Consumer Behavior
2 The Consumer Value Framework
(CVF) illustrates the factors shaping consumption-related behaviors and ultimately determines the value associated with consumption.
12 Habitual (or routine), decision-making
- Consumers generally do not seek information at all when a problem is recognized and select a product based on habit. Can manifest as either brand inertia or brand loyalty. Low involvement and perceived risk
12 Extended decision-making
- Consumers move diligently through various problem-solving activities in search of the best information that will help them reach a decision. Usually involves sequentially going through all 5 stages of the purchase decision process. Corresponds with The rational decision-making perspective. Involvement & perceived risk are high.
12 Limited decision-making
- Consumers search very little for information and often reach decisions based on prior beliefs about products and their attributes. Relatively low amounts of involvement and perceived risk
Brand Loyalty -
A deeply held commitment to rebuy a product or service regardless of situational influences that could lead to switching behavior.
12 Know what need recognition entails and the various means (e.g., a change in the actual or ideal state) by which consumers enter into this stage of the purchase decision process. Be able to recognize the characteristics of the ideal and actual states and examples of each.
A need is recognized when a consumer perceives a difference between an actual state and a desired state.
12 Know the important characteristics of attributes recalled through internal search (i.e., accessibility, salience, etc.) And why each is important. Be able to recognize examples.
Accessibility - Accessible attributes are more available in memory. Salience - Salient attributes are more prominent (closely associated with the product/brand). Diagnosticity - Diagnostic attributes help us distinguish brands from one another. Determinant attributes - are salient and diagnostic attributes that we use to choose one brand over another.
13 Know how consumers form judgments (i.e., anchoring and adjustment). Be able to recognize examples.
Anchoring and Adjustment - Evaluating an item on an initial attribute and then "updating" the evaluation as additional information is considered. The "anchor" is very important because it influences our judgment more than subsequently evaluated attributes.
1 Relationship marketing
Based on the belief that a firm's performance is enhanced through repeat business. It is the recognition that customer desires are recurring and that a single purchase may be only one touchpoint in an ongoing series of interactions with a customer.
1 Value =
Benefits - Costs.
Tactics For Developing (or Breaking) Brand Loyalty
Brand Loyal Creating: High, consistent quality products Loyalty programs
compensatory decision models
Compensatory rules Allow consumers to select products that may perform poorly on one attribute by compensating for the poor performance by good performance on another attribute.
Rational Perspective -
Consumers gather information about purchases, carefully compare various brands of products on salient attributes, and make informed decisions regarding what brand to buy.
13 Know what consumers make judgments about and be able to recognize examples (i.e., presence of features, levels of features, etc.).
Consumers make judgments about different types of characteristics, including: Presence of features - both physical features (i.e., color) and associations (i.e., country of origin) Feature levels - the amount of a feature offered The benefits associated with a feature The value associated with benefits How objects differ from each other
Experiential Perspective -
Consumers make purchases and reach decisions based on the feelings attached to the product or behavior under consideration
Benefits of Brand Loyalty to Consumers
Convenience - reduces search time Benefits that come from long-term relationships with companies such as special incentives for frequent purchasers
Behavioral Influences Perspective -
Decisions are influenced by "cues" consumers encounter in the shopping environment (such as a POP display, a featured low price, or a store's layout).
13 Understand the components of consumer judgments (likelihood estimation and evaluation) and the difference between judgment and decision-making.
Estimation of likelihood of an event or attribute occurring Evaluation of the goodness or badness of the event or attribute Evaluations of individual attributes/events are combined to produce an overall judgment.
13 Understand the difference between features and benefits
Feature - performance characteristics of an object (i.e., snooze button). Benefit - a perceived favorable result that is derived from the presence of a particular feature (i.e., a kinder, gentler way to wake up). MARKETERS FOCUS ON BENEFIT
Tactics For Developing (or Breaking) Habitual Purchases
Habitual Creating: Brand familiarity Shelf space and eye catching POP (point-of-purchase) displays Breaking: Sales promotions "New and improved" products
13 Know the heuristics commonly used by consumers to help them make decisions and the marketing tactics associated with the use of heuristics (i.e., comparative advertising, use of base rate information, etc.).
Heuristics are Mental Rules-of-Thumb That Help Consumers Make Speedy Decisions.
12 Know the concept of involvement including what it is, the different levels of involvement, factors that influence a consumer's level of involvement, and how the level of involvement relates to consumer decision making.
Involvement is the personal, social and economic significance of a purchase to a consumer. Involvement tends to be higher when: The purchase is expensive relative to the consumer's income The purchase could have serious personal consequences to the consumer The purchase could reflect on the consumer's social image.
2 Target market
Is a term used to signify the particular market segment that a company will serve with a specific marketing mix.
Benefits of Brand Loyalty to Marketer
It cost less to retain current customers than to attract new ones Brand loyal customers generate predictable revenue streams Brand loyal customers are resistant to competition
1 Undifferentiated marketing
It involves offering the same product to all customers with no customization. Undifferentiated marketers generally adopt a production orientation, wherein innovation focuses on making the production process as efficient and economical as possible.
1 Differentiated marketing -
It involves serving multiple market segments with a unique product offering. One-to-one marketing offers unique products to each individual customer.
13 Understand affective (feelings-based) decision making and marketing techniques (i.e., use of imagery) associated with it. Be able to recognize examples.
It is when decisions are made in a more holistic manner on the basis of feelings or emotions. Consumer feelings are particularly important for offerings with hedonic, symbolic, or aesthetic aspects. Imagery plays a key role in emotional decision making
When consumers experience risk
Little information is available about the product The product is new The product is expensive The product is technologically complex Quality differences exist between brands The consumer has little confidence in their ability to judge The opinions of other people are important
12 Stages in the consumer decision making process and what each stage involves.
Need recognition Sear for Information Evaluation of Alternatives Choice Post Purchase Evaluation
non-compensatory decision models
Noncompensatory rules Strict guidelines are set prior to selection, and any option that does not meet the specifications is eliminated from consideration.
1 Exchange
Occurs when one thing of value is traded for another.
12 Know the concept of perceived risk, including what it is, the different types of perceived risk, when consumers experience risk, and how the level of perceived risk relates to consumer decision making
Perceived Risk - The consumer's perception of the negative consequences that are likely to result from a course of action and the uncertainty of which course of action is best to take.
12 Know what kinds of information are retrieved during internal search (i.e., brand names, attributes, evaluations and experiences). Be able to recognize examples.
Retrieval of knowledge stored in memory about products, services, and experiences.
Social Risk
Risk associated with how significant others will view the purchase
Types include both objective and subjective forms: Financial Risk
Risk associated with the cost of the product or the chance of being harmed financially in some way
Performance Risk
Risk associated with the likelihood of a product performing as expected
Physical Risk
Risk associated with the safety of the product and the likelihood that physical harm will result from its consumption
Time Risk
Risk associated with the time required to search for the product and the time necessary for the product to be serviced or maintained
Awareness (or Evoked) Set -
Set of alternatives of which a consumer is aware
13 Know the various factors that determine the evaluative criteria used by consumers and be able to recognize examples
The attributes, features, or potential benefits that consumers consider when reviewing possible solutions to a problem
13 Understand the difference between evaluative criteria and
The attributes, features, or potential benefits that consumers consider when reviewing possible solutions to a problem
determinant criteria. Be able to recognize examples.
The evaluative criteria that are most carefully considered and related to the actual choice that is made.
1 market orientation.
The organizational culture that embodies the importance of creating value for customers among all employees
1 Consumer behavior
The set of value seeking activities that takes place as people go about addressing realized needs.
2 Corporate strategy .
This strategy deals with how the firm will be defined and sets general goals
13 Know the characteristics of determinant criteria (attributes).
Though there may be many evaluative criteria, the choice is often based on just one or two determinant criteria. Determinate criteria vary depending on the consumer's preferences or the situation in which the product is consumed. Marketers often position their products on attributes they believe will be determinant.
Brand Inertia (Habitual Purchases) -
What occurs when a consumer simply buys a product repeatedly without any real attachment.
1 A product is
a collection of potentially valuable benefits. Companies need to understand why people buy their products, in order to keep their business going. Companies need to constantly innovate to stay in business.
Exhibit 2.2 displays the CVF in detail. All components in the model are interrelated
a. Internal influences b. External influences c. Consumption process d. Value e. Relationship quality
Consideration Set -
alternatives that are considered acceptable for further consideration in decision making. Usually quite small
2 Individual differences
are traits like personality and lifestyle differences that help determine consumer behavior. These traits define an individual's personality. A consumer with an outdoorsy personality might have a strong preference for a convertible than someone who is happy spending time indoors.
1 Reaction
follows the purchase when the consumer feels good about her purchase after evaluating her new iPad.
2. Elasticity
is a term that is used to demonstrate the degree to which a consumer is sensitive to changes in some product characteristic. The example in the book suggested that there was more elasticity in the price variable versus the warranty variable when consumers purchase tablet computers.
1 Consumer (customer) orientation
is a way of doing business in which consumer value and satisfaction are prioritized above all other concerns. A consumer orientation is a key component of a firm with a market-oriented culture.
2 Market segmentation
is the separation of a market into groups based on the different demand curves associated with each group. There may be many or few market segments (groups of people with similar characteristics) in any given market. Exhibit 2.6 depicts the market segmentation process.
1 Consumption
represents the process by which goods, services, or ideas are used and transformed into value. It produces value through the interactions between the marketer and the consumer
1 Costs involve
the actual price of the product as well as the time and physical effort to visit the store.
1 Benefits are
the positive results of the purchase, such as better work performance, easier Facebook access and so on.
