THEORIES OF Consumer Behavior

1
THEORIES OF Consumer Behavior
The factors that affect the demands of the
consumers
Trends in the consumer behavior in 2011- 2012
HON. EDUARDO G. ONG BSC, MBA, LLB, PhD,
DPA, DBA Diplomate in Business
Education Fellow in Personnel Management Fellow
in Real Estate Management Management Academic
Consultant Professor of Business Public
Administration Chairman Professional Board of
Real Estate Service-PRC President Phil.
Association of Professional Regulatory Boards
2
What would you choose???
3
(No Transcript)
4
(No Transcript)
5
Consumer Behavior
Involves the psychological processes that
consumers go through in recognizing needs,
finding ways to solve these needs, making
purchase decisions (e.g., whether or not to
purchase a product and, if so, which brand and
where). Interpret information, make plans, and
implement these plans (e.g., by engaging in
comparison shopping or actually purchasing a
product).
6
Consumer Buying Behavior

• Consumer Buying Behavior
• Refers to the buying behavior
• of final consumers individuals
• households who buy goods
• and services for personal
• consumption.

7
Influences on and of Consumer Behavior
PERCEPTION/ SENSATION
MARKET RESEARCH
INFO SEARCH
COGNITION
CHOICES
STRATEGY
AFFECT
PREFERENCES
CONSUMER
BELIEFS
COMMUNICATION
SOCIAL AND OTHER INFLUENCE
8
True or False?

• If you have bad breath, you cannot smell it
  yourself.
• If you eat a balanced diet, you do not need
  vitamin supplements.
• Using a razor with five blades will reduce the
  likelihood of cutting yourself and will result in
  less skin irritation.
• Dell Computers tend to be of higher quality than
  those made by HP and Sony.
• Rust stains on clothes can be removed with the
  use of lemon juice. Bleach actually makes these
  stains worse.

9
Questions Faced By Consumers

• Are veggie burgers actually healthy?
• What makeup should you use to get an even skin
  tone?
• Do I get any useful benefits from spending more
  than Php 5,000.00 on a digital camera?
• Should I get a make-over? What am I looking
  for? What should I do?
• Is my mechanic honest?
• Which tie should I wear for a job interview?
• Should I give my wife roses, chocolate, or
  software?

10
Consumer Problems and Recognition

• Consumer problem Discrepancy between ideal and
  actual state--e.g., consumer
• Has insufficient hair
• Is hungry
• Has run out of ink in his or her inkjet cartridge
• Problems can be solved in several ways--e.g.,
  stress reduction lt----- vacation, movie, hot
  bath, medication

11
CONSUMER DECISIONSTheory and Reality in
Consumer Buying
PROBLEM RECOGNITION
INFORMATION SEARCH
EVALUATION OF ALTERNATIVES
PURCHASE
POSTPURCHASE EVALUATION/ BEHAVIORS
Theory Complications
12
Approaches to Search for Problem Solutions
INTERNAL
Memory Thinking
EXTERNAL
Word of mouth, media, store visits, trial
CATALOG
13
Options Identified and Considered
UNIVERSAL SET
All possible options
RETRIEVED SET
Options that readily come to mind
EVOKED SET
Options that will be considered by the consumer
Note Retrieved and evoked sets will vary among
different consumers
14
REMINDER

• For low involvement products, efforts aimed at
  affecting internal search tend to be more
  effectivethe consumer is usually not willing to
  expend energy on external search.
• External search is more likely for higher
  involvement products.

15
Decision Making Issues

• Involvement level
• Temporary
• Enduring
• Consumer locus of control
• Internal
• External
• Product category complexity
• Consumer knowledge

16
Evaluation Type

• Compensatory Decision based on overall value of
  alternatives (good attribute can outweigh bad
  ones)
• Non-compensatory Absolutely must meet at least
  one important criterion (e.g., car must have
  automatic transmission)
• Hybrid Combination of the two (e.g., one
  non-compensatory measure, then compensatory
  tradeoffs on other attributes
• Abandoned strategy Consumer finds initial
  criteria unrealistic and proceeds to less
  desirable solution

IMPORTANT
LESS IMPORTANT
17
HeuristicsLow Involvement Decision Rules

• If either Coke or Pepsi is on sale, buy that
  brand otherwise, buy Coke
• The larger the navels, the better the orange
• The larger package is likely to offer a lower
  unit price (not true in reality)

18
Attitudes?components
BELIEFS
AFFECT (FEELING)
BEHAVIORAL INTENTIONS
19
Attitude Components

• Beliefs
• Can be positive, negative, or neutral
• May or may not be accurate
• May contradict other beliefs held by the other
  person
• Affect
• May be positive or negative
• May take on specific dimension (e.g., pleasure,
  disgust)

• Behavioral Intentions
• An individuals plan or expectations of what he
  or she will do
• May appear inconsistent with beliefs
• May not predict well what the individual will do
  in reality

20
Generating Beliefs Through Advertising

• Statements must be
• Perceived
• Comprehended
• Remembered
• Believed (at least in part)

21
Marketing and Other Stimuli
Model of Buyer Behavior
Product Price Place Promotion
Economic Technological Political Cultural
Buyers Black Box
Buyer Characteristics
Buying Decision Process
Buyers Response
Purchase Timing Purchase Amount
Product Choice Brand Choice Dealer Choice
22
Factors Influencing Consumer Behavior
Culture Subculture Social class
Social Reference groups Family Roles and sta
tus
Cultural
Individual/Personal Age and life-cycle Occupati
on Economic situation Lifestyle Personality and
self-concept
Psychological Motivation Perception Learning B
eliefs and attitudes
Buyer
23

• Culture
• Most basic cause of a person's wants and
  behavior.

• Social Class
• Societys relatively permanent ordered
  divisions whose members share similar values,
  interests, and behaviors.
• Measured by Occupation, Income, Education,
  Wealth and Other Variables.

• Subculture
• Groups of people with shared value systems based
  on common life experiences.
• Hispanic Consumers
• African American Consumers
• Asian American Consumers
• Mature Consumers

24
CELL PHONE CRAZE
In Filipino Culture everything new and shiny
is attractive
25
Factors Affecting Consumer BehaviorSocial

• Groups
• Membership
• Reference

• Family
• Husband, wife, kids
• Influencer, buyer, user

Social Factors
Roles and Status
26
Reference Group are groups that have direct
(face to face)or indirect influence on the
persons attitudes or behavior
People are often influenced by reference groups
to which they do not belong
27
Family members can strongly influence Buyer
behavior
Role consists of the activities people
are expected to perform according to the
persons around them Each role carries a status
reflecting the general esteem given to it
by society
People often choose products that show their
status in society
28
Personal Influences
Factors Affecting Consumer Behavior Individual/
Personal
Lifestyle Identification
Age and Life Cycle Stage
Occupation
Personality Self-Concept
Economic Situation
Opinions
Activities
Interests
29
Factors Affecting Consumer BehaviorPsychological
Motivation
Psychological Factors
Beliefs and Attitudes
Perception
Learning
30
BELIEFS ATTITUDE A persons beliefs and
attitude are acquired through acting and
learning. A belief is a descriptive thought
that a person has about something An attitude
is a persons consistency favorable
or Unfavorable evaluations , feelings and
tendencies Toward an object or idea.
31
PERCEPTION Is the process by which people
select, organize, and interpret information to
form a meaningful picture of the world. The
marketer must remember that two people with the
same motivation and in the same situation may act
differently because they perceive the situation
differently.
32
LEARNING Is described as changes in an
individual behavior arising from experience.
33
MOTIVATION The process of motivation is
initiated by the Tensions an unsatisfied want
creates motive (drive) is a need that is
sufficiently pressing to direct the person to
seek satisfaction of the need.
34
Theories of Motivation
Sigmund Freud's Theory Assumes that people are
largely unconscious about the real psychological
forces shaping their behavior. Accordingly, a
person does not fully understand his or her
motivation. id - is an important part of our
personality because as newborns it allows us to
get basic needs
35
Sigmund Freud's Theory Ego- based on reality
principle the ego understands that other people
have needs and desires and that something being
impulsive or selfish can hurt us in a long
run Superego moral parts of us are develops due
to moral and ethical restraints placed on us by
our caregivers
36
The role of the unconscious is only one part of
the model.  Freud also believed that everything
we are aware of is stored in our conscious.  Our
conscious makes up a very small part of who we
are.  In other words, at any given time, we are
only aware of a very small part of what makes up
our personality most of what we are is buried
and inaccessible.   The final part is the
preconscious or subconscious.  This is the part
of us that we can access if prompted, but is not
in our active conscious.  Its right below the
surface, but still buried somewhat unless we
search for it.  Information such as our telephone
number, some childhood memories, or the name of
your best childhood friend is stored in the
preconscious.  
37
HENRY MURRAYs THEORY Henry Alexander Murray
(May 13, 1893 June 23, 1988) was an American
psychologist who taught for over 30 years at
Harvard University. He was founder of the Boston
Psychoanalytic Society and developed a theory of
personality based on "need" and "press". He also
is developer of the Thematic Apperception Test
(TAT) which is widely used by psychologists.
38
Murray classified needs as being either
Primary needs (which are biologically based)
food, water, air, sex, avoidance of pain
Secondary needs (which either derive from our
biological needs or are inherent in our
psychological nature) achievement, recognition,
acquisition dominance, aggression, autonomy
affiliation, play, cognizance (asking questions
of others) Murray believed that stronger needs
are expressed more often over time and lead to
more intense behaviour.
39
WILLIAM MCGUIRE William McGuire has described
the steps an individual must be persuaded to pass
through to assimilate a desired behavior. These
steps are Exposure to the message Attention to
the message Interest in or personal relevance of
the message Understanding of the
message Personalizing the behavior to fit ones
life Accepting the change Remembering the message
and continuing to agree with it Being able to
think of it Making decisions based on bringing
the message to mind Behaving as decided Receiving
positive reinforcement for behavior Accepting the
behavior into ones life
40
Maslows Hierarchy of Needs
Self Actualization (Self-development)
Esteem Needs (self-esteem, status)
Social Needs (sense of belonging, love)
Safety Needs (security, protection)
Physiological Needs (hunger, thirst)
41
Consumer Decision-Making Process
42
Complete model of consumer behavior
Start
Need recognition
Internal search

• Influences
• culture
• social class
• family
• situation

Search
Exposure
Memory
Stimuli (marketer dominated, other)
Attention
Alternative evaluation
Comprehension

• Individual
• differences
• resources
• motivation
• involvement
• knowledge
• attitudes
• personality,
• values, lifestyle

Purchase
Acceptance
Retention
Outcomes
External search
Dissatisfaction
Satisfaction
43

• How do you know when to shop? What are the
  triggers that initiate an awareness search?
• What are the internal external sources of these
  triggers?

44
(No Transcript)
45
Need Recognition

• When a current product isnt
• performing properly
• When the consumer is running out of an product
• When another product seems
• superior to the one currently used

Marketing helps consumers recognize (or create)
an imbalance between present status and preferred
state
46
The information search stage
An internal search involves the scanning of one's
memory to recall previous experiences or
knowledge concerning solutions to the problem--
often sufficient for frequently purchased
products.
Personal sources (friends and family)
Public sources (rating services like Consumer
Reports)
An external search may be necessary when past
experience or knowledge is insufficient, the risk
of making a wrong purchase decision is high,
and/or the cost of gathering information is low.
Marketer-dominated sources (advertising or sales
people)
The evoked set a group of brands from which the
buyer can choose
47

• go back to your past purchase what were the
  specific internal and external sources of
  information that influenced your decision?
• how do you determine (and rate) the credibility
  of these sources?
• what specific information influenced you?

48
Determinants of External Search
49
Buyer Behavior
Other people often influence a consumers purchase
decision. The marketer needs to know which people
are involved in the buying decision and what role
each person plays, so that marketing strategies
can also be aimed at these people. (Kotler et al,
1994).

• Initiator the person who first suggests or
  thinks of the idea of buying a particular product
  or service.
• Influencer a person whose views or advice carry
  weight in making the final buying decision
• Decider the person who ultimately makes the
  final buying decision or any part of it
• Buyer the person who makes the actual purchase
• User the person who consumes the product or
  service

Note teens are increasingly assuming more of
these roles
Think about your past purchase who was in which
role?
50
Relative influence of husbands wives
Wife Dominant
Womens clothing
Child clothing
Information search
groceries
Final decision
Pots pans
NonRx
lamps
Toys/games
furniture
luggage
carpet
Paint wallpaper
refrigerator
vacations
Mens leisure clothing
Joint
Mens business clothing
stereo
TV sets
camera
Financial planning
Family car
Sport equipment
hardware
Lawn mower
Husband Dominant
Extent of role specialization
100
50
0
75
25
51
Consumer decision making varies with the level of
involvement in the purchasing decision

• Extensive problem solving occurs when
• buyers purchase more expensive, less
• frequently purchased products in an
• unfamiliar product category requiring
• information search evaluation may
• experience cognitive dissonance.
• Limited problem solving occurs when buyers are
  confronted with an unfamiliar brand in a familiar
  product category
• Routine response behavior occurs when buyers
  purchase low cost, low risk, brand loyal,
  frequently purchased, low personal identification
  or relevance, items with which they are familiar.

Increase in Consumer evaluation processes
52
(No Transcript)
53
Factors affecting Consumer involvement
So

• Offer extensive information on high involvement
  products
• In-store promotion placement is important for
  low involvement products
• Linking low-involvement product to
  high-involvement issue can increase sales

54
Types of consumer involvement and decision making
Routine Limited Extensive
Involvement Short Low to moderate High
Time Low Short to moderate Long
Cost Short Low to moderate High
Information Search Internal only Mostly internal Internal external
Number of alternatives one few many
55
Compensatory Decision Using product
characteristics to guide decision

• Select the best overall brand-- evaluates brand
  options in terms of each relevant attribute and
  computes a weighted or summated score for each
  brand. The consumer chooses the brand with the
  highest score.
• Compensatory model because a positive score on
  one attribute can outweigh a negative score on
  another attribute.

• Conjunctive Decision Rule (cutoff criteria)--
  Consumer sets a minimum standard for each
  attribute and if a brand fails to pass any
  standard, it is dropped from consideration.
• Reduces a large consideration set to a manageable
  size.
• Often used in conjunction with another decision
  rule.

• Disjunctive Decision Rule (rank by importance)--
  sets a minimum acceptable standard as the cutoff
  point for each attribute--any brand that exceeds
  the cutoff point is accepted.
• Reduces large consideration set to a more
  manageable number of alternatives.
• Consumer may settle for the first satisfactory
  brand as final choice or may use another decision
  rule.

• Synthesized decision rule-- Consumers maintain
  overall evaluations of brands in their long term
  memories. Brands on not evaluated on individual
  attributes but on the highest perceived overall
  rating.

56

• think of an important purchasing decision
  you have made
• what are some of the thoughts you have had
  following your purchase? Any regrets?
• what has influenced those thoughts?
• how have you dealt with the discomfort?
• how has the company anticipated or dealt with
  your discomfort?

57
Post purchase Behavior
Marketing
Can minimize through Effective
Communication Follow-up GuaranteesWarranties Unde
r promise over deliver
58
Sour Grapes a story of cognitive dissonance
after being unable to reach the grapes the fox
said, these grapes are probably sour, and if I
had them I would not eat them.

--Aesop
59
Cognitive Dissonance

• psychological discomfort caused by
  inconsistencies among a persons beliefs,
  attitudes, and actions
• varies in intensity based on importance of issue
  and degree of inconsistency
• induces a drive state to avoid or reduce
  dissonance by changing beliefs, attitudes, or
  behaviors and thereby restore consistency

Applications
Tendency to avoid information can be countered by
eliciting interest, norm of fairness, or
perceive usefulness of information
Post-decision buyers remorse may be increased
by importance or difficulty or irreversibility of
decision
Counter-attitudinal action, freely chosen with
little incentive or justification, leads to
attitude change (e.g., new product at special low
price)
60

• think of an innovation in your field
• describe different groups of employees in your
  organization who would respond early and
  favorably, as well as later and unfavorably
• what are the differences between these groups?
• how could you use this information to market the
  innovation to them more effectively?

61
(No Transcript)
62
(No Transcript)
63

• Identify an innovation in your organization or an
  organization you are familiar with
• Identify the subgroups who responded to the
  innovation using the Rogers Shoemaker
  stakeholder model
• What could have been done to facilitate
  acceptance by each of these groups?

64
Decision Processing
65
(No Transcript)
66
THANK YOU for listening! HON. EDUARDO G.
ONG BSC,MBA,LLB,PHD,DPA,DBA Professor of
Business Management Public Administration