Consumer Behavior Midterm

five covid-19 era dynamics that are still shaping the consumer sector

1. people are spending more time alone and online

2. digital channels win users but not their trust

3. gen Z grows up and spends

4. consumers lean local over global

5. consumers solve the value equation in new ways

four strategic imperatives that help consumer players win

1. get even closer to the consumer

2. invest in the revenue-growth management (RGM) engine

3. tailor the portfolio for growth

4. require tech capabilities

what are the two questions that consumer behavior seeks to answer?

• what determines why people buy certain things, at certain times?

• how can they be “encouraged” in certain directions, and how can consumers avoid being manipulated by marketing and advertising?

quote by marcus aurelius

“everything we hear is an opinion, not a fact. everything we see is a perspective, not the truth.”

mystery shopping roadmap

• create a program or partner with a provider

• create a customized shopper survey to identify customer pain points

• mirror shopping requirements with a typical guest experience

• hire secret shoppers

• ensure shoppers compete timely audits

• review shop surveys for completeness and accuracy

• reach out to shoppers for more information to fill in any gaps

• analyze reports to discover areas of improvement

• act on information to improve CX

• use reports as an employee training tool

• review shop survey template

• adjust questions as needed before conducting the next round of shops

consumer behavior is

more than buying things, it is the study of why people buy things

consumer behavior is a mix of

psychology and economics, blown up on a massive scale

consumer behavior is ultimately the understanding of

how people make decisions about what they want, need, or buy

two reasons for consumer behavior

1. companies want people to buy their products

2. understanding the behavior of your customer can help you to better show them: what it is they are buying, why they are buying, and what it will do to improve their lives

why do we buy what we buy?

• consumer behavior is a process

• marketers have to understand the wants and needs of different consumer segments

• our choices as consumers relate in powerful ways to the rest of our lives

• our motivations to consume are complex and varied

• technology and culture create a new “always on” customer

a need is

a basic goal or requirement

functional need

pertain to the performance of a product or service

psychological needs

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

a want

is a desire that helps achieve a need

needs are things we must have in order to stay alive, thus they are

states of felt deprivation

demands

human wants that are backed by buying power

wants are the form

that human needs take as they are shaped by culture and individual personality

the most basic concept underlying marketing is that of

human needs; they are essential or very much required. it includes basic physical needs for food, clothing, shelter, and safety

marketers did not create needs, as they are

a basic part of the human makeup

formal definition of a want

something that we wish to have which is not available with us. it is the human form of needs, which are shaped by surrounding culture and individual personality.

formal definition of a demand

an extension of “want”, with a clear objective of filling the gap that wants have left with. when backed by an individual buying power, wants to become demands

mckinsey and company report “state of the consumer” (2025)

five years after the start of the Covid-18 pandemic, consumers’ crisis-era habits have lingered. here’s what organizations can do in the new environment to outcompete in the second half of the decade.

at the start of the decade, consumers adopted a slew of new behaviors - almost overnight - in response to the covid-19 pandemic

remote work, digital connectivity, solo activities became the norm for life in lockdown, and consumers remain concerned about rising prices and inflation

mckinsey have identified

five behavioral forces that will shape the sector in the years ahead and four strategic imperatives to position organizations for growth

while growth in emerging markets and global demographic shifts, such as an aging global population and lower average birth rates, are also

reshaping the consumer landscape, the article focuses on the sticky consumer behavioral changes that we see affecting the world’s largest markets

to understand how consumers have changed, mckinsey and company

questioned more than 25,000 consumers in 18 markets that together account for 75% of global GDP

many marketers realize that long-standing, learned connections between memories are

a potent way to build and keep brand loyalty; several familiar fav returned in major advertising campaigns

what are the key points for driving consumer behavior with the psychology of memory?

• not all experiences are equally likely to be remembered, by designing for memory, marketers can optimize experiences for later recall

• capturing and maintaining attention is crucial, in particular, for converting explicit experiences into memories

• relatability is also a crucial memory-booster. the use of analogies helps to connect in existing concepts with new ones, solidifying it more securely in the brain of the consumer

leaning is

a relatively permanent change in behavior caused by experience

the learner need not have the experience directly;

we can also learn by observing events that affect others

we learn that even when we are not trying:

consumers recognize many brand names even products do no use

incidental learning

casual, unintentional acquisition of knowledge; occurs outside of the restraints of studying a structured program

learning is an ongoing process,

relatively permanent change in behavior that is caused by experience

our knowledge about the world is being revised constantly as we are

exposed to new stimuli and receive ongoing feedback that allows us to modify our behavior when we find ourselves in similar situations at a later time

simple association between a stimulus such as a product logo and

a response to a complex series of cognitive activities

the consumer’s mind is often referred to as a

“black box”

concept of the black box

the stimuli, or events perceived from the outside world go into the consumers mind (black box) and things that come out of the box - the response ms, or reactions to these stimuli

stimuli

• marketing stimuli (product, price, place, promotion)

• environmental stimuli (demographic, natural, economical, political, technological, and cultural)

what fits in the black box?

• buying characteristics (personal, social, cultural, psychological, knowledge, and lifestyle)

• decision process (problem statement, information search, evaluation, purchase decision, post purchase decision)

buyer response

• buyer choice (product, brand, dealer, purchase time, amount)

• no purchase

psychologists have advanced several theories to explain the learning process, which are important to understand for marketers as well, because

basic learning principles are at the heart of many consumer purchase decisions

behavioral learning theories focus on

stimulus response connections (classic conditioning and instrumental/operant conditioning)

cognitive theories focus on

consumer as problem solver who learn when they observe relationships

behavioral learning theories assume

that takes places as the result of responses to external events

we learn through the experience we go through our lives

similarly, we respond to brand names, scents, jingles, and other marketing stimuli

consumers who receive compliments on a product will be more likely to buy that brand again, whereas

those get food poisoning at a new restaurant are not likely to go to that restaurant in the future

what are the two major approaches to behavioral learning?

classical conditioning and instrumental/operant conditioning

classical conditioning

associate an involuntary response and a stimulus (ex. Pavlov’s dogs)

operant conditioning

associate a voluntary behavior and a consequence

classical conditioning occurs when

a stimulus that elicits a response is paired with another stimulus that initially does not elicit a response on its own

over time, the second stimulus causes

a similar response because we associate it with the first stimulus

pavlov, a russian physiologist who conducted research on digestion in animals, first demonstrated the phenomenon of classical conditioning in dogs

he paired a neutral stimulus (a bell) with a stimulus known to cause salivation in dogs (meat powder). the powder was an unconditioned stimulus (UCS) because it was naturally capable of causing the response

over time, the bell a conditioned stimulus (CS); it did not initially cause salivation, but

the dogs learned to associate the bell with the meat powder and began to salivate at the sound of the bell

the drooling of the dogs because of a sound, now linked to food, was a

conditioned response (CR)

repeated exposures - repetition -

increase the strength of stimulus - response associations

extinction, which happens when

the effects of prior conditioning diminish and finally disappear

many classic advertisement consist in product slogans that companies repeat so often they

are etched in consumer minds

repetition

conditioning effects are more likely to occur after the conditioned (CS) and unconditioned (UCS) stimuli have beenpaired a number of times 

stimulus generalization (halo effect)

stimuli similar to a CS may evoke similar responses

stimulus discrimination

conditions may also weaken over time especially when a UCS does not follow a stimulus similar to a CS

behavioral learning principles apply to

many consumer phenomena, such as creating a distinctive brand image or linking a product ot an underlying need

classical conditioning is used in a plethora of advertisements;

the idea behind it is a simple one. make an ad (UCS) that elicits a positive response (CR) in the person exposed to the ad 

the product or brand within the ad then becomes

the conditioned stimulus (CS)

the goal of the advertisement media is to

make the consumers associate certain things they see to the feeling these things proportionate them

advertisement media wants to make consumers

associate their product in their daily lives to the feeling they got when they saw it; this means they want to get a conditioned response from the consumers/viewers

a good example of cognitive learning is cigarette boxes with decaying teeth because

Tte advertisement makes the viewer associate smoking with death and provokes the sensation of fear of smoking again because there’s the risk that they die due to the cigars they smoke

when a celebrity is used in advertisements,

it creates an unconditioned stimulus, which then leads to the positive conditioned response of the audience because this only heightens the value of the product being offered

another classic example of behavioral learning, classical conditioning

the Coke Santa

the process of stimulus generalization is critical to

branding and packaging decisions that try to capitalize on consumers’ positive associations with an existing brand or company name

strategies that marketers base on stimulus generalization

family branding, product line extension, licensing, and look-alike packaging

instrumental conditioning (or operant conditioning) occurs when

we learn to perform behaviors that produce positive outcomes and avoid those that yield negative outcomes

in instrumental conditioning, the learner receives a reward after he/she

performs the desired behavior

responses to classical conditioning are 

fairly simple and involuntary, but the responses we make to instrumental conditioning are related to obtaining a goal

instrumental conditioning occurs in one of three ways

• positive reinforcement (reward)

• negative reinforcement (shows how a negative outcome can be avoided)

• punishment (unpleasant event follows a response example)

some events or consequences increase the frequency with which a given behavior is likely to be repeated. for example,

if a reward (cash rebate) is given at the time of purchase, it may increase the probability that a shopper will buy something in the same store in the future. in this case, because the reward increases the probability of the behavior being repeated, it is called positive reinforcement

in general, the greater the amount of the reward and the sooner it is received after the behavior,

the more likely it is that the behavior will be reinforced and that similar behavior will occur in the future

the frquency of consumer behavior is increased by removing

aversive stimuli that operate to deter a customer’s purchase (ex. refunding of parking costs)

if the environment is arranged so that a particular response results in neutral consequences, over a period of time that response will 

diminish in frequency (ex: understock of nationally branded products. quit shopping!) 

if a response is followed by a noxious or unpleasant result, the frequency of that response is likely to

decrease (ex: the actions of a pushy sales person)

positive reinforcement

something is added to increase the likelihood of a behavior (ex. child gets praise from parent for good school grades)

negative reinforcement

something is removed to increase the likelihood of a behavior (ex. a child cleans their room to avoid nagging parents)

negative punishment

something is removed to decrease the likelihood of a behavior (ex. child losing iPad privileges after refusing to eat vegetables)

positive punishment

something is added to decrease the likelihood of a behavior (ex. parent scolding a child for fighting with their sibling)

cognitive learning theory approaches

stress the importance of internal mental processes; this perspective views people as problem-solvers who actively use information from the world around them to master their environments

proponents of cognitive learning argue that even these simple effects are based on cognitive factors:

that is, expectations are created that a stimulus will be followed by a response (the formation of expectations requires mental activity) 

observational learning occurs when we watch 

the actions of others and note the reinforcements they receive for their behaviors; in these situations, learning occurs as a result of vicarious rather than direct experience

people store these observations in memory (from observational learning) as they accumulate knowledge and then

they use this information at a later point to guide their own behavior

modeling is the process of

imitating the behavior of others

observation learning is a powerful form of learning but

it can also have negative effects (ex. when the behavior proposed is not good)

observational learning is a vital factor in 

shaping the behavior of children 

components of observation learning

attention (the consumer focuses on a model’s behavior) to retention (the consumer retains this behavior in memory) to production processes (the consumer has the ability to perform the behavior) to motivation (a situation arises wherein the behavior is useful to the consumer) to observational learning (the consumer acquires and performs the behavior earlier demonstrated by a model)

marketing application of cognitive learning principles

marketers can show what happens to desirable models (ex. celebrities) who do or do not use their products (ex;. julia roberts for calzedonia)

memory refers to

the storage of learned information

memory is a process of 

acquiring information and storing it over time so that it will be available when we need it 

the way information is encoded when it is perceived determines

how it will be stored in memory

external inputs

encoding (information is placed in memory) to storage (information is retained in memory) to retrieval (information stored in memory is found as needed)

the memory systems known as sensory memory, short-term memory and long-term memory

each play a role in retaining and processing information from the outside world

memory for product information can be measured through

either recognition or recall techniques 

consumers are more likely to recognize an advertisement if it is presented to them than

to recall one without being given any cues

memory system components

sensory memory, attention, short-term memory, elaborative rehearsal, long-term memory