Understanding Consumer Behaviour in the New Millennium 9/12/20151Media Management Study Notes.

Understanding Consumer Behaviour in the New

Millennium

04/19/23 1Media Management Study Notes

Buyer behaviour• “It is behaviour involved in searching for, purchasing, using,

evaluating and disposing of products and services that they expect will satisfy their needs” (Schiffman & Kanuk)

• How individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants (the mental, emotional and physical activities that they engage in).

• Gaining a thorough in depth consumer understanding helps to make sure that the right products are marketed to the right consumers in the right way.

Defining our terms• Loyalty (to brands, services etc.) has become the

most significant aspect of behaviour requiring understanding

• But … what do we mean by ‘loyalty’?

For some:

An issue of emotional attachment

For others:

An objective account of behaviour


Which definition is best?

Emotional loyalty

Measured by ‘affect’, e.g.• attitudes• brand beliefs• liking, preference• behavioural intention

BUT:

• There are other measures• Potentially redundant

Measured by observation

of ultimate interest

BUT:

Difficult to incorporate into ad-hoc methods

Behavioural loyalty


In an ideal world ...

• … we would want the best of both!• i.e. using questionnaire based methods

measuring affective topics, but able to make an accurate prediction of consumer choice behaviour

• Modelling actual behaviour


Why bother?

If we can model behaviour, then we can predict it

• Examine strengths and weaknesses of brand positions

• Develop marketing strategies designed to maximise attraction/minimise defection

• Identify individuals of ‘opportunity’ and ‘risk’


The purchase process • The purchase of a product or service is usually the

result of a complex process, that cannot be represented as a single-point decision.

• The purchase process consists of the collection and processing of information, of exchange of communications, of decision-making, that develops along time and involves usually a number of different individuals.

• Such a process involves investments in time and energy and it is often perceived as risky, and cloud by uncertainty.

• Preferences for options are often constructed along the process, not merely revealed, and will often be context dependent.

A simple decision modelA simple decision model

Awareness ofalternatives

Importance offeatures

Decisionstrategies


Buying behavior –a simple model

• Objectives Why motives• Object What benefits• Operations How process• Organization Who participants

WhereWhenHow much

BRAND BRAND

EQUITYEQUITY

AFFINITYAFFINITY

EmotionalEmotional

PERFORMANCEPERFORMANCE

FunctionalFunctional

BRANDVALUE

PRICEPRICE


Affinity

The ‘closeness’ of a brand to a person, together with its authority and potential for the individual

AuthorityAuthority IdentificationIdentification ApprovalApproval


Affinity: Authority

AuthorityAuthority

Long standing reputation Long standing reputation and leadershipand leadership

HeritageHeritage

The brand as something The brand as something one can trust or rely onone can trust or rely on

TrustTrust

Leading edge, at the Leading edge, at the forefront of new forefront of new developmentdevelopment

InnovationInnovation


Affinity: Identification

IdentificationIdentification

Brand with which the Brand with which the consumer feels comfortable consumer feels comfortable emotionallyemotionally

BondingBonding

Understanding the Understanding the consumer as an individual, consumer as an individual, knows what he/she needsknows what he/she needs

CaringCaring

Associated with happy Associated with happy personal memoriespersonal memories

NostalgiaNostalgia


Affinity: Approval

ApprovalApproval

Upmarket, upscale or Upmarket, upscale or premiumpremium

PrestigePrestige

Seen as a ‘good choice’ by Seen as a ‘good choice’ by peerspeers

AcceptabilityAcceptability

Used or approved by Used or approved by experts or ‘people I respect’experts or ‘people I respect’

EndorsementEndorsement


Performance

• Category specific issues

• Product features/configuration

• Functional benefits

• Customer service topics


Developing the model

• Essentially a hierarchical model, incorporating standard elements of a survey questionnaire

• Weights estimated using a Genetic Algorithm


A Typical Model

EQUITYEQUITY

Performance

Affinity40% 48%

52%40%

20%

Authority

Heritage43%

Innovative42%

Trust15%

Identification

Bonding34%

Nostalgia33%

Caring33%

Approval

Prestigious18%

Acceptability65%

Endorsement17%

Source: Credit Cards Market04/19/23 21Media Management Study Notes

… including performance issues

EQUITYEQUITY

Performance

Affinity

Benefits10%

CustomerService

11% Accepted

Everywhere37%

CompetitiveCharges

10%

Direct32%

52%

48%

Source: Credit Cards Market04/19/23 22Media Management Study Notes

Genetic algorithms

• General purpose optimisation tool• Based on principles of evolutionary theory• Finds best fitting parameters within a given

set of constraints• Constraints are very useful• Computer intensive


A simple (!) problem

• A travelling salesman has to visit 25 locations in turn (A,B,C,D… etc.)

• The exact positions of each location is known.• What is the single sequence of visits that

results in the shortest travelling time?


A Genetic Algorithm solution• Generate a large number of possible routes

ACUSDIXOS…..JITPBEXZAI……HUWVDIEQB….. Etc. (Maybe 100 or so.)

• Work out how good each route is.• Take the best ten, and discard the others.• Make up the full number of routes by ‘changing’ the top ten.• Repeat the process until the ‘best’ answer is good enough.


All things are relative ...All things are relative ...All things are relative ...All things are relative ...

Performance

Equity

Price

Performance

Affinity

Equity

Price

Relative Value

Affinity

Value of CURRENT brand

Value of ALTERNATIVE

brand


0

25

50

75

% Probability of switching

Utility difference between CURRENT and NEW

100

Relationship to behaviour is not Relationship to behaviour is not linear ...linear ...

Relationship to behaviour is not Relationship to behaviour is not linear ...linear ...


Local telephone

airlines

automobiles

hospitalsLo

yalt

y

Relative brand value

Source: Jones and Sasser

Category DifferencesCategory DifferencesCategory DifferencesCategory Differences


Our ultimate objectives

To answer the following client questions:

• How loyal are my existing customers?• What are the key factors in creating and

weakening loyalty?• What additional customers may be available to

me, and how do I get them?• What is the impact on customer loyalty of my

strategies?


Overall inclination/ preference

Actualbehaviour

Interveningvariables

InertiaCircumstance

Barriers to switching

Why do people behave Why do people behave differently?differently?

Why do people behave Why do people behave differently?differently?


The concept of ‘inertia’

• There are factors which act to ‘inhibit’ (but possibly ‘promote’) the likelihood that an individual will act on their evaluation of product alternatives

• These factors operate at the individual consumer level

• Therefore, each individual interprets relative brand values in the light of their own constraints


Relativecurrent brand value

Inertia

Unhappyprisoners

Secure brandfans

Committedvolunteers

Earlyleavers

LOW switchingMEDIUM switching

HIGH switching MEDIUM switching


An extended model

Brand equity

Price

Brandattractiveness

Experimentalism

Confidence

Inertia

Barriers

LOYALTY


Experimentalism

INDIVIDUAL oriented• Brand differentiation• Habit• Variety seeking• Shopping around• Susceptibility to new offers• Importance of right choice


Confidence

CATEGORY oriented• Knowledge of the category, issues, etc.• Understanding of the products• Predictability/transparency of products


Barriers to choice

CATEGORY specific - both physical and psychological

• Effort required to switch• Availability/difficulty in acquisition• Financial implication• Compatibility with prior choices• Ancillary benefits• etc.


• Think of a recent important purchase– briefly draw a flowchart of the steps you recall moving through from the awareness of need to post purchase

• What influenced you at each step?


Consumer Decision-Making Process

Postpurchase Behavior


PurchasePurchase

Evaluation of Alternatives

Evaluation 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


Decision Processing


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

Preferred State

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 choose04/19/23 46Media Management Study Notes

• 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?


Determinants of External Search


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?04/19/23 51Media Management Study Notes

Participants in the Buying Process

• Buying center: The decision-making unit in a buying process

– Not fixed or formally identified unit.

– It will vary for different products and buying tasks.

• Buying center members:– Users– Deciders– Influencers– Buyers– Gatekeepers

• Members can play multiple roles.

Communication Objectives (Effect of advertising on consumers

from awareness to action)

04/19/23 Media Management Study Notes 53

The Brand pyramid

BRAND SET

Purchased/reg. purchased

Evoked

Considered

Aware

Available

Total

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


• quickly list 10 items you have purchased in the past month

• reexamine how long it took you to make a decision on each

• why did such a difference in decision occur?


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


Think Feel

HighInvolvement

Informative (Economic)Learn – Feel – Do

Ex. Cars, appliances, and insurance.

Affective (Psychological)Feel – Learn – Do

Ex. Cosmetics, jewelry, and fashion clothing.

LowInvolvement

Habitual (Responsive)Do – Learn – Feel

Ex. Consumer goods, gasoline

Satisfaction (Social)Do – Feel – Learn

Ex. "life’s little pleasures" such as beer, cigarette, and candy/sweets.

Purchase categories

Routine Impulse

Rational DM


Drivers of consumers’ decisions

Culture

• Culture is the most basic cause of a person's wants and behavior.– Culture is learned from family, church, school,

peers, colleagues.– Culture reflects basic values, perceptions, wants,

and behaviors.– Cultural shifts create opportunities for new

products or may otherwise influence consumer behavior.

Types of sub-culturesDemographicCharacteristic Sub Culture

Age Child, Teen, Young Adult, Middle-aged, Elderly

Religion Jewish, Catholic, C of E, Buddhism, Muslim

Race Black, Caucasian, Asian

Income Affluent, Middle-income, Poor, Destitute

‘Nationality’ Scottish, Irish, Welsh, Geordie

Gender Female, Male

Family Type Single, Single Parent, Couple, Divorced

Occupation Professional, White Collar, Blue Collar

Community Rural, Small town, Suburban, City

Social Class

• Society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors.

• Measured by a combination of: occupation, income, education, wealth, and other variables.

Social Factors

• Groups:– Membership, Reference (Opinion Leaders),

Aspirational• Family:

– Most important consumer buying organization• Roles and Status:

– Role = Expected activities– Status = Esteem given to role by society

Individual Factors/1

• Age and Life-Cycle Stage– People change the goods they buy over their

lifetimes.• Occupation

– Occupation influences the purchase of clothing and other goods.

• Economic Situation– Some goods and services are especially income-

sensitive.

Individual Factors/2

• Lifestyle:– Pattern of living as expressed in psychographics

• Activities• Interests• Opinions

• Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment. Generally defined in terms of traits.

• Self-concept suggests that people’s possessions contribute to and reflect their identities.

Market Models

Continuous

contract

‘Opt-out’

% defecting

Banks

Regular

purchasing

Probabilistic

Market share/

volume

Airlines

Hotels

FMCG’s

Infrequent

purchasing

Buy/not buy

% purchasing

Durables

Holidays

Model of Buying Behavior

• Marketing factors and other stimuli are inputs into the “buyer’s black box.”

• Here, stimuli are evaluated in light of the buyer decision process, determined by her/his psychological processes and by social influence.

• Buyer responses influence choice of the product, brand, vendor, as well as the timing and amount of purchase.

Key psychological processesThe marketer’s task is to understand what happens in the consumer’s consciousness between the arrival of the outside marketing stimuli and the ultimate purchase decisions.

– Motivation– Perception– Learning, attitudes and beliefs– The buying situation– Memory

Motivation and needs

• A person has many needs at any given time. A motive is a need that is sufficiently pressing to drive the person to act.

A broader view of Needs

The “set” of needs is larger and needs are not organized in a hierarchical structure.Needs are:

• Autonomy• Competence• Relation• Meaning, self-realization• Physical Well-being• Safety• Pleasure, stimuli• Self-esteem• Popularity, influence• Money, Physical possession

Laddering technique

A Customer Value Hierarchy

• Desired End States – Describes the goals of the person/organization

• Consequences– Describes the user/product interaction

• Attributes– Describes the product/service

Perception• How the motivated person actually acts is influenced

by his or her view or perception of the situation.

• Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world.– Selective attention, distortion, retention– Subliminal perception

Learning

• A relatively permanent change in behavior due to experience.

• Interplay of drives, stimuli, cues, responses, and reinforcement.

• Strongly influenced by the consequences of an individual’s behavior– Behaviors with satisfying results tend to be repeated.– Behaviors with unsatisfying results tend not to be

repeated.

Beliefs & Attitudes

• A belief is a descriptive thought that a person holds about something.

• An attitude is a person’s consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea.

Memory

• All information and experiences individuals encounter as they go through life can end up in their long-term memory– Long term vs short term

• Memory processes– Encoding– Retrieval

Lens Model• Customers see the world through the lens of

perceptions and preferences based on those perceptions, therefore perceptions drive preferences and choice.

• Perceptions are influenced by product features and psycho-sociological cues.

Product Features

Psycho-social cues

Perceptions

Psycho-social cues

Preferences

Choice

The Means – End ChainConcrete Attributes

Abstract Attributes

Instrumental Value

Functional Conseq.

Psychosocial Conseq.

Terminal Value

Level of Abstraction – Attributes and Values

Concreteattributes

Examples Explanation

Self-Esteem Preferred end states of being, very abstract consequences of product use

Being centerof attention

Preferred models of conduct (mine or others’ toward me), abstract conseq. of product use

Others seeme as special

Psychological (How do I feel?) and social (How do others feel about me?) consequences of product use.

Handles easilyImmediate tangible consequences of product use. What does it do? What functions does it perform?

Good quality Abstract chunk for several more concreteattributes. Subjective, not directly measurable.

Price Cognitive representation of physical characteristic of product.

Abstractattributes

Terminalvalues

Instrumentalvalues

Psychosocialconsequences

Functionalconsequences

Importance of Family as a Reference Group

• Family is a fundamental social unit

• Effects of family attitudes likely to be lifelong in impact due to intensity and duration during formative years

• Individual buying decisions can be strongly influenced by family members

Economic Model (Supply, Demand and Competition)


Demand Curve slopes down

Price

Quanitity 100

$2

$1

150

Demand Schedule or Curve describes at each price the quanitity of the good that consumers would purchase at that price if they could—Demand curves slope down—lower prices—more demand!! Why?


Why do demand curves slope down?

• Two major reasons• 1. What is called the Law of Diminishing Returns—

for each individual as you have more of a particular good additional consumption of the good is worth less to you—this is what limits how much you are willing to buy—BUT if price goes down since each unit consumed costs less you are more likely to increase the amount you buy

• Think of any food you like—if the price of that food goes down are you going to buy less of it? Not likely.


Substitutes

• 2. Substitutes are everywhere! Most goods have some substitutes—a good which has many but not exactly the same characteristics—eg. Fish and meat. If the price of meat goes up you are more likely to substitute fish for meat in your diet—this means the demand for meat declines

• In almost any activity you can imagine there are lots of potential substitutes. Economists argues that over the longer run this is probably the most important reason a demand for a particular goods declines as its price rises


Supply

• Firms supply most goods in market systems• Supply of a firm comes from applying ideas,

organization, technology together with factor inputs (eg. labour) to produce stuff that people want

• Supply in a market comes by adding up what all the firms in a market would be willing to bring to the market at a particular price

• Each firm is limited in what they can bring to the market by the cost of doing so


Short run supply• In the short run supply at any price is limited by available

capacity in an industry and basic inputs (eg. How much labour is available etc.)(this is what defines the SHORT RUN—a few months to a few years depending on industry)

• If price goes up however firms have some ability and desire to increase supply Why?

• Firms are motivated by higher prices to make more money• Higher prices cover the additional costs that must be covered

if more output is brought to the market --therefore


The short run supply curve slopes up!!

Supply Curve

Price

Quantity 100 120

$1

$1.50


Supply in the long run

• In the long run supply is generally much more sensitive to price—that is an increase in prices producers receive leads to larger increases in supplies brought to market

• Why? Because a) existing producers can add to capacity which it is in their interest to do and b) higher prices attract NEW suppliers to the market. Both increase supply

• As a result we say supply is more ELASTIC in the long run


The Law of Supply and Demand

• Very simple—in a market in which buyers and sellers can negotiate prices, the average price will adjust such that demand=supply (we call this the Equilibrium or Market Clearing Price

• Corollary: a) if price is such that demand exceeds supply (excess demand) buyers will bid up the price and b) if price is such that supply exceeds demand (excess supply) sellers will bid down the price


The scissors of demand and supply!

Supply Curve

Demand Curve

Price

Q

Excess Supply at High Price- price fallls

Excess Demand at Low Price—price rises

High Price

Low Price


Intervention in markets• In many markets prices are not free to adjust –they

are set by regulation or law• Two cases: prices set below the equilibrium price

(ceiling price controls) create excess demand (eg. Rent control of apartments in New York); intent of controls is to benefit consumers but often just create large queues of people wanting to get apartments

• Prices set too high (price floors) create excess supply; very common in agricultural sectors where the intent is to benefit producers but clearly hurts consumers and a lot of waste


Common reasons for market interventions

• Market interventions usually happen for a reason: political, social justice, or economic

• Prices are regulated out of concerns the poor may not be able to afford the goods otherwise (eg. Drugs)

• Certain regions of the economy where producer interests are protected because they are politically important (eg. Tariff protection of Lumber industry in the US)

• Markets are often regulated because of significant non-market spillovers or side effects which cannot otherwise be dealt with at reasonable cost; eg in Europe they keep gasoline prices high out of concern for the environmental consequences of car pollution-they want people to drive less—here sales in the gasoline market have social side effects other than the direct purpose for which the product was sold


The Missing Ingredient: Competition!!

• Competition is an important characteristic of many if not most markets

• We say markets are competitive if there are lots of buyers and sellers

• Competition is why the law of supply and demand holds most of the time

• Competition amongst sellers in particular gives consumers (buyers) a choice from whom to purchase

• The existence of this choice is one characteristic of what are sometimes referred to as FREE markets (as opposed to regulated markets or monopolistic markets)

• Eg. The TV cable market is not regulated for the most part but it is NOT competitive –I only have one firm from whom to purchase cable service


Competition and Capitalism• An idealized capitalist market system is one in which markets

are free (unregulated prices and quantities), competition amongst firms occurs, and firms are free to enter or leave a market as they wish

• Market socialism has markets but firms (producers) are typically state controlled and/or owned

• Assuming that firms what to make money (profits) capitalism with unrestricted competition has lots of desirable properties over the longer run (several years)

• The entrepreneur is very important because they are the ones who risk their capital by creating new firms to take advantage of new opportunities


This leads to the important dynamic characteristics of capitalism/free market

systems• Firms leave sectors or industries that are losing money• New firms created by entrepreneurs enter sectors in which

profits are unusually high• This in turn implies that the process of capitalist expansion

and contraction (what Schumpeter called ‘creative destruction’) over time leads an economy to use its resources more efficiently

• Because capitalism promotes change it also creates losers as well as winners; people who lose their jobs in declining sectors being the most obvious group that loses

• Winners include consumers and people who get the jobs in the new sectors/industries


Innovation in a Capitalist System

• Capitalism seems to have been particularly good at dealing with creating incentives for innovation—ie creation of new products and technologies

• Entrepreneurs driven by the profit incentive try to create new markets for their inventions

• Most entrepreneurs fail but the successful usually have a positive effect on our economy (eg. Bill Gates and Microsoft)

• Government plays an important role in education and basic research in promoting innovation but most commercial innovation in the modern mixed economy is conducted within a market competition enviornment--often unregulated

• The INTERNET is an example of a very important innovation that was actually created in the university system, but didn’t really take off until it was commercialized


Economic systems today

• Most economies in the world today are mixed economies

• In terms of systems they are a mixture of free market capitalism, market socialism, and government regulated markets, and government directed command-and-control sectors


Stimulus-Response Model (B2C)

StimuliMarketing Stimulus

Other Stimulus

Products & Services

Price

Distribution

Communications

Economic

Tech.

Political

Cultural

Black Box

Motivation

Perception

Learning

Beliefs/ attitudes

Memory

Consumer Psychology

Cultural

Social

Personal

Consumer Characteristics

Customer Response

BuyingDec. Proc.

OBJECTIVE

OBJECT

OPERATIONS

ORGANIZATION

Purchase Decision

Product choice

Brand choice

Dealer choice

Purchase amount

Purchase timing

Payment method

CO

NTR

OLLA

BL

E NO

N-

CO

NTR

OL.

Hierarchy of effects

• Unawareness• Awareness• Knowledge• Liking• Preference• Conviction• Purchase• Repurchase

COGNITIVE

EMOTIONAL/ATTITUDINAL

BEHAVIORAL

Structuring your Persuasive Messages

• The AIDA model organizes your message into four phases:– Attention: your first intention is to encourage your

audience to want to hear about your main idea.– Interest: explain your message to your audience,

paint a more detailed picture of the problem.– Desire: help audience members embrace your idea

by explaining how the change will benefit them.– Action: suggest the action you want

consumers/audiences to make.


Applying the AIDA model

• Getting Attention: – Your product’s strongest benefit- “Carry a tune or 2,000 – (for

Apple IPOD nano)– A piece of genuine news – “Take entertainment to a whole new

place” – (Verizon’s V cast service)– A point of common ground – “An SUV adventurous enough to

accommodate your spontaneity.”– The promise of savings – “Right now, you can get huge

savings..”– A solution to the problem – “ This backpack is designed to

endure all a kid’s dropping and dragging.”



• Building Interest:– Use the interest section of your message to build

on the intrigue you created with your opening.

A thinner design. Five stylish colors. A brighter display. Up to 24 hours of battery life. Just about the only thing that hasn’t changed is the name. In 2GB, 4GB, and 8GB models starting at $149, IPOD nano puts up to 2,000 songs in your pocket.

Itemizes the key improvements in the new nano.Puts music capacity in a position of emphasis, since that – not price – is the major selling point of the Ipod nano.



• Increasing Desire: to build desire continue to expand and explain what it offers.– On the Ipod nano page, Apple continues with

more details about the features.

Instead of This Write ThisThe NuForm desk chair is designed to support your lower back and relieve pressure on your legs.

The NuForm desk chair supports your lower back and relieves pressure on your legs.



• Motivating Action: make sure to ask for the sale.


ActionConfirmationReminding

Desire Trail

Decision

Persuading

Attention

Interest

Awareness

Interest

Evaluation

Informing

AIDA ModelAdoption ProcessPromotion Objectives

Relation of Promotion Objectives, Adoption process, and AIDA Model


Impact of promotional tools on consumer response

Personal SellingAdvertising

Public relations and publicity

Sales promotion

Eff

ecti

ven

ess

Awareness/Attention Interest Desire Action


Sales PromotionPublicityAdvertising

Personal selling

Consumer goods Industrial goods

Normal communication mix in consumer VS. industrial market

Per

cen

t o

f p

rom

oti

on b

ud

get


Sales Promotion

Publicity

Advertising

Personal selling

Awareness Preference

Communication mix cost-effectiveness at different buyer readiness stage

Per

cen

t o

f p

rom

oti

on b

ud

get

Knowledge Purchase


The DAGMAR Approach

Define

Advertising

Goals for

Measuring

Advertising

Results


DAGMAR

• for setting advertising objectives and measuring the results of an ad campaign.

• communications effects are the logical basis for advertising goals and objectives against which success or failure should be measured.


DAGMAR• an advertising goal involves a communications task that is

specific and measurable• communications task must be based on a hierarchical model

of the communications process with four stages:– Awareness—making the consumer aware of the existence of the

brand or company.– Comprehension—developing an understanding of what the

product is and what it will do for the consumer.– Conviction—developing a mental disposition in the consumer to

buy the product.– Action—getting the consumer to purchase the product.


Characteristics of Objectives

• Well-Defined Target Audience

• Concrete Measurable Communication Tasks

• Existing Benchmark Measure

• Degree of Change Sought

• Specific Time Period


Assessment of DAGMAR• Problems with response hierarchy

– Consumers do not always go through this sequence of the communication effects before making a purchase.

• Practicality and costs– Research costs more than it is worth.

• Inhibition of creativity– Imposes too much structure.


Communication Objectives: Are stated in three parts:

1. Target Audience 2. Behavioural Objectives – what is the

behaviour that you want this communication to cause in your target audience

3. Communications Objectives – the effect that you want your communication to have on the target audience


Target Audience

Current Customers• Brand Loyal Customers – regularly buy the firm’s products.

• Favorable Brand Switchers – buy the focal brand, but also buy other brands within the product category.

Non-customers• New category users – customers not currently purchasing in the focal brand’s

product category.

• Other brand switchers – purchase a few different brands within the product category, but not the focal brand.

• Other brand loyals – purchase only one brand and are completely loyal


Behavioral Objectives

What is the behaviour that you want this communication to cause in your target audience– Trial– Repeat purchase– Purchase related behaviour– Repeat consumption– Application


Communication Objectives

• Category Need• Brand Awareness• Brand Attitude• Brand Purchase Intention• Purchase Facilitation.


Communication Objectives: Are stated in three parts:• Target Audience

– Customers – brand loyal, favourable brand switchers– Non-customers – new category users, other brand switchers, other

brand loyals• Behavioural Objectives – what is the behaviour that you want this

communication to cause in your target audience– Trial– Repeat purchase– Purchase related behaviour– Repeat consumption– Application

• Communications – the effect that you want your communication to have on the target audience– Create category need– Brand awareness– Brand attitude– Brand purchase intention– Purchase facilitation


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?



Can minimize through:Effective Communication

Follow-upGuaranteesWarranties

Underpromise & overdeliver

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.”


Cognitive Dissonance Theory and Social Influence


What is Cognitive Dissonance?

• Cognition: opinion, belief• Dissonance: disagreement• Consonance: agreement


What is Cognitive Dissonance?

• Experienced when inconsistency exists• An uncomfortable feeling• A drive state must be satisfied• People try to find ways to make it better

– Make excuses– Add more, related, cognitions

• Often cannot correct the behavior, so change the attitude.


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:


How People Respond?

-One may try to change one or more of the beliefs, opinions, or behaviors involved in the dissonance;

-One may try to acquire new information or beliefs that will increase the existing consonance and thus cause the total dissonance to be reduced; or,

-One may try to forget or reduce the importance of those cognitions that are in a dissonant relationship

Leon Festinger (1957)04/19/23 153Media Management Study Notes

Example: Ice Cream

I like ice cream but I’m also trying to lose weight.


Example: New Car

I bought a nice new car, but it’s not comfortable on long drives.


Cognitive Dissonance Theory• Exists whenever a person has two

contradictory cognitions (or beliefs) at the same time

• Example: – “I am a loyal and considerate friend.”– “Yesterday I repeated some juicy gossip I heard

about my friend.”


• Two cognitions are dissonant• Each one implies the opposite of the other• According to Festinger, cognitive dissonance

creates unpleasant psychological tension• Tension motivates the individual to try to

resolve the dissonance in some way

Cognitive Dissonance Theory



• “Proposes we feel tension (‘dissonance’) when two simultaneously accessible thoughts or beliefs (‘cognitions’) are psychologically inconsistent – as when we decide to say or do something we have mixed feelings about” (Myer, 99)


• Suggests that people have a need for consistency between attitude and behavior.

• People are aware of their attitudes and behaviors, and thus are aware of inconsistencies between them.

• Often change their attitudes to correct the inconsistency.



How?

• Changing one’s attitude is the easiest way to reduce discomfort

• Example:– “Chris is not really my friend, he is more of an

acquaintance.” – My attitude now fits my new behavior– Spreading gossip about someone who is not a true

friend does not contradict that I am a loyal and considerate friend.


OR

– “I need to discuss this news in order to determine if this news is true about Chris.”

– OR “Terry doesn’t know Chris so therefore it is ok to talk about Chris.”

– OR Small bribes reduce dissonant behavior


Norms


Norms

• Cultural Norm – the behavioral rules shared by an entire society

• Behavior is also shaped by the norms of smaller organizations such as families, teams and communities

• Norm – A shared idea or expectation about how to behave


Norms

• Some norms are written into law or official rules

• Others are more unwritten expectations enforced by teasing, frowns, ostracism and other informal means of punishment

• Without NORMS life would be chaotic• With them behavior becomes predictable

despite great differences in underlying attitudes and preferences


Conformity


Conformity

• Conformity – Voluntarily yielding to social norms, even at the expense of one’s own preference.

• Implies a conflict between the individual and the group – a conflict that people resolve by yielding their preferences or beliefs to the norms or expectations of a larger group.


Solomon Asch1950s


• Solomon Asch conducted the first systematic study of the subject.

• He demonstrated in a series of experiments that under some circumstances people will conform to group pressures even if this forces them to deny obvious physical evidence


Results• Overall, participants conformed 35 % of the trials• 2 Important variables• 1. Characteristics of the situation

– Size – likelihood of conformity increased until the size of the group reached four confederates.

– After that number made no difference in the participants’ tendency to ignore the evidence with their own eyes

– Nature of the task – task is difficult or poorly defined, conformity tended to be higher

• 2. Characteristics of the individual– The more an individual is attracted to a group, expects to

interact with that group in the future, holds a relatively low status in the group, and does not feel completely accepted by the group, the more the that person tends to conform.


Compliance• Compliance – a change in behavior in response to an

explicit request from another person or group.


3 Techniques

• How do you get people to comply?• 1. Foot-in-the-Door Effect – Once people have

granted a small request, they are more likely to comply with a larger one.

• This technique realigns the participant’s self perception slightly to that of someone who favors the cause


• 2. Lowball Procedure – steps– Step #1: Induce a person to agree to something– Step #2: Raise the cost of compliance


• 3. Door-in-the-Face Effect – A person who refuses to comply with one request may be more likely to comply with a second.– If saying no to the first request made you feel

guilty, you may say yes to something else.


Obedience• Obedience – is a change in behavior in response to a

command from another person, typically an authority figure.


Milgram

• Factors that contribute to obedient behavior: • Presence of a uniform• Surveillance – people need to be watched• Diffusion of responsibility


Why?

• People see themselves as agents of another person’s wishes and therefore not responsible for their own actions or consequences.

• Once this shift in self perception occurs – obedience follows.

• How to tell authority figure is unfaithful?


• 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?


Persuasive Communication

Nature of Active Cognitive Processing: (initial attitude, argument quality, etc.)

FavorableThoughts

Predominate

UnfavorableThoughts

Predominate

Neither orNeutral

Predominate

Cognitive Structure Change: Are new cognitions adopted and stored in memory? Are different responses made salient than previously?

• personal relevance• personal importance• personal responsibility

Motivated to Process?

• dissonance arousal• need for cognition• repetition

• cognitive complexity• critical thinking• distraction free• low arousal

Ability to Process?

• appropriate schema• message pace• repetition• issue familiarity

Enduring positive attitude change (persuasion)

Enduring negative attitude change (boomerang)

• greater persistence• resistant to counterattacks & fading• predictive of behavior• > brand memory• > elaboration• >usage intention• > attitude accessibility• > attitude confidence• > attitude-behavior consistency

Peripheral Cues Present?• reciprocity (obligated, did a favor)• consistency (way it’s done, similar to before)• social proof (peer pressure, conformity)• liking (attractiveness, friendliness)• celebrity (identification, prestige)• authority (expertise, experience, credibility)• rapid speech, forceful presentation, charismatic style• scarcity (limited time offer)• tangible rewards• appealing visuals & music (emotional arousal)• fear appeal• weak counter-arguments

Attitude Shift:• short-lived• susceptible to influence• unpredictable

Retain or Regain Initial Attitude

Elaboration Likelihood Method (ELM) of persuasion


Write in the number that best fits your view:

1 2 3 4 completely mostly mostly completely false false true true

_____1. I would prefer complex to simple problems.

_____2. I like to have the responsibility of handling a situation that requires a lot of thinking.

_____3. Thinking is not my idea of fun. *

_____4. I would rather do something that requires little thought than something that is sure to challenge my thinking abilities. *

_____5. I try to anticipate and avoid situations where there is likely chance I will have to think in depth about something. *

_____6. I find satisfaction in deliberating hard and for long hours.

_____7. I only think as hard as I have to. *

_____8. I prefer to think about small, daily projects to long-term ones. *

_____9. I like tasks that require little thought once I’ve learned them. *

_____10. The idea of relying on thought to make my way to the top appeals to me.

_____11. I really enjoy a task that involves coming up with new solutions to problems.

_____12. Learning new ways to think doesn’t excite me very much. *

_____13. I prefer my life to be filled with puzzles that I must solve.

_____14. The notion of thinking abstractly is appealing to me.

_____15. I would prefer a task that is intellectual, difficult, and important to one that is somewhat important but does not require much thought.

_____16. I feel relief rather than satisfaction after completing a task that required a lot of mental effort. *

_____17. It’s enough for me that something gets the job done; I don’t care how or why it works. *

_____18. I usually end up deliberating about issues even when they do not affect me personally.

Need for Cognition Scale

Items 3, 4, 5, 7, 8, 9, 12, 16, and 17 are reverse scored


Sleeper Effect:

• when secondary source becomes more credible than primary source over time

• persuasion may increase over time with a weak source

• forget the source but remember the message

• not if source is learned prior to the message (will ignore or bias processing)

Example: Attack ads during political campaigns


Understanding Consumer Behaviour in the New Millennium 9/12/20151Media Management Study Notes.

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