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Consumer Decision Making Unit 4 Lamb, Hair, McDaniel 2012-2013 © 2013 by Cengage Learning Inc. All Rights Reserved. 1 1 Explain why marketing managers should understand consumer behavior 2 Analyze the components of the consumer decisionmaking process 3 Explain the consumer’s postpurchase evaluation process 4 Identify the types of consumer buying decisions and discuss the significance of consumer involvement © 2013 by Cengage Learning Inc. All Rights Reserved. 2 5 Identify and understand the cultural factors that affect consumer buying decisions 6 Identify and understand the social factors that affect consumer buying decisions 7 Identify and understand the individual factors that affect consumer buying decisions 8 Identify and understand the psychological factors that affect consumer buying decisions © 2013 by Cengage Learning Inc. All Rights Reserved. 3 The Importance of Understanding Consumer Behavior Explain why marketing managers should understand consumer behavior © 2013 by Cengage Learning Inc. All Rights Reserved. 4 1 Understanding Consumer Behavior consumers make purchase decisions Consumer behavior = HOW consumers use and dispose of product 1 © 2013 by Cengage Learning Inc. All Rights Reserved. 5 The Consumer Decision-Making Process Analyze the components of the consumer decision-making process © 2013 by Cengage Learning Inc. All Rights Reserved. 6 2 Consumer Decision-Making Process A five-step process used by consumers when buying goods or services. 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 7 Exhibit 6.1 Consumer Decision-Making Process 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 8 Need Recognition Result of an imbalance between actual and desired states. Need recognition is the first stage in the decision-making process 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 9 When “Need” Turns to Greed • • • In 2011, a woman allegedly pepper sprayed a crowd of shoppers reaching for discounted Xbox 360s. Black Friday: • Retailers offer their best bargains of the year • Consumers camp out for days at stores’ front doors Violent incidents were reported in at least seven states during the 2011 Black Friday sales, most occurring at or near Walmart stores. Michael Martinez, “Woman Surrenders in Black Friday Pepper Spray Incident,” CNN, November 26, 2011, http://articles.cnn.com/2011-1126/us/us_california-pepper-spray-suspect_1_pepper-spray-woman-surrenders-video-game?_s=PM:US (Accessed May 3, 2012). © 2013 by Cengage Learning Inc. All Rights Reserved. 10 Need Recognition Present Status 2 Preferred State Marketing helps consumers recognize an imbalance between present status and preferred state. © 2013 by Cengage Learning Inc. All Rights Reserved. 11 Stimulus Any unit of input affecting one or more of the five senses: •sight •smell •taste •touch •hearing 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 12 Recognition of Unfulfilled Wants • When a current product isn’t performing properly • When the consumer is running out of a product • When another product seems superior to the one currently used 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 13 Information Search Internal Information Search • Recall information in memory External Information search • Seek information in outside environment • • Nonmarketing controlled Marketing controlled 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 14 External Information Searches Need Less Information Less Risk More knowledge More product experience Low level of interest Confidence in decision Need More Information More Risk Less knowledge Less product experience High level of interest Lack of confidence 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 15 Evoked Set Group of brands, resulting from an information search, from which a buyer can choose 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 16 Evaluation of Alternatives and Purchase Evoked Set Analyze product attributes Use cutoff criteria Rank attributes by importance 2 Purchase! 17 © 2013 by Cengage Learning Inc. All Rights Reserved. Purchase To buy or not to buy... Determines which Attributes are most in influencing a consumer’s choice 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 18 Postpurchase Behavior Explain the consumer’s postpurchase evaluation process © 2013 by Cengage Learning Inc. All Rights Reserved. 19 3 Cognitive Dissonance Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions. 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 20 Postpurchase Behavior Consumers can reduce dissonance by: ❑ Seeking information that reinforces positive ideas about the purchase ❑ Avoiding information that contradicts the purchase decision ❑ Revoking the original decision by returning the product Marketing can minimize dissonance through effective communication with purchasers. 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 21 Types of Consumer Buying Decisions and Consumer Involvement Identify the types of consumer buying decisions and discuss the significance of consumer involvement © 2013 by Cengage Learning Inc. All Rights Reserved. 22 4 Consumer Buying Decisions and Consumer Involvement Routine Response Behavior Limited Decision Making Less Involvement Extensive Decision Making More Involvement 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 23 Involvement the amount of time and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior. 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 24 Exhibit 6.2 Continuum of Consumer Buying Decisions 4 25 Routine Limited Extensive Involvement Low Low to Moderate High Time Short Short to Moderate Long Cost Low Low to Moderate High Information Search Internal Only Mostly Internal Internal and External Number of Alternatives One Few Many © 2013 by Cengage Learning Inc. All Rights Reserved. Routine Response Behavior ▪ Little involvement in selection process ▪ Frequently purchased low cost goods ▪ May stick with one brand ▪ Buy first/evaluate later 4 ▪ Quick decision © 2013 by Cengage Learning Inc. All Rights Reserved. 26 Limited Decision Making ▪ Low levels of involvement ▪ Low to moderate cost goods ▪ Evaluation of a few alternative brands ▪ Short to moderate time to decide 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 27 Extensive Decision Making ▪ High levels of involvement ▪ High cost goods ▪ Evaluation of many brands ▪ Long time to decide ▪ May experience cognitive dissonance 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 28 Factors Determining the Level of Consumer Involvement Previous Experience Interest Perceived Risk of Negative Consequences Situation Social Visibility 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 29 Not All Involvement Is The Same Product Involvement Situational Involvement Shopping Involvement Enduring Involvement Emotional Involvement 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 30 Marketing Implications of Involvement High-involvement purchases require: Extensive and Informative promotion to target market Low-involvement purchases require: In-store promotion, eye-catching package design, and good displays. Coupons, cents-off, 2-for-1 offers 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 31 Cultural Influences on Consumer Buying Decisions Identify and understand the cultural factors that affect consumer buying decisions © 2013 by Cengage Learning Inc. All Rights Reserved. 32 5 Factors Influencing Buying Decisions Cultural Factors Individual Factors Social Factors Psychological Factors CONSUMER DECISIONMAKING PROCESS BUY / DON’T BUY 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 33 Components of Culture Values Language Myths Customs Rituals Laws Material artifacts 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 34 Culture is. . . Pervasive Functional Learned Dynamic 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 35 Value Enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct. 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 36 Subculture A homogeneous group of people who share elements of the overall culture as well as cultural elements unique to their own group. 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 37 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. 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 38 U.S. Social Classes Upper Classes Capitalist Class 1% People whose investment decisions shape the national economy; income mostly from assets, earned or inherited; university connections Upper Middle Class 14% Upper-level managers, professionals, owners of medium-sized businesses; well-to-do, stay-at-home homemakers who decline occupational work by choice; college educated; family income well above national average Middle Class 33% Middle-level white-collar, top-level blue-collar; education past high school typical; income somewhat above national average; loss of manufacturing jobs has reduced the population of this class Working Class 32% Middle-level blue-collar, lower-level white-collar; income below national average; largely working in skilled or semi-skilled service jobs Working Poor 1112% Low-paid service workers and operatives; some high school education; below mainstream in living standard; crime and hunger are daily threats Underclass 8-9% People who are not regularly employed and who depend primarily on the welfare system for sustenance; little schooling; living standard below poverty lineby Cengage Learning Inc. All Rights © 2013 Middle Classes Lower Classes Reserved. 39 SOURCE: Adapted from Richard P. Coleman, “The Continuing Significance of Social Class to Marketing,” Journal of Consumer Research, December 1983, 267; Dennis Gilbert and Joseph A. Kahl, The American Class Structure: A Synthesis (Homewood, IL: Dorsey Press, 1982), ch. 11. Exhibit 6.4 Social Class Measurements Occupation Income Education Wealth Other Variables 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 40 The Impact of Social Class on Marketing ▪ Indicates which medium to use for advertising ▪ Helps determine the best distribution for products 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 41 Social Influences on Consumer Buying Decisions Identify and understand the social factors that affect consumer buying decisions © 2013 by Cengage Learning Inc. All Rights Reserved. 42 6 Social Influences Reference Groups Opinion Leaders Family Members 6 © 2013 by Cengage Learning Inc. All Rights Reserved. 43 Exhibit 6.5 Types of Reference Groups Primary: small, informal group Direct Face-to-Face membership Secondary: large, formal group Reference Groups Aspirational Group that someone would like to join Indirect Nonmembership 6 © 2013 by Cengage Learning Inc. All Rights Reserved. Nonaspirational Group with which someone wants to avoid being identified 44 Influences of Reference Groups ▪ They serve as information sources and influence perceptions. ▪ They affect an individual’s aspiration levels. ▪ Their norms either constrain or stimulate consumer behavior. 6 © 2013 by Cengage Learning Inc. All Rights Reserved. 45 Opinion Leaders The first to try new products and services out of pure curiosity. May be challenging to locate. Marketers are increasingly using blogs, social networking, and other online media to determine and attract opinion leaders. 6 © 2013 by Cengage Learning Inc. All Rights Reserved. 46 Family Purchase Process Roles in the Family • Initiators • Influencers • Decision Makers • Purchasers • Consumers 6 © 2013 by Cengage Learning Inc. All Rights Reserved. 47 Individual Influences on Consumer Buying Decisions Identify and understand the individual factors that affect consumer buying decisions © 2013 by Cengage Learning Inc. All Rights Reserved. 48 7 Individual Influences Gender Age Life Cycle Personality Self-Concept Lifestyle 7 © 2013 by Cengage Learning Inc. All Rights Reserved. 49 Age and Family Life Cycle Stage • Consumer tastes in food, clothing, cars, furniture, and recreation are often age related. • Marketers define target markets according to life cycle stages such as “young singles” or “young married with children.” 7 © 2013 by Cengage Learning Inc. All Rights Reserved. 50 Personality, Self-Concept, and Lifestyle • Personality combines psychological makeup and environmental forces. • Human behavior depends largely on self-concept. • Self-concept combines ideal selfimage and real self-image. 7 © 2013 by Cengage Learning Inc. All Rights Reserved. 51 Psychological Influences on Consumer Buying Decisions Identify and understand the psychological factors that affect consumer buying decisions © 2013 by Cengage Learning Inc. All Rights Reserved. 52 8 Psychological Influences Perception Motivation Learning Beliefs & Attitudes 8 © 2013 by Cengage Learning Inc. All Rights Reserved. 53 Perception Selective Exposure Consumer notices certain stimuli and ignores others Selective Distortion Consumer changes or distorts information that conflicts with feelings or beliefs Selective Retention Consumer remembers only that information that supports personal beliefs 8 © 2013 by Cengage Learning Inc. All Rights Reserved. 54 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 8 © 2013 by Cengage Learning Inc. All Rights Reserved. 55 Exhibit 6.6 Maslow’s Hierarchy of Needs 8 © 2013 by Cengage Learning Inc. All Rights Reserved. 56 Types of Learning Experiential An experience changes behavior Conceptual Not learned through direct experience 8 © 2013 by Cengage Learning Inc. All Rights Reserved. 57 Beliefs and Attitudes Belief Attitude An organized pattern of knowledge that an individual holds as true about his or her world. A learned tendency to respond consistently toward a given object. 8 © 2013 by Cengage Learning Inc. All Rights Reserved. 58 Changing Beliefs • Change beliefs about the brand’s attributes • Change the relative importance of these beliefs • Add new beliefs 8 © 2013 by Cengage Learning Inc. All Rights Reserved. 59 Business Marketing Chapter 7 Lamb, Hair, McDaniel 2012-2013 © 2013 by Cengage Learning Inc. All Rights Reserved. 60 1 Describe business marketing Describe the role of the Internet in business marketing 2 Discuss the role of relationship marketing and strategic alliances in business marketing Identify the four major categories of business market customers 3 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 61 5 Explain the North American Industry Classification System Explain the major differences between business and consumer markets 6 Describe the seven types of business goods and services Discuss the unique aspects of business buying behavior 7 8 © 2013 by Cengage Learning Inc. All Rights Reserved. 62 What Is Business Marketing? Describe business marketing © 2013 by Cengage Learning Inc. All Rights Reserved. 63 1 What Is Business Marketing? The marketing of goods and services to individuals and organizations for purposes other than personal consumption. 1 © 2013 by Cengage Learning Inc. All Rights Reserved. 64 Business Products • Are used to manufacture other products • Become part of another product • Aid the normal operations of an organization • Are acquired for resale without change in form …The key is intended use 1 © 2013 by Cengage Learning Inc. All Rights Reserved. 65 Business Marketing on the Internet Describe the role of the Internet in business marketing © 2013 by Cengage Learning Inc. All Rights Reserved. 66 2 Business-to-Business Electronic Commerce the use of the Internet to facilitate the exchange of goods, services, and information between organizations. 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 67 Measuring Online Success Stickiness A measure of a Web site’s effectiveness; calculated by multiplying the frequency of visits by the duration of a visit by the number of pages viewed during each visit. Stickiness = Frequency x Duration x Site Reach 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 68 Internet Sites for Small Businesses ▪ http://www.allbusiness.com AllBusiness provides entrepreneurs with the knowledge and tools to start, manage, and grow their business. The site links to hundreds of how-to articles and provides expert answers to questions. ▪ http://www.microsoft.com/business Microsoft Business offers small business solutions from security to enterprise content management to cloud services. The site also contains practical tips, advice, and links to how-to articles. ▪ http://www.quicken.com/small_business This site offers information on starting, running, and growing a small business. It also provides links to a variety of other Quicken sites that are useful to small-business owners and managers. © 2013 by Cengage Learning Inc. All Rights Reserved. 69 Exhibit 7.2 Evolution of E-Business Initiatives 2 70 Relationship Marketing and Strategic Alliances Discuss the role of relationship marketing and strategic alliances in business marketing © 2013 by Cengage Learning Inc. All Rights Reserved. 71 3 Relationship Marketing ▪ Loyal customers are more profitable than price-sensitive customers with little brand loyalty ▪ Long-term relationships build competitive advantage 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 72 Strategic Alliances • Licensing or distribution agreements • Joint ventures • Research and development consortia • Partnerships Alliances succeed with commitment and trust. 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 73 Relationships in Other Cultures Keiretsu relationships are highly integrated: • Companies have executives sitting on each others’ boards • Maintain dedicated trade efforts • Joint development, finance, and marketing 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 74 Major Categories of Business Customers Identify the four major categories of business market customers © 2013 by Cengage Learning Inc. All Rights Reserved. 75 4 Major Categories of Business Customers Producers • OEMs Resellers • Wholesalers • Retailers Governments Institutions • Federal • State • Local • Schools • Hospitals • Colleges • Churches • Unions • Fraternal • Civic Clubs • Foundations groups • Nonbusiness organizations 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 76 North American Industry Classification System Explain the North American Industry Classification System © 2013 by Cengage Learning Inc. All Rights Reserved. 77 5
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