Exam 2 Consumer research and strategies

Why study CB

Helps analyze consumers’ increasing influence

The business is influenced by the consumers’

needs

 What do consumers want to buy? They cast votes with $.

 Customer is king

 Need to understand them. Then try to influence them.

Helps educate and protect consumers

 Teach consumers to buy wisely, protect against deception,

etc.

Helps formulate public policy

 Used to form economic, welfare policy, warning labels

Affects personal policy

 How YOU make decisions

Ethics

Guidelines that govern decisions.

 Prior to the 1960’s-let the buyer beware

 Since 1962-Consumer bill of rights:

1) right to safety,

2) right to be informed,

3) right to choose,

4) right to be heard,

5) right to enjoy a clean and healthful environment, and

6) right of the poor and other minorities to be protected

Three Facets of Motivation

Motivation Needs, Motivation Needs, and Motivation Pyschographics

Motivation emotions

types of emotions, customer needs, and hedonic consumption

Motivation needs

Maslow’s needs hierarchy, Murray’s psychogenic needs, Dichter’s consumption needs

Motivation Psychographics

values, self-concept, lifestyles

The motivation process

Drive/arousal → Behavior → outcome

motivation

the state of drive that impels behavior toward a goal

Drive

internal state of tension that produces action to reduce

tension

Goal-Object

something in the external world whose acquisition will

reduce the tension

Purposive behavior

energy is expended to attain a goal-object

Approach motivation

desire to attain a goal-object

ex) vacation

avoidance motivation

desire to protect one-self from an object

ex) speeding ticket

Approach and avoidance

ex) Pepsi (taste good/calories)- diet pepsi

needs

A felt deprivation of the desired state

Ex).

1.low’s need hierarchy

2. Murray’s psychogenic needs

3. Dichter’s consumption needs

4. Additional specific needs: arousal, cognition and attribution

Needs-Maslow

Needs:

Physiological needs (hunger, thirst)

Safety and security needs (security, protection)

Wants:

Belongingness and love needs (social needs)

Esteem and ego needs (self-esteem, recognition, status)

Need for self-actualization (self-development, realization)

Autonomy

To be independent and free to act according to

impulse; to be unattached, irresponsible; to defy

convention.

Ex).

-Impulse buying, wearing

-unconventional clothing

Dominance

To direct the behavior of others

Ex).

-Aggressively demanding attention

in service establishments

Nurturance

To give sympathy and to feed, help, and protect the needy

Ex).

Giving to humanitarian causes

Exhibition

To make an impression; to excite, amaze,

fascinate, entertain, shock, intrigue, amuse, or

entice others

Ex).

Wearing high-fashion clothing

Cognizance

To explore, to ask questions, to seek knowledge

Ex).

Visiting museums, learning about

new technology and products

Exposition

To give information and explain, interpret, and

lecture.

Ex).

Playing opinion leaders

Needs: Dichter’s Consumption

Unconscious motives: used for symbolism in marketing

Ex).

Mastery over environment →kitchen appliances, power tools

Status →Scotch, owning a car in third-world economies

Rewards → Candies, gifts to oneself

Individuality →Gourmet foods, foreign cars, tattoos

Social acceptance →Companionship: sharing tea drinking

Love and affection →Giving children toys

Security →Full drawer of neatly ironed shirts

Maculinity →Toy guns, heavy shoes

Femininity Decorating →(products with heavy tactile component)

Eroticism →Sweets (to lick), gloves (to be removed by women as a form of undressing)

Disalienation →Listening to and calling in talk shows (a desire to feel connected)

Moral purity/cleanliness →White bread, bathing, cotton fabrics

Magic→myster

Need for arousal

Need for stimulation

• Optimal level of stimulation: neither bored or overwhelmed

• Level of adaptation: As one is exposed to new stimulus, it holds

attention. As continually exposed to it, learn to adapt to it and

become bored.

• Gambling, extreme vacations, xmas toys

Cognition

Need for knowing

• Tolerance for ambiguity: degree which lack of information or

uncertainty makes a person anxious

• People magazine, CNN, etc.

Attribution

Need to assign causes

• Internal: assign cause to personal traits, abilities, etc.

• External: assign cause to situational demands

• Sales people spiffs

Emotions

Consciousness of the occurrence of some physiological arousal

followed by a behavioral response along with the appraised

meaning of both

-Felt deprivations (needs) are experienced as negative

emotions

emotions have three components

Cognitive, Physiological, and Behavioral

Emotions: Schachter

Schachter’s two-factor theory

• Autonomic arousal by a stimulus (internal or external)

• Cognitive interpretation of meaning

Marketers can adapt or respond to customer emotions by:

• Designing the stimulus (product) to fit the emotion

• Aiding the meaning appraisal by explaining why

• Server explaining why food is delayed

Emotion: Plutchik’s Circle

Optimism, Joy, love, acceptance, fear, submission, fear, surprise, awe, disappointment, sadness, remorse, disgust, contempt, anger, aggressiveness, anticipation

Emotions: Plutchnik’s scale

Measured by rating the following triads of adjectives from Not at all to Very

strongly. How do you feel at the moment?

Emotions: Moods

Moods are short-lived emotions felt less intensely

• Marketing stimuli that can induce positive or negative moods are:

• Ambiance of the store or service delivery facility

• Demeanor of the salesperson

• Sensory features of the product

• Tone and manner of advertising

• Content of the message itself

Emotions: positive moods

Mood states have consequences in terms of favorable or

unfavorable customer response to marketer efforts

• Customers have been found to:

• Linger longer in positive mood environments

• Recall advertisements more that had created positive moods

• Feel more positive toward brands based on advertising that

created feelings of warmth

Emotion: Hedonic

Hedonic consumption: use of products for the sake of intrinsic

enjoyment rather than to solve some problem in the physical

environment

• Ex. Watching movies, playing video games, sports, etc.

• Deep involvement: deep relationship with selected products

• Special type of hedonic consumption: love soccer, computer

enthusiast, etc

Emotion: Involvement

Involvement: degree of personal relevance of an object or

product or service to a customer

• Situational involvement: degree of interest in a specific situation

or on a specific occasion (i.e., a purchase)

• Enduring involvement: degree of interest a customer feels in a

product or service on an ongoing basis

• Some may be deeply involved (form of enduring involvement):

• Knowledgeable about the product; can act as opinion leaders

• Consume a greater quantity of the product; buy related products

• Less price sensitive

• Seek constant information about products

• Want to spend more time in related activities

Pyschographics

-Values: What we value

-Self concept: What we think of ourselves

-Lifestyles: The way we live

Physcographics: values

Terminal values: The goals we seek in life

Examples:

• Self-respect

• Self-fulfillment

• Security

• Sense of belonging

• Excitement

• Sense of accomplishment

• Fun and enjoyment

• Being well respected

• Warm relationships with others

• Instrumental values: The means or behavioral standards by

which we pursue these goals (e.g., honesty)

Psychographics: Linking

Attributes To Values

Customers don’t buy products or services; they buy benefits

• Not a car---transportation

• Means-end chains

• Identifying the connections between product/service features

and customers’ fundamental needs and values

• Laddering: process in which to identify means ends chains

• Consumers are asked repeatedly: “Why is that important to

you”

Psychographics: Self-concept

• Self-concept: What we think of ourselves

• Actual self

-Who the person currently is

• Ideal self

-What the person would like to become

Psychographics: Lifestyle

Lifestyle: the way we live

• Lifestyles are determined by:

• personal characteristics: genetics, age, personality, etc.

• personal context: culture, institutions, reference groups, etc.

• needs and emotions

Psychographic profiles (AIO)

• Activities

• Interests

• Opinions

Attitudes

Learned predispositions to respond to an object or class of

objects in a consistently favorable or unfavorable way

• Attitudes are our evaluations of:

• Objects

• People

• Places

• Brands

• Products

• Organizations, etc

three attitude dimensions

Cognition, conation, affect

cognition

Beliefs or knowledge

• Beliefs are expectations as to what something is or is not or what

something will or will not do

• Descriptive: Connect object to a quality

• Computer has large memory

• Evaluative: Connect object to like/dislikes/preferences

• I like this user friendly computer

• Normative: Invoke ethical judgments

• Cigarette companies should not advertise to youth

affect

Feelings a person has toward an object or the emotions that

object evokes for the person

conation

The action a person wants to take toward the object

Example:

• Cognition: Starbucks serves coffee

• Affect: I dislike the smell and taste of coffee

• Conation: I won’t go to Starbucks

Attitude Hierarchy

refers to the sequence in which the three

components occur: they can occur in any sequence

Consistency can be related to two factors

valence and intensity

Valence

Refers to favorable and unfavorable thoughts, feelings,

and actions

• If have favorable thoughts, will likely have favorable feelings, etc.

intensity

Refers to the degree of commitment one

feels toward a cognition or feeling or action

• Strong beliefs, strong feelings, etc.

Avenues of molding

Due to consistency of three components, attitudes can be

changed by changing

1. Cognition: claiming fat free

2. Affect: using upbeat music

3. Conation: giving free samples/incentives

Four major groups of theories on attitude change:

1. Learning theories (Psych)

2. Attribution theory (Psych)

3. Cognitive consistency theories

4. High or low involvement processing: Elaboration likelihood

model

Classical Conditioning

Ice cream truck music-

salivate for ice cream

self perception theory

Sometimes people do not know what their attitudes really are.

When queried about their attitudes, they reflect on their

behavior and infer what their attitude must be.

• When they assign the causality internally (to themselves), they infer

their attitude must have been positive

Cognitive Consistency

Various cognitions people hold tend to be consistent with one

another

Festinger’s Cognitive Dissonance (Buyer’s Remorse)

Two cognitions are in dissonance

• The cognition that the decision has been made and the cognition

that the decision may not have been the best.

• Consumers look for positive information

Heider’s balance theory (Cognitive Consistency)

When an opinion leader endorses an issue not initially favored by a

person, the person would either lower the opinion leader or become

more favorable toward the endorsed issue

Elaboration Likelihood model

High Involvement Processing

• Central processing route

• Customer attends to and scrutinizes message content actively and

thoughtfully

• Content matters more

Low Involvement Processing

• Peripheral processing route

• Customer attends to the message only cursorily, and tends to make quick

inferences

• Form matters more

Multi-attribution Model

Overall attitude is based on the component beliefs about the

object, weighted by the evaluation of those beliefs

• Example: The Fishbein Multi-Attitribute Model

: The Fishbein Multi-Attitribute Model

• Ao is the overall attitude toward the object (product, model, brand, etc.)

• Bi is the belief that object i has a certain consequence

• Ei is the evaluation of that consequence

• η is the number of consequences

Use of multi-attribution models

Multi-attribute models allow researchers to know why

something is favorable or unfavorable

• They essentially explain the attitude

According to the multi-attribute model, we can change

customer attitudes the following ways:

• adding a new salient belief

• making an existing favorable belief more salient.

• enhancing the strength of an existing positive belief.

• improving the evaluation of a strongly held belief.

Customer Decisions

Decisions customers make in the marketplace as buyers,

payers, and users:

• Whether to purchase

• What to purchase

• When to purchase

• From whom to purchase

• How to pay for it

• Consumer decision making is a problem solving process

Customer Decision Process

1. 1. problem recognition

2. 2. information research

3. 3. Alternative evaluation

4. 4. Purchase decision

5. 5. Post-purchase evalution

problem recognition

Customer problem: any state of deprivation, discomfort, or

wanting

• Problem recognition

• The realization that one needs to buy something to get back to

the normal state of comfort

• physically and psychologically

• Internal stimuli/Problem stimuli

• Perceived states of physical or psychological discomfort that

causes problem recognition

• External stimuli/Solution stimuli

• Marketplace information that causes problem recognition

four situations of problem recognition

why understand stage 1

May identify a segment with unsatisfied desires which helps

identify new product opportunities

• Women’s sports gear

• May reveal existing barriers

• Why replace furniture every 21 years compared to cars every few?

• Understand how to activate need recognition

• Change consumers’ desired state with new products or

innovations (remote control)

• Influence how consumers perceive current state (pet odor)

• Remind consumers of a need (toothbrush, water filter)

stage 2: information research-three elements of the information

• Sources of information

• Search strategies

• Determinants of the amount of search

sources of information

• Internal search:

• Scanning and retrieving decision-relevant knowledge stored in

memory

• Many consumers rely solely on existing knowledge

• External search:

• Collecting information from the marketplace when internal

search is inadequate

Marketer sources

•Advertising

•Salespersons

•Product/service brochures

•Store displays

•Company web sites

nonmarketer sources

PERSONAL

•Past experience (is key)

•Friends and other acquaintances

INDEPENDENT SOURCES

•Public information (e.g., Consumer

Reports, Better Business Bureau, news

reports in media, government

publications)

•Product or service experts: (e.g., auto

critic, home appraiser, pharmacist)

•Internet (online reviews, blogs, etc.)

search strategies

Pattern of information acquisition customers utilize to solve

their decision problems

• Customer decision strategies

extend problem solving (EPS), limited problem solving (LPS), routine problem solving (RPS)

Extended problem solving (EPS)

Often occurs with expensive items or can be fueled by doubts/fears

• Importance in making the “right decision”

• All consumer decision making stages are often activated

• Dissatisfaction is often vocal

Limited problem solving

• Consumers don’t have motivation, time, or resources to engage

in EPS

• Risk is limited, product is generally not complex

• May have search due to desire for variety

• Limited search and evaluation before purchase

Routine problem solving

• Consumers simply repeat the previous purchases

• No new information or search is conducted or it is very minimal

• Accompanied by a feeling of indifference toward choice

• Simplifies consumers’ lives

• Dissatisfaction and stock-outs may break the routine

Systematic vs. heuristic search strategies

• Systematic consists of comprehensive search and evaluation

• Heuristics are shortcuts used to make decisions

• Broad inferences from partial information

• Past experiences

• Others’ judgments

• Brand names, etc.

Risk

• Higher risk, higher search

• Performance risk-plastic surgery

• Social risk-hair cut

• Psychological risk-foreign products

• Financial risk-other alternative not considered

• Obsolescence risk-fashion or software

involvement

Higher involvement, higher search

• Involvement: personal relevance or importance

• Purchase-decision involvement (situational)

• degree of concern that customers bring to bear on the purchase

decision

• Enduring involvement

• on-going interest in the product or service

high familiarity, less search

Familiarity = experience with purchasing

• Higher familiarity leads to routine problem solving

Higher expertise, more search

• Expertise = understanding of attributes

Ignorance Paradox

less expertise, less search

Amount of search: time

less time, less research

Time is scarce due to:

• Both spouses working

• Many customers employed in more than one job

• Many customers re-enrolling in school

• New leisure activities enabled by technology

• Customers look for convenience to relieve time pressure

Amount of search: uncertainty

More brand uncertainty, more search

• Relative brand uncertainty

• uncertainty about which brand is best among a set of brands

• Individual brand uncertainty

• uncertainty about what each brand offers

Functional vs expressive

Functional Products: buy for physical performance

• Use Information Processing Mode (IPM)

• Expressive product: buy for social image or enjoyment

• Use Affective Choice Mode (ACM)

• May deliberate extensively, but not search for information

information overload

Customers are exposed to so much information that they are

unable to process it to make a decision

• Too much information, suboptimal decisions

• Provide enough information and organize it in way that is easy to

process

why understand stage 2?

• Understand how much search consumers will implement and

how to assist consumers with the process

• Focus promotions on sources that consumers search most

• Identify new ways to reach and gain customers

• Adjust number of products available to consumers

• Campbell soup reduce breadth of product line

• Adjust price based on amount of search

• Charge more if no search

step 3: alternative evaluation

• Evaluative Criteria:

• Standards and specifications used to compare different products

and brands

• Choice Models

• Compensatory: consider all attributes/benefits and mentally

trade-off the alternative’s perceived weaknesses for its perceived

strengths

• Non-compensatory: no trade-offs

Non-compensatory choice models

Conjunctive model

• Minimum cutoffs on all salient criteria are set, each alternative is

evaluated on each criterion-then may resort to another model

• Good is minimum cutoff = banana

Lexicographic model

• Attributes of alternatives are rank-ordered in terms of

importance-pick one with the highest level on most important

criterion

• Taste is most important = apple

Elimination by aspects model

• Attributes of alternatives are rank-ordered in terms of

importance, and cutoff values are defined, keep those that satisfy

the cut-off and move to next criterion

• Good is minimum cutoff = banana

why understand stage 3?

• Understand what consumers utilize to evaluate products so

can determine which offerings will be evaluated highly by

customers

• Understand the trade-offs customers make so that

product/firm makes the consideration set

• Understand how firm compares to competitors

Step 4: purchase

Purchase:

• May purchase something different than they intended or opt not

to buy at all

• Choice Identification

• Identify the most preferred alternative

• Purchase Intent

• Determination that one will buy product or service

• Purchase Implementation

• Determine terms: payment, when receiving possession, etc.

Deviation from choice

• Preferred brand may be out of stock

• New store information may reopen the evaluation process

• Financing terms may render a purchase infeasible, etc.

After purchase… consumption

When do users consume?

• How much time between purchase and consumption (stock-up)?

• What time of day is product used (Pop Tarts, Coke)?

• During which season is product consumed (champagne)?

•Where does consumption occur?

• Is it consumed in or out of home? (toast sticks)

How much is consumed?

How is the product consumed?

• Is it consumed alone or with other products (milk and Oreos),

• Is it an ingredient?

• Is it used as intended or have consumers invented a new use (Skin-

so-Soft)?

why understand stage 4

Understand why consumers may not purchase and how to

overcome these obstacles

• Understand how consumers consume so can design optimal

product offerings and promotion

• Find alternative uses for product

step 5: post purchase experience 1/2

Evaluate the experience

• This step provides information to be utilized in future decision

making

Satisfaction/Dissatisfaction

• Do expectations meet perceived performance?

• WHY?? Which attributes satisfied/dissatisfied?

• Create realistic expectations

• Deliver what is promised

Cognitive Dissonance

• Post purchase regret

set 5:Post purchase experience

Future Response:

• If satisfied, build loyalty

• If dissatisfied,

• Exit: don’t buy again, go through decision making process again

• Voice: complain and spread negative word of mouth

• If successfully deal with complain, customer feels perceived justice. This

decreases negative word of mouth.

• If perceived justice is not experienced, negative outcomes

why understand stage 5?

• Understand the importance of satisfaction

• Post-purchase evaluation is stored in memory and is used during

the next decision process

• Understand the influence marketers can have on satisfaction

• Understand the importance of recovery

Variables in decision making

Individual Differences

• Attitudes

• Motivation

• Knowledge

• Demographics, psychographics, personality

• Consumer resources

Environmental Influences

• Culture

• Social Class

• Family

• Personal Influence

• Situation

Psychological Processes

• Information processing

• Learning

• Attitude and behavior change