Chapter 6--Consumer Behavior

The consumer decision process

The steps consumers go through before, during, and after making purchases.

-B2C

-need recognition, information search, alternative evaluation, purchase and consumption, post-purchase

need recognition

The beginning of the consumer decision process; occurs when consumers recognize they have an unsatisfied need and want to go from their actual, needy state to a different, desired state.

-the greater discrepancy between these two states, the greater the need recognition will be

-goods or services seek to satisfy functional as well as psychological needs (need the right balance)

wants

goods or services that are not necessary but that we desire or wish for (like the color of a car)

functional needs

pertain to the performance of a product or service (like the need or a car to transport you)

Psycological Needs

pertain to the personal gratification consumers associate with a product or service

(wanting a jaguar because its a beautiful car)

search for information

search for info abt the various options that exist to satisfy that need

-want to rely on what we know first

-the length and intensity of the search are based on the degree of perceived risk associated with purchasing the product or service

-internal and external search for information

internal search for information

the buyer examines their own memory and knowledge about the product or service gathered through past experience

external search for information

buyer seeks information outside of their personal knowledge base to help make a buying decision

-might fill personal knowledge gaps by talking with family, friends, or sales person or look online

factors affecting consumer's search process

-The Perceived Benefits vs. Perceived Costs of Search

-The Locus of control

-actual or perceived risk

The perceived benefits vs perceived costs of search

-people can get stuck on this step by keep researching and not buying anything

-is it worth the time and effort to search for information about a product or service?

-weight cost and benefit

internal locus of control

believe they have some control over the outcomes of their actions, in which case they generally engage in more search activities

external locus of control

consumers believe that fate or other external factors control all outcomes

-it does not matter how much information they gather if they make a good decision it wasnt to their credit and it isnt their fault if they make a wring one

-do not really need to search if someone chooses for you

5 types of risks

performance, financial, social, physiological/safety, psychological

Performance risk

the perceived danger inherit in a poorly performing product or service

Financial Risk

risk associated with a monetary outlay; includes the initial cost of the purchase, as well as the costs of using the item or service

social risk

the fears that consumers suffer when they worry others might not regard their purchases positively

Physiological risk

AKA Safety Risk. The fear of an actual harm should a product not perform properly (like a car)

psychological risks

those risks associated with the way people will feel if the product or service does not convey the right image

Evaluation of alternatives

sift through the choices available and evaluate the alternatives

-happens when you are engaged in information search

-this step does not happen when you are buying habitual (convince) product (like buying coke vs pepsi)

Attribute sets

consumer's mind organizes and categorizes alternatives to aid his or her decision process

-universal sets, retrieval sets, evoked sets

Universal sets

all possible choices for a product category, but because it would be unwieldy for a person to recall all possible alternatives for every purchase decision, marketers tend to focus on only a subset of choices

retrieval sets

brands and stores that can be readily brought forth from memory

evoked set

comprises the alternative brands or stores that the consumer states he or she would consider when making a purchase decision

-brands want to be here

evaluative criteria

consist of salient, or important, attributes about a particular product

determinant attributes

product or service features that are important to the buyer and on which competing brands or stores are perceived to differ

-something it absolutely must have

Consumer decision rules

the set of criteria that consumers use consciously or subconsciously to quickly and efficiently select from among several alternatives

-can be compensatory or noncompensatory

compensatory decision rule

assumes that the consumer, when evaluating alternatives, trades off one characteristic against another, such that good characteristics compensate for bad characteristics

multi-attribute model

A compensatory model of customer decision making based on the notion that customers see a product as a collection of attributes or characteristics. The model uses a weighted average score based on the importance of various attributes and performance on those issues.

noncompensatory decision rule

choose a product or service on the basis of one characteristic or one subset of a characteristic, regardless of the values of its other attributes

choice architecture

Various methods that marketers use to present different choices to consumers, which have a pertinent effect on their decision making.

impulse products

A buying decision made by customers on the spot when they see the merchandise

nudge

one element of the choice architecture (environment) that alters behavior in a predictable way, without forbidding other options or significantly changing any economic incentives

default

An element of choice architecture (the environment) that deals with a "no-action" condition by imposing a choice on a person who fails to make a decision or does not actively opt for a different alternative.

opt-out

consumers engage in a dedicated effort not to share personal data each time they visit a website

opt-in

agreement to share information to marketer

-GDRP requires a choice option

Conversion rate

measures how well they have converted purchase intentions into purchases

abandoned real or virtual cart

have people actually purchased what they put in their cart

post purchase

three outcomes; customer satisfaction, post purchase cognitive dissonance, and customer loyalty

Customer satisfaction

need realistic expectations, demonstrate correct product use, money back guaranteed or warranties, encourage customer feedback, thank customers and contact them

post purchase cognitive dissonance

internal conflict that arises from an inconsistency between two beliefs or between beliefs and behavior

-question how appropriate your purchase was after you buy it

=happens the most to infrequent, expensive, and risky purchase

customer loyalty

loyal customers are valuable

undesirable customer behavior

Negative word of mouth occurs when customers spread negative information about a product/service/store to others

-you dont usually say anything when your needs are met

factors influencing consumer decision process

1. Marketing Mix

2. Psychological Factors

3. Social Factors

4. Situational Factors

Marketing mix

Product, Price, Place, Promotion

psychological factors

motives, attitudes, perceptions, learning and memory, lifestyle

social factors

family, reference groups, culture

situational factors

purchase situation, sensory situation, temporal state

Motive

a need or want that is strong enough to cause the person to seek satisfaction

Maslow's Hierarchy of Needs

(level 1) Physiological Needs, basic biological necessities of life like food, drink, rest, and shelter

(level 2) Safety needs, protection and physical well-being

(level 3) Love needs, interactions with others like haircut and makeup

(level 4), Esteem needs, allows people to satisfy their inner decisions like yoga, meditation and self-help books

(level 5) Self Actualization feels completely satisfied with your life and how you live

attitude

A person's enduring evaluation of his or her feelings about and behavioral tendencies toward an object or idea; consists of three components that influence our decisions and actions: cognitive, affective, and behavioral.

-we dont like dissonance, so we avoid it by convincing ourselves that the decision was good in some way

-marketers can influence us and change the way we think and feel about something

cognitive component

what we believe to be true

affective component

what we feel about the issue at hand

behavioral component

actions we undertake based on what we know and feel

perceptions

the process by which people select, organize, and interpret information to form a meaningful picture of the world

-we tend to assign meaning to something based on color and packages, and how we were brought up and our culture

learning

a change in a person's thought processes caused by prior experience and takes place through the consumer decision process

memories

information that has been acquired and stored in the brain, to be available and utilized when needed

three stages of memory that influence decision making

1. informative encoding stage: consumers transform informative that they receive about products and services into storable information

2. information storage stage: that knowledge gets integrated and stored with what consumers already know and remember

3. Retrieval stage: consumers access desired information

-learning and memory affects attitudes and perceptions

lifestyle

the way consumers spend their time and money to live

-does it fit your actual lifestyle or your perceived lifestyle

family

usually purchase something entire family will use

-want to influence the group with the spending power

reference groups

one or more persons whom an individual uses as a basis for comparison regarding beliefs, feelings, and behaviors

-friends family, coworkers, celebrities, influencers

-these reference groups affect buying decisions by offering information and enhancing a consumers self-interest

-can be in person or virtual

culture

shared set of beliefs, values, knowledge, and patterns of behavior common to a group of people

-ex: your culture at school

situational factors definition

factors specific to the situation override or at least influence psychological and social interests

purchase situation

Customers may be predisposed to purchase certain products or services because of some underlying psychological trait or social factor, but these factors may change in certain purchase situations

-usually thrifting but splurging on a friends birthday

visual sense

colors, lighting, brightness, size, shape, and setup of a retail space and the products within it

auditory senses

A sensory stimulation that involves hearing and influences the shopping experience, e.g., music.

olfactory sense

involves smell and influences shopping experience like cinnamon roll sent

tactile

relating to the sense of touch

-first sense humans developed. interactive with merchandise

taste

important to restaurants and food and bev retailers

temporal state

our state of mind at any particular time can alter our preconceived notions of what we are going to purchase

-mood swings, being a morning or night person

involment

the relative importance of perceived consequences of the purchase to a consumer

-two people make based on level of involvement elaborate likelihood model

extended problem solving

customer devotes considerable time and effort to analyze alternatives done for high risk decisions

-buying process begins when customers realize they have an unsatisfied need

limited problem solving

happens during a purchase decision that calls for, at most, a moderate amount of time and effect

-had prior expense and risk is moderate

habitual decision making

requires little conscious effort, routine