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CONSUMER BEHAVIOR

BUAD 307
MARKETING FUNDAMENTALS
Why does Staples
sell Starbucks
coffee?
BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 2
Influences on and of Consumer Behavior

PERCEPTION/ MARKET
SENSATION INFO
RESEARCH SEARCH

COGNITION

STRATEGY CHOICES

AFFECT

PREFERENCES

BELIEFS
CONSUMER
COMMUNICATION
SOCIAL AND
OTHER INFLUENCE
BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 3
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 4
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 5
Questions Faced By
Consumers
• 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?
• Which tie should I wear for a job interview?
• Should I give my wife roses, chocolate, or
software?

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 6


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 7


CONSUMER DECISIONS:
Theory and Reality in Consumer Buying

PROBLEM
RECOGNITION
INFORMATION
SEARCH

EVALUATION OF
ALTERNATIVES
PURCHASE
POSTPURCHASE
EVALUATION/ Theory
BEHAVIORS
Complications
BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 8
Approaches to Search for
Problem Solutions

INTERNAL
Memory
Thinking

EXTERNAL
Word of mouth, media, CATALOG
store visits, trial
BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 9
Options Identified and Considered

UNIVERSAL SET
All possible options

RETRIEVED SET
Options that readily
come to mind

EVOKED SET
Options that will be
considered by the
consumer

Note: Retrieved and


evoked sets will vary
among different
consumers

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 10


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 11
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 12


Evaluation Type

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
LESS
BUAD 307
IMPORTANTCONSUMER BEHAVIOR Lars Perner, Instructor 13
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 14


Attitudes―components

AFFECT
BELIEFS
(FEELING)

BEHAVIORAL
INTENTIONS

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 15


Attitude Components
• Beliefs • Behavioral
– Can be positive, Intentions
negative, or neutral
– An individual’s plan or
– May or may not be expectations of what he
accurate or she will do
– May contradict other – May appear inconsistent
beliefs held by the other with beliefs
person
– May not predict well what
• Affect the individual will do in
reality
– May be positive or
negative
– May take on specific
dimension (e.g.,
pleasure, disgust)

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 16


Generating Beliefs Through
Advertising
• Statements must be
– Perceived
– Comprehended
– Remembered
– Believed (at least in part)

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 17


Positioning Through Creating
Beliefs
• “It’s not delivery; it’s De Journo!”
• “Wal-Mart. Always low prices.
Always.”
• “I just saved a bunch of money on
my auto insurance.”
• “U-um Good!” (Campbell’s Soup)

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 18


Multiattribute Models of
Attitude
• Attitude computed as a
function of multiple attributes
weighted for importance:

Ab  i 1WiXib
n

Ab= attitude toward brand b


Wi: weight of attribute I
Xib: belief about brand b’s
performance on attribute I
• Model assumes rationality
Calculations will not be required on the
exam. You should know conceptually what
this involves conceptually—i.e., weighing
importance and intensity of feeling.

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 19


Multiattribute Models
• Caveats • Applications
– Different segments exist that will weight – Determining
factors differently—thus, overall • Overall performance
averages can be misleading. Separate • Areas of strength and weakness
analyses should be done for different
– Comparison to competitors
segments of interest. (Segments can be
identified by certain statistical • Overall
techniques). • Areas of strength and weakness
– Individual differences exist in scale
intensity—for some, it is much “easier” to
be extremely good or extremely bad.
– Prior research may be needed to identify REMINDER:
issues (dimensions) to be weighted. PERCEPTIONS ARE NOT
– Some factors may be intangible—What NECESSARILY ACCURATE. We
are the substantive differences between are looking to work with what
Windows and Apple computers? consumers believe.
– Non-compensatory factors—“must-
haves”—may determine final result.

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 20


Affect
• Based on
– past emotional
associations of product
– emotional effect of beliefs

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 21


Attitude Characteristics
• Availability/
accessibility

• Constructe
d vs.
natural

• Strength
BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 22
Measurement of Attitude
Components
• Beliefs
– Semantic Differential Scales
– Good -------------------Bad
– Fast --------------------Slow
– Reliable-----------------Unreliable

• Feelings
– Likert Scales (Strongly agree … Strongly Disagree)
– “This product makes me happy.”

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 23


Measurement
• Behavioral Intention
– Rating of likelihood of
purchase
– May need projection if
social desirability affects
willingness to admit to
product use

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 24


Attitude Change Strategies, Part I
• Change 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

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 25


Attitude Change Strategies II
• Change behavior (e.g.,
sampling)
– Attitudes are inferred from
behavior (e.g., I buy the product
 I must like it or It must be
good)
• Change Belief Component
– Change existing beliefs
• Difficult
• Advertiser’s motives are suspect
– Change importance of attributes
– Add beliefs
– Change ideal (fashion)
BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 26
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 27
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 28


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 29


Potential Family Life Cycle
Stages

YOUNG YOUNG EMPTY NEST


SINGLE COUPLE I/II

FULL NEST
I/II/III
SINGLE OLDER
PARENT SINGLE
BLENDED
BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 30
Economic/Marketing Implications of
Household Cycles
• Income tends to • Product demand
increase with time due to
• But children/ – singles with low
obligations add cost expenses
• Divorce – new couples
– increases costs – divorced
– may change families
income – children
distribution – empty nesters
marriage --> more income

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 31


Household Decision Making
• Roles/influence
– Information gatherers/holders
– Influencers
– Decision makers
– Purchasers
– Users

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 32


The Means-End Chain

Aim promotion/
positioning at higher Self-esteem
levels of chain!

Values Feeling of power

Consequences
Performance
Attributes
Fast acceleration

Large engine
BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 33
Subliminal Perception: A
Diabolical Marketing Tool?
• Subliminal messages in ads
are illegal in U.S.
• Some research support for
modest effects
– Probably limited to one
syllable words
– Complex messages can
probably not be
processed subliminally

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 34


Message Framing
• Many tradeoffs
can be stated in
two,
mathematically
equivalent ways
—e.g.,
– “80% lean” vs.
“20% fat”
– $49.00 per
person per night
based on double
occupancy
BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 35
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 36


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

BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 37