Consumer Behavior

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Consumer Behavior

• Week 4
• Fall 2007

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Lecture 7 Consumer Behavior

• Agenda
• Framework for consumer behavior
• Decision making process and types
• Factors affecting consumer behavior

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Model of Consumer Behavior
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Decision Making Process
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Framework for CB and Marketing Implications

• Need Recognition
• routinized need (milk, eggs, meat)
• impulse need (candy, gum)
• social interaction
• Information Search
• Sources Personal WOM, Advertising, Public
  Sources, Experiential (packaging)
• intensity of search
• Evaluation (Perception and Preference)

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Implications for Marketing

• Purchase Decision
• Brand
• Quantity, quantity discounts?
• Timing, Advance purchase discounts?
• Post Purchase
• after sales support (computers, appliances)
• Managing Post-purchase gap (Fedex)
• reduce post purchase dissonance (how?)

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Marketing Implications

• Why keep this framework in mind?
• Framework highlights 3 types of goods based upon
  knowledge of quality. Is your product a
• Search (Quality known before purchase, what
  marketing activity is important? feature ad for
  milk).
• Experience (movie, use of image advertising)
• Credence (Surgery? What marketing action comes
  to mind).

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Evaluation

• Perception and Preferences
• Perception is the process by which an individual
  selects, organizes and interprets stimuli into a
  meaningful picture of the world.
• Preference is a function of
• The position of the product on underlying
  perceptual attributes
• The importance of each underlying perceptual
  attribute for satisfying the needs and wants of
  consumers.
• Perception and Preference does not happen in a
  vacuum.

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Perception Visual Illusions - 1
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Perception Visual illusions - 2
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PerceptionVisual Illusions - 3
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Factors Affecting Preference and Choice
Psychological Factors

• Perception
• Interpreting and giving meaning to marketing
  stimuli
• Perception is largely relative
• Perception is context-dependent
• Perception depends upon what is anchored upon.
• Adaptation
• People are sensitive to changesperceive changes.
• People get used to stuff but cannot predict how
  much they will get used to it
• People who win the lottery are not as happy as
  they expect to be ...
• Implications for marketing strategy
• Changes in prices
• Changing the taste of new Coke.

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Psychological Factors

• Memory
• Short-term memory Limited (7-2)
• Strong sequential effects
• Primacy Recency
• Implications for marketing strategy of memory and
  perception.
• Limited short-term memory and processing ability
  (Clutter, why reminder advertising is important)
• Below the perceptual thresholdthe Coca-Cola
  experiments.
• Direct and simple messages can have important
  role in advertising

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Psychological Factors

• Personality
• collection of traits that makes individual
  distinctive. Distinguishing Traits that lead to
  lead to an individuals response to the
  environment.
• Self Concept theory actual vs. ideal self
  (Nike).
• Self Image Consumption is an expression of self
  (Porsche)
• Brand Personality (Pillsbury)
• Motivation
• Motive is a need that leads the person to act
  (e.g., a purchase)
• Effects attention, processing capacity.
• Think about the day before the final.
• Home work (Learning and Attitudes from the
  textbook)

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Factors Affecting Preference and
ChoiceEnvironmental Factors

• Cultural Shared norms or beliefs of the society
  which lead to common patterns of behavior.
• competitiveness
• value for time
• individualism vs. conformity (Panasonic)
• Reference Groups
• Social need to belong. Provides frame of
  reference
• A Group Referent is a representation of ideal
  set of characteristics
• use of group referents/opinion leaders as
  testimonials (Nike and Jordan...inner-city kids).
• How does reference group influence work? (WOM)
• For which products will this work?

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Environmental Factors Social Influence

• Group level choice behavior?
• When you go to a restaurant are your choices
  changed by others in your group?
• Is it conformity or divergence?
• Casino gambling the effect of others wins

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Systematic Biases in Interpreting Consumer
Behavior

• It was found that kids that were breast-fed had
  high IQ
• What can you deduce from that /Why
• Correlation is not causation
• Students who come to all the classes do better
• Why?
• Self selection is a problem

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Magical Thinking

• Shooting an empty gun at your head
• Stuff sticks to other things
• Try to aim a dart at a picture of Hitler or JFK
• Marketing Implications? Think of a marketing
  application
• What is the principle here?
• HOMEWORK

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Messages

• Consumer decision making though complex and has
  some well defined steps. Marketers can influence
  consumers at every one of these steps.
• Consumer behavior is influenced by many more
  factors than just the core physical need.
  Marketers are not just selling a physical good.
  They also sell self-images, dreams, aspirations
  and happy feelings.
• Marketers do this by understanding and taking
  advantage of the key consumer characteristics.
• People are impressionable and marketing strategy
  can deeply influence purchasing behavior.