Transcript Consumer behavior - UE Graduate School

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
WHAT WOULD YOU CHOOSE???
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).
CONSUMER BUYING BEHAVIOR
Consumer Buying Behavior
Refers to the buying behavior
of final consumers individuals
& households who buy goods
and services for personal
consumption.
INFLUENCES ON AND OF CONSUMER BEHAVIOR
PERCEPTION/
SENSATION
MARKET
RESEARCH
INFO
SEARCH
COGNITION
STRATEGY
CHOICES
AFFECT
PREFERENCES
BELIEFS
CONSUMER
COMMUNICATION
SOCIAL AND
OTHER INFLUENCE
TRUE OR FALSE?
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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.
QUESTIONS FACED BY CONSUMERS
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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?
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 <----- vacation, movie, hot
bath, medication
CONSUMER DECISIONS:
THEORY AND REALITY IN CONSUMER BUYING
PROBLEM
RECOGNITION
INFORMATION
SEARCH
EVALUATION OF
ALTERNATIVES
PURCHASE
POSTPURCHASE
EVALUATION/
BEHAVIORS
Theory
Complications
APPROACHES TO SEARCH FOR
PROBLEM SOLUTIONS
INTERNAL
Memory
Thinking
EXTERNAL
Word of mouth, media,
store visits, trial
CATALOG
OPTIONS IDENTIFIED AND CONSIDERED
UNIVERSAL SET
All possible options
RETRIEVED SET
Options that readily
come to mind
Options that will be
considered by the
consumer
Note: Retrieved and
evoked sets will vary
among different
consumers
EVOKED SET
REMINDER

For low involvement products,
efforts aimed at affecting
internal search tend to be
more effective—the consumer
is usually not willing to expend
energy on external search.

External search is more likely
for
higher
involvement
products.
DECISION MAKING ISSUES
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Involvement level
 Temporary
 Enduring
Consumer locus of control
 Internal
 External
Product category
complexity
Consumer knowledge
EVALUATION TYPE
IMPORTANT
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LESS
IMPORTANT
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 noncompensatory measure, then compensatory
tradeoffs on other attributes
Abandoned strategy: Consumer finds initial
criteria unrealistic and proceeds to less
desirable solution
HEURISTICS—LOW INVOLVEMENT DECISION
RULES
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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)
ATTITUDES―COMPONENTS
AFFECT
(FEELING)
BELIEFS
BEHAVIORAL
INTENTIONS
ATTITUDE COMPONENTS

Beliefs
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Can be positive,
negative, or neutral
May or may not be
accurate
May contradict other
beliefs held by the other
person
Affect

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May be positive or
negative
May take on specific
dimension (e.g., pleasure,
disgust)

Behavioral
Intentions
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An individual’s 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
GENERATING BELIEFS THROUGH
ADVERTISING

Statements must be
Perceived
 Comprehended
 Remembered
 Believed (at least in part)

Model of Buyer Behavior
Product
Price
Place
Promotion
Buying Decision
Process
Product Choice
Brand Choice
Dealer Choice
Marketing and
Other Stimuli
Buyer’s Black Box
Buyer’s Response
Economic
Technological
Political
Cultural
Buyer
Characteristics
Purchase
Timing
Purchase
Amount
Factors Influencing Consumer Behavior
Cultural
Social
Individual/Personal
Culture
Reference
groups
Subculture
Family
Social
class
Roles
and
status
Age and
life-cycle
Occupation
Economic
situation
Lifestyle
Personality
and
self-concept
Psychological
Motivation
Perception
Learning
Beliefs and
attitudes
Buyer
Culture

Most basic cause of a person's wants and
behavior.
Subculture
• Groups of people with shared
value systems based on
common life experiences.
• Hispanic Consumers
• African American Consumers
• Asian American Consumers
• Mature Consumers
Social Class
• Society’s relatively permanent
& ordered divisions whose
members share similar
values, interests, and
behaviors.
• Measured by: Occupation,
Income, Education, Wealth
and Other Variables.
CELL PHONE CRAZE
“ In Filipino Culture everything new and shiny
is attractive”
Factors Affecting Consumer Behavior:
Social
Groups
•Membership
•Reference
Family
•Husband, wife, kids
•Influencer, buyer, user
Roles and Status
Social Factors
Reference Group
are groups that have direct (face to
face)or indirect influence on the
person’s attitudes or behavior
“ People are often
influenced by reference
groups to which
they do not belong”
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
Factors Affecting Consumer Behavior:
Individual/ Personal
Personal Influences
Age and Life Cycle
Stage
Occupation
Economic Situation
Personality & Self-Concept
Lifestyle Identification
Opinions
Activities
Interests
Factors Affecting Consumer Behavior:
Psychological
Motivation
Beliefs and
Attitudes
Psychological
Factors
Learning
Perception
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 person’s consistency favorable or
Unfavorable evaluations , feelings and tendencies
Toward an object or idea.
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.
LEARNING
Is described as changes in an individual
behavior arising from experience.
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.
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
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
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.
HENRY MURRAY’s 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.
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.
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 one’s 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 one’s life
Maslow’s 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)
Consumer Decision-Making
Process
Need Recognition
Information Search
Cultural, Social,
Individual and
Psychological
Factors
affect
all steps
Evaluation
of Alternatives
Purchase
Postpurchase
Behavior
Complete model of consumer behavior
Start
Need
recognition
Internal
search
Search
Exposure
Stimuli
(marketer
dominated,
other)
Attention
Comprehension
Alternative
evaluation
Influences
• culture
• social class
• family
• situation
Memory
Acceptance
Purchase
Retention
Outcomes
External
search
Dissatisfaction
Satisfaction
Individual
differences
• resources
• motivation &
involvement
• knowledge
• attitudes
• personality,
values, lifestyle
• 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?
Need Recognition
Marketing helps
consumers recognize (or
create) an imbalance
between present status
and preferred state
• When a current product isn’t
performing properly
• When the consumer is running
out of an product
• When another product seems
superior to the one currently used
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.
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.
Personal sources
(friends and family)
Public sources (rating
services like
Consumer Reports)
Marketer-dominated
sources (advertising
or sales people)
The evoked
set: a group of
brands from which the buyer can
choose
• 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?
Determinants of External Search
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?
Relative influence of husbands & wives
Wife
Dominant
Child clothing
Final
decision
Information
search
groceries
Women’s
clothing
Pots & pans
NonRx
lamps
Toys/games
furniture
luggage
carpet
refrigerator
Paint wallpaper
vacations
Men’s leisure clothing
Joint
Men’s business clothing
TV sets
stereo
camera
Financial planning
Family car
Sport equipment
hardware
Lawn mower
Husband
Dominant
Extent of role specialization
100
75
50
25
0
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
Factors affecting
Consumer involvement
• Previous experience: low level involvement
• Interest: high involvement
• Perceived risk of negative consequences: high involvement
• Situation: low to high due to risk
• Social visibility: involvement increases with product visibility
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
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
Compensatory Decision: Using product characteristics to guide decision
•
Select the best overall brand--
•
Compensatory model
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.
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
•
•
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--
a minimum acceptable
standard as the cutoff point for each attribute--any brand that exceeds the cutoff point is
accepted.
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.
• 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?
Post purchase Behavior
Cognitive Dissonance
?
Did I make a good decision?
Did I buy the right product?
Did I get a good value?
Can minimize through:
Effective Communication
Follow-up
Guarantees
Warranties
Under promise & over deliver
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
Cognitive Dissonance
• psychological discomfort caused by inconsistencies
among a person’s 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 “buyer’s 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)
• 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?
• 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?
Decision Processing
THANK YOU
for listening!
HON. EDUARDO G. ONG
BSC,MBA,LLB,PHD,DPA,DBA
Professor of
Business Management &
Public Administration