is spent searching for information or in considering alternatives

Selective exposure

-Consumer notices certain stimuli and ignores others

Selective retention

-Consumer remembers only that information that supports personal beliefs

Age

-Consumer tastes in clothes, food, cars, and recreation are often age related

Social influences

-Consumers interact socially with reference groups, opinion leaders, and family members to obtain product information and decision approval

Factors that affect consumer decision journey

-Cultural -Social -Individual -Psychological -These factors all influence the consumer decision journey

Low involvement products require:

-Customers may not recognize their wants until they are in the store -In-store promotion and package design are important tools for catching the customer's attention -Good displays can help explain a product's purpose and create recognition of a want

Utilitarian value

-Derived from a product or service that helps the consumer solve problems and accomplish tasks

Learning

-Experiential: an experience changes behavior -Conceptual: Not learned through direct experience

Journey innovation

-Extends customer interactions to new sources of value -Many companies mine their data to figure out what adjacent goods or services a shopper might be interested in, then they put those products in front of the shopper in the middle of his or her journey

High involvement products require:

-Extensive and informative promotion to target market -A good ad gives consumers the information they need for making the purchase decision, as well as specifying the benefits and advantages of owning the product

Need recognition

-First stage in the consumer decision-making process -Result of an imbalance between actual and desired states

Evoked set

-Group of brands, resulting from an information search, from which a buyer can choose. From this set, consumers will further evaluate the alternatives and make a choice -Too many choices can be bad because a consumer may get overwhelmed and may not decide to buy at all -Once the evoked set is constructed the consumer is ready to make a decision

Extensive decision making

-High involvement -High cost goods -Evaluation of many brands -Long time to decide -Applies to unfamiliar, expensive products, or an infrequently bought item -The most complex type of consumer buying decisions and is associated with high involvement on the part of the consumer -People usually experience the most cognitive dissonance when buying high-involvement products

Consumer behavior

-How consumers make purchase decisions and how consumers use and dispose of products

Re-conceptualizing consumer decision-making process

-Ideally want to eliminate evaluation step so you don't have to consider other brands -In order to minimize the "consider and evaluate" phases of the consumer journey, a company must have these four distinct but interconnected capabilities: -Automation -Proactive personalization -Contextual interaction -Journey innovation

Understanding needs and wants

-If marketers don't understand the target market's needs, the right good or service may not be produced -Marketers selling their products in global markets must observe the needs and wants of consumers in various regions

Psychological ownership

-Important to marketers because when consumers feel a sense of ownership over a product, they are willing to pay more for it and are more likely to tell other consumers about it

Non-marketing controlled sources

-Includes personal experience, personal sources, and public sources such as Underwriters Laboratories

Impact of social class on marketing

-Indicates which medium to use for advertising (ex: middle class families tend to watch more TV than other classes) -helps determine where best to distribute their products

Opinion leaders

-Individuals who influence the opinions of others -Influential, informed, plugged-in, and vocal members of society -May be challenging to locate -Often the first to try new products -Technology companies have found that teenagers, because of their willingness to experiment, are key opinion leaders for the success of new technologies -Opinion leadership is a casual, face-to-face phenomenon - Locating opinion leaders can be a challenge. Marketers may try to create opinion leaders, such as cheerleaders or civic leaders. -On a national level, companies sometimes use prominent public figures, such as movie stars, sports figures, and celebrities to promote products. -Marketers are increasingly using social media to determine and attract opinion leaders

External stimuli

-Influences from an outside source -Ex: Google search, YouTube video, etc.

Purchase process roles in the family

-Initiators: suggest or initiate the purchase process -Influencers: actually makes the decision to buy or not to buy -The purchaser: the one who exchanges money for the product -Children can have great influence over the purchase decision

Cognitive dissonance

-Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions -For the marketer, an important element of any post purchase evaluation is reducing any lingering doubts that the decision was sound. -Consumers try to reduce dissonance by justifying their decision.

Social visibility

-Involvement increases as the social visibility of a product increases. -These products that make a statement about the user may include cars, jewelry, furniture, and clothing.

Interest

-Involvement is directly related to consumer interests, such as cars, motorcycles, or electronics. -High interest means high involvement

Routine response behavior

-Little involvement in selection process -Frequently purchased low-cost goods -May stick with one brand -Quick decision -Buy first/evaluate later

Marketing implications of perception

-Marketers must recognize the importance of cues or signals in a consumers perception of products -Marketing managers first identify the important attributes, then design signals to communicate these attributes to consumers. -Important attributes: price, brand names, quality and reliability, foreign consumer perception

Product involvement

-Means that a product category has high personal relevance

Direct reference groups

-Membership groups that touch people's lives directly -May be primary or secondary -Primary membership: groups include all groups with which people interact regularly in an informal way, such as family, friends, and coworkers -Secondary membership: Include clubs, professional groups, and religious groups; people associate with secondary groups less consistently and more formally

Consumer decision-making process

-Need recognition -Information search -Evaluation of alternatives -Purchase -Post purchase behavior

Indirect reference groups

-Nonmembership reference groups to which they do not belong -Include aspirational reference groups, such as organizations that a person would like to join -To join an aspirational group, a person must at least conform to the norms of that group -On the other hand, a nonaspirational reference group is one that someone wants to avoid being identified with -A consumer may avoid buying a product to avoid being associated with a particular group

Social class measurements

-Occupation -Income -Education -Wealth -Other variables

Internal stimuli

-Occurrences you experience, such as hunger or thirst

Planned versus impulse purchase

-Partially planned: When the consumer knows the product category they want to buy but wait until they go to the story or go online to choose a specific style or brand -Unplanned: buying on impulse

Perception

-People cannot perceive every stimulus in their environment -They use selective exposure, along with the closely related concepts of selective distortion and retention, to decide which stimuli to notice and which to ignore

Purchases are made based on:

-Perceived value (what you expect to get)

Factors determining the level of involvement in the purchase:

-Previous experience -Interest -Perceived risk of negative consequences -Social visibility

Not all product involvement is the same

-Product involvement -Situational involvement -Shopping involvement -Emotional involvement

Internal information search

-Recall information in memory -This includes prior experience or prior knowledge about a product

Family life cycle

-Related to a person's age is his or her place in the family life cycle -An orderly series of stages through which consumers' attitudes and behavior evolve through maturity, experience, and changing income and status -Marketers define target markets according to life cycle stages such as "young singles" and "young married with children."

External information search

-Relies on information in the outside environment -Includes personal and public references, advertisements, and publicity -External information may be obtained from non-marketing controlled sources and/or marketing controlled sources

Enduring involvement

-Represents an ongoing interest in some product or activity -The consumer is always searching for opportunities to consume the product or participate in the activity.

Emotional involvement

-Represents how emotional a consumer gets during some specific consumption activity -Ex: sports fans typify consumers with high emotional involvement

Shopping involvement

-Represents the personal relevance of the process of shopping -Modern shoppers tend to browse less and make fewer impulse buys because they shop on a mission -Showrooming: examining merchandise in a physical retail location without purchasing it, and then shopping online for a better deal on the same item

3 categories of consumer buying decisions:

-Routine response behavior -Limited decision making -Extensive decision making

Consumers can reduce dissonance by:

-Seeking information that reinforces positive ideas about the purchase -Avoiding information that contradicts with the purchase decision -Revoking the original decision by returning the product -Marketing can minimize dissonance through effective communication with purchasers

Cultural influences

-Set of values, norms, attitudes, and other meaningful symbols that shape human behavior and the products of that behavior as they are transmitted from one generation to the next Characteristics: -Pervasive, Functional, learned, and dynamic

Automation

-Streamlines journey steps

Involvement

-The amount of time and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior

Situational involvement

-The circumstances of a purchase may temporarily transform a low-involvement decision into a high-involvement one -Ex: usually buy cheap wine but when the boss comes over for dinner you're going to buy a nicer wine

Purchase

-The consumer decides which product to buy or not to buy at all -Ultimately the consumer must decide whether to buy, when to buy, what to buy (product type and brand), where to buy (type of retailer, specific retailer, online, or in store), and how to pay

Hedonic value

-The experiences and emotions you get out of a product

External information searches

-The extent to which an individual conducts an external search depends on such factors as the perceived risk of purchasing a product, knowledge, prior experience, and level of interest in the good or service -The external search is also influenced by the consumer's confidence in her decision-making ability. IF a consumer has prior experience, he/she will spend less time searching -Need less information if: less risk, more knowledge, more product experience, low level of interest, confidence in decision -Need more information if: more risk, less knowledge, less product experience, high level of interest, lack of confidence

Attributes

-The goal of the marketing manager is to determine which attributes have the most influence on a consumer's choice, and design a marketing mix that stresses those attributes to the consumer -A single attribute, such as price, may not always explain a consumer's evaluation of products -Attributes that the marketer may consider important are not always important to the consumer -Brand names, such as Johnson & Johnson, have a significant impact over the choice of products

"Want-not gap"

-The imbalance between actual and desired states -There are internal and external stimuli that will remind you of this "want-not gap" -A marketing manager's objective is to get consumers to recognize an imbalance between their present and preferred state. Advertising and sales promotion often provide this stimulus

Family

-The most important social institution for many consumers, influencing values, attitudes, and buying behavior -Purchase decisions vary significantly among family members, who assume a variety of roles in the purchase process

Gender

-The physiological differences in men and women result in the need for different products, such as health and beauty products -Trends in gender marketing are influenced by the changing roles of men and women

Influence of reference groups

-They serve as information sources and influence perceptions -They affect an individual's aspiration levels -Their norms either constrain or stimulate consumer behavior -Marketers must also consider that people with well-formed networks of somewhat overlapping reference groups and those with strong personal values are less susceptible to reference group influences.

Proactive personalization

-Uses information to customize the customer experience

Contextual interaction

-Uses knowledge about where a customer is in the journey to deliver them to the next set of interactions

Post-purchase behavior

-When buying a product, consumers expect certain outcomes from the purchase -Once the purchase is made, the next step in the process is evaluation of the product after purchase -Consumers expect certain outcomes from the purchase, and how well these expectations are met determines the level of customer satisfaction.

Post purchase behavior

-When buying products, consumers expect certain outcomes from the purchase. Once a purchase decision is made, the next step in the process is the evaluation of the product after purchase. -Consumers expect certain outcomes from the purchase, and how well these expectations are met determines the level of customer satisfaction.

Previous experience

-When consumers have had previous experience with a product or repeat trials, the level of involvement typically decreases and quick choices are made

Personality

-a broad concept combining psychological makeup and environmental forces

Lifestyle

-a mode of living as identified by a person's activities, interests, and opinions

Maslow's Hierarchy of Needs

-classifying human needs and motivations into five categories in ascending order of importance: -psychological, safety, social, esteem, self-actualization

Self-concept

-combines the ideal self-image and the real self-image -human behavior depends largely on self-concept -consumers seldom buy products that jeopardize their self-image

Individual influences

-gender -age -life cycle -personality -self-concept -lifestyle

Psychological influences

-perception -motivation -learning -the factors consumers use to interact with their world -they are the tools used to recognize feelings, gather and analyze information, formulate thoughts and opinions, and take action

U.S. social classes

-the upper and upper middle classes comprise the small segment of affluent and wealthy Americans -In terms of consumer buying patterns, the affluent are more likely to own their own home and purchase new cars and trucks and are less likely to smoke. -Way of putting people into subcultures; these classes influence purchase decisions