THEORIES OF Consumer Behavior
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Transcript of THEORIES OF Consumer Behavior
The factors that affect the demands of the consumers
Trends in the consumer behavior in 2011- 2012
HON. EDUARDO G. ONGHON. EDUARDO G. ONGBSC, MBA, LLB, PhD, DPA, DBABSC, MBA, LLB, PhD, DPA, DBA
Diplomate in Business EducationDiplomate in Business EducationFellow in Personnel ManagementFellow in Personnel Management
Fellow in Real Estate ManagementFellow in Real Estate ManagementManagement & Academic ConsultantManagement & Academic Consultant
Professor of Business & Public AdministrationProfessor of Business & Public AdministrationChairman Professional Board of Real Estate Service-PRCChairman Professional Board of Real Estate Service-PRCPresident Phil. Association of Professional Regulatory Boards President Phil. Association of Professional Regulatory Boards
Involves the psychological processes that consumers go through in recognizing needs, finding ways to solve these needs, making purchase decisions (e.g., whether or not to purchase a product and, if so, which brand and where). Interpret information, make plans, and implement these plans (e.g., by engaging in comparison shopping or actually purchasing a product).
Consumer Buying Behavior Refers to the buying behavior
of final consumers individuals
& households who buy goods
and services for personal
consumption.
CONSUMER
PERCEPTION/SENSATION
COGNITION
AFFECT
BELIEFS
SOCIAL ANDOTHER INFLUENCE
INFOSEARCH
CHOICES
PREFERENCES
COMMUNICATION
MARKETRESEARCH
STRATEGY
If you have bad breath, you cannot smell it yourself.
If you eat a balanced diet, you do not need vitamin supplements.
Using a razor with five blades will reduce the likelihood of cutting yourself and will result in less skin irritation.
Dell Computers tend to be of higher quality than those made by HP and Sony.
Rust stains on clothes can be removed with the use of lemon juice. Bleach actually makes these stains worse.
Are veggie burgers actually healthy? What makeup should you use to get
an “even” skin tone? Do I get any useful benefits from
spending more than Php 5,000.00 on a digital camera?
Should I get a “make-over?” What am I looking for? What should I do?
Is my mechanic honest? Which tie should I wear for a job
interview? Should I give my wife roses,
chocolate, or software?
Consumer problem: Discrepancy between ideal and actual state--e.g., consumer: Has insufficient hair Is hungry Has run out of ink in his or
her inkjet cartridge
Problems can be solved in several ways--e.g., stress reduction <----- vacation, movie, hot bath, medication
INFORMATIONSEARCH
PROBLEMRECOGNITIO
N
EVALUATION OF
ALTERNATIVES PURCHASE
POSTPURCHASE
EVALUATION/BEHAVIORS
Theory
Complications
UNIVERSAL SET
RETRIEVED SET
EVOKED SET
All possible options
Options that readily come to mind
Options that will be considered by the consumer
Note: Retrieved and evoked sets will vary among different consumers
For low involvement products, efforts aimed at affecting internal search tend to be more effective—the consumer is usually not willing to expend energy on external search.
External search is more likely for higher involvement products.
Involvement level Temporary Enduring
Consumer locus of control Internal External
Product category complexity
Consumer knowledge
Compensatory: Decision based on overall value of alternatives (good attribute can outweigh bad ones)
Non-compensatory: Absolutely must meet at least one important criterion (e.g., car must have automatic transmission)
Hybrid: Combination of the two (e.g., one non-compensatory measure, then compensatory tradeoffs on other attributes
Abandoned strategy: Consumer finds initial criteria unrealistic and proceeds to less desirable solution
IMPORTANT
LESSIMPORTANT
If either Coke or Pepsi is on sale, buy that brand; otherwise, buy Coke
The larger the navels, the better the orange
The larger package is likely to offer a lower unit price (not true in reality)
Beliefs Can be positive,
negative, or neutral May or may not be
accurate May contradict other
beliefs held by the other person
Affect May be positive or
negative May take on specific
dimension (e.g., pleasure, disgust)
Behavioral Intentions An individual’s plan or
expectations of what he or she will do
May appear inconsistent with beliefs
May not predict well what the individual will do in reality
Model of Buyer Behavior
Marketing andOther Stimuli
Marketing andOther Stimuli
Buyer’s Black BoxBuyer’s Black Box
Buyer’s ResponseBuyer’s Response
ProductPricePlacePromotion
EconomicTechnologicalPoliticalCultural
Buyer Characteristics
Buying Decision Process
Product ChoiceBrand ChoiceDealer Choice
Purchase TimingPurchase Amount
Factors Influencing Consumer Behavior
Culture
Subculture
Socialclass
Social
Referencegroups
Family
Rolesand
status
Individual/Personal
Age andlife-cycle
OccupationEconomicsituationLifestyle
Personalityand
self-concept
Psychological
MotivationPerceptionLearning
Beliefs andattitudes
Buyer
Cultural
Social Class• Society’s relatively
permanent & ordered divisions whose members share similar values, interests, and behaviors.
• Measured by: Occupation, Income, Education, Wealth and Other Variables.
Social Class• Society’s relatively
permanent & ordered divisions whose members share similar values, interests, and behaviors.
• Measured by: Occupation, Income, Education, Wealth and Other Variables.
Culture Most basic cause of a person's wants and
behavior.
Culture Most basic cause of a person's wants and
behavior.
Subculture• Groups of people with
shared value systems based on common life experiences.
• Hispanic Consumers
• African American Consumers
• Asian American Consumers
• Mature Consumers
Subculture• Groups of people with
shared value systems based on common life experiences.
• Hispanic Consumers
• African American Consumers
• Asian American Consumers
• Mature Consumers
Groups• Membership• Reference
Groups• Membership• Reference
Factors Affecting Consumer Behavior:Social
Family• Husband, wife, kids• Influencer, buyer, user
Family• Husband, wife, kids• Influencer, buyer, user
Roles and StatusRoles and Status
Social FactorsSocial Factors
Reference Group are groups that have direct (face to face)or indirect influence on the person’s attitudes or behavior
“ People are often influenced by reference groups to whichthey do not belong”
Family members can strongly influenceBuyer behavior
Role – consists of the activities people areexpected to perform accordingto the persons around them
Each role carries a status reflecting thegeneral esteem given to it bysociety
People often choose products that show their status in society
Factors Affecting Consumer Behavior:Individual/ Personal
Personal InfluencesPersonal Influences
Age and Life CycleStage
Age and Life CycleStage OccupationOccupation
Economic SituationEconomic Situation
Lifestyle IdentificationLifestyle Identification
ActivitiesActivities OpinionsOpinions
InterestsInterests
Personality & Self-ConceptPersonality & Self-Concept
Factors Affecting Consumer Behavior:PsychologicalFactors Affecting Consumer Behavior:Psychological
Psychological Factors
MotivationMotivation
PerceptionPerception
LearningLearning
Beliefs and Attitudes
Beliefs and Attitudes
BELIEFS & ATTITUDE
A persons beliefs and attitude are acquired through acting and learning.
A belief is a descriptive thought that a person has about something
An attitude is a person’s consistency favorable orUnfavorable evaluations , feelings and tendenciesToward an object or idea.
PERCEPTION
Is the process by which people select, organize, and interpret information to form a meaningful picture of the world.
The marketer must remember that two people with the same motivation and in the same situation may act differently because they perceive the situation differently.
MOTIVATION
The process of motivation is initiated by the Tensions an unsatisfied want creates motive (drive) – is a need that is sufficiently pressing to direct the person to seek satisfaction of the need.
Sigmund Freud's Theory –
Assumes that people are largely unconscious about thereal psychological forces shaping their behavior. Accordingly, a person does not fully understand his or her motivation.
id - is an important part of our personality because as newborns it allows us to get basic needs
Sigmund Freud's Theory –
Ego- based on reality principle the ego understands that other people have needs and desires and that something being impulsive or selfish can hurt us in a long run
Superego moral parts of us are develops due to moral and
ethical restraints placed on us by our caregivers
The role of the unconscious is only one part of the model. Freud also believed that everything we are aware of is stored in our conscious. Our conscious makes up a very small part of who we are. In other words, at any given time, we are only aware of a very small part of what makes up our personality; most of what we are is buried and inaccessible. The final part is the preconscious or subconscious. This is the part of us that we can access if prompted, but is not in our active conscious. Its right below the surface, but still buried somewhat unless we search for it. Information such as our telephone number, some childhood memories, or the name of your best childhood friend is stored in the preconscious.
HENRY MURRAY’s THEORY
Henry Alexander Murray (May 13, 1893 – June 23, 1988) was an American psychologist who taught for over 30 years at Harvard University. He was founder of the Boston Psychoanalytic Society and developed a theory of personality based on "need" and "press". He also is developer of the Thematic Apperception Test (TAT) which is widely used by psychologists.
Murray classified needs as being either:
Primary needs (which are biologically based): food, water, air, sex, avoidance of pain
Secondary needs (which either derive from our biological needs or are inherent in our psychological nature): achievement, recognition, acquisition dominance, aggression, autonomy affiliation, play, cognizance (asking questions of others) Murray believed that stronger needs are expressed more often over time and lead to more intense behaviour.
WILLIAM MCGUIRE
William McGuire has described the steps an individual must be persuaded to pass through to assimilate a desired behavior.
These steps are:Exposure to the messageAttention to the messageInterest in or personal relevance of the messageUnderstanding of the messagePersonalizing the behavior to fit one’s lifeAccepting the changeRemembering the message and continuing to agree with itBeing able to think of itMaking decisions based on bringing the message to mindBehaving as decidedReceiving positive reinforcement for behaviorAccepting the behavior into one’s life
Maslow’s Hierarchy of Needs
Esteem Needs(self-esteem, status)
Social Needs(sense of belonging, love)
Safety Needs(security, protection)
Physiological Needs(hunger, thirst)
Self Actualization
(Self-development)
Consumer Decision-Making Process
Postpurchase Behavior
Postpurchase Behavior
PurchasePurchase
Evaluation of AlternativesEvaluation
of Alternatives
Information SearchInformation Search
Need RecognitionNeed Recognition
Cultural, Social, Cultural, Social, Individual and Individual and Psychological Psychological
Factors Factors affect affect
all stepsall steps
Cultural, Social, Cultural, Social, Individual and Individual and Psychological Psychological
Factors Factors affect affect
all stepsall steps
Complete model of consumer behavior
Stimuli (marketer dominated, other)
External search
Memory
Internal search
Exposure
Attention
Comprehension
Acceptance
Retention
Search
Need recognition
Alternative evaluation
Purchase
Outcomes
Dissatisfaction Satisfaction
Individual differences• resources• motivation & involvement• knowledge• attitudes• personality, values, lifestyle
Influences• culture• social class• family• situation
Start
• How do you know when to shop? What are the triggers that initiate an awareness & search?
• What are the internal & external sources of these triggers?
Need Recognition
Marketing helps consumers recognize (or
create) an imbalance between present status
and preferred state
• When a current product isn’t
performing properly
• When the consumer is running out of an product
• When another product seems
superior to the one currently used
The information search stage
An internal search involves the scanning of one's memory to recall previous experiences or knowledge concerning solutions to the problem-- often sufficient for frequently purchased products.
An external search may be necessary when past experience or knowledge is insufficient, the risk of making a wrong purchase decision is high, and/or the cost of gathering information is low.
Personal sources (friends and family)
Public sources (rating services like Consumer Reports)
Marketer-dominated sources (advertising or sales people)
The evoked set: a group of brands from which the buyer can choose
• go back to your past purchase– what were the specific internal and external sources of information that influenced your decision?
• how do you determine (and rate) the credibility of these sources?
• what specific information influenced you?
Buyer Behavior
• Initiator: the person who first suggests or thinks of the idea of buying a particular product or service.
• Influencer: a person whose views or advice carry weight in making the final buying decision
• Decider: the person who ultimately makes the final buying decision or any part of it
• Buyer: the person who makes the actual purchase
• User: the person who consumes the product or service
Other people often influence a consumers purchase decision. The marketer needs to know which people are involved in the buying decision and what role each person plays, so that marketing strategies can also be aimed at these people. (Kotler et al, 1994).
Note: teens are increasingly assuming more of these roles
Think about your past purchase– who was in which role?
WifeDominant
HusbandDominant
Joint
100 50 075 25
Women’s clothing
Pots & pans
Child clothing
groceries
vacations
TV sets
Family car Sport equipment
Lawn mower
Paint wallpaper
lamps
Men’s leisure clothing
Men’s business clothing
cameraFinancial planning
furniture
refrigerator
luggage
carpet
NonRx
Toys/games
stereo
hardware
Extent of role specialization
Relative influence of husbands & wives
Informationsearch
Final decision
Consumer decision making varies with the level of involvement in the
purchasing decision
• Extensive: problem solving occurs when buyers purchase more expensive, less frequently purchased products in an unfamiliar product category requiring information search & evaluation; may experience cognitive dissonance.
• Limited: problem solving occurs when buyers are confronted with an unfamiliar brand in a familiar product category
• Routine: response behavior occurs when buyers purchase low cost, low risk, brand loyal, frequently purchased, low personal identification or relevance, items with which they are familiar.
Increase in Consumer evaluation processes
Factors affecting Consumer involvement
• Previous experience: low level involvement
• Interest: high involvement
• Perceived risk of negative consequences: high involvement
• Situation: low to high due to risk
• Social visibility: involvement increases with product visibility
• Offer extensive information on high involvement products• In-store promotion & placement is important for low involvement products• Linking low-involvement product to high-involvement issue can increase sales
So…
Types of consumer involvement and decision making
Routine Limited Extensive
Involvement Short Low to moderate
High
Time Low Short to moderate
Long
Cost Short Low to moderate
High
Information Search
Internal only Mostly internal
Internal & external
Number of alternatives
one few many
Compensatory Decision: Using product characteristics to guide decision
• Select the best overall brand-- evaluates brand options in terms of each relevant attribute and computes a weighted or summated score for each brand. The consumer chooses the brand with the highest score.
• Compensatory model because a positive score on one attribute can outweigh a negative score on another attribute.
• Conjunctive Decision Rule (cutoff criteria)-- Consumer sets a minimum standard for each attribute and if a brand fails to pass any standard, it is dropped from consideration .
• Reduces a large consideration set to a manageable size.• Often used in conjunction with another decision rule.
• Disjunctive Decision Rule (rank by importance)-- sets a minimum acceptable standard as the cutoff point for each attribute--any brand that exceeds the cutoff point is accepted.
• Reduces large consideration set to a more manageable number of alternatives.• Consumer may settle for the first satisfactory brand as final choice or may use
another decision rule.
• Synthesized decision rule-- Consumers maintain overall evaluations of brands in their long term memories. Brands on not evaluated on individual attributes but on the highest perceived overall rating.
• think of an important purchasing decision you have made
• what are some of the thoughts you have had following your purchase? Any regrets?
• what has influenced those thoughts?
• how have you dealt with the discomfort?
• how has the company anticipated or dealt with your discomfort?
Post purchase Behavior
Can minimize through:Effective Communication
Follow-upGuaranteesWarranties
Under promise & over deliver
Cognitive DissonanceCognitive Dissonance
??Did I make a good decision?Did I make a good decision?
Did I buy the right product?Did I buy the right product?
Did I get a good value?Did I get a good value?
Sour Grapes– a story of cognitive dissonance
…after being unable to reach the grapes the fox said, “these grapes are probably sour, and if I had them I would not eat them.” --Aesop
Cognitive Dissonance
• psychological discomfort caused by inconsistencies among a person’s beliefs, attitudes, and actions
• varies in intensity based on importance of issue and degree of inconsistency
• induces a “drive state” to avoid or reduce dissonance by changing beliefs, attitudes, or behaviors and thereby restore consistency
Tendency to avoid information can be countered by eliciting interest, norm of fairness, or perceive usefulness of information
Post-decision “buyer’s remorse” may be increased by importance or difficulty or irreversibility of decision
Counter-attitudinal action, freely chosen with little incentive or justification, leads to attitude change (e.g., new product at special low price)
Applications:
• think of an innovation in your field
• describe different groups of employees in your organization who would respond early and favorably, as well as later and unfavorably
• what are the differences between these groups?
• how could you use this information to market the innovation to them more effectively?
• Identify an innovation in your organization or an organization you are familiar with
• Identify the subgroups who responded to the innovation using the Rogers & Shoemaker stakeholder model
• What could have been done to facilitate acceptance by each of these groups?