Consumer Behavior

consumer behavior

reflects the totality of consumers’ decisions with respect to the acquisition, consumption, and disposition of goods, services, activities, experiences, people, and ideas by decision-making units over time

acquisition

the process by which a consumer comes to own or experience an offering

usage

the process by which a consumer uses or consumes an offering

dispoition

the process by which a consumer discards an offering

what affects consumer behavior?

the psychological core, the process of making decisions, the consumer’s culture, and outcomes and issues

the psychological core

internal factors; what do you know, think, and feel?

the process of making decisions

problem recognition and information search, judgement and decision-making, and post-decision process

consumer culture

the typical or expected behavior, norms, and ideas that characterize a group of people

reference groups

a group of people consumers compare themselves with for information regarding behavior, attitudes, or values

consumer behavior outcomes and issues

innovations, social responsibility, and a symbol of who we are

symbol

external signs that consumers use to express their identity

Market segmentation bases

demographics, geographics, psychographics (product-related mindset), and behavioral (product-related habits and patterns)

ideal state

the way we want things to be

actual state

current state; the way things actually are

problem recognition

the perceived difference between an actual state and an ideal state

active problem

one that consumers are aware of or will become aware of

inactive problem

one that consumers are not aware of

diderot effect

attaining one thing that makes you want to change everything else to match that one thing

internal search

after recognizing a problem, consumers typically first search for information to solve the problem from their memory

internal search: recall of brands

universal set, retrieval set, and consideration/evoked set (which usually consists of top-of-mind brands)

associative link

strong branding element in consumer’s minds

recall of attributes

thinking about info that is accessible, available, diagnostic, salient, and vivid

accessible/available

information that is easy to perceive, understand, and utilize

diagnostic

highly distinguishing and recognizeable

salient

how prominent an attribute is

vivid

presented in concrete words, pictures, or instructions

recall of experiences

in the form of specific images and/or the effect associated with them; more likely to be recalled if it is extreme (positive or negative)

recall of evaluations

from one’s experiences or exposure to relevant information; one thing associated with another

confirmation bias

tendency to recall information that reinforces or confirms our overall belief rather than contradicting them

selective perception

we see what we want to see

inhibition

recalling some information can block recall of other information

mood

consumers are more likely to recall mood-matching information

why engage in external search?

missing or uncertain information from simple internal recalls

MAO

motivation, ability, and opportunity - common determinants of engaging in external search

motivation

involvement and perceived risk (personal, social, and economic), information uncertainty, and discrepancy of information

ability

consumer knowledge

opportunity

situational factors, like the amount of information and time availability

stages in the decision-making process

problem recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior

system 1 thinking

low MAO → low effort (fast, subconscious, automatic, everyday, error prone)

system 2 thinking

high MAO → high effort (slow, conscious, effortful, complex decisions, reliable)

judgement

consumers’ evaluations and estimates about a choice (they are not decisions)

judgements of likelihood

the likelihood of something

judgements of goodness/badness

the desirability of something

anchoring and adjustment process

consumers use an initial information as an “anchor” and adjust their judgements as they consider additional information

self-positivity bias

bad things are more likely to happen to other people than to themselves

confirmation bias

focus more on information that confirms what we already know or believe

attraction effect

the inferior brands increase the attractiveness of the dominant brands

mental accounting

consumers categorize spending and saving decisions into “accounts” they mentally designate for specific consumption trx, goals, or situations

decoy pricing

using an unattractive option to make a specific option seem even more appealing

compromise effect

the intermediate choice is preferred over the extreme choices

cognitive decision-making models

thought-based, use information to make a decision

affective decision-making models

feeling-based, use emotions to make a decision

compensatory model (multi-attribute model)

a cognitive decision-making model; a mental cost-benefit analysis model in which negative features can be compensated by positive ones

noncompensatory model

a cognitive decision-making model; a simple decision making model in which one attribute information leads to selection/rejection of the option

conjunctive model

use minimum cutoff values to immediately reject “bad” options

disjunctive model

use acceptable cutoff values to immediately find “good” options

lexicographic model

compares one attribute at a time, in order of importance

construal level theory

whether consumers think about things abstractly (high-level construal) or concretely (low-level construal)

criteria that are important for decision-making

goal (functional, emotional, symbolic) purposes, time (when to make the decision), and framing (they way the decision is phrased)

framing

the way in which the task is defined, represented, or framed (attribute = positive or negative framing, outcome framing = gain/loss)

affective forecasts

a prediction of how you will feel in the future

representativeness heuristic

making a judgement (goodness/badness) by simply comparing a stimulus with how you usually perceive that thing (green coffee = weird); comparing it with the prototype/exemplar

prototype

the most typical example of a category

exemplar

a specific, individual example of a category that is stored in memory

availability heuristic

a judgement is influenced by the ease with which instances of an event can be brought to mind

base-rate fallacy

ignore the information on how often an event really occurs and factor in information that is more available

law of small numbers

the expectation that information obtained from a small number of people represents the larger population

unconscious, low-effort decision making

when choices are made without conscious awareness; consumers not knowing how or why they are doing something. 50% of unconscious choices in stores are affected by environmental stimuli

conscious low effort decision making

putting the least amount of effort into making a purchasing decision

satisficing vs optimizing

finding a good enough option as opposed to finding the best option

choice tactics

simple rule of thumb used to make low-effort decisions, like price

cognitive choice tactics include

performance-related tactics, brand loyalty, price, and normative tactics

performance-related tactics

includes benefits, features, or brand evaluations

brand loyalty tactics

encouraging repeat purchases

cognitive lock-in

remain loyal because of high cognitive costs of switching to an alternative

price tactics

usually context dependent - what are the prices of surrounding or competing products?

price consciousness

how important is price?

zone of acceptance

the acceptable price range

normative tactics

low-elaboration decision-making based on others’ opinions

affective choice tactics include

affect tactics, brand familiarity, and variety-seeking tactics

brand familiarity

how recognizable is the brand?

mere exposure effect

preference is developed by repeated exposure, like co-branding

variety-seeking tactics

like optimal stimulation level - an internal ideal level of stimulation

operant conditioning

a process of learning drive by the use of rewards to reinforce desired behavior and punishment to discourage objectionable behavior

reinforcement

a feeling of satisfaction when consumers’ needs have been met

punishment

bad product experience, negative consumer evaluations, never purchase it again

learning (consumer learning)

based on prior beliefs, gather information from the consumption, revise beliefs

hypothesis generation

about the likely features and quality of the product

exposure to evidence

actual experience

encoding of evidence

processing information from the consumption experience

integration of evidence and prior beliefs

combining new information from the consumption experience with stored knowledge 

MAO

motivation (involvement), ability (familiarity with the domain and prior knowledge), and opportunity (ambiguity of information)

top dog

market leader. less affected by the halo effect (positive impressions cushion negative outcomes)

underdog

lower-share brand. more affected by the learning outcome, the horn effect (negative impressions spill over)

disconfirmation

a positive or negative discrepancy between one’s prior expectations and the actual performance or outcomes

functional performance

physical functions

affective performance

emotional experiences

symbolic performance

image-enhancing

accountability — attributing theory

how people try to find explanations or causes for events

locus of control

is the event caused by the self (internal) or others not under your control (external)?