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Consumer Behavior Consumer behavior: consists of the actions a person takes in purchasing and using products and services, including the mental and social processes that come before and after these actions. 4-2 Influences on the consumer purchase decision process from both internal and external sources 4-4 Perception Perception is the process by which an individual selects, organizes, and interprets information to create a meaningful picture of the world. 4-5 In marketing: “Perception is reality.” In art: “Is all what we see or seem but a dream within a dream.” Edgar Allan Poe 1809 - 1849 In politics: “Power is the ability to define phenomena.” Huey Newton 1942 - 1989 1. Perception Encoding Stimulus Receptor Codes SIS SIS Filter Attention Expectations Motives Attitudes Gestalt Organization Closure Proximity Common Fate Figure-ground PH Perception Perceptual Hypothesis Memory Feedback Principles of Sensation 1. Only change is recognized 2. The ability to detect is based on the amount of the stimulus Thresholds: Absolute JND (Just noticeable difference) S. S. Stevens Package volume and price Perceptual Defense Smoking study Sherif’s Theory Subliminal Advertising Perceptual Defense Sherif’s Theory Perceptual Defense Subliminal advertising Perceptual Defense Jean Piaget Schemata Assimilation Accommodation 1896 - 1980 Perceptual Equilibrium Cognitive Dissonance Perceptual Equilibrium Cognitive Dissonance Other perceptual factors Color Other perceptual factors Size Square Root Law Impact Other perceptual factors Social factors Halo effect Being attractive is good Jane is attractive therefore Jane is good! Other perceptual factors Social factors Stereotypes Other perceptual factors Social factors Similarity Other perceptual factors Social factors Initial impressions Other perceptual factors Perceived risk People are not good at calculating actual risk… What to do about it: Perceived Risk • Obtain Seals of Approval • Secure Endorsements • Provide Free Trials/Samples • Give Extensive Instructions • Provide Warranties/Guarantees • Allow customers to disconnect 4-33 Learning A relatively permanent change in behavior due to prior experience. Behavioral Learning Classical conditioning Appetite Appeal 4-34 Classical Conditioning Ivan Pavlov 1849 - 1936 Is a brain necessary for learning? Behavioral Learning Operant conditioning 4-37 Law of Effect The probability of behaviors followed by a “satisfying” state of affairs increases, while probability of behaviors followed by a “dissatisfying” state of affairs decreases. Edward Thorndike 1874 - 1949 Behaviorism Behaviors are dictated only by the environment and by Thorndike’s Law. B. F. Skinner 1904 - 1990 It thinking necessary for learning? Extremely important to: Behavioral Learning • Stimulus Generalization • Stimulus Discrimination 4-42 Cognitive Learning Brand Loyalty 4-43 Attitudes and Attitude Change Attitudes: Learned predispositions to respond to an object or class of objects in a consistently favorable or unfavorable way. Attitudes and Attitude Change 1. They are learned 2. They are predispositions 3. They are consistent 4. They are the link between perception and behavior 5. They are a “hypothetical construct” Why do customers have them? 1. Organize knowledge 2. Ego-defense 3. Value 4. Utilitarian (tools) Changing attitudes 1. Consistency 2. Communications Consistency 1. Reactance Theories Establishing and maintaining freedom Consistency 2. Cognitive Dissonance Festinger (grasshoppers) Leon Festinger 1919 - 1989 Consistency 2. Cognitive Dissonance Pro-Obama article Consistency 2. Cognitive Dissonance Post purchase dissonance Consistency 3. Social judgment theories Sherif Heider’s Balance Theory Consistency 4. Congruity theories Linkage to positive or negatives Attitude Change and Communication Attitude Change and Communication 1. Source credibility Expertise and familiarity The “Sleeper Effect” Attitude Change and Communication 2. Source physical attractiveness Halo Effect Why? Gets attention Gives information Minimizes cognitive dissonance Works Attitude Change and Communication 3. Source likeability Factors Similarity (unless….) Speed of speaking http://www.youtube.com/watch?v=0MBzYZVzJCY Errors Known factors (As seen on TV!) Attitude Change and Communication 4. Message factors Repetition (two factor theory) Words vs Pictures Vivid or Abstract Attitude Change and Communication 4. Message factors Comparative One-sided vs. two-sided Drawing conclusions Primacy or Recency Effects Attitude Change and Communication 5. Receiver Emotions a. Feeling good Humor (What is funny?) Attractiveness Sex… food…. Music Flattery Good news Attitude Change and Communication 5. Receiver Emotions a. Feeling bad Works or doesn’t work? Protection Racket Al Capone 1899 - 1947 Hierarchy of Effects Learning Hierarchy Cognition Affect Behavior Hierarchy of Effects Emotion Hierarchy Affect Behavior Cognition Hierarchy of Effects Behavior Hierarchy Behavior Affect Cognition Customer Decision Making Involvement & Decision Complexity Low Involvement • Maintain Product Quality • Avoid Stockouts • Reduce Cognitive Dissonance with Ads High Involvement • Use Comparative Ads • Use Personal Selling 4-66 Customer Decision Making Involvement Low High High Impulse Buying Complex Decision Making Low Inertia Brand Loyalty Complexity Comparison of problem-solving variations: extended, limited, and routine 4-68 Consumers use search, experience, and credence properties to evaluate services 4-69 The purchase decision process consists of five stages: Ideal Opportunity Actual Need 4-70 2. Information Search Internal Search Awareness Sets Evoked set 50% to 70% of all purchases 2. Information Search External Search How much: Involvement Perceived Risk Time Pressures Customer Characteristics Familiarity and Expertise Ignorance paradox 3. Alternatives Evaluation Models: Compensatory Non-compensatory Conjunctive Bottom up Lexicographic Top down Heuristic Satisficing 4. Purchase 5. Post-Purchase Experience All products are evaluated! Expectancy Disconfirmation model Equity Theory What is fair? Cognitive Dissonance Contrast Effects Valence Post-Purchase Experience Buyer’s Regret + Reactance Dissonance Time Personality Traits Self-Concept 4-76 Personality and Lifestyle Sigmund Freud 1856 - 1939 Personality and Lifestyle Carl Jung 1875 - 1961 Personality is related to consumer behavior but No one knows how it works!!! Values and lifestyle: VALS™ identifies eight consumer segments INNOVATORS Sophisticated, Change Leading, Active, Take Charge ACHIEVERS Successful, Career & Family Oriented, Moderate THINKERS EXPERIENCERS Information Seeking, Satisfied, Reflective Risk Seeking, Enthusiastic, Impulsive BELIEVERS MAKERS Conservative, Conventional, Traditional Homegrown, Self Sufficient, Macho, Family Oriented STRIVERS Trendy, Approval, Seeking, Disenfranchised SURVIVORS Passive, Risk Averse, Constrained Copyright © 2010 by Strategic Business Insights. All rights reserved. 4-80 Take the VAL’s Test http://www.strategicbusinessinsights.com/vals/presurvey.shtml Take a personality test http://personality-testing.info/tests/BIG5.php Hierarchy of needs Abraham Maslow 1908 - 1970 4-82 Group Influence A group is a social structure in which people have common goals. Groups establish: 1. Norms 2. Roles 3. Status 4. Conformity Types of Groups: 1. Membership groups Formal Informal Types of Groups: 2. Non-membership groups Aspirational Avoidance Usage Private - Necessity Private – Luxury Public - Necessity Public - Luxury Rule little influence of groups influence what but not which influence which but not what influence both what and which Social Class A social stratification of persons with shared values, attitudes, and behaviors. In the U.S., social class is mostly a matter of: 1. Education 2. Occupation Not INCOME! Social Class Privilege In U.S. Education Occupation Stores and shopping Perhaps nothing in the U.S. more segmented by social class! SOCIOCULTURAL INFLUENCES ON CONSUMER BEHAVIOR PERSONAL INFLUENCE Opinion Leaders Word of Mouth • Buzz 4-94 SOCIOCULTURAL INFLUENCES ON CONSUMER BEHAVIOR FAMILY INFLUENCE Consumer Socialization Family Life Cycle 4-95 Modern family life cycle stages and flows 4-96 SOCIOCULTURAL INFLUENCES ON CONSUMER BEHAVIOR CULTURE AND SUBCULTURE Culture • Hispanic Buying Patterns • African American Buying Patterns Subcultures • Asian American Buying Patterns 4-97 Culture and Subculture Some basic definitions : Racial subcultures Ethnic subcultures High and low context De-ethnicization Culture and Subculture Some basic definitions : Micro cultures: Shared ID with an activity or art form Norms Culture and Subculture Clyde Kluckhohn 1905 - 1960 1. Time a. Past-Present-Future Orientation b.Monochronomatic vs Polychronomatic c. Basic nature of time Linear Circular Procedural 2. Individual relation to nature a. Subjugated b. In harmony c. Mastery over 3. Individual relation to others a. Traditional b. Democratic c. Individualistic 4. Personal activity a. Being b. Becoming c. Doing