MARKETING SEMINAR

Chapter 6

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Would you purchase this good?

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What about this one?

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What do you prefer for lunch?

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What is your choice?

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ANALYZING CONSUMER MARKETS

Chapter 6

Felipe RibeiroIvan RibeiroPaula RibeiroPaulo MagalhãesPedro Ivo Rodrigo CabralYuri Renó

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Chapter Objectives

1. How do consumer characteristics influence buying behavior?

2. What major psychological processes influence consumer responses to the marketing program?

3. How do consumers make purchasing decisions?

4. How do marketers analyze consumer decision making?

Feel free to ask questions at anytime!

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WHAT INFLUENCES CONSUMER BEHAVIOR?

Consumer Behavior is the study of how individuals, groups and organizations make decisions to satisfy their needs and wants.

The consumer’s buying behavior is influenced by cultural, social, and personal factors.

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Cultural Factors

Fundamental determinants of a person’s wants and behavior

Consists Subcultures Social Classes: members who share

similar values, interests, and behavior according to the social stratification

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Reference Groups

Family

Role and Status

Social Factors

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Social Factors – Reference Groups

Membership Groups Primary Groups Secondary Groups

Opinion Leaders: individual whose ideas and behavior serve as a model to others.

Aspirational Groups Dissociative Groups

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Social Factors - Family

Family Orientation

Family Procreation

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Social Factors - Roles and Status

Social groups: family, organizations and clubs

Roles: activities a person is expected to perform

Status: degree of importance of each role

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Personal factors – Age & Life cycle

Factors related to age: clothes, food and recreation

Life cycle: Family x Psychological (patterns) (critical life

events)

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Personal factors – Occupation & Economic Circumstances

Developing products for occupational groups

Economic events:

purchase power x effects

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Personal factors – Personality & Self - Concept

Personality: each of the different human psychological style.

How can we describe it? Self-confidence, sociability, defensiveness and adaptability.

How does it influence? Self-concept, ideal self-concept and other’s self-concept

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Personal factors – Lifestyle & Values

“A lifestyle is a person’s pattern of living in the world as expressed in activities, interests and opinions”

(Kotler & Keller)

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Personal factors – Lifestyle & Values

Lohas

Gen Next

Time constrained x money constrained

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Personal factors – Lifestyle & Values

Core values:

The point marketers want to achieve. Why?

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KEY PSYCHOLOGICAL PROCESSES

The starting point for understanding consumer behavior is the stimulus-response model:

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KEY PSYCHOLOGICAL PROCESSES

Four key psychological processes fundamentally influence consumer responses to the various marketing stimuli:

MotivationPerceptionLearningMemory

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Motivation: Freud, Maslow, Herzberg

A need becomes a motive when it is aroused to a sufficient level of intensity. A motive is a need that is sufficiently pressing to drive the person to act.

Three theories of human motivation Sigmund FreudAbraham MaslowFrederick Herzberg

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Motivation: Freud

Sigmund Freud assumed that the psychological forces shaping people's behavior are largely unconscious, and that a person cannot fully understand his or her own motivations.

Whisky can meet the need for social relaxation, status, or fun.

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Motivation: Maslow

Human needs are arranged in a hierarchy.

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Motivation: Maslow

People will try to satisfy their most important needs first.

Maslow's theory helps marketers understand how various products fit into the plans, goals, and lives of consumers.

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Motivation: Herzberg

two-factor theory:• dissatisfiers (factors that cause

dissatisfaction)• satisfiers (factors that cause satisfaction)

Satisfiers must be present to motivate a purchase

Avoid dissatisfiers Identify and supply the major satisfiers or

motivators of purchase in the market.

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PERCEPTION

A motivated person is ready to act. Perception influences how the motivated

person acts in the situation. In marketing, perceptions are more

important than the reality Three perceptual processes: selective

attention, selective distortion, and selective retention

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SELECTIVE ATTENTION

Attract consumers' notice

Which stimuli people will notice

Marketers may attempt to promote their offers intrusively to bypass selective attention filters.

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SELECTIVE ATTENTION

People are more likely to notice stimuli that relate to a current need

People are more likely to notice stimuli that they anticipate

People are more likely to notice stimuli whose deviations are large in relation to the normal size of the stimuli

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SELECTIVE DISTORTION

Tendency to interpret information in a way that will fit our preconceptions

Consumers will often distort information to be consistent with prior brand and product beliefs.

Can work to the advantage of marketers with strong brands

"blind" taste tests

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SELECTIVE DISTORTION

Diet Coke X Diet Pepsi

Equally split in preference on a blind basis

Diet Coke(65%), Diet Pepsi(23%), others see no difference.

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SELECTIVE RETENTION

We are likely to remember good points about a product we like and forget good points about competing products.

Works to the advantage of strong brands

Explains why marketers need to use repetition in sending messages to their target market—to make sure their message is not overlooked.

Learning

When people act, they learn. Learning involves changes in an individual's behavior resulting from experience.

Learning is produced through the interplay of drives, stimuli, cues, responses, and reinforcement.

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Learning

A drive is a strong internal stimulus impelling action.

A Cue is a minor stimulus that determines when, where, and how a person responds.

Example: buying a Dell computer: you generalize your response to a similar stimulus.

Discrimination means that the person has learned to recognize differences in sets of similar stimuli and can adjust responses accordingly.

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Learning

Learning theory teaches marketers that they can build demand for a product when they associate it with strong drives, use motivating cues, and provide positive reinforcement. For example: A new company can enter the market by appealing

to the same drives that competitors use and by providing similar cue configurations, because buyers are more likely to transfer loyalty to similar brands (generalization);

or the company might design its brand to appeal to a different set of drives and offer strong cue incentives to change (discrimination).

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Memory

All the information and experiences we encounter in our life can end up in our long-term memory.

Cognitive psychologists distinguish between: STM: a temporary repository of

informationLTM: a more permanent repository.

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Memory

Most widely accepted views of long-term memory structure involve some kind of associative model formulation.

Any type of information can be stored in the memory, including information that is verbal, visual, abstract, or contextual.

Memory becomes activated because external information is being encoded (e.g., when a person reads or hears a word or phrase) or internal information is retrieved from LTM (e.g., when a person thinks about some concept).

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Memory

Consumer brand knowledge is linked to associations.

The strength and organization of these associations will be important determinants of the information that can be recalled about the brand.

Brand associations consist of all thoughts, feelings, perceptions, images, experiences, beliefs, attitudes, and so on, related to the brand.

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Memory

Marketing can be seen as making sure that consumers have the right types of product and service experiences so that the right brand knowledge structures are created and maintained in memory.

Companies like Procter & Gamble create mental maps of consumers that show their knowledge of a particular brand in terms of the key associations that are likely to happen in a marketing setting and their relative strength, favorability, and uniqueness to consumers.

The following figure displays a very simple mental map:

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Hypothetical Dole Mental Map

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Memory

ENCODING: Memory encoding refers to how and

where information gets into memory.

It can be characterized according to how much a person thinks about the information and the manner a person thinks about it.

The quantity and quality of processing determines the strength of an association.

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Memory

In general, the more attention placed on the meaning of information during encoding, the stronger the resulting associations in memory.

One reason why personal experiences create such strong brand associations is that information about the product is likely to be related to existing knowledge.

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Memory

A number of different scenarios characterize how consumers might process an ad:

1. Some consumers almost don’t notice the ad, so the amount of processing devoted to the ad is extremely low, resulting in a weak brand association.

2. The ad may catch the attention of other consumers, resulting in sufficient processing, but these consumers may devote most of the time during the ad.

3. Another group of consumers may not only notice the ads but may think of how they had a wrong impression of the brand and that they would feel good with this brand.

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Memory

Repeated exposures to information provide greater opportunity for processing and thus the potential for stronger associations.

But high levels of repetition for an

uninvolving, unpersuasive ad is unlikely to have sales impact as lower levels of repetition for an involving and persuasive ad.

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Memory

RETRIEVAL: Refers to how information gets out of memory.

The strength of a brand association increases both the probability that the information will be accessible, and how easily it can be recalled.

Successful recall of brand information by consumers does not depend only on the initial strength of that information in memory. Three factors are particularly important:

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Memory

1. The presence of other product information in memory can produce interference. It may cause the information to be either overlooked or confused.

2. The time, since exposure to information at encoding affects the strength of a new association.

3. Information may be "available" in memory but not "accessible". The particular associations for a brand that "come to mind" depend on the context in which the brand is considered.

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UNDERSTANDING CONSUMER BEHAVIOR

Who buys our product or service? Who makes the decision to buy the product? Who influences the decision to buy the product? How is the purchase decision made? Who assumes what

role? What does the customer buy? What needs must be

satisfied? Why do customers buy a particular brand? Where do they go or look to buy the product or service? When do they buy? Any seasonality factors? How is our product perceived by customers? What are customers' attitudes toward our product? What social factors might influence the purchase

decision? Do customers' lifestyles influence their decisions? How do personal or demographic factors influence the

purchase decision? 47

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The Buying Decision Process

THE FIVE-STAGE MODEL

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THE FIVE-STAGE MODEL

Problem Recognition

Information Search

Evaluation of Alternatives

Purchase Decision

Postpurchase Behavior

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PROBLEM RECOGNITION

A problem or need, triggered byinternal or external stimuli, that risesto a drive.

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INFORMATION SEARCH

Hightened attention: receptive to information about a product. Active information search: looking for readings, asking friends and family, web searchs, visiting stores.

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INFORMATION SEARCH

Search dynamics:

Total Set Awareness Set

Consideration Set

Choice Set Decision

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EVALUATION OF ALTERNATIVES

No single process is used, butseveral. Basic concepts: need satisfaction,benefits from the productsolution and the product as a bundleof attributes. Beliefs and attitudesinfluence the evaluation.

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PURCHASE DECISIONS

To execute a purchase intention theconsumer may make up to five subdecisions:BrandDealerQuantityTimingPayment Method

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PURCHASE DECISIONS

In some cases, consumers may

decide not to formally evaluate each and every brand. In other cases,

intervening factors may affect the final decision.

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PURCHASE DECISIONSNONCOMPENSATORY MODELS OF

CONSUMER CHOICE

With noncompensatory models of consumerchoice, positive and negative attribute

considerations do not necessarily net out.

Evaluation attributes more in isolation makesdecision making easier for a consumer

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PURCHASE DECISIONS

Three kinds of choice heuristics:

1.Conjunctive heuristic

2.Lexicographic heuristic

3.Elimination-by-aspects heuristic

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PURCHASE DECISIONS

Even if consumers form brand evaluations, two general factors can

intervene between the purchase intention and the purchase decision.

1.Attitudes of others

2.Unanticipated situational factors58

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PURCHASE DECISIONS

Perceived risk – modify, postpone or avoid a purchase decision

1) Functional risk2) Physical risk3) Finantial risk4) Social risk5) Psychological risk6) Time risk

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POSTPURCHASE BEHAVIOR

Marketer’s job does not end with the purchase.

Monitor postpurchase satisfaction, postpurchase actions, and postpurchase product uses

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POSTPURCHASE BEHAVIOR

Postpurchase Satisfaction

Expectation x Product’s perceived value

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POSTPURCHASE BEHAVIOR

Postpurchase Actions

Satisfaction x Dissatisfaction

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POSTPURCHASE BEHAVIOR

Postpurchase use and disposal

How buyers use and dispose of the product

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OTHER THEORIES OF CONSUMER DECISION MAKING

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Elaboration Likehood Model

Peripheral Route

Central Route

• Less Rational• Celebrity

Endorsement, credible source

• Rational Consideration• Motivation,

ability and opportunity

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Low-Involvement Marketing Strategies

Link the product to some involving issue Toothpaste to avoiding cavities

To some involving personal situation Fruit juice with calcium

Ads to trigger strong emotions Heart-healthy nature of cereals

Add na important feature GE launched fluorescent lamps

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Heuristics

Availability heuristic Quickness and ease of an example

comes to mind Representativeness Heuristic

How similar the outcome is to other examples

Anchoring and Adjustment Heuristic Based on an initial judment, first

impression

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Mental Accounting Principles

Segregate Gains

Integrate Losses

Integrate Smaller Losses with Larger Gains

Segregate Small Gains from Large Losses

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Profiling the Customer Buying-Decision Process

Introspective Method Think of how you act

Retrospective Method Ask recent consumers

Prospective Method Ask consumers who plan to buy the

product Prescriptive Method

Ask consumers the ideal way to buy the product

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Now we can answer the questions!

Consumer behavior is influenced by three factors: cultural, social and personal.

Four main psychological processes affect consumer behavior: motivation, perception, learning, and memory.

The typical process consists of the following sequence of events: problem recognition, information search, evaluation of alternatives, purchase decisions, and postpurchase behavior

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Now we can answer the questions!

1. How do consumer characteristics influence buying behavior?

Consumer behavior is influenced by three factors: cultural, social

and personal.

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2. What major psychological processes influence consumer

responses to the marketing program?

Four main psychological processes affect consumer behavior: motivation,

perception, learning, and memory.

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3. How do consumers make purchasing decisions?

The typical process consists of the following sequence of events: problem recognition,

information search, evaluation of alternatives, purchase decisions, and

postpurchase behavior

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4.How do marketers analyze consumer decision making?

To understand how consumers actually make buying decisions, marketers must

identify who makes and has input into the buying decision. Different marketing

campaigns might be targeted to each type of person.

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Thank you!

ANALYZING CONSUMER MARKETS

The most important thing is to forecast where customers are moving, and be in

front of them.