Chapter 5

Consumer Behavior
Consumer Behavior
• Let’s tackle each word in this title

• WHO is the consumer?

• What do we mean by BEHAVIOR?
• What is CB (Consumer Behavior)?
Defining Consumer Behavior
Consumer behavior: the
study of the processes
involved when
individuals or groups
select, purchase, use, or
dispose of products,
services, ideas, or
experiences to satisfy
needs and desires.

Prentice-Hall, cr 2009
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Defining Consumer Behavior
Consumer behavior: the
study of the processes
involved when
individuals or groups
select, purchase, use, or
dispose of products,
services, ideas, or
experiences to satisfy
needs and desires.

Prentice-Hall, cr 2009
1- 4
Who is the consumer?

• Individuals
Who is the consumer?
• Families
Who is the consumer?
• Businesses / Organizations / Clubs / Governments
CONSUMER
vs.
CUSTOMER
vs.
BUYER
vs.
SHOPPER
Defining Consumer Behavior
Consumer behavior: the
study of the processes
involved when
individuals or groups
select, purchase, use, or
dispose of products,
services, ideas, or
experiences to satisfy
needs and desires.

Prentice-Hall, cr 2009
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What is a BEHAVIOR?
• Acquiring (Acquisition) – Select, Purchase
• Using (Consumption) - Use
• Disposing (Disposition) - Dispose

• Can consumption be all three? Broadened

understanding of consumption

• ‘Consumption is NOT a simple outcome of a single

purchase, but may involve a host of activities’
Circle of Consumption

• From Disposal to Acquisition

• From Disposal to Production
• From Disposal to Consumption
• From Production to Consumption
• From Acquisition to Consumption
• From Acquisition to Disposal
Circle of Consumption

• From Disposal to Acquisition. Young married couples

often put new households together from extra and
leftover wares retrieved from their parents' garages
and basements.

• From Disposal to Production. In West Africa, empty

kerosene tins are used to deliver water from public
pumps to home storage jars. In Senegal, craftsmen
mold empty tuna fish and beer cans into attaché
cases.
Circle of Consumption

• From Disposal to Consumption. Cast-off rubber tires

are used as planters and children's swings in the U.S.
and as hoops in children's games.

• From Production Consumption. Farmers produce and

consume an important fraction of their own food,
shelter, and clothing.
Circle of Consumption

• From Acquisition to Consumption. Hunter-gatherer

groups in the Arctic, South America, Africa, Australia,
and South Asia harvest natural products for
immediate consumption, as do amateur game hunters
and mushroom gatherers in the developed world.

• From Acquisition to Disposal. Some impulse

shoppers purchase expensive clothing for the thrill of
the purchase and later return the goods unused to the
retail store or even hide them away in drawers and
closets unused.
What is Consumer Behavior ?

• DECISIONS

• Why
• Benefit
• When
• Dynamic pricing
• Where
• Online vs. brick and mortar

17
What is Consumer Behavior ?

• Who influences?
• Peers, celebrities
• Who decides?
• Children, adults
• Who uses?
• Individuals, families, groups, clubs,
organizations, governments

18
Defining Consumer Behavior
Consumer behavior: the
study of the processes
involved when
individuals or groups
select, purchase, use, or
dispose of products,
services, ideas, or
experiences to satisfy
needs and desires.

Prentice-Hall, cr 2009
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Products, Services, Experiences, And Ideas..
• Products, services, experiences, and ideas

• In-class assignment
• Consider car buying. What aspects of this activity
involve the purchase of these four. What does this
require, say, Ford to understand in the marketing
of its cars?

• What are the challenges in marketing each of these?

Consumers’ Impact on Marketing

• Understanding people/organizations to satisfy

consumers’ needs

• Knowledge and data about customers:

• Help to define the market
• Identify threats/opportunities to a brand

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Why Study Consumer Behavior?
• Volkswagen Beetle– why were they “out?”
(relatively) Why are they back “in?”
Why Study Consumer Behavior?
• From a managerial perspective,

• Flip camera– what consumer understandings

made this product a success?
Why Study Consumer Behavior?
• McDonald’s – what factors have attributed to its
performance?
Decision-Making Perspectives
• Rational perspective: Consumers
• Integrate as much information as possible with
what they already know about a product
• Weigh pluses and minuses of each alternative
• Arrive at a satisfactory decision
• Other models of decision making:
• Purchase momentum: occurs when consumers
buy beyond needs satisfaction
• Behavioral influence perspective: consumers buy
based on environmental cues, such as a sale
• Experiential perspective: consumers buy based
on totality of product’s appeal
Three Types of Decision-Making

Figure 9.2 Stages in Consumer Decision Making

Problem?
• Consumer hyperchoice
• Constructive processing
• Mental budget
The Consumer Decision Making Process

© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Types of Buying Decision Behavior
Types of Buying Decision Behavior

• Extended problem solving:

• Initiated by a motive that is central to self-concept
• Consumer feels that eventual decision carries a fair degree
of risk
• Limited problem solving:
• Buyers not as motivated to search for information or to
evaluate rigorously
• Buyers use simple decision rules to choose
• Habitual decision making:
• Choices made with little to no conscious effort
The Consumer Decision Making Process

© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Stage 1: Problem\Need Recognition
Occurs when consumer sees difference between
current state and ideal state
Marketers can create:
• Primary demand: encourage consumers to use
product category
• Secondary demand: persuade consumers to use
specific brand
Stage 1: Problem\Need Recognition
What can be the examples of consumer needs? How can they be
categorized?

Functional needs

Psychological needs

Buying shoes versus buying Reebok/Nike shoes

Problem Recognition

Figure 9.3 Problem Recognition: Shifts in Actual or

Ideal States Does
The Consumer Decision Making Process

© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Stage 2: Information Search
• Information search: process by which consumer surveys the
environment for appropriate data to make reasonable decision

• Where do consumers search for information to generate

alternatives for satisfying their needs? I know…
• Internal vs External Search
• Variety Seeking
Amount of Information Search and Product Knowledge

Figure 9.5
The Consumer Decision Making Process

© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Evaluation of Alternatives: Attribute Sets

Universal Set
Retrieval Set

Evoked Set

Choice
© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Stage 3: Evaluation of Alternatives
• Extended problem solving = evaluation of several
brands
• Evoked set versus consideration set
• We usually don’t seriously consider every brand
we know about.
• In fact, we often include only a surprisingly small
number of alternatives in our evoked set.
• Which is the greater problem for a consumer:
• Not having enough choices or having too
many choices?
Stage 3: Evaluation of Alternatives
• Evaluative criteria:
• dimensions used to judge merits of competing
options
• Determinant attributes: features we use to
differentiate among our choices
• Criteria on which products differ carry more
weight
• Marketers educate consumers about (or even
invent) determinant attributes
• Pepsi’s freshness date stamps on cans
The Consumer Decision Making Process

© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Stage 4: Product Choice
• Selecting among alternatives
• Once we assemble and evaluate relevant options
from a we must choose among them
• Decision rules for product choice can be very
simple or very complicated
• Prior experience with (similar) product
• Present information at time of purchase
• Beliefs about brands (from advertising)
Compensatory Rule
• Simple additive rule leads to the option with the
largest number of positive attributes
• Weighted additive rule allows consumer to take in to
account the relative importance by weighting.
Noncompensatory Decision Rules
• Lexicographic rule: consumers select the brand that
is the best on the most important attribute
• Elimination-by-aspects rule: must have a specific
feature to be chosen
• Conjunctive rule: entails processing by brand
Perceived Risk
• Perceived risk: belief that
product has negative
consequences
• Expensive, complex, hard-to-
understand products
• Product choice is visible to
others (risk of embarrassment
for wrong choice)
• Risks can be objective (physical
danger) and subjective (social
embarrassment)
Five Types of Perceived Risk
In-class Discussion
• Compare the risk levels associated with the following
purchase situations:
• A gift for the grab bag for the office holiday
party.
• A gift for your mother’s birthday.
• A gift for your future mother-in-law’s birthday.

• What type of risk is associated with each decision?

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Heuristics: Mental Shortcuts
• Heuristics: mental rules-of-
thumb that lead to a speedy
decision
• Examples: higher price =
higher quality, buying the
same brand your mother
bought
• Can lead to bad decisions
due to flawed assumptions
(especially with unusually
named brands)
 Click photo for
iparty.com
Country-of-Origin as Heuristics
• We rate our own country’s
products more favorably than
do people who live elsewhere
• Attachment to own versus
other cultures
• Nationalists
• Internationalists
• Disengaged
The Consumer Decision Making Process

© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Stage 5: Postpurchase
• Satisfaction/ Dissatisfaction
• Judgment of a pleasurable/ unpleasent level of
consumption fulfillment/underfulfillment
• Highly subjective
• Variation across industries
• Different variables are important
• Varies across cultures

• Satisfaction vs. dissatisfaction?

What causes satisfaction?
• Product performance / service quality
• Role of pre-consumption expectations
• Marketers should manage expectations
Consequences of Satisfaction
• Continued/Increased Patronage
• Brand Ambassador/Brand Community Member
Consequences of Dissatisfaction
• Exit – the avg. firm loses 20% of its customers a year,
primarily due to diss.
• Do people complain more than they exit, or exit more than they
complain?
• How can marketers try and encourage consumers to complain
so that they can make reparations?
• Voice – praise or complaint to company, WOM to other
present or potential consumers
• factors you think are relevant that will determine whether a customer
will complain about an unsatisfactory GSE
• To retailer, to friends, to third party (legally)

• Twist – positive or negative ways that consumers

restructure objects in the marketplace
• “Consumer Vengeance” -- the Neiman-Marcus cookie recipe (or was
it “Consumer” vengeance?)
Satisfaction is a Complex Phenomenon

• Consumers can have the same experience but have

different end-states in terms of satisfaction (why?)

• Consumers in different social classes/social strata

can have different levels of satisfaction with the
same phenomenon

• Different products, services, or experiences in the

same industry can vary widely in terms of how much
they satisfy consumers

• Consumers can be satisfied and dissatisfied with

different elements of GSE, but still arrive at an
overall judgment (exs from your own experience?)
Postpurchase Dissonance

 Firm’s 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?

© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Ethical Dilemma 5.1: Dissatisfied
Customers Use ihate____.com

 Customer
complaint system
 Customer service
failure leads to consumers
seeking other means
 Effective means of
raising complaints
 Do you have microsoft?

© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Factors Influencing the Consumer
Decision Process

Social
Factors

Consumer
Situational Marketing Mix
Decision
Factors Elements
Process

Psychological
Factors

© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Psychological Factors

© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Situational Factors

© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Psychological Factors: Motives

© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin