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Understanding Consumers Session 2 & 3

Sanjeev Varshney

Understanding Consumer Behavior


consumers make purchase decisions Consumer behavior = HOW consumers use and dispose of product
Help government make public decisions

Exercise
Each one of you write a story around a recent purchase you have made. The story should have:
A beginning Body Ending What influenced you etc etc. Time : 5 min
Note: Please bring this story everyday with you for next two classes

Type of Product or Service

Specialty Goods/ Services

Shopping Good/Services

Convenience Goods/Services
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Types of Buying Decisions

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

The Consumer Decision Process

Need Recognition

Present Status

Preferred State

Marketing helps consumers recognize an imbalance between present status and preferred state.

Need Recognition

Functional needs

Psychological needs

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Continuum of Consumer Buying Decisions


Routine Limited Extensive Involvement Time Cost Low Short Low Low to Moderate Short to Moderate Low to Moderate High Long High

Information Search
Number of Alternatives

Internal Only
One

Mostly Internal
Few

Internal and External


Many

Stimulus
Stimulus
Any unit of input affecting one or more of the five senses: sight smell taste touch hearing

Search for Information


I know

Internal Search for Information

External Search for Information

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Factors Affecting Consumers Search Process

Perceived Benefits

Perceived Costs

Discussion question What is the difference in search time between the following: A wedding gift for a) coworker, b) your brother, c) your best friend?
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

External Information Searches


Need Less Information
Less Risk More knowledge More product experience Low level of interest Confidence in decision

Need More Information


More Risk Less knowledge Less product experience High level of interest Lack of confidence

Evaluation of Alternatives: Attribute Sets

Universal Set
Retrieval Set
Evoked Set

Choice

Actual or Perceived Risk


Financial risk

Performance risk

Psychological risk

Evaluation of Alternatives: Evaluate Criteria


Evaluative Criteria Determinant Attributes

Discussion question What are some of the features of a vacation that would be in your evaluative criteria?
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Evaluation of Alternatives: Decision Heuristics

?
Product Presentation

Price

Brand
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Postpurchase: Customer Satisfaction

Customer contact Encourage feedback Provide money back guarantee Build realistic expectations Demonstrate correct product use

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Cognitive Dissonance
Cognitive Dissonance

Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions.

Postpurchase: Dissonance

Firms attempt to reduce dissonance by reinforcing the decision Thank you letters, congratulations letters, quality ratings

Discussion question What other ways do firms reinforce purchase decisions?

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Factors Influencing the Consumer Decision Process


Social Factors

Situational Factors

Consumer Decision Process

Marketing Mix Elements

Psychological Factors

Socio-Cultural Factors
Social Factors
Reference group Family Opinion Leaders

Cultural Factors

Components of Culture
Values

Language
Myths Customs Rituals Laws Material artifacts

Subculture

Subculture A homogeneous group of people who share elements of the overall culture as well as cultural elements unique to their own group.

Social Class
Social Class
A group of people in a society who are considered nearly equal in status or community esteem, who regularly socialize among themselves both formally and informally, and who share behavioral norms.

Social Class Measurements


Occupation Income Education
Wealth Other Variables
Social Class in India: SEC(Socio-economic class) Classification Uses Education level and Occupation for classification in Urban India Uses education level and Kind of House in Rural India

The Impact of Social Class on Marketing


Indicates which medium to use for advertising Helps determine the best distribution for products

Social Influences
Reference Groups

Opinion Leaders

Family Members

Influences of Reference Groups


They serve as information sources and influence perceptions.
They affect an individuals aspiration levels. Their norms either constrain or stimulate consumer behavior.

Do reference groups exist on Social Media and if Yes, what role do they play?

The Nature of Reference Group Influence


Informational: when an individual uses behavior and opinions of reference group members as potentially useful bits of information Normative: when an individual fulfills group expectations to gain a direct reward or to avoid a sanction Identification: when individuals have internalized the groups values and norms

Situations and Influence: Example

Opinion Leaders
are the first to try new products and services out of pure curiosity. can be challenging to locate. Marketers are increasingly using blogs, social networking, and other online media to determine and attract opinion leaders.
How will you identify Opinion Leaders on Social Media (Twitter, Facebook) ?

Opinion Leaders
Opinion Leaders: Greater Involvement with the product Enhanced knowledge and experience with the product category Function primarily through interpersonal communication & observation More gregarious than others Expertise & Sociability Market Mavens

Social Factors: Family

Decision makers

Influencers

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Household Influences on Consumption Decisions

HLC/Occupational Category Matrix


Executive/ elite professional Administra tive/profes sional Technical/S ales/Clerical Crafts Unskilled/m anual

Single Young married Full nest I Full nest II Empty Nest I

Empty Nest II
Single Old

Family
Purchase Process Roles in the Family

Initiators

Influencers
Decision Makers Purchasers Consumers

Household Decision-Making Process for Childrens Products

Individual Influences

Gender

Age Life Cycle

Personality Self-Concept Lifestyle

Age and Family Life Cycle Stage


Consumer tastes in food, clothing, cars, furniture, and recreation are often age related. Marketers define target markets according to life cycle stages such as young singles or young married with children.

Personality, Self-Concept, and Lifestyle


Personality combines psychological makeup and environmental forces. Human behavior depends largely on self-concept. Self-concept combines ideal self-image and real self-image.

Dimensions of a Consumers SelfConcept

Exercise
How does a tattoo affect ones selfconcept and become part of ones extended self? Will one or multiple visible tattoos become the norm for younger consumers over the next 10 years?

Extended Self
Self + Possessions

Think of products that explain your self. Identify one single product in your possession which you feel contribute to yours self concept and has become part of your extended self.

Interaction of Self-Concept and Brand Image

Life Style
How a Person Lives or how one enacts his or her self concept Determined by:
Past experiences Innate experiences Current situation

Measurement of Lifestyle
Lifestyle Studies
Can be used as a general measure, but most commonly used to measure a specific product or activity.

Attitudes Values Activities and Interests General lifestyles can be used to discover new Demographics product opportunities. Media Patterns Specific lifestyle analysis Usage Rates may help reposition existing brands.

Dimensions of Brand Personality

Psychological Factors

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Perception

Selective Exposure Selective Distortion Selective Retention

Consumer notices certain stimuli and ignores others Consumer changes or distorts information that conflicts with feelings or beliefs Consumer remembers only that information that supports personal beliefs

Marketing Implications of Perception


Important attributes Price Brand names Quality and reliability Threshold level of perception Product or repositioning changes Foreign consumer perception Subliminal perception

Motivation
Maslows Hierarchy of Needs

A method of classifying human needs and motivations into five categories in ascending order of importance.

Motivation Theory and Marketing Strategy


Discovering Purchase Motives Marketing Strategies Based on Multiple Motives Marketing Strategies Based on Motivation Conflict

Latent and Manifest Motives

Motivation Research Techniques

Write a Story Around this Picture

Story should have a Beginning, Body and An End Also describe the characters in your story.

Most Ads appeal to Multiple Motives

Types of Learning
An experience changes behavior

Experiential

Conceptual

Not learned through direct experience

Learning Theories and Involvement

Exercise
Read these wordsTime: 15 sec Sholay Zanjeer Agnipath Baghban Paa Viruddh Deewar Abhimaan Mard Cheene kam Now try to recall these words: Time: 20 sec

The Psychology of Learning (Tony Buzan)


The human brain primarily remembers the following: Items from the beginning of the learning period (the primacy effect) Items from the end of the learning period (the recency effect) Any items associated with things or patterns already stored, or linked to other aspects of what is being learned Any items which are emphasized as being in some way outstanding or unique Any items which appeal particularly strongly to any of the five senses Those items which are of particular interest to the person

Increasing Retrieval
Avoid competing Advertising Strengthen Initial Learning Reduce Similarity to Competing Ads Provide External Retrieval Cues Spacing

Memory
Sensory Meaning Semantic Meaning (symbolic associations) Episodic Memories Schematic Memory
Sensory Memory Short Term Memory Long Term Memory

Attention

Elaborative Rehearsal

Schematic Memory

Beliefs and Attitudes


An organized pattern of knowledge that an individual holds as true about his or her world. A learned tendency to respond consistently toward a given object.

Belief

Attitude

Process of Attitude Formation

Theory of Reasoned Action


Behavioral Intentions are based on a combination of the attitude toward a specific behaviour: Purchasing a brand Social or normative beliefs about the appropriateness of behaviour Motivation to comply with the normative beliefs

Situational Factors

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

The Nature of Situational Influence


Communication Situation
What you hear

Purchase Situation
When and Where

Usage Situation
How

Disposition Situation
What now

Five Classes of Situational Influence


1.

Physical surroundings include geographical and


institutional location, decor, sounds, aromas, lighting, weather, and visible configurations of merchandise or other material surrounding the stimulus object.

2.

Social surroundings

considers examples like other persons present, their characteristics, their apparent roles, and interpersonal interactions occurring.

3.
4.

Temporal perspective
Task definition

may be specified in units ranging from time of day to seasons of the year.
includes an intent or requirement to select, shop for, or obtain information about a general or specific purchase.

5.

Antecedent states
momentary conditions

are momentary moods or

Variables in Store Choice Behaviour


Individual characteristics Perceived risk (social cost, financial cost, time cost, efforts cost) Shopping orientation (utilitarian/recreational) Market characteristics Retailer characteristics Outlet image Retailer brands Retail advertising Outlet location and size

Summary: Understanding Consumer Behaviour


Most decisions a Consumer Make are emotional and not rational and hence important to hit his/her emotional mind For this it is important to understand why a consumer wants to buy the product and hence what will influence him. Important to get the consumer insight Then create an imagery to sell the product and create associations

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