Part 2 Understanding Buyers and Markets 5 Consumer

Part 2: Understanding Buyers and Markets 5. Consumer Behavior 6. Business-to-Business (B 2 B) Marketing 7. Serving Global Markets Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Chapter 5 Consumer Behavior Copyright © 2006 by South-Western, a division of Thomson Learning,

Chapter Objectives 1. Distinguish between customer behavior and consumer behavior. 2. Explain how marketers classify behavioral influences on consumer decisions. 3. Describe cultural, group, and family influences on consumer behavior. 4. Explain each of the personal determinants of consumer behavior; needs and motives, perceptions, attitudes, and self-concept theory. 5. Distinguish between high-involvement and lowinvolvement purchase decisions. 6. Outline the steps in the consumer decision process. 7. Differentiate among routinized response behavior, limited problem solving, and extended problem solving by consumers. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 3

Customer vs. Consumer Behavior n Customer behavior: a broad term that covers both individual consumers who buy goods and services for their own use and organizational buyers who purchase business products n Consumer behavior: the process through which the ultimate buyer makes purchase decisions Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 4

Interpersonal Determinants of Consumer Behavior n Figure 5. 1: Why People Buy New Products

n Cultural Influences üCulture: values, beliefs, preferences, and tastes handed down from one generation to the next üIt is important to recognize the concept of ethnocentrism, or the tendency to view your own culture as the norm, as it relates to consumer behavior. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 6

n Core Values in the U. S. Culture üWhile some cultural values change over time, basic core values do not üExamples of American core values include: w Importance of family and home life w Education w Youthfulness w Individualism Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 7

n International Perspective on Cultural Influences üCultural differences are particularly important for international marketers üSuccessful strategies in one country often cannot extend to other international markets because of cultural variations Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 8

n Subcultures: subgroup of culture with its own, distinct modes of behavior üCultures are not homogeneous entities with universal values. üSubcultures can differ by: w Ethnicity or Nationality w Age or Gender w Religion w Social class or Profession n Figure 5. 2 (next slide) üEthnic and Racial Minorities as a Percentage of the Total U. S. Population Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 9

Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

n Hispanic-American Consumers üThe 40 million Hispanics in the U. S. , coming from a wide range of countries, are not homogenous üThere are important differences in acculturation üThe Hispanic market is large and fastgrowing üHispanics tend to be younger than the general U. S. population üHispanics are geographically concentrated Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 11

n African-American Consumers üAfrican-American buying power is rising rapidly compared to U. S. consumers in general üFamily structures may differ for African. American consumers, creating differences in preferences for clothing, music, cars, and many other products Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12

n Asian-American Consumers üMarketing to Asian-Americans presents many of the same challenges as reaching Hispanics üAsian-Americans are spread among culturally diverse groups, including Chinese, Japanese, Indians, Koreans, Filipinos, and Vietnamese--many retaining their own languages Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 13

n Social Influences Group membership influences an individual’s purchase decisions and behavior in both overt and subtle ways. üNorms: are the values, attitudes, and behaviors that a group deems appropriate for its members üStatus: is the relative position of any individual member in a group üRoles define behavior that members of a group expect of individuals who hold specific positions within the group Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 14

n The Asch Phenomenon: the effect of a reference group on individual decision-making n Reference groups: groups whose value structures and standards influence a person’s behavior üRequires two conditions: w The purchased product must be one that others can see and identify w The purchased item must be conspicuous; it must stand out as something unusual, a brand or product that not everyone owns Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 15

n Social classes: groups whose rankings are determined by occupation, income, education, family background, and residence location W. Lloyd Warner identified six classes: 1. Upper-upper 2. Lower-upper 3. Upper-middle 4. Lower-middle 5. Working class 6. Lower class Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 16

n Opinion leaders: trendsetters who purchase new products before others in a group and then influence others in their purchases n Figure 5. 4: 5. 4 Alternative Channels for Communications Flow Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 17

n Family Influences üAutonomic role is when the partners independently make equal numbers of decisions. üHusband-dominant role is when the husband makes most of the decisions. üWife-dominant role is when the wife makes most of the decisions. üSyncratic role is when both partners jointly make most decisions. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 18

n Children and Teenagers in Family Purchases üGrowing numbers are assuming responsibility for family shopping üThey also influence what parents buy üThey represent over 50 million consumers in their own right Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 19

Personal Determinants of Consumer Behavior Copyright © 2006 by South-Western, a division of Thomson

n Needs and Motives üNeed: an imbalance between a consumer’s actual and desired states üMotives: inner states that direct a person toward the goal of satisfying a felt need Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 21

n Maslow’s Hierarchy of Needs Self-Actualization Esteem Needs Social Needs Safety Needs Physiological Needs Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 22

Physiological Needs Products Vitamins, herbal supplements, medicines, food, exercise equipment, fitness clubs Marketing themes Pepcid antacid—”Just one and hearburn’s done” Puffs facial tissues—”A nose in need deserves Puffs indeed” Ocean Spray cranberry juice—”Crave the wave” Safety Needs Products Cars and car accessories, burglar alarm systems, retirement investments, insurance, smoke and carbon-monoxide detectors, medicines Marketing themes Fireman’s Fund insurance—“License to get on with it. ” American General Financial Group—“Live the life you’ve imagined. ” Volvo—“Protect the body. Ignite the soul. ” Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 23

Belongingness Products Beauty aids, entertainment, clothing, cars Marketing themes Old Navy—”Spring Break from coast to coast” Washington Mutual banks—”More human interest” TJ Maxx clothing store—”You should go” Esteem Needs Product Clothing, cars, jewelry, hobbies, beauty spa services Marketing themes Lexus automobiles—The relentless pursuit of perfection” Van Cleef & Arpels—“The pleasure of perfection. ” Accutron watches—“Perhaps it’s worthy of your trust. ” Jenn-Air kitchen appliances—“The sign of a great cook. ” Self-Actualization Products Education, cultural events, sports, hobbies, luxury goods, technology, travel Marketing themes Gatorade—“Is it in you? ” De. Paul University—”Turning goals into accomplishments” Dodge cars and trucks—”Grab life by the horns” Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 24

n Perceptions: the meaning that a person attributes to incoming stimuli gathered through the five senses – sight, hearing, touch, taste, and smell. n Perceptual screens: the filtering processes through which all inputs must pass Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 25

n Subliminal Perception: subconscious receipt of information üAlmost 50 years ago, a New Jersey movie theater tried to boost concession sales by flashing the words Eat Popcorn and Drink Coca-Cola. üSubliminal advertising is aimed at the subconscious level of awareness. üSubliminal advertising has been universally condemned as manipulative, and is exceedingly unlikely that it can induce purchasing. üResearch has shown that subliminal messages cannot force receivers to purchase goods that they would not consciously want. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 26

n Attitudes üA person’s enduring favorable or unfavorable evaluations, emotional feelings, or action tendencies toward some object or idea üAttitude components: w Cognitive w Affective w Behavioral Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 27

n Changing Consumer Attitudes üAttempt to produce consumer attitudes that will motivate the purchase of a particular product üEvaluate existing consumer attitudes and then make the product characteristics appeal to them n Modifying the Components of Attitude üAttitudes change in response to inconsistencies among the three components üMarketers can work to modify attitudes by providing evidence of product benefits and by correcting misconceptions Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 28

n Learning üAn immediate or expected change in behavior as a result of experience. üThe learning process includes the component of: w Drive w Cue w Response w Reinforcement Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 29

n Applying Learning Theory to Marketing Decisions üShaping: process of applying a series of rewards and reinforcements to permit more complex behavior to evolve over time Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 30

n Self-Concept üA person’s multifaceted picture of himself or herself, composed of the: w Real self w Self-image w Looking-glass self w Ideal self Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 31

The Consumer Decision Process Problem Opportunity Recognition Search Alternative Evaluation Purchase Decision n Consumers complete a step-by-step process when making purchase decisions ü High-involvement purchase decisions are those with high levels of potential social or economic consequences ü Low-involvement decisions are routine purchases that pose little risk to the consumer Purchase Act Postpurchase Evaluation Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 32

n Figure 5. 8 üIntegrated Model of the Consumer Decision Process Copyright © 2006

n Problem or Opportunity Recognition üConsumer becomes aware of a significant discrepancy between the existing situation and the desired situation üMotivates the individual to achieve the desired state of affairs Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 34

n Search üConsumer gathers information related to their attainment of the desired state of affairs üIdentifies alternative means of problem solution üMay cover internal or external sources of information üBrands that a consumer actually considers buying before making a purchase decision are known as the evoked set Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 35

All Brands Evoked Set Model Known Brands Unknown Brands Evoked Acceptable Unacceptable Set Brands Purchased Brand Rejected Brands Overlooked Brands Inert Set Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 36

n Evaluation of Alternatives üConsumer evaluates the evoked set üDifficult to completely separate the second and third steps, since some evaluation takes place as the search progresses üOutcome of the evaluation stage is the choice of a brand or product (or possibly a decision to renew the search) üEvaluative criteria: features that a consumer considers in choosing among alternatives Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 37

n Purchase Decision and Purchase Act üConsumer narrows the alternatives down to one üThe purchase location is decided Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 38

n Postpurchase Evaluation üAfter the purchase, consumers are either satisfied or experience post-purchase anxiety üCognitive dissonance: Post-purchase anxiety that results from an imbalance among an individual’s knowledge, beliefs, and attitudes after an action or decision is taken Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 39

n Classifying Consumer Problem-Solving Processes üThree categories of problem-solving behavior w Routinized Response Behavior w Limited Problem Solving w Extended Problem Solving Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 40