consumer blackbox

Consumer Environment

Consum

er

Behavior

Affe

ct &

Cog

nitio

n

The exchange processes by which consumers conduct their lives.

Understanding Consumer Understanding Consumer BehaviorBehavior

Part 1 of 3

To conceptualize basic models of To conceptualize basic models of

consumer behavior consumer behavior

Objectives

Simplified ModelSimplified Model

MarketingStimuli

TargetAudienceResponse

Black Box

Multiple StimuliMultiple Stimuli BlackBlackBoxBox

Marketing Mix

EnvironmentalEvents

Product

Price

Place

Promotion

Economic

Technology

Political

Cultural

Expanding the Black Box”Expanding the Black Box”Intra-Personal,psychological

Influences

Inter-Personal,social

Influences

Decision Process

Mediated by audience : social

class,culture,motiveperception.

Situational Influences Occasion,

usage

Multiple ResponsesMultiple ResponsesBlackBlackBoxBox Potential

Buyer Responses

Product choice

Brand choice

Retailer choice

Purchase timing

Need Satisfaction

Why Study Consumer Behavior?Why Study Consumer Behavior?

To implement the Marketing Concept . . a plan to To implement the Marketing Concept . . a plan to influence buyer – seller exchanges to meet organizational influence buyer – seller exchanges to meet organizational goals goals

• To understand complex influences on consumption To understand complex influences on consumption processes processes

• To increase a manager’s confidence to To increase a manager’s confidence to predict consumer responses to their predict consumer responses to their marketing strategymarketing strategy

• To avoid “the Self-Reference Criterion”To avoid “the Self-Reference Criterion”

Information Gaps:Information Gaps:Listen to Your Customer(s)Listen to Your Customer(s)

Self ReferenceSelf Reference: : Home Builders construct what they think Home Builders construct what they think customers needed (Presumptuous)customers needed (Presumptuous)

RESULTRESULT: : Cookie Cutter designs, mass production for Cookie Cutter designs, mass production for economies of scale and sales pressureeconomies of scale and sales pressure

SURPRISE!!!SURPRISE!!! A home builder A home builder

(Finally) Surveys Buyers (1996)(Finally) Surveys Buyers (1996)

ObjectivesObjectives• To understand the types of consumer To understand the types of consumer

decision processes decision processes • To understand the steps in the To understand the steps in the

consumer’s decision process.consumer’s decision process.• To discover how buyers learn about To discover how buyers learn about

and buy products.and buy products.

Consumer Decision Consumer Decision ProcessesProcesses

Multiple Participants in the Multiple Participants in the Consumer’s Decision ProcessConsumer’s Decision Process

InitiatorsInitiators

UsersUsers DecidersDeciders

Influencers Influencers (Gatekeeper)(Gatekeeper)

Simplified Linear Model of the Simplified Linear Model of the Consumer Decision ProcessConsumer Decision Process

ProblemRecognition

InformationSearch

Evaluation ofAlternatives

PurchaseDecision

Post PurchaseBehavior

Expectations

SITUATIONALSITUATIONAL INFLUENCES INFLUENCES

• Physical and Physical and • Social SurroundingsSocial Surroundings• TimeTime• Purchase UsePurchase Use• Buyer’s ConditionBuyer’s Condition

SOCIAL SOCIAL INFLUENCES INFLUENCES

• Roles Roles • FamilyFamily• Reference Groups Reference Groups Social Classes Social Classes• CultureCulture

PSYCHOLOGICALPSYCHOLOGICAL INFLUENCESINFLUENCES• PerceptionPerception• MotivesMotives• LearningLearning• AttitudesAttitudes• PersonalityPersonality

Consumer Decision ProcessConsumer Decision Process

Major Influences in the Consumer’sMajor Influences in the Consumer’s“Black Box”“Black Box”

Problem Recognition

Post Purchase

IncreaseIncreaseGapGapSizeSize

Increase Intensity of (Need) WantIncrease Intensity of (Need) Want

ExistentState

DesiredState

Problem or needrecognition

Buying ProcessBuying Process

Major Causes of Problem Major Causes of Problem Recognition or OpportunityRecognition or Opportunity

Science and Technology AdvancementsScience and Technology Advancements– new productsnew products– new informationnew information

Changing Consumer Circumstances & ExpectationsChanging Consumer Circumstances & Expectations– improved educationimproved education– family life cyclefamily life cycle– income adjustmentsincome adjustments

Psychology of Psychology of Simplification/ComplicationSimplification/Complication

• Consumers try to simplify decision making by reducing Consumers try to simplify decision making by reducing the amount of information processingthe amount of information processing

HighHigh

LowLow

Simple DecisionSimple Decision ComplexComplex

InformationInformationAmountAmount

Psychology of ComplicationPsychology of Complication• Gum - Gum - color…crème w/blue spec’s color…crème w/blue spec’s

– sugar…or…sugar free?sugar…or…sugar free?– Flavor/taste (Cool Mint,?)Flavor/taste (Cool Mint,?)– Chewable ness…Chewable ness…– bubble blowing…or not?bubble blowing…or not?– liquid center…or not ?liquid center…or not ?– Shape, chick let casingShape, chick let casing– Family package or individual?Family package or individual?– Stick to your teeth or not?Stick to your teeth or not?– Length of chew time ?Length of chew time ?


InformationSearch

Information Is knowledge

Information SourcesInformation Sources

1.1. Internal Sources (Psychological)Internal Sources (Psychological)– experienceexperience– memory storage/retrievalmemory storage/retrieval– mental processingmental processing

2.2. External Sources (Social)External Sources (Social)

2.2. familyfamily

3.3. friendsfriends

4.4. professionalsprofessionalsPersonal interaction

Information SourcesInformation Sources

3.3. Public SourcesPublic Sources– government studiesgovernment studies– product testing magazinesproduct testing magazines– media storiesmedia stories

4.4. Commercial SourcesCommercial Sources– advertisingadvertising– sales peoplesales people– product pamphletsproduct pamphlets

Information Source Comparisons

SourceSource EffortEffort RequiredRequired BelievabilityBelievability

#1 Internal (experience) Low High Experiential (examining High High or testing the product)

#2 Personal (friends, relatives) Low High

#3 Public (consumer reports) High High

#4 Commercial (Promotions) Low Low

Picking PhysiciansPicking PhysiciansSurveyed consumers said the most Surveyed consumers said the most frequent sources for selecting a doctor are:frequent sources for selecting a doctor are:

Referral from friend

Referral from another doctor

Referral from family member

General word of mouth

24%

14%

10%

9%

Applied Marketing

Principles:Principles:Information Search Information Search

Consumers seek to simplify decision making via time, Consumers seek to simplify decision making via time, energy & costs.energy & costs.

Consumers seek Information credibility & predictive nessConsumers seek Information credibility & predictive ness

• Tactics:Tactics: Identify the information Identify the information sources & importance to assure sources & importance to assure processing of your brand’s processing of your brand’s information.information.

Information GapsInformation GapsExamples of Dell’sExamples of Dell’s Customer FeedbackCustomer Feedback

- Where’s the power button?- Where’s the power button?

- Won’t work after I washed the - Won’t work after I washed the

keyboardkeyboard

- Where’s the any key? (Click any - Where’s the any key? (Click any key to continue)key to continue)

- fax won’t work- fax won’t work

- I refuse to read manual- I refuse to read manual

Applied Marketing

Principle:Principle:Information OverloadInformation Overload

With greater amounts of information available, Consumers With greater amounts of information available, Consumers make poorer choices make poorer choices

• Tactic:Tactic:– focus on product information (features) that is important focus on product information (features) that is important

(salient) to consumers(salient) to consumers

Principle: Principle: Information Wear outInformation Wear out

• Repetition increases consumer learningRepetition increases consumer learning• Too much repetition = wear outToo much repetition = wear out(consumers decrease attention over time)(consumers decrease attention over time)Tactic:Tactic: Change information and/or format Change information and/or format Pictures are better than words Pictures are better than words


Evaluation ofAlternatives

• Utility TheoryUtility Theory - Consumers perform rational, - Consumers perform rational, quantitative calculations to maximize personal quantitative calculations to maximize personal utilities .. economic, behavioral ,societal.utilities .. economic, behavioral ,societal.

3 Major Evaluation Criteria3 Major Evaluation Criteria

• Economic: cost/performanceEconomic: cost/performance• Behavioral: prestige/status/peer influence/lifestyle Behavioral: prestige/status/peer influence/lifestyle

• Societal: product externalitiesSocietal: product externalities• environmental effectsenvironmental effects

– society’s long run welfaresociety’s long run welfarePerformancePerformance

SafetySafety

Lots of storageLots of storage

Variety ofVariety ofcolorscolors

Evaluation CriteriaEvaluation Criteria

• Principle: Evaluation criteria change over time and among Principle: Evaluation criteria change over time and among market segments.market segments.

Promotions “frame” Promotions “frame” certain product attributes certain product attributes

(evaluation criteria) to (evaluation criteria) to influence their perceived influence their perceived

relative importancerelative importance

Supermarket Selection Criteria Change Supermarket Selection Criteria Change over timeover time

CleanlinessCleanliness

attractiveattractive

Product QualityProduct Quality Low pricesLow prices

locationlocation Low pricesLow prices LocationLocation

Labeling of Labeling of ProductsProducts

Product varietyProduct variety Product VarietyProduct Variety

CleanlinessCleanliness

attractiveattractive

Courteous Courteous employeesemployees

1974 1981 1985

#1

Law of Diminishing ReturnsLaw of Diminishing Returns(Marginal Utility)(Marginal Utility)

UtilityUtilitySatisfactionSatisfaction

BeerBeer

11 22 33 44 55 66

2828

2424

2020

1515

1010

Applying Evaluative CriteriaApplying Evaluative Criteria((Behavioral,Societal,Economic)Behavioral,Societal,Economic)

ToothpasteToothpaste

Decay PreventionDecay Preventionand Priceand Price

Economic AttributesEconomic Attributes

Behavioral AttributesBehavioral AttributesTaste and FlavorTaste and Flavor

PackagingPackaging Societal AttributesSocietal Attributes

(safety, recyclable, resources)(safety, recyclable, resources)

Evaluation criteria are the basis of product Evaluation criteria are the basis of product attitudesattitudes

• Product Attributes - Price Product Attributes - Price (value), - Quality, (value), - Quality, - style, etc. - style, etc.

• + relative importance + relative importance (utility)(utility)

• = Attitude toward Product= Attitude toward Product

• Retailer Attributes - Retailer Attributes - location, - credit location, - credit terms, - return terms, - return policies,etc.policies,etc.

• + relative importance (utility)+ relative importance (utility)• = Attitude toward = Attitude toward

Retailer (Image)Retailer (Image)

• Product Beliefs x Evaluations = AttitudeProduct Beliefs x Evaluations = Attitude• An overall evaluation of a good, service or An overall evaluation of a good, service or

idea . . .with a predisposition to purchase the type of idea . . .with a predisposition to purchase the type of product or specific brandproduct or specific brand

Product AttitudeProduct Attitude


PurchaseDecision(s)

WHO BUYS?WHO BUYS?

WHAT?WHAT?

WHEN?WHEN?

WHERE?WHERE?

AND WHY?AND WHY?

Influences on Purchase DecisionsInfluences on Purchase Decisions

• Purchase Situation(s)Purchase Situation(s)• Usage (Social or Private)Usage (Social or Private)• Time Perspective (long or short)Time Perspective (long or short)• Resource CapabilitiesResource Capabilities• Level of personal controlLevel of personal control

Purchase Decisions Purchase Decisions

• Principle:Principle: Consumers dislike making Consumers dislike making decisions/choicesdecisions/choices

• Tactic: Tactic: Show satisfied customersShow satisfied customers– ordinary peopleordinary people– expertsexperts– celebritiescelebrities


• Cognitive dissonance: post-purchase tension .Cognitive dissonance: post-purchase tension .

Post-PurchaseBehavior

Post Purchase BehaviorPost Purchase Behavior

Product ExperienceProduct Experience

ActualActualBenefitsBenefits

ActualActualExpectationsExpectations

SatisfiedSatisfied DissatisfiedDissatisfied

GapGapSizeSize

Post Purchase Behavior Post Purchase Behavior

• Principle:Principle: Dissatisfied customers communicate Dissatisfied customers communicate more negative word of mouth than satisfied more negative word of mouth than satisfied customers communicating positive word of customers communicating positive word of mouthmouth

Post Purchase BehaviorPost Purchase Behavior

• Cognitive DissonanceCognitive Dissonance

Did I Do the Right Thing?

• Lack of confidence (doubts) Lack of confidence (doubts) about the correctness of a about the correctness of a prior purchase decision and prior purchase decision and efforts to reconcile doubtsefforts to reconcile doubts

Cognitive DissonanceCognitive Dissonance

• Causes: Perceived RiskCauses: Perceived Risk– Performance riskPerformance risk– Physical risk (wear-out) Physical risk (wear-out) – High financial commitmentHigh financial commitment– High involvement levelHigh involvement level– Information OverloadInformation Overload


• Potential ReactionsPotential Reactions– Return productReturn product– Seek confirming informationSeek confirming information

• Marketing TacticMarketing Tactic– Provide post decision positive Provide post decision positive

informationinformation

A Model of Consumer Decision Making

Information in the environment

InterpretationExposure,attention, and comprehension

Knowledge, meanings and beliefs

IntegrationAttitudes and

intentions

Decision/Behavior

Consumer decision making

MemoryProduct

knowledge and involvement

Questions?Questions?

consumer blackbox

Documents