Basic Model Of Consumer Behavior 663k68

Basic Model of Consumer Behavior

Complete model of consumer behavior Start Need recognition Internal search

Search

Exposure Stimuli (marketer dominated, other)

External search

Attention Comprehension

Memory

Alternative evaluation

Acceptance

Purchase

Retention

Outcome s

Dissatisfaction

Satisfaction

Influences • culture • social class • family • situation

Individual differences • resources • motivation & involvement • knowledge • attitudes • personality, values, lifestyle

Buying Process Stage 1

Existent State

Problem or need recognition Increase Gap Size

Desired State

Increase Intensity of (Need) Want

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 State Preferred superior to the one currently used

ICEBERG EFFECT The act of buying is 10% visible effort

90% of buying process is invisible -

Problem recognition Information search Pre evaluation Post Purchase education

Buying Process Stage 2

Information Search Informatio n Is knowledge

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.

Personal sources (friends and family) Public sources (rating services like Consumer Reports)

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.

Marketer-dominated sources (advertising or sales people)

The

evoked set:

a group of brands from which the buyer can choose

Determinants of External Search

Information Gaps Examples of Dell’s Customer

- Where’s the power button? - 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 is in coke?

No response.

Reebok Is it dangerous to wear running shoes to play basketball?

Four weeks later

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

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 Brands found accidentally

Known brands

Brands found through search

Consideratio n set of brand choice

Evoke d set

Unrecalle d brands

+ I like o Neutral - I dislike

Buying Process Stage 3



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 environmental effects 

Lots of storage

 society’s long run welfare Performance

Safety Variety of colors

Evaluation Criteria Evaluation criteria change over time and among market segments.  Promotions “frame” certain product attributes (evaluation criteria) to influence their perceived relative importance

Stage 4

WHO BUYS? WHAT? WHEN? WHERE? AND WHY?

Outlet Selection & Purchase

Influences on Purchase Decisions  Purchase

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

OUTLET SELECTION OUTLET - TO ANY SOURCE OF PRODUCTS OR SERVICES FOR THE CONSUMERS TYPES OF OUTLETS: 

STORE BASED (BRICK & MORTAR): RETAIL SHOPS, SUPERMARKETS, MALLS, CHAIN STORES, DISCOUNT STORES ETC  NON-STORE BASED: INTERNET PORTALS, CATALOG SHOPS, TELE-SHOPS ETC. 

ABOVE DISTINCTION COULD SOMETIMES BE BLURRED (PIZZA, MILK ETC)

SOME FACTORS WHICH INHIBIT IN-HOME SHOPPING ARE:

‘IN-HOME SHOPPING’ REFERS TO SHOPPING FROM COMFORT OF HOME/ OFFICE AT NON-STORE OUTLETS .

THE

 CUSTOMER’S INABILITY TO ‘TOUCH & FEEL’ GOODS  ABSENCE OF PHYSICAL ACTIVITY/ EXCITEMENT OF ‘GOING SHOPPING’  ABSENCE OF SOCIAL INTERACTION (BARGAINING/ INTERACTING WITH FELLOW SHOPPERS ETC.)  TRANSACTION SECURITY 

DESPITE THESE INHIBITORS, THE SHARE OF NON-STORE BASED OUTLETS, PARTICULARLY THE INTERNET BASED ONES, IS RAPIDLY GROWING.

Factors Determining the Store Choice 1. Store Location ◦ Intercity Choice (Outshoppers and nonoutshoppers) ◦ Intracity Choice (Shopping Center Model- The model estimates the probability of that shoppers in homogeneous geographical segments will visit a particular shopping center for a particular type of purchase. Two fundamental parameters in this are square feet of floor space in the shopping center and travel time to the center.) ◦ Interstore Choice

2.Store Design and Physical facilities (Positive moods can increase the time spent in the store and willingness to interact with the salesperson). 3. Merchandise (quality, selection or assortment, styling or fashion, guarantees and pricing) 4. Advertising and sales promotion 5. Personnel 6.Customer Services (Increase product satisfaction, increase convenience, provide special benefits) 7. Clientele

General Shopper Profiles (Anti Shoppers)  Store specific shoppers profile (Traditional Department, National Chain Department, Discount Department)  Store loyalty (Engage in less comparison) 



In-store Purchasing Pattern: ◦ Merchandising Techniques:  Store Layouts and traffic Patterns(ing and buying Ratio)  Point of Purchase media  Product Shelving (Shelf height & Shelf space)

Pricing

Strategies ◦Price Awareness ◦Promotional Pricing ◦Couponing Packaging Brand Choice: National Vs. Private Position of Private Brands Generic Brands

RISK PERCEIVED BY THE CONSUMER WITH REF. TO AN OUTLET

RISK IN THE CONTEXT OF OUTLETS COULD BE ‘SOCIAL RISK’ (I.E. NEGATIVELY VIEWED BY FRIENDS/ GROUPS – ROADSIDE SHOPS, DISCOUNTS/ SECONDS STORES ETC) OR ‘ECONOMIC RISK’ (I.E. RELATING TO PRICE, QUALITY ETC – HIGH MARGINS, PRICING BASED ON SNOB VALUE, POSSIBILITY OF FRAUD ETC)

CONSUMER’S OWN SHOPPING ORIENTATION/ SHOPPING PROFILE INHERENT PSYCHOGRAPHIC PROFILE OF THE SHOPPER, LIKE: INACTIVE SHOPPER (BUY BECAUSE THEY HAVE TO; DO NOT ENCOURAGE SALES TALK; JUST PICK-UP, PAY AND GET OUT TYPES)

BARGAIN OR

ACTIVE SHOPPER (OPPOSITE OF ABOVE; LIKE TO SHOP AROUND; ENGAGES STORE ASSISTANTS EXTENSIVELY) SERVICE SHOPPER (SEEK HIGH LEVEL OF SERVICE/ ATTENDANCE PURCHASING)

WHILE

TRADITIONAL SHOPPER (SOMEWHERE IN BETWEEN ACTIVE AND INACTIVE TYPES OF SHOPPERS) FRINGE SHOPPERS (SEEKING NEW PRODUCTS; LIMITED BRAND/ STORE LOYALTIES) PRICE SHOPPERS (BARGAIN HUNTERS)



FROM THE FOREGOING DISCUSSION ON CONSUMER PROFILES, IT ARISES THAT, STORES CAN DESIGN SEGMENT SPECIFIC MARKETING TACTICS: EX: INACTIVE SHOPPERS MIGHT RESPOND WELL TO HOME DELIVERY; ACTIVE ONES MIGHT RESPOND WELL TO LIVELY STORE AMBIENCE.

Purchase Decisions  Consumers

dislike making decisions/choices  Tactic: Show satisfied customers ◦ ordinary people ◦ experts ◦ celebrities

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 • : 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?

Wife Dominant

Relative influence of husbands & wives

Child clothing

Final decision

Information search

groceries

Women’s clothing

Pots & pans

NonRx

lamps

Toys/games

furniture luggage carpet

Paint wallpaper

refrigerator vacations

Men’s leisure clothing

t

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

Buying Process Stage 5

 Cognitive

Post-Purchase Behavior

dissonance: postpurchase tension .

Postpurchase Behavior Cognitive Dissonance

?

Did I make a good decision? Did I buy the right product? Did I get a good value?

Marketing

Can minimize through:

Effective Communication Follow-up Guarantees Warranties Underpromise & overdeliver

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

Post Purchase Behavior Product Experience

Actual Benefits

Actual Expectations Gap Size

Satisfied

Dissatisfied

Post Purchase Behavior 

Dissatisfied customers communicate more negative word of mouth than satisfied customers communicating positive word of mouth Principle:

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