Download - 37687579 Consumer Behavior
Consumer BehaviorAn Overview
Brief Overview of topics1. Introduction, nature scope of Consumer Behavior
(CB), Marketing Strategy.2. The Consumer decision Process.3. Pre Purchase Processes and Purchase.4. Post purchase processes.5. Individual determinants of CB: Consumer Motivation.6. Individual determinants of CB: Personality and CB
7. Individual determinants of CB: Consumer Perception.8. Individual determinants of CB: Consumer Learning.9. Individual determinants of CB: Consumer attitudes,
attitude change and values.10. Environmental influences on CB: Reference Groups and
Family & Household influences.11. Environmental influences on CB: Culture, Ethnicity and
Social class.12. Consumer influence and diffusion of innovations.
Introduction to Consumer Behavior
Learning Objectives:• Overview.• Defining Consumer Behavior.• Applications of Consumer Behavior.• Evolution of Consumer Behavior.• How to study Consumer behavior. • What influences consumer behavior.• Underlying Principles of Consumer behavior.• Consumer behavior and Marketing Strategy.• Stimulus – Response model of Consumer behavior.
Introduction to Consumer Behavior
What is consumer behavior?
• “Consumer behavior is defined as activities people undertake when obtaining, consuming and disposing of products and services.”
• Activities included in the definition are: Obtaining – refers to the activities up to & including the purchase or receipt of a product. Consuming – refers to how, where, when and under what circumstances consumers use product. Disposing – includes how consumers get rid of products and packaging.
Introduction to Consumer Behavior
Consumer Behavior
Consumer influencesCulture EthnicityPersonality FamilyLife stage ValuesIncome Available resourcesAttitudes OpinionsMotivations Past - experienceKnowledge Peer groupsFeelings
Disposing• How you get rid of product• How much thrown away after use• Is product resold• how product is recycled
Obtaining• How you decide you want to buy• Other products you consider buying• Where you buy • where you pay• How product transported
Organizational influences Brand Product featuresAdvertising PromotionsPrice QualityService PackagingConvenience Loyalty ProgramProduct Store AmbienceAvailability WOM
Consuming• How product used• How product stored• Who uses the product• How much is it consumed• How product compares with expectations
CONSUMER
Introduction to Consumer Behavior
Some more definitions:
• “Consumer behavior can also be defined as a field of study, focusing on consumer activities.”
• “The field of consumer behavior studies how individuals, groups and organizations select, buy, use, and dispose off goods, services, ideas , or experiences to satisfy their needs and desires.”• "The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose off products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society."
Introduction to Consumer Behavior
Rationale for studying Consumer Behavior
• Consumer behavior determines success of Marketing programs.• Consumer behavior determines economic health of a nation.• It determines economic health of the consumers.• Consumer behavior helps formulate public policy. • It affects consumers’ personal policy.
Introduction to Consumer Behavior
Applications of consumer behavior
Introduction to Consumer Behavior
Marketing Strategy
Social Marketing Makes usbetter consumers
Public Policy
MANUFACTURING ORIENTATION
SELLINGORIENTATION
MARKETINGORIENTATION
COMPREHENSIVECONSUMER
ORIENTATION
Introduction to Consumer Behavior
Evolution of Consumer Behavior
Manufacturing Orientation:
• The belief that customers prefer products that are widely available and inexpensive.
Selling Orientation:
• The belief that companies must sell and promote their offerings aggressively because consumers will not buy enough of the offerings on their own.
Introduction to Consumer Behavior
Marketing Orientation:
• The belief that the key to achieving organizational goals consists of the company being more effective than competitors in creating, delivering and communicating customer value to its chosen target markets.
Comprehensive Consumer orientation:
• It extends the focus of marketing orientation as to how all organizations in demand chain adapt to changing consumer lifestyles and behaviors.
Introduction to Consumer Behavior
How to study CB or get into the minds of Consumer ?
• Consumer behavior is an applied science drawing from Economics, Psychology, Sociology, Anthropology and Statistics.
• Methods of study include observation, interviews & surveys and experimentation.
• By exploring peoples homes, cars, closets, offices, lifestyles, circles etc.
• By observing consumers’ behavior in different situations such as when using products or eating foods.
Introduction to Consumer Behavior
• By interviewing in person, asking questions in surveys and recording responses on video cameras.
• Focus groups.
• Repeated studies over a period of time to determine changes in consumers’ opinions, buying and consumption.
• Experimentation - a research methodology. Cause and effect relationships.
Introduction to Consumer Behavior
What influences Consumer behavior?
• Attitude, Personality, Age, Income, Motivation, Feelings, learning, Knowledge, Past Experiences.
…….Individual factors• Values, Culture, Ethnicity, Family, Opinions, Past experiences.
……. Group factors• Brand, Advertising, Promotions, Price, Service, Convenience, Packaging, Product features, Word of Mouth, Retail Displays, Quality, Store Ambiance, Loyalty Programs, Product Availability.
…….Organizational factors
Introduction to Consumer Behavior
Underlying Principles of Consumer Behavior
Introduction to Consumer Behavior
Consumer issovereign
Consumer isglobal
Consumers aredifferent
Consumers arealike
Consumers haverights
Consumer behavior and Marketing Strategy
Purpose of any business is to……..
• To create a consumer.• To develop consumer based corporate strategy.• To understand consumer.• To create product and services that meet the
consumers’ needs and expectations.• To communicate with consumer.• To retain consumer.• To modify and improve products and services.
Introduction to Consumer Behavior
Strategy, Marketing Strategy and Customer Centricity
• Strategy can be viewed as a decisive allocation of resources (Capital, technology and people) in a particular direction.
• At the operational level, Marketing strategy is a long range, time phased plan designed to achieve, usually at a high return on investment, a market leadership position that competitors can challenge only at prohibitively high costs.
• Customer Centricity is a strategic commitment to focus every resource of the firm on serving and delighting profitable customers.
• It involves producing new or improved products with evolving marketing methods focused on core, but changing market trends.
Introduction to Consumer Behavior
Characteristics of Customer centric organizations
Introduction to Consumer Behavior
Shared vision and values
Cross-functional integration
System-wide simultaneous training
Customer-based metrics
Consumer behavior and Marketing Strategy – Consumer driven Market Strategy Process:
Introduction to Consumer Behavior
Market Analysis
Market Segmentation
Marketing Strategy
Implementation
Marker Analysis
ConsumerCompany
EnvironmentalPolitical-legal
Marketing Mix Strategies
ProductPrice
PromotionBrandPlace7 Rs
Implementation in marketplace
Market segmentation
DemographicSituational
PsychographicBehavioral
CONSUMER
Introduction to Consumer Behavior
Consumer Centric Marketing Strategy
Market analysis:• It is the process of analyzing changing consumer trends, current and potential competitors, company strengths & resources and technological, legal and economic environments. Process of …….
Analyzing changing consumer trends involves gaining consumer insight. Consumer insight refers to understanding consumers’ expressed and unspoken needs and realities that affect how they make life, brand and product choices. Current and potential trends – demographic trends, personal and group influences.
Introduction to Consumer Behavior
Company strengths and resources- manpower, assets, financial stability, production capability, research & marketing abilities, competitor (current & potential). Business environment- Political, Economical, Social,
Technological, Environmental and Legal.
Market Segmentation
• It is the process of identifying homogeneity in the market place based on characteristics such as demographic, situational, psychographic and behavioral.
Introduction to Consumer Behavior
Consumer Characteristics :
Demographics: Age, Gender, Ethnicity, Income, Education, Family Size, Nationality, Life Stage, Marital Status, Occupation, Religion, Living arrangements.
Psychographics: Activities, Interests, Opinions.
Purchase and consumption behavior: Shopping location
preferences, frequency, price sensitivity of purchase, media used, brand loyalty, benefits sought, how used and usage rate.
Introduction to Consumer Behavior
Marketing – Mix Strategy:
• It involves a plan to meet the needs and wants of the target markets by providing value to the target market better than the competitors.
• Marketing strategy must also include brand strategy. Brand can be viewed as a promise – a promise to consumers that the attributes they desire the most will be obtained if they buy the preferred brand.
• It must involve essential components of the marketing mix that is the four Ps and seven Rs.
Introduction to Consumer Behavior
Introduction to Consumer Behavior
Organization Consumer
Research Formulate methodology, Conduct research.
Participate in research.
Rate Speed to market. Speed through shopping process, Usage rates of products.
Resources Commitments to project, effect on pricing.
Payment for product. Scarcity of resources.
Retailing Which outlets to sell products, Location in store and shelf position.
Where they expect to buy product.
Reliability Dependency on Supply chain partners.
Product quality and consistency, Reliability of retailer.
Reward Program to increase purchases and loyalty.
Reward from using product, Reward programs.
Relationship Relationships within supply chain and CRM.
Loyalty to brand and store.
The 7 Rs of theMarketing Mix
Marker Analysis
ConsumerCompany
EnvironmentalPolitical-legal
Marketing Mix Strategies
ProductPrice
PromotionBrandPlace7 Rs
Implementation in marketplace
Market segmentation
DemographicSituational
PsychographicBehavioral
CONSUMER
Introduction to Consumer Behavior
Consumer Analysis
Consumer Research
Consumer Decision Process
Individual OutcomesSocietal Outcomes
Consumer Centric Marketing Strategy: Marketing Mix and
Implementation
Model of Consumer behavior (Stimulus response model):
MarketingStimuli
ProductPricePlacePromotion
OtherStimuli
EconomicTechnologicalPoliticalCultural
Buyer’sCharacteristics
CulturalSocialPersonalPsychological
Buyer’s decision processProblem recognitionInformation searchEvaluation of AlternativesPurchase decisionPost purchase evaluation
Buyer’s decisionsProduct choiceBrand choiceDealer choicePurchase timingPurchase amount
Introduction to Consumer Behavior
The Consumer Decision Process
The Consumer Decision Process
Learning objectives: Introduction. Four views of consumer decision making. Models of consumer behavior. Input, Process and Output model. Engel-Blackwell-Kollat model. Consumer Decision Process (CDP) Model. Types of decision processes. Decision Process continuum. Initial purchase and Repeat purchase. Factors affecting the extent of problem solving. Degree of involvement.
Introduction
• Consumer decision making comes about as an attempt to solve consumer problems.• Four schools of thought that depict consumer decision making in distinctly different ways are:
Economic view, Passive view, Cognitive view and Emotional view.
The Consumer Decision Process
• The economic view portrays a world of perfect competition, characterizing consumer as making rational decisions.• The economic model of an all rational consumer is unrealistic for following reasons:
Consumers are restricted by their knowledge, skills, habits and reflexes. They are limited by their existing values and goals.
• Consumers operate in imperfect world and do not maximize their decisions in terms of economic considerations.
The Consumer Decision Process
• The passive view depicts the consumer as submissive to the self- serving interests and promotional efforts of marketers.
• Consumers are perceived to be impulsive and irrational.
• The Limitation of the view is that it fails to recognize that the consumer plays an equal role in buying situations.
• The consumer seeks information about alternatives and selects products that appear to offer greatest satisfaction or satisfy emotion of the moment.
The Consumer Decision Process
• Cognitive view portrays the consumer as thinking problem solver. It focuses on the processes by which consumers seek and evaluate information about products.
• The cognitive or problem solving view describes a consumer who falls somewhere between extremes of the economic and passive views.
• The consumer does not have full knowledge about the product and hence can not make perfect decisions but seeks information about available alternatives to make satisfactory decisions.
The Consumer Decision Process
• As per Emotional view the consumer is likely to associate deep feelings or emotions such as joy, fear, love, hope or fantasy with certain purchases or possessions.
• Consumers make many purchases based on whims or impulse rather than searching for and evaluating alternatives.
Models of Consumer behavior
• A number of models have been proposed including those based on any or combinations of from amongst four views from time to time.
The Consumer Decision Process
• Some of the Models are:
1. Economic model.2. Psychological model.3. Pavlovian model.4. Input, Process, Output model- Gandhi, Kotler.5. Sociological model.6. Howrath Sheth model.7. Engel-Blackwell-Kollat model.8. Model of family decision making.9. Nicosia model.10. A model of Industrial buying behavior.
The Consumer Decision Process
Input, Process and Output model
• It is a simple model where input for the consumer is the firm’s marketing effort and social environment.
• The elements of the process of decision making consist of need recognition, Product awareness, Evaluation and intention.
• The output comprises of Purchase and Post purchase behavior. If the purchase and use of product is a satisfying experience, it leads to repeat purchase otherwise discontinuation.
The Consumer Decision Process
Input, Process and Output model
Firm’sMarketingEffort
SocialEnvironment
P e r s o n a l I t y
A t t i t u d e s
Motivation
Perception
NeedRecognition
ProductAwareness
Interest Breakdown
EvaluationInterest
Intention Purchase
Post-purchaseBehavior
Repeatpurchase
Discontinuation
The Consumer Decision Process
Engel-Blackwell-Kollat Model
The Consumer Decision Process
Information Processing
Decision Process
Environmental Influences
Central Control unit
Engel-Blackwell-Kollat model
The Consumer Decision Process
Consumer Decision Process (CDP) Model• Consumer decision making comes about as an attempt to solve consumer problems.• No one buys a product unless one has a problem, a need or want.• The CDP Model represents a roadmap of consumers’ minds that we as marketers can use to help us guide Product mix, communication and Marketing Strategies.• It captures activities that occur when decisions are made and depicts how internal and external forces interact to affect how consumers think, evaluate and act.
The Consumer Decision Process
The Consumer Decision Process (CDP) Model
The Consumer Decision Process
Need Recognition
Search for Information
Pre-Purchase Evaluation
Purchase
Consumption
Post-Consumption Evaluation
Divestment
Need Recognition: Need or problem recognition occurs when the consumer senses a difference between what he or she perceives to be ideal versus the actual state of affairs.
Memory Need
Recognition
EnvironmentalInfluences
• Culture• Social Class• Family• Personal influences• Situation
IndividualDifferences
• Consumer Resources• Motivation• Knowledge• Attitudes• Personality, values and Lifestyle
The Consumer Decision Process
Search for Information: • Environmental influences and Individual differences are sources for search for information. Internal Search External Search Internal; retrieving from the memory or genetic tendencies. External; influenced by Marketer and Non-Marketer dominated stimuli. It involves collecting information from peers, family and the marketplace.
The Consumer Decision Process
Memory
Need Recognition
Search
ExternalSearch
InternalSearch
Search for information
The Consumer Decision Process
EnvironmentalInfluences
• Culture• Social Class• Family• Personal influences• Situation
IndividualDifferences
• Consumer Resources• Motivation• Knowledge• Attitudes• Personality, values and Lifestyle
Information Processing
Memory
Attention
Exposure
Comprehension
Acceptance
Retention
Stimuli
• Marketer Dominated• Non Marketer Dominated
The Consumer Decision Process
Pre-Purchase Evaluation of alternatives:
• Consumers compare, contrast and select from various products or services.• Different Consumers employ different criteria.• Evaluation of choices is influenced by both Individual and Environmental influences.• Attributes on which evaluations are based may be salient or determinant. Both affect advertising and marketing strategies.
The Consumer Decision Process
• Salient attributes include price, quality, reliability and factors that vary little between similar products. Consumers think about these as potentially the most important.• Determinant attributes (Such as style and finish) usually determine which brand or store consumers choose especially when salient attributes are same.• Consumers often monitor attributes such as size, quality and price . Changes in these affect their brand and product choices.
The Consumer Decision Process
Pre-Purchase Evaluation of alternatives: EnvironmentalInfluences
• Culture• Social Class• Family• Personal infl.• Situation
IndividualDifferences
• Consumer Resources,• Motivation,• Knowledge,• Attitudes and• Personality, values and Lifestyle
Need Recognition
Memory
Pre-Purchase Evaluation ofAlternatives
Exposure
Attention
Comprehension
Acceptance
Retention
Stimuli
• Marketer Dominated• Non Marketer Dominated
Search InternalSearch
External Search
The Consumer Decision Process
Purchase:
After deciding whether to purchase or not, the consumers move through two stages. In the first phase they choose the form of retailing and choice of retailers. For example, Electronic sale, Internet based marketing or direct marketing. During the second phase, consumers make in store choices. Best retailers manage the overall attributes and image of the store to ensure satisfying experience for the consumer.
The Consumer Decision Process
Purchase:
Stimuli
• Marketer Dominated• Non Marketer Dominated
External Search
Exposure
Attention
Comprehension
Acceptance
Retention
Memory
InternalSearch
Need Recognition
Pre-Purchase Evaluation ofAlternatives
EnvironmentalInfluences
• Culture• Social Class• Family• Personal infl.• Situation
IndividualDifferences
• Consumer Resources,• Motivation,• Knowledge,• Attitudes and• Personality, values and Lifestyle
Purchase
Search
The Consumer Decision Process
Consumption and Post consumption Evaluation:
Consumption may be immediate or delayed. How consumers use the products affects how satisfied they are with the purchases and determines whether they will make repurchase. How carefully consumers use or maintain the product determines how long the product will last and when will the repurchase be made. During post consumption evaluation stage, consumers experience satisfaction or dissatisfaction.
The Consumer Decision Process
Satisfaction occurs when consumers’ expectations are matched by perceived performance. Even if the product works well, consumers second guess their purchase decisions. This phenomenon is called post purchase regret or cognitive dissonance. Higher is the price, higher is the level of cognitive dissonance. Emotions also play a role when consumer evaluates a product or service. It is a reaction to a cognitive appraisal of events and is normally expressed physically through gestures, posture or facial expressions etc.
The Consumer Decision Process
EnvironmentalInfluences
• Culture• Social Class• Family• Personal infl.• Situation
IndividualDifferences
• Consumer Resources,• Motivation,• Knowledge,• Attitudes and• Personality, values and Lifestyle
Need Recognition
Search
Pre-Purchase Evaluation ofAlternatives
Purchase
Consumption
InternalSearch
Memory
Exposure
Attention
Comprehension
Acceptance
Retention
External Search
Stimuli
• Marketer Dominated• Non Marketer Dominated
Post-ConsumptionEvaluation
Consumption & Post-Consumption Evaluation:
Dissatisfaction Satisfaction
The Consumer Decision Process
Divestment: EnvironmentalInfluences
• Culture• Social Class• Family• Personal infl.• Situation
IndividualDifferences
• Consumer Resources,• Motivation,• Knowledge,• Attitudes and• Personality, values and Lifestyle
Need Recognition
Search
Pre-Purchase Evaluation ofAlternatives Purchase
Consumption
Post-ConsumptionEvaluation
InternalSearch
Memory
Exposure
Attention
Comprehension
Acceptance
Retention
Stimuli
• Marketer Dominated• Non Marketer Dominated
External Search
SatisfactionDissatisfaction
Divestment
The Consumer Decision Process
What influences Consumer decision making?
Introduction to Consumer Behavior
Individual Differences
Psychologicalprocesses
Environmental Influences
Individual Differences
Introduction to Consumer Behavior
Demographics, Psychographics,
Values andPersonality
Motivation Attitudes
ConsumerResources
Environmental Influences
Introduction to Consumer Behavior
Culture
Situation
Family Personal Influence
Social Class
Psychological Processes
Introduction to Consumer Behavior
Perception
Learning Attitude and Behavior change
InformationProcessing
The Consumer Decision ProcessTypes of Decision Processes
The extent to which each of the seven stages is followed precisely can vary from one situation to another. Sometimes consumers undertake a complex decision process investing substantial time and effort. In most situations consumers follow more simplistic processes.
Decision Process continuum
When consumers make decisions for the first time, their actions are based on some form of problem solving.
When the process is very complex, it is called ‘Extended Problem Solving’ (EPS). ‘Limited Problem Solving’ (LPS) represents a lower degree of complexity. ‘Midrange Problem Solving’ (MPS) falls somewhere between the two. Most purchases are made on a repeat basis when the consumer may engage in problem solving again or may simplify the process by choosing the same brand purchased previously. This represents ‘Habitual decision making’, the least complex of the processes.
The Consumer Decision Process
Consumer Decision Process Continuum
The Consumer Decision Process
Decision Making processes for initial purchases
Extended Problem Solving (EPS)
Mid-range Problem Solving
MPS
Limited Problem Solving LPS
High Degree of complexity Low
Decision Making processes for initial purchases
Extended Problem Solving (EPS)
Mid-range problem solving MPS
Limited problem solving LPS
Habitual decision making
High Degree of complexity
Low
The Consumer Decision Process
Initial Purchase
Extended Problem Solving: EPS occurs when decision process is detailed and vigorous. It is commonly used by consumers purchasing automobiles, expensive clothing and consumer durable goods. In EPS, all stages of CDP are followed, may not be in exact order. Limited Problem Solving: In most situations consumers have neither time, resources nor the motivation to engage in EPS. In LPS, there is little information search or pre-purchase evaluation, need recognition leads to buying action.
Repeat Purchases
When repeat purchases occur, there are two possibilities:
Repeated Problem Solving Habitual Decision making Repeat purchase requires continued problem solving especially when dissatisfaction with previous purchase or stock-outs occur. Habitual Decision making: In many situations, purchases are made on the basis of habits or routines that ‘simplify’ life for the consumers.
The Consumer Decision Process
The Consumer Decision Process
Habitual behavior can take different forms depending on the decision process followed in the initial purchase. It may be:
Brand or company loyalty and Inertia
If the consumer expectations are met resulting in satisfaction, they often reward the companies with continued repurchase over time resulting in brand or company loyalty. In case of products where there is limited brand loyalty, buying habits are based on inertia. Although there may not be any incentive to switch, it may occur when the brand is promoted as offering something new.
The Consumer Decision ProcessImpulse buying
It refers to unplanned or spur of the moment action triggered by product display or point of sale promotion.
It is the least complex form of LPS. Its characteristics are:
A sudden and spontaneous desire to act accompanied by urgency. A state of psychological disequilibrium in which a person can feel temporarily out of control. Onset of conflict and struggle that is resolved by an immediate action.
Minimal objective evaluation exists – emotional considerations dominate. A lack of regard for consequences. A high sense of emotional involvement short circuits the reasoning process and motivates immediate action. Variety seeking When consumers express satisfaction with their present brand and yet engage in brand switching – the motive is variety seeking. It occurs most often when there are similar alternatives and high purchase frequency.
The Consumer Decision Process
Factors affecting the Extent of Problem Solving
The Consumer Decision Process
Degree ofInvolvement
Degree ofDifferentiation
Availability ofTime
The Consumer Decision ProcessDegree of Involvement:
It is the level of perceived personal importance and/or interest evoked by a stimulus with in a specific situation. The consumer acts to minimize the risk and maximize the benefits gained from purchase and use.
It ranges from low to high and depends on how important the consumer perceives the product or service to be.
Involvement becomes activated and felt when intrinsic personal characteristics (needs, values and self concept) are confronted by appropriate marketing stimuli.
Degree of involvement is determined by: Personal factors, Product factors, Situational factors and Consumer's mood state. The degree of involvement tends to be higher when the
outcome of decision affects the person directly. Personal factors include self image, health, beauty or physical
condition.
The Consumer Decision Process
The Consumer Decision Process
Involvement will be the strongest when the product or service is perceived as enhancing self image.
Products and brands also become involving if there is some perceived risk in purchasing and using them. Some of the perceived risks are:
Physical (Risk of bodily harm), Psychological ( Especially negative effect on self image), Performance related (Fear that the product will not perform
as expected) and Financial (Risk that outcome will lead to loss of earnings).
The Consumer Decision Process
The greater the perceived risk, the greater is the likelihood of high involvement.
When perceived risk becomes unacceptably high, there is motivation to avoid the purchase and use altogether or minimize the risk through search and pre-purchase evaluation stages.
Situational involvement includes factors such as whether product is purchased for personal use or as a gift and whether it is consumed alone or with others.
The Consumer Decision Process Situational involvement changes over time; it may be
strong on a temporary basis and recede once purchasing outcomes are resolved.
Involvement can increase when social pressures are felt.
Degree of differentiation between alternatives
EPS is more probable when choice alternatives are differentiated.
Time availability
Extended Problem solving (Higher degree of involvement) is followed when time pressures are low.
The Consumer Decision Process
Recap: Introduction. Four views of consumer decision making. Models of consumer behavior. Input, Process and Output model. Engel-Blackwell-Kollat model. Consumer Decision Process (CDP) Model. Types of decision processes. Decision Process continuum. Initial purchase and Repeat purchase. Factors affecting the extent of problem solving. Degree of involvement.