Understanding Consumer

Behavior

Co hav
gn t &
on

Be
ns i or
Co fec
iti

um
Af

er
Part 1 of 3

Consumer
Environment

The exchange processes by which

consumers conduct their lives.
 Objectives

 To conceptualize basic models of

consumer behavior
 To understand the consumer
decision process for goods,
services, and ideas
 Simplified Model

Target
Marketing
Black Box Audience
Stimuli
Response
Multiple Stimuli Black
Box

Marketing Environmental
Mix Events
Product Economic

Price Technology

Place Political

Promotion Cultural
 Expanding the Black Box”
Intra-Personal, Situational Inter-Personal,
psychological Influences social
Influences Occasion, Influences
usage
Motives, perceptions,.. Culture, social class,..

Mediated by
audience
characteristics:
Gender,age,

Decision Process
 Multiple Responses
Black
Box Potential
Buyer Responses

Product choice

Brand choice

Retailer choice

Purchase timing

Need Satisfaction
Why Study Consumer Behavior?
 To implement the Marketing Concept . .
a plan to influence buyer – seller
exchanges to meet organizational goals
• To understand complex influences on
consumption processes

• To increase a manager’s confidence to

predict consumer responses to their
marketing strategy
• To avoid “the Self-Reference Criterion”
 Self Reference Criterion:
Product Knowledge IQ

Low High
MEAN
knowledge knowledge
 Information Gaps:
Listen to Your Customer(s)
Self Reference: Home Builders
construct what they think customers
needed (Presumptuous)
RESULT: Cookie Cutter designs, mass
production for economies of scale and
sales pressure
SURPRISE!!! A home builder
(Finally) Surveys Buyers (1996)
 Information Gaps:
Listen to Your Customer(s)
SURVEY FINDINGS
Many Customers prefer doing without . . .

Fireplaces Denver - San Fran.

Covered Porches Phoenix - South
Coffee Bar . . . Bedroom - Kitchen
Loffice - A combination loft + office space
for a computer
 Consumer Decision
Processes
Objectives
• To understand the types of
consumer decision
processes
• To understand the steps in
the consumer’s decision
process.
• To discover how buyers
learn about and buy
products.
 Continuum of Decision
Process Effort
Gum
Cigarettes New Car

Pure Limited Extended

Routine Negotiation

Water Education New House

Gas
Impulse Purchase
(no conscious pre planning)
 Continuum of Decision
Process Involvement
Personal Product Environmental Situational
sources characteristics characteristics sources

Low High
Involvement Involvement
Weak attitude Strong attitude

Degree of perceived Importance:Enduring/situational

(Risk: Social, Financial , Physical & Emotional )
 Multiple Participants in the
Consumer’s Decision Process

Initiators

Users Deciders

Influencers
(Gatekeeper)
Simplified Linear Model of the
Consumer Decision Process

Problem Information Evaluation of

Recognition Search Alternatives

Purchase Post Purchase

Decision Behavior
Expectations
 Major Influences in the Consumer’s
“Black Box”
SITUATIONAL PSYCHOLOGICAL SOCIAL
INFLUENCES INFLUENCES INFLUENCES
• Perception
• Physical and • Roles
• Motives • Family
• Social Surroundings • Learning
• Time • Reference Groups
• Attitudes
• Purchase Use Social Classes
• Personality • Culture
• Buyer’s Condition

Consumer Decision Process

Problem Post
Recognition Purchase
 Buying Process

Problem or need
recognition

Increase
Existent Gap Desired
State Size State

Increase Intensity of (Need) Want

 Major Causes of Problem
Recognition or Opportunity
 Science and Technology Advancements
– new products
– new information
 Changing Consumer Circumstances &
Expectations
– improved education
– family life cycle
– income adjustments
 ICEBERG EFFECT
The act of buying is 10% visible effort

90% of buying process is

invisible
- Problem recognition
- Information search
- Pre evaluation
- Post Symptoms
Caution: Purchase education
Vs. Causes
 Applied
Marketing CONVENIENCE. . .
CONVENIENCE. . .
CONVENIENCE. . .
• The average consumer (a woman) takes
just 21 minutes to do her supermarket
shopping
• buys an avg. of 18 items out of 30 – 40,000
• browse time decreased 25% over past 5yrs.
& she doesn’t bother to check prices

•Proctor + Gamble
(WSJ, 1998)
 Psychology of
Simplification/Complication
• Consumers try to simplify decision
making by reducing the amount of
information processing
High

Information
Amount

Low
Simple Decision Complex
 Psychology of Complication
• Gum - color…crème w/blue spec’s
– sugar…or…sugar free?
– Flavor/taste (Cool Mint,?)
– Chewable ness…
– bubble blowing…or not?
– liquid center…or not ?
– Shape, chick let casing
– Family package or individual?
– Stick to your teeth or not?
– Length of chew time ?
Buying Process

Information
Search

Information
Is knowledge
 Information Sources
1. Internal Sources (Psychological)
– experience
– memory storage/retrieval
– mental processing
2. External Sources (Social)
2. family
3. friends
4. professionals
Personal interaction
 Information Sources
3. Public Sources
– government studies
– product testing magazines
– media stories
4. Commercial Sources
– advertising
– sales people
– product pamphlets
 Information Source Comparisons
Effort
Source Believability
Required

#1 Internal (experience) Low High

Experiential (examining High High
or testing the product)
#2 Personal (friends, relatives) Low High

#3 Public (consumer reports) High High

#4 Commercial (Promotions) Low Low

 Applied
Picking Physicians
Marketing

Surveyed consumers said the most

frequent sources for selecting a doctor are:
Referral from friend
24%
Referral from another doctor
14%
Referral from family member
10%
General word of mouth
9%
 Applied
Researching Services
Marketing

Consumers spend time researching

professional service providers:

Financial Planner
30 hours
Stockbroker
21 hours
Lawyer
19 hours
Accountant
17 hours
Dentist & Primary Care Physician
16 & 15 hours
 Principles:
Information Search
 Consumers seek to simplify decision
making via time, energy & costs.
 Consumers seek Information credibility &
predictive ness

• Tactics: Identify the information

sources & importance to assure
processing of your brand’s
information.
 Influences on Intensity of
Information Search
• Personal factors - ability to process product
information, physical energy and mobility to search
out alternative information .. Shopping propensity
-special sales, return policies.
• Social factors - social pressures for right”
choice, time pressure on the purchase
• Environmental Factors
– availability of product substitutes, supplier
alternatives and resources to search
– Product life (long or short?)
 Applied
Marketing Information Gaps
Examples of Dell’s Customer Feedback
- Where’s the power button?
- Won’t work after I washed the

keyboard
- Where’s the any key?
(Click any key to continue)
- fax won’t work
- I refuse to read manual
 Questions and
(Sometimes) Answers
(All Day Counts Include Weekends)
Web site What we asked What happened
Coca-cola How much caffeine No response.
is in coke?
Reebox Is it dangerous to wear Four weeks later
running shoes to play
basketball?
3M Do post-it notes get less Twenty days later

sticky from just sitting

around?
 Principle:
Information Overload
 With greater amounts of information
available, Consumers make poorer
choices (Threshold effects)
• Tactic:
– focus on product information (features)
that is important (salient) to consumers
 Principle:
Information Wear out
• Repetition increases consumer learning
• Too much repetition = wear out
(consumers decrease attention over time)
Tactic: Change information and/or format
 Pictures are better than words
 Information search leads to a Consideration Set of
Brand Alternatives

All brands in a product class

Unknown brands Known brands

Brands Brands found

found through Evoked Unrecalled
brands
accidentally search set

Consideration
set of brand + I like
choice o Neutral
alternatives - I dislike
 Buying Process

Evaluation of
Alternatives

• Utility Theory - Consumers perform

rational, quantitative calculations
to maximize personal utilities ..
economic, behavioral & societal.
 3 Major Evaluation Criteria
• Economic: cost/performance
• Behavioral: prestige/status/peer
influence/lifestyle
• Societal: product externalities Lots of storage
• environmental effects
Performance
– society’s long run welfare

Safety

Variety of
colors
 Evaluation Criteria

• Principle: Evaluation criteria change

over time and among market segments.

 Promotions “frame”
certain product attributes
(evaluation criteria) to
influence their perceived
relative importance
 Supermarket Selection Criteria
Change over time
1974 1981 1985

#1 Cleanliness Product Low prices

attractive Quality
location Low prices Location

Labeling of Product Product

Products variety Variety
Cleanliness Courteous
attractive employees
 Economic Theory
• Economic Rationality is …
price and quality = value.
Assumptions: Complete product knowledge, freedom
of choice & ability to measure utilities (satisfaction)

Economic Theory Limitations

• Consumers are not always economically “rational”
due to social & emotional motives & imperfect
knowledge.
• Expenditures do not vary with income due to
varying resource constraints
 Law of Diminishing Returns
(Marginal Utility)

28
24
Utility
20
Satisfaction
15
10

1 2 3 4 5 6
Beer
Applying Evaluative Criteria
(Behavioral,Societal,Economic)
Toothpaste
Decay Prevention Economic Attributes
and Price

Taste and Flavor Behavioral Attributes

Packaging Societal Attributes

(safety, recyclable, resources)
 Evaluation criteria are the basis of
product attitudes

• Retailer Attributes • Product Attributes

- location, - Price (value),
- credit terms, - Quality,
- return policies,etc. - style, etc.
• + relative • + relative
importance (utility) importance (utility)
• = Attitude toward • = Attitude toward
Retailer (Image) Product
 Product Attitude

• Product Beliefs x Evaluations = Attitude

• An overall evaluation of a good, service or
idea . . .with a predisposition to purchase
the type of product or specific brand
• Generally, … a weak predictor of product or
brand choice due to mediators
(time,situation,money)
 Product attitudes lead to . . .
Behavioral intentions
Of each 100 persons who stated a definite
intention to buy a (brand) appliance.
68% bought
44% bought the brand
Brand the appliance intended
A
32% changed
brands
56% did not
buy the
appliance
 Factors that weaken the relationship
between intention and behavior

Different
Intervening Unforeseen
levels of
time event
specificity

Unforeseen
environmental
context

Degree of
Instability of New
voluntary
intentions information
control
 Buying Process

Purchase
Decision(s)

WHO BUYS?
WHAT?
WHEN?
WHERE?
AND WHY?
 Influences on Purchase
Decisions

• Purchase Situation(s)
• Usage (Social or Private)
• Time Perspective (long or short)
• Resource Capabilities
• Level of personal control
 Purchase Decisions

• Principle: Consumers dislike

making decisions/choices
• Tactic: Show satisfied customers
– ordinary people
– experts
– celebrities
 Buying Process

Post-Purchase
Behavior

• Cognitive dissonance: post-

purchase tension .
Post Purchase Behavior

Product Experience

Actual Actual
Benefits Expectations
Gap
Size
Satisfied Dissatisfied
 Post Purchase Behavior

• Principle: Dissatisfied customers

communicate more negative word
of mouth than satisfied customers
communicating positive word of
mouth
 Post Purchase Behavior
• Cognitive Dissonance
• Lack of confidence (doubts)
about the correctness of a
prior purchase decision and
efforts to reconcile doubts
Did I Do the Right
Thing?
 Cognitive Dissonance
• Causes: Perceived Risk
– Performance risk
– Physical risk (wear-out)
– High financial commitment
– High involvement level
– High social visibility
– Information Overload
 Cognitive Dissonance

• Potential Reactions
– Return product
– Seek confirming information
• Marketing Tactic
– Provide post decision positive
information
Cognitive Dissonance
 A Model of Consumer Decision Making
Information in the
environment

Interpretation
Exposure,attention,
and comprehension

Memory Consumer
Product Knowledge, meanings decision
knowledge and and beliefs making
involvement

Integration
Attitudes and
intentions

Decision/Behavior
Questions?