Topic 5 - Consumer Behavior

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Consumer Behavior

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 Process through which buyers make decisions  Every buying decision is influenced by external and internal factors— often by what consumers believe others expect of them.  Three broad categories of interpersonal influences on consumer behavior: cultural, social,

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 Marketers borrow from the sciences of psychology and sociology.  B = f(P, E)  In this sense, behavior is a function of both interpersonal influences (culture, friends, classmates, coworkers, and relatives) and personal factors (attitude, learning, and perception).

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Interpersonal Determinants of

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CULTURAL INFLUENCES  Culture - the values, beliefs, preferences, and tastes handed down from one generation to the next.  It is the broadest environmental determinant of consumer behavior, so marketers need to understand its role in consumer decision making, both here and abroad.  Marketing strategies that work in one country or region may be offensive or ineffective in another, especially were population is quickly diversifying.

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Filipino Core Values Professor Felipe M. de Leon, Jr. Commissioner, NCCA Chairman, NLTA University of the Philippines

KAPWA (share identity)  the core of Filipino psychology, it is humaneness at the highest level  implies unique moral obligation to treat one another as equal fellow human beings

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Filipino Core Values PAKIRAMDAM (SHARED INNER PERCEPTION)  Knowing Through Feeling or Tacit Knowing; Participatory Sensitivity)  A unique social skill inherent in Filipino personhood  The need for openness and basic trust is a precondition for this active process of sensing subtle cues Friday, July 12, 13

Filipino Core Values Kagandahang Loob (SHARED HUMANITY)  Pagkamakatao; A Shared Inner Nobility; A Quiet Sense of Responsibility for Others; A Great Compassion for All Living Beings)  Nudges a person towards genuine acts of generosity, kindness and caring Friday, July 12, 13

Pakikisama DEEPEST LEVEL OF INVOLVEMENT WITH ANOTHER PERSON STILL CONSIDERED AN OUTSIDER (IBANG TAO)

Characteristic tendencies of this trait are giving in to another person’s wish, demands, wants or desires The motive for this could be politeness or expectation of future concessions or immediate rewards

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International Perspective on Cultural Influences  Marketing strategies that work in prove successful in one country may not often cannot extend to others international markets due to cultural because of cultural vaiations..  Packaging can be interpreted in many ways and may contain different information in various cultures.  Some products must be adapted to fit tastes and palates if they are to succeed in various cultures.

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Subcultures  Cultures are not homogeneous entities with universal values, though core values do dominate..  Each culture has subcultures groups with their own distinct modes of behavior. Friday, July 12, 13

SOCIAL INFLUENCES  Every consumer belongs to a number of social groups.  Group membership influences an individual’s purchase decisions and behavior in both overt and  Groups establish subtle ways. norms, which are values, attitudes, and behaviors that a group deems appropriate for its members and even for nonmembers who aspire to join.

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Social Influences

 Buying behavior is affected by differences in group status and role.  Group status refers to the relative position of any individual member in a group.  Group role refers to formal or informal guides for behavior that is expected of members who hold specific positions in the group.  People often make purchases that reflect their status within a group., particularly regarding expensive purchases within affluent groups. Friday, July 12, 13

Asch Phenomenon  Asch found that individuals conform to majority rule, even if that majority rule went against their beliefs

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Reference Groups  Reference groups – groups whose values, structures, and standards influence a person’s behavior..  Consumers often try to coordinate their purchase behavior with their perceptions of values of their reference group’s values  Strong from a reference group requires two conditions:  Purchased product must be seen and identifiable.  Purchased product must be conspicuous,

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 Reference groups tend to affect the purchase of luxury, gourmet, or designer items more than everyday purchases.  Children are especially vulnerable to the influence of reference groups that they aspire to, and to ads with celebrity endorsements

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Social Class  Socioeconomic Classification  Upper A Php Php 100,000+  Upper B Php 50,001-99,999  Upper Middle C1 Php 30,001-50,000  Middle C2 Php 15,001-30,000  Lower DE 15,000 and below Source: PSRC/AGB data Friday, July 12, 13

Social Class  People in one social class may aspire to a higher class and exhibit buying behavior common to that class, rather than to their own..  Marketers often attract consumers in higher social classes by offering exclusive memberships or special services not

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Opinion Leaders

 Opinion leaders are trendsetters within a reference group who are likely to purchase new products before others in the group and then share their experiences and opinions via word of mouth.  Generalized opinion leaders are rare; people which rotate in and out of this role depending on their knowledge of or interest in specific products often take this role, found in all segments of the population.  Information about goods and services may flow from the media (Internet, TV, radio, print) to opinion leaders and then to other consumers, or directly to consumers. .  Some opinion leaders influence purchases by others merely through their own actions, which consumers decide to emulate. Friday, July 12, 13

FAMILY

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 Most people are members of at least two families in their lifetime—the one they’re born into and the one they form later in life.  The family group is perhaps the most important determinant of consumer behavior because of close and ongoing interactions among members..  Each family has norms of expected behavior, and different roles and status relationships for its members.  Those norms and behaviors that

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Philippine Family Structure  2 in every 5 households have OFW family member  3 out of 10 OFWs have broken families  It is a norm that both parents are working

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 Marketers describe the role of each spouse in terms of four categories  Autonomic role— partners independently make equal numbers of decisions.  Husband-dominant role —the husband makes most of the purchase decisions.  Wife-dominant role—

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Children and Teens  Children and teenagers influence what parents buy, are exposed to endless messages, are more sophisticated about purchasing than previous generations were.  They create a huge market of more than 50 million, wielding $192 billion in purchasing power annually.  Individualism

 Affect family consumer behavior Friday, July 12, 13

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Personal Determinants

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NEED AND MOTIVES  A need is an imbalance between the consumer’s actual and desired states.. 

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Someone who recognizes or feels a significant or urgent need then seeks to correct the imbalance.. Marketers arouse this sense of urgency by making a need “felt” and suggesting a product to satisfy it.

 Motives are inner states that direct a person toward the goal of satisfying and that prompt some action.

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slow’s Hierarchy of Need

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Maslow’s Hierarchy of Needs  person must at least partially satisfy lower-level needs before higher needs can affect behavior  In developed countries where basic needs are more likely already satisfied, higherorder needs may be more important to consumer

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Maslow  The theory says that once a need is satisfied, it no longer has to be met, so the individual moves on to the next level of needs.  But it has flaws—some don’t move through the hierarchy; some fixate on a certain level or relate to

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PERCEPTIONS  Perception is the meaning that a person attributes to incoming stimuli gathered through the five senses—sight, hearing, touch, taste, and smell.  A buyer’s behavior is influenced by his or her perceptions of a good or service.  Buyers’ perceptions depend as much on what they want to perceive as on the actual stimuli.

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A person’s perception of an object or event results from the interaction of two types of  Stimulus factors— characteristics of the physical object. (size, color, weight, shape).  Individual factors—unique characteristics of the individual (sensory processes, experiences with similar inputs, basic motivations, and expectations). Friday, July 12, 13

Perceptual Screens  People are bombarded by marketing messages today.  The typical supermarket carries 30,000 packages, network TV stations typically air 60,000 commercials a week.  The increased marketing clutter has caused people to ignore many promotional messages, responding only to those that break through their  perceptual screens—the mental filtering process that all inputs must pass. Friday, July 12, 13

Breaking Perceptual Screens  Marketers determine which stimuli evoke good responses, create a message that stand outs and gets the attention of prospective customers..  Doubling the size of a print ad breaks through the clutter, increasing its attention value by 50 percent; use of white space, dark backgrounds, or color also attract viewers.  The psychological concept of closure—the human tendency to perceive a complete picture from an incomplete stimulus—helps a

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Breaking Perceptual Screens  Word-of-mouth marketing can get attention by a more natural path of conversation.  Virtual reality displays 3-D marketing messages and info via merchandise tours or walks through service venues.  Selective perception leads to brand loyalty as customers tune out info that doesn’t match beliefs and

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Subliminal Perception  Subliminal perception is the subconscious receipt of incoming information.  Subliminal advertising is. aimed at the subconscious level of awareness to circumvent perceptual screens, and though condemned as manipulative, it is unlikely to induce buying except by people already inclined to buy.  There are three reasons for this: 

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strong stimulus factors are needed to gain consumer attention

Subliminal Perception  Emotions do play a vital role in decision making, so marketers look for ways to elicit emotional feelings toward purchasing a product..  Neuromarketing is a new technology that beams commercials or messages to certain individual customers in particular areas of stores.

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ATTITUDE  Attitudes are the enduring favorable or unfavorable evaluations, emotions, or action tendencies toward an object or idea.

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Attitude  Perception of incoming stimuli is greatly affected by attitudes about the product, store, or  Attitudes form over time via individual experiences and group contacts, and are highly resistant to change.  Because favorable attitudes likely affect brand preferences, marketers need to determine consumer attitudes toward their Friday, July 12, 13

Attitude Components  cognitive component refers to the individual’s information and knowledge about an object or concept.  affective component deals with feelings or emotional reactions.  behavioral component involves tendencies to act in a certain manner.  All components have stable and balanced relationships to one another to form an attitude

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Changing consumer  Marketers have two choices regarding attitudes:  to encourage consumer attitudes that motivate purchase of a particular product;  to evaluate existing consumer attitudes and make the product features appeal to them.

 If consumers view an existing item unfavorable, the seller may redesign it or offer new options.  But a negative attitude may not be truly unfavorable; it just may not motivate the consumer to

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Modifying the  Attitudes frequently change in response to inconsistencies among the three components.  Attitudes change when new information changes the cognitive or affective components of an attitude, such as when benefits are given or misconceptions are corrected.  Attitudes change when buyers are engaged in new behavior that gets them to try a product

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Modifying the  Attitudes change when new technologies encourage consumers to change their attitudes.

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Marketing looks at not only changes in consumer decisions over time, but also at the current status of those decisions.

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Learning Marketing looks at not only changes in consumer decisions over time, but also at the current status of those decisions.

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Learning  Learning (in marketing) refers to immediate or expected changes in consumer behavior based on experience.  It includes the components of :  drive (any strong stimulus that impels action) and;  cue (any object that determines the nature of a person’s response to a drive).

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Learning  A response is an individual’s reaction to a set of cues and drives.  Reinforcement is the reduction in drive that results from a proper or rewarding response, so a strong bond links the drive and the purchase and increases the chance of future purchases. Friday, July 12, 13

Applying it Marketing  Shaping refers to applying a series of rewards and reinforcements to permit more complex behavior to evolve over time  Both promotional strategy and the product itself play a role in the shaping process.

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Shaping Process 1. getting consumers to try a product, possibly using a cue such as a sample or coupon. 2. entice the consumer to buy the product with little financial risk. 3. motivate the person to buy the item again at a moderate cost, with the only reinforcement being satisfactory performance. Friday, July 12, 13

Self Concept Theory  Self-concept—a person’s multifaceted picture of himself or her self—plays an important role in consumer behavior..  It comes from the interaction of many influences—both personal and interpersonal—that affect buying behavior.  A person’s needs, motives, perceptions, attitudes, and learning are at its core, which is also affected by

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4 Components of Self Concept

 Real self—an objective view of the total person.  Self-image—the way an individual views himself or herself.  Looking-glass self—the way an individual thinks others see him or her.  Ideal- self—the image to which the person aspires.  Consumers are likely to choose products that will move them closer to their ideal

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Consumer Decision Process

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 Even if they’re unaware of it, consumers complete a step-bystep process in making purchase decisions.  The time and effort spent on particular purchasing decision depends on the importance of the desired good or service.  High-involvement purchase decisions are those with greater levels of potential social or economic consequences.  Low-involvement purchase decisions are routine purchases that pose little risk to consumers..

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Problem or opportunity  Duringrecognition the first stage in the decision process, the consumer becomes aware of a significant discrepancy between the existing situation and a desired situation.  Marketers help prospective buyers identify and recognize potential problems or needs in the form of advertising, promotion, or personal sales

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Search  During the second step, the consumer gathers information about attaining a desired state of affairs.  The search identifies alternative ways to solve the problem and may cover internal sources (mentally reviewing or recalling past experience) or external sources (gathering opinions and info)

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Search identifies alternative brand to consider  The number of alternatives that a consumer actually considers is called the evoked set.  In some searches the consumer knows the brands that merit further consideration; in others, external searches bring together this new information.  The number of brands in the

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Evaluation of alternatives  Actually, some evaluation takes place in the second step as consumers accept, distort, or reject information found.  A brand or product is chosen from the evoked set, or the decision is made to keep looking for alternatives.

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Evaluative criteria are the features that a consumer considers in choosing among alternatives  These criteria may be objective facts.  The criteria may also be subjective impressions.  Common criteria include price, brand name, and country of origin, and can vary with the consumer’s age, income, social class,

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Marketers attempt to influence the outcome in three ways:  By educating consumers about attributes that they view as important in evaluating certain goods  By identifying which evaluative criteria are important to an individual and showing why a specific brand fulfills those criteria  By inducing a customer to expand the evoked set to include the Friday, July 12, 13

Purchase Decision and Act  The fourth and fifth steps involve the eventual purchase decision and the act of making the purchase.  By this time, each alternative in the evoked set has been weighed, based on the individual’s own evaluative criteria, and the alternatives have been narrowed down to one.  The consumer then decides on the purchase location.  Marketers help smooth the purchase by offering benefits such as warranties, financing, or free delivery,

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Postpurchase evaluation  The purchase act produces one or two results.  The buyer feels satisfaction at the removal of the discrepancy between the existing and desired states, usually if the purchase meets or exceeds expectation.  The buyer feels anxiety or dissatisfaction with

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Cognitive  A buyer often experiences postpurchase anxiety from an imbalance among a person’s knowledge, beliefs, and attitudes.  It might include worry about paying too much or complaining to the seller.

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Cognitive dissonance may increase in three  When the value of the purchase increases  When the rejected alternatives have desirable features not seen in the chosen alternative  When the purchase decision has a major

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Dealing with cognitive  It’s more often seen in highinvolvement purchases.  The consumer may focus on the item’s good points and ignore anything dissatisfactory.  Marketers may help reduce cognitive dissonance by providing information that supports the chosen item.  The consumer may decide to change products and vow to purchase the rejected item next time Friday, July 12, 13

Classifying consumer problem-solving  Marketers recognize three categories of problem-solving behavior: routinized response, limited problem solving, and extended problem solving.  The classification of a purchase within this framework influences the consumer-decision process.

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Routinized response behavior

 A consumers makes many routine purchases by choosing a preferred brand or one of a few acceptable brands .  The consumer has already set evaluative criteria and identified options, so any further external search is limited.  It’s most common in buying very lowinvolvement products, limited searching.

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Limited problem  The has already set evaluative criteria for a certain kind of purchase,then encounters a new, unknown brand..  The buyer spends a moderate amounts of time and efforts in external searches and in applying the evaluative criteria to assess the new brand..  This limited problem solving is affected by the number of evaluative criteria and brands, the extent of external search, and the process for determining preferences..

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Extended Problem Solving  The consumer feels brands are difficult to categorize or evaluate., so begins to compare one with another.  The consumer needs to understand the product features before evaluating alternatives..  This extended problem solving refers to a lengthy external search, usually in high-involvement purchase decisions.

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