CONSUMER BEHAVIOUR

Retail Customer - 1

why marketing managers should understand consumer behavior

Consumers make purchase decisions Consumer Behaviour = HOW Consumers use and dispose of products

Consumer Behavior Model

The consumer shopping/purchasing model Retailers can use their understanding of their target

consumers buying behavior to improve their profit performance Consumers are typically confronted with fundamental decisions when it comes to meeting their requirements
What products or brands can potentially fill their need? Where should they purchase these products or brands?

Consumer Shopping/ Purchase Model

consumer behavior is a process with a series of stages or

steps.

Stimulus
A stimulus involves a cue (external to the individual) or

drive (internal to the individual) A cue is any object or phenomenon in the environment that is capable of eliciting a response
e.g.- point-of-purchase displays, advertisements, coupons,

salespeople, free samples, word-of-mouth advertising

A drive is a motivating force that directs behavior Physiologically based or Learning based Passive information gathering Is the receiving and processing of information regarding the existence and quality of merchandise, services, stores, shopping, convenience, pricing, advertising, and any other factors that a consumer might consider in making a purchase.

Problem recognition
Occurs when the consumers desired state of affairs

departs sufficiently from the actual state of affairs, placing the consumer in a state of unrest The level of ones desire to resolve a particular problem depends on two factors:
The magnitude of the gap between the consumers desired and

actual states. The importance of the problem.

Problem Solving
Individuals solve problems by searching for information

and then evaluating their options or alternatives

to reduce risk

Financial risk Safety risk Social risk The amount of problem-solving activity consumers

engage in varies considerably depending on their prior experience and the need to reduce these risk Consumers learn quickly

Degrees of Consumer Problem Solving in Shopping/Purchasing

Degrees of Consumer Problem Solving in Shopping/Purchasing

Habitual problem solving Occurs when the consumer relies on past experiences and learns to convert the problem into a situation requiring less thought. The consumer has a strong preference for the brand to buy and the retailer from which to purchase it e.g., toothpaste, milk, bread, soda pop Limited problem solving Occurs when the consumer has a strong preference for either the brand or the store, but not both Extended problem solving Occurs when the consumer recognizes a problem but has decided on neither the brand nor the store. Extensive problem solving typically involves infrequently purchased expensive products of high risk Problem solving should be viewed as a continuum.

Problem-Solving Stages
The first step is active information gathering where

consumers proactively gather information. The second step is evaluation of alternatives.

1. 2. 3.

Consumers develop a set of attributes on which the purchase decision will be based. Consumers narrow their consideration set to a more manageable number of attributes. Consumers directly compare the key attributes of the alternatives remaining on their short list.

Set of attributes - The characteristics of the store and its

products and services One of the most important variables of problem solving is which information resources consumers use

Purchase
The purchase stage may include final negotiation,

application for credit if necessary, and the determination of the terms of purchase. The purchase stage is often seen by retailers as an opportunity to use suggestion selling to sell add-on or related purchases.
such as extended service warranties, batteries for toys, and

impulse merchandise

Post-Purchase Evaluation
Immediately after the transaction, consumers form lasting

impressions regarding the soundness of their purchase decision.

Post-purchase resentment - Arises after the purchase

when the consumer becomes dissatisfied with the product, service, or retailer and thus begins to regret that the purchase was made.

Post-Purchase Evaluation
If post-purchase resentment is not identified and rectified

quickly by the retailer, it can have a long-term negative effect on the retailers bottom line.
If the retailer is proactive in its customer-satisfaction

program and responds quickly to budding resentment, it can be overcome.

Stages in Buying Process

Comprehensive models of consumer behaviour (Blackwell 2005)

A Framework for Understanding Retail Customer

Factors That Affect the Consumer Decision-Making Process

Individual Influences on Consumer Buying Decisions

A persons buying decisions are also influenced by

personal characteristics that are unique to each individual

Gender Age and life-cycle stage Personality self-concept, and lifestyle

Gender
Physiological differences between men and women result

in different needs Trends in gender marketing are influenced by the changing roles of men and women in society The changing roles of women are also forcing companies that have traditionally targeted women to develop new strategies

Age and Family Life Cycle

How old a consumer is generally indicates what products

he or she may be interested in purchasing Consumer tastes in food, clothing, cars, furniture, and recreation are often age related The family life cycle is an orderly series of stages through which consumers attitudes and behavioral tendencies evolve through maturity, experience, and changing income and status.

Family Life Cycle

Age Marital status Career Disposable income Children Marketers should also be aware of the many

nontraditional life-cycle paths that are common today and provide insights into the needs and wants of such consumers as divorced parents, lifelong singles, and childless couples.

Personality, self-concept, and lifestyle

Personality - A way of organizing and grouping the

consistencies of an individuals reactions to situations. Self-concept - How consumers perceive themselves in terms of attitudes, perceptions, beliefs, and selfevaluations
Ideal self-image - The way an individual would like to be Real self-image - The way an individual actually perceives himself

or herself

Lifestyle - A mode of living as identified by a persons

activities, interests, and opinions

Psychological influences on consumer buying decisions

Perception Motivation Learning Belief & Attitude

Perception
A stimulus is any unit of input affecting one or more of the

five senses: sight, smell, taste, touch, and hearing The process by which we select, organize, and interpret these stimuli into a meaningful and coherent picture is called perception Selective exposure
The process whereby a consumer notices certain stimuli and

ignores others.

Perception
Selective distortion A process whereby a consumer changes or distorts information that conflicts with his or her feelings or beliefs. Business travelers who fly often may distort or discount information about airline crashes because they must use air travel constantly in their jobs Selective retention A process whereby a consumer remembers only that information that supports his or her personal beliefs Consumers may see a news report on suspected illegal practices by their favorite retail store, but soon forget the reason the store was featured on the news

Marketing Implications of Perception

Marketers must recognize the importance of cues, or signals, in consumers perception of products.

Marketing Implications of Perception

Brand names send signals to consumers Close-up Yahoo! Quality & Reliability Perceived brand value and customer loyalty Kodak, Disney, National Geographic, Mercedes-Benz Threshold level of perception - just-noticeable difference how much would Apple have to drop the price of its iPod Shuffle before consumers recognized it as a bargain 20% The bargain-price threshold for a name brand is lower

than that for a store brand

Marketing Implications of Perception

Important attributes Price Brand names Quality and reliability Threshold level of perception Product or repositioning changes Foreign consumer perception Subliminal perception

Motivation
A driving force that causes a person to take action to

satisfy specific needs Maslows hierarchy of needs

A method of classifying human needs and motivations into five

categories in ascending order of importance: physiological, safety, social, esteem, and self-actualization.

Maslows Hierarchy of Needs

Physiological

Safety

Social

Esteem

Self actualization
This ad is for the United States Army. It represents selfactualization because it is talking about utilizing the skills you already have for the Army. They want you to realize your potential and what your skills could do for them, so that you will want to join.

Learning
A process that creates changes in behavior, immediate or

expected, through experience and practice. Experiential learning occurs when an experience changes your behavior Conceptual learning, which is not acquired through direct experience Reinforcement and repetition boost learning Stimulus generalization
A form of learning that occurs when one response is extended to a

second stimulus similar to the first. Microsoft entered the video game industry, hoping that the Microsoft brand would guarantee sales for the Xbox

Learning
Stimulus discrimination A learned ability to differentiate among similar products. Some consumers prefer Coca-Cola and others prefer Pepsi. Many insist they can taste a difference between the two brands.

Beliefs and Attitudes

Belief An organized pattern of knowledge that an individual holds as true about his or her world Consumers tend to develop a set of beliefs about a

products attributes and then, through these beliefs, form a brand image a set of beliefs about a particular brand Attitude
A learned tendency to respond consistently toward a given object

Beliefs and attitudes are closely linked to values

Changing Attitudes
Change beliefs about the brands attributes Change the relative importance of these beliefs Add new beliefs

Change beliefs about the brands attributes

Changing the Importance of Beliefs

Adding New Beliefs

Psychological Factors

Cultural Influences on Consumer Buying Decisions

Culture The sets of values, norms, attitudes, and other

meaningful symbols that shape human behavior and the artifacts, or products, of that behavior as they are transmitted from one generation to the next
Pervasive Functional Learned Dynamic

Components of Culture
Value Language Myths Customs Rituals Laws Material artifacts

Value
Enduring belief that a specific mode of conduct is

personally or socially preferable to another mode of conduct.

Subculture
A homogeneous group of people who share elements of

the overall culture as well as unique elements of their own group.

Social Class
A group of people in a society who are considered nearly

equal in status or community esteem, who regularly socialize among themselves both formally and informally, and who share behavioral norms.

Social Class Measurements

Occupation Income Education Wealth Other variables

The Impact of Social Class on Marketing Indicates which medium to use for advertising Helps determine the best distribution for products

Cultural Factors

Social Influences on Consumer Buying Decisions

Social Influences Reference Group
A group in society that influences an individuals purchasing

behavior.

Opinion Leaders An individual who influences the opinion of others. Family Members

Reference Groups

Influences of Reference Groups

They serve as information sources and influence

perceptions.
They affect an individuals aspiration levels. Their norms either constrain or stimulate consumer

behavior.

Opinion Leaders
Marketers are looking to Web logs, or blogs, to find

opinion leaders
Teenagers Movie stars Sports figures Celebrities

Family
Purchase Process Roles in the Family
Initiators Influencers Decision Makers Purchasers Consumers

Relationships among Purchasers and Consumers in the Family

Social Factors