CONSUMER BEHAVIOR BUAD 307 MARKETING FUNDAMENTALS Learning Outcome

CONSUMER BEHAVIOR BUAD 307 MARKETING FUNDAMENTALS

Learning Outcome Objectives • Understand how consumer cognitive (thinking) processes and limitations, affect, beliefs, social influences, and other contextual factors influence consumer decision making, choices, and behavior • Appreciate how these insights can be used to design and implement effective marketing strategies • Appreciate individual and segment differences in process and outcome BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 2

Influences on and of Consumer Behavior PERCEPTION/ SENSATION MARKET RESEARCH INFO SEARCH STRATEGY CHOICES COGNITION AFFECT PREFERENCES BELIEFS CONSUMER COMMUNICATION SOCIAL AND OTHER INFLUENCE BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 3

True or False? 1. If you have bad breath, you cannot smell it yourself. 2. If you eat a balanced diet, you do not need vitamin supplements. 3. Using a razor with five blades will reduce the likelihood of cutting yourself and will result in less skin irritation. 4. Dell Computers tend to be of higher quality than those made by HP and Sony. 5. Rust stains on clothes can be removed with the use of lemon juice. Bleach actually makes these stains worse. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 4

Questions Faced By Consumers • Are soft drinks sweetened with high fructose corn syrup worse than those sweetened with cane sugar? • 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 $125 on a digital camera? • Should I get a “make-over? ” What am I looking for? What should I do? • Is my mechanic honest? • Should I give my wife roses, chocolate, or software? BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 5

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 BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 6

CONSUMER DECISIONS: Theory and Reality in Consumer Buying PROBLEM RECOGNITION INFORMATION SEARCH EVALUATION OF ALTERNATIVES PURCHASE POSTPURCHASE EVALUATION/ BEHAVIORS Theory Complications BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 7

Post Purchase Behavior BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 8

Usefulness of the Model of Consumer Decision Making • Most useful to determine how search for a particular consumer need or a product category may systematically differ from others – Importance of different steps – What may happen in each step (e. g. , brand switching) – Extent of overlap of stages – Likeliness of different types of post purchase behaviors (e. g. , WOM, positive or negative review, returning product) • Not as useful for assessing search for frequently used products BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 9

Approaches to Search for Problem Solutions INTERNAL Memory Thinking EXTERNAL Word of mouth, media, store visits, trial BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 10

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 EVOKED/ CONSIDERATI ON SET Note: Retrieved and evoked sets will vary among different consumers. Brand awareness is important since this is required for the brand to be in the evoked and retrieved sets. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 11

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. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 12

Decision Making Issues • Involvement level – Temporary – Enduring • Consumer locus of control – Internal – External • Product category complexity • Consumer knowledge BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 13

Temporary Involvement CONSUMER NEEDS TO MAKE A DECISION IN AN IMPORTANT PRODUCT CATEGORY OF LIMITED PERSONAL INTEREST NO NEED TO REMAIN INVOLVED UNTIL NEXT PURCHASE EXTENSIVE RESEARCH AND ANALYSIS IN ORDER TO MAKE A GOOD DECISION READING REVIEWS LOOKING AT PRODUCTS ASKING FRIENDS DECISION NEED FILLED THINKING ABOUT OPTIONS PURCHASE Note that temporary involvement can be quite high while it takes place. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 14

Enduring Involvement READING REVIEWS CONSUMER HAS AN INHERENT INTEREST IN THE PRODUCT CATEGORY EXTENSIVE RESEARCH AND ANALYSIS TO SATISFY CURIOSITY DECISION MAY OR MAY NOT NEED TO BE MADE AT THIS TIME ASKING FRIENDS THINKING ABOUT OPTIONS PURCHASE MAY OR MAY NOT BE NEEDED AT THIS TIME CONSUMER REMAINS INTERESTED IN PRODUCT CATEGORY BUAD 307 LOOKING AT PRODUCTS CONSUMER BEHAVIOR Lars Perner, Instructor 15

Evaluation Type IMPORTANT BUAD 307 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 non-compensatory measure, then compensatory tradeoffs on other attributes – Abandoned strategy: Consumer finds initial criteria unrealistic and proceeds to less desirable solution CONSUMER BEHAVIOR Lars Perner, Instructor 16

Heuristics—Low Involvement Decision Rules • 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) BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 17

Consumer Information Processing PERCEPTION CONSCIOUS PRE-CONSCIOUS ATTENTION LIMITED—SUBJECT TO PRIORITY DIVIDED Note: This is a simplified conceptual model that should not be taken too literally. The boundaries between the steps are actually rather “blurry. ” BEHAVIOR ELABORATION LINKS TO OTHER ITEMS IN MEMORY ASSOCIATION STORAGE (IN MEMORY) BUAD 307 No “guaranteed” arrow— triggers may or may not happen. COMPREHENSION CORRECT OR INCORRECT ELABORATE OR SHALLOW TRIGGERS (“REMINDERS” TO ACTIVATE MEMORY) CONSUMER BEHAVIOR (THINKING BRINGS ABOUT NEW LINKS AND THOUGHTS) RETRIEVAL (ACTIVATION) Lars Perner, Instructor 18

Associate Network of Knowledge SANDWICH PEANUT BUTTER MITT ROMNEY FAT PEANUTS REPUBICAN PARTY ELEPHANT 7 BLIND MEN TRUNK ZOO GIRAFFE MEDICINE TIGER BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 19

TRAVEL CASKET i. TUNES E-MAIL PORTABLE TEXTING FUNERAL STEVE JOBS DEAD INNOVATION LAPTOP SPREADSHEET GOSSIP i. PHONE i. PAD APPLE FRUIT HEALTHY PEAR REPORT TV MONITOR FINANCE DESKTOP SOAP OPERAS JUICY GRANDMA BUAD 307 PRINTER CONSUMER BEHAVIOR Lars Perner, Instructor 20

Attitudes―components AFFECT (FEELING) BELIEFS BEHAVIORAL INTENTIONS BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 21

Attitude Components • Beliefs – Can be positive, negative, or neutral – May or may not be accurate – May contradict other beliefs held by the other person • Affect – May be positive or negative – May take on specific dimension (e. g. , pleasure, disgust) BUAD 307 CONSUMER BEHAVIOR • Behavioral Intentions – 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 Lars Perner, Instructor 22

Generating Beliefs Through Advertising • Statements must be – Perceived – Comprehended – Remembered – Believed (at least in part) BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 23

Affect • Based on – Past emotional associations of product – Emotional effect of beliefs BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 24

Attitude Change Strategies, Part I • Changing Affect – Classical conditioning: “Pairing” the brand or product with desired stimulus—e. g. , a car with a beautiful woman – Attitude toward the ad: A likable ad for a brand in a mundane product category— e. g. , • Energizer Bunny • Snuggles (fabric softener) – Mere exposure: Items (e. g. , advertisements) that have been seen before tend to be better liked BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 25

Attitude Change Strategies II • Changing behavior (e. g. , sampling): Consumers tend to infer attitudes from behavior (e. g. , I buy the product I must like it or It must be good) • Changing a belief component – Changing existing beliefs • Difficult • Advertiser’s motives are suspect – Changing the importance of attributes – Adding beliefs BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 26

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 27

Adding Beliefs (True or Not): Examples • Brushing and flossing do not reach all areas of the mouth • People under stress need more vitamins • Baking soda will reduce odor of refrigerators • Fragmented hard drives may cause computer errors BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 28

REMINDER • Changing currently held beliefs tends to be difficult —people know the marketer has an ulterior motive • Adding new beliefs that are not inconsistent with what is already believed may be more effective BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 29

One-sided vs. two sided appeals • One-sided: only saying what favors your side • Two-sided: stating your case but also admitting points favoring the other side – Why is this effective? BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 30

The Means-End Chain Promotion/ positioning should be aimed at higher levels of chain! Self-esteem Values Feeling of power Consequences Attributes Note additional details on the handout. BUAD 307 Performance Fast acceleration Large engine CONSUMER BEHAVIOR Lars Perner, Instructor 31

Subliminal Perception: A Diabolical Marketing Tool? • Subliminal messages in ads are illegal in U. S. • Almost certainly not a useful method to sell products – At most one or two syllables can be “registered” or understood – Complex messages cannot be processed subliminally BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 32

The Mythical Theater Experiments • An advertising executive claimed in 1957 to have “spliced” messages of “EAT POPCORN” or “DRINK COCA COLA” into film footage (24 frames per second in traditional movie films) – A frame with the message inserted every, say, 20 th frame – Not consciously notable • Claimed that popcorn sales increased 57% and Coca Cola sales by 18% on days the respective message was used BUAD 307 • • • Admitted to be a hoax These messages are much longer than the 1 -2 syllables the brain can pick up Tachistoscope research: People giggle at brief “dirty” (“four letter”) words exposed for a fraction of a second but not at neutral ones (those exposed to dirty words do not consciously know specifically what they saw) CONSUMER BEHAVIOR Lars Perner, Instructor 33

Procedural Knowledge: One Component of Ability • Knowledge—some conscious and some unconscious—of how to do something – – – – Drive a car Draw in 3 D Handwrite Hit a baseball with a bat Touch type Tie a tie Walk in high heels • Usually contains a large unconscious component (over time, clumsy conscious actions become semi-automatic with practice) • Often involves a component of fine motor skills • Lack of training may prevent consumers from buying and using certain products—e. g. , manual transmission car, motorcycle • Some products can be optimized to reduce the effort needed to gain sufficient procedural knowledge BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 34

Some Consumer Behavior Issues That Will Come Up Elsewhere in the Course • Demographics (segmentation) • Lifestyle (segmentation) • Culture/subculture (segmentation, international marketing) • Diffusion of innovation (product) • Attention (promotion) BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 35

Organizational Buyers • Types • Characteristics – Industrial – Reseller – Government and non -profit organizations – Greater involvement – Bureaucracy – Long term relationships – Price is important but may not be the most important factor • Purchase types – Straight rebuy – Limited decision making – Extended decision making BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 36