Introduction to Marketing 1100 and Chapter 6 Consumer

Introduction to Marketing 1100 and Chapter 6: Consumer Behaviour Week 3 Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Lecture Presentation Slides Prepared by Charles Lamb, Joseph Hair, Carl Mc. Daniel & Alison Barker Lecture Slides available on Moodle on the Friday BEFORE the lecture occurs Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Consumer Decision Making Chapter 6 Lamb, Hair, Mc. Daniel 2012 -2013 Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G 3

Chapter 6: Consumer behaviour Learning outcomes: • explain why marketers require a thorough understanding of consumer behaviour and its major influences • understand the major group factors that influence consumer behaviour • analyse the major individual factors that influence consumer behaviour • explain the general steps in the consumer decision-making process. Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Understanding Consumer Behavior consumers make purchase decisions Consumer behavior = HOW consumers use and dispose of product Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

The process of consumer decisionmaking Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Need Recognition Result of an imbalance between actual and desired states. Need recognition is the first stage in the decisionmaking process Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

1. Need/Want Recognition Marketing helps consumers recognise an imbalance between present status and preferred state. Curtin College | www. curtincollege. edu. au Internal stimuli ACTUAL STATUS and external stimuli DESIRED STATUS A member of Navitas | CRICOS Provider Code 02042 G

1. Need/Want Recognition Change in Desired state: • • Aspirations Circumstances Culture Marketing strategies are designed to stimulate problem recognition. • For example: neighbour gets new car • For example: TV ad for holiday to Phuket • For example: Smell freshly baked bread Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Stimulus Any unit of input affecting one or more of the five senses: • sight • smell • taste • touch • hearing Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Information Search Internal Information Search • Recall information in memory External Information search • Seek information in outside environment • • Curtin College | www. curtincollege. edu. au Nonmarketing controlled Marketing controlled A member of Navitas | CRICOS Provider Code 02042 G

2. Information Search Internal information Search: Long term memory Non-marketingcontrolled information sources (family, friends, groups) Curtin College | www. curtincollege. edu. au External information search, Sales staff, magazines, adverts , websites handling, using, examining A member of Navitas | CRICOS Provider Code 02042 G

External Information Searches Need Less Information Less Risk More knowledge More product experience Low level of interest Confidence in decision Curtin College | www. curtincollege. edu. au Need More Information More Risk Less knowledge Less product experience High level of interest Lack of confidence A member of Navitas | CRICOS Provider Code 02042 G

3. Evaluation of options Develop an understanding of how consumers evaluate brand alternatives. Evoked set Purchase Curtin College | www. curtincollege. edu. au Evaluation of products • Analyse product attributes. • Use cutoff criteria. • Rank attributes by importance. A member of Navitas | CRICOS Provider Code 02042 G

4. Purchase n n n Move consumers from purchase intention to purchase decision. Decide on where to buy (vendor), brand, method of payment, quantity In evaluation, there is a preference of brand that is formed an intent to purchase this preferred brand…. . but other impacts…. n Attitudes of others – depends on how negative, social visibility, conformity pressure (particularly strong in Asia), info-mediaries/consumer reports n Unanticipated situational factors Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

5. Post-purchase evaluation Cognitive dissonance: • Did I make a good decision? • Did I buy the right product? • Did I get a good value? Marketing can minimise through: • • In 2009: effective communication – REALISTIC follow-up guarantees warranties. What about now? 75% of Toyota customers were highly satisfied with their purchase Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G 75% of Toyota customers intended to buy a Toyota again

Cognitive Dissonance Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions. Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Consumer Buying Decisions and Consumer Involvement Routine Response Behavior Less Involvement Curtin College | www. curtincollege. edu. au Limited Decision Making Extensive Decision Making More Involvement A member of Navitas | CRICOS Provider Code 02042 G

Consumer decision making continuum Low involvement Frequently purchased Inexpensive Routine Response Behavior Little risk Little information needed Curtin College | www. curtincollege. edu. au High involvement Infrequently purchased Limited Extended Expensive decision making High risk behaviour Much information desired A member of Navitas | CRICOS Provider Code 02042 G

Involvement the amount of time and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior. Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Factors Determining the Level of Consumer Involvement Previous Experience Interest Perceived Risk of Negative Consequences Situation Social Visibility Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Factors Influencing Buying Decisions Cultural Factors Individual Factors Social Factors Psychological Factors Curtin College | www. curtincollege. edu. au CONSUMER DECISIONMAKING PROCESS BUY / DON’T BUY A member of Navitas | CRICOS Provider Code 02042 G

Social Influences Reference Groups Opinion Leaders Family Members Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Group/Social /Reference group influences on consumer behaviour Primary Family/friends Direct/ Membership Types of REFERENCE GROUPS Secondary (less interaction) Aspirational Indirect Nonaspirational Curtin College | www. curtincollege. edu. au CRICOS Provider Code 00301 J A member of Navitas | CRICOS Provider Code 02042 G

Opinion leader • A reference group member who provides relevant and influential advice about a specific topic of interest to group members. • Diffusion of innovations is a theory explaining the way in which innovations are adopted. • ‘Innovators’ introduce innovations, ‘early adopters’ including opinion leaders then drive adoption by the ‘early majority’, before it reaches the ‘late majority’ and the ‘laggards’. Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Group/Social/Family influences on consumer behaviour Family life cycle • A series of characteristic stages through which most families pass. – – – Bachelorhood stage – recreation/fashion Honeymoon - Newly married couples – durables/furniture Full Nest 1 & 2– focus on child needs/cheap holidays Empty Nest – recreation, medical care products, Widowhood - Solitary Survivor – medical products, security Pester power • The influence of children on their parents’ purchasing decisions. Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Family Buying Roles Initiator User Buyer Key Family Decision Roles Influencer Decider Curtin College | www. curtincollege. edu. au CRICOS Provider Code 00301 J A member of Navitas | CRICOS Provider Code 02042 G

Individual Influences Gender Age Life Cycle Personality Self-Concept Lifestyle Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G 28

Individual/Personal/Demographic influences on consumer behaviour • Individual factors Ø Personal and psychological factors that influence consumer behaviour independently of social circumstances. • Personal characteristics Ø Demographic, lifestyle and personality factors that influence consumer behaviour. • Demographic factors Ø The vital and social characteristics of populations, such as age, education and income. Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Individual/Personality & self-concept influences on consumer behaviour Personality: the most dominant characteristics or traits of a person Self concept: a person’s perception and appraisal of him/herself • Actual vs. ideal self • Which “selfconcept” is usually portrayed in an advertisement? Curtin College | www. curtincollege. edu. au CRICOS Provider Code 00301 J A member of Navitas | CRICOS Provider Code 02042 G

Individual/Personal/Lifestyle influences on consumer • Lifestyle • How an individual spends their time and interacts with others. • AIOs • Activities • Interests • Opinions • VALS = Values and Lifestyle – What a 35 year old father of 2 will be doing on Saturday afternoon. Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Psychological Influences Perception Motivation Learning Beliefs & Attitudes Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Individual/Psychological influences on consumer behaviour Psychological characteristics • Internal factors, independent of situational and social circumstances, that shape thinking, aspirations, expectations and behaviours. Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Individual/Psychological/Perception influences on consumer behaviour Perception • The psychological process that filters, organises and attributes meaning to external stimuli. • Filtering produces: Øselective exposure Øselective attention Øselective distortion and Øselective retention. Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Individual/Psychological/Motivation influences on consumer behaviour 1. Motivation When consumers express interest in buying a product there a number of questions we might ask. n Why? n What is the person really seeking? n What needs is he or she trying to satisfy? A person has many needs at any given time. Curtin College | www. curtincollege. edu. au CRICOS Provider Code 00301 J A member of Navitas | CRICOS Provider Code 02042 G

Individual/Psychological/Motivation influences on consumer behaviour Maslow’s hierarchy of needs • A theory that suggests that people seek to satisfy needs according to an hierarchy that places lower order ‘biogenic’ needs before higher order ‘psychogenic’ needs. Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Individual/Psychological/Beliefs & attitudes influences on consumer behaviour Belief Descriptive or evaluative thoughts that an individual holds regarding their knowledge of a person, idea, or product. Beliefs may be based on objective knowledge, opinions or faith. Knowledge that an individual holds as true about his or her world. Attitude An individual’s relatively stable and consistent thoughts, feelings and behaviours towards an object or idea. A learned tendency to respond consistently towards a given object Incorrect beliefs about product features or brand image can block sales. Blind tests: 50% split between Diet Coke and Diet Pepsi as BEST COLA Branded tests: 65% Diet Coke, 23% Diet Pepsi, 12% saw no difference Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G

Individual/Psychological/Learning theories influence on consumer behaviour Behavioural learning theory • Stresses the role of experience and repetition of behaviour, as seen in ‘classical conditioning’. Most relevant in low involvement purchases. Cognitive learning theory • Learning takes place through rational problem solving, emphasising acquisition and processing of new information, relevant in high involvement purchasing decisions. Curtin College | www. curtincollege. edu. au A member of Navitas | CRICOS Provider Code 02042 G