Principles of Business & Marketing BConsumer Behavior

Principles of Business and Marketing BAnnouncements

● Expectations this week○ Lesson 8|Consumer Behavior (Quiz)○ All past due Quizzes: 1, 3, 4, & 5 (Quiz Games & Links!)○ Targeting Portfolio if not done (now a temp zero)

● Open office hours○ Wednesday 8-9 am (Ms. Adame’s LL room)○ Thursday 9-10 am (Mr. Velarde’s LL room)

● LiveLessons○ Thursday 3-4 pm (Your business teacher’s LL room)

Officer Elections1. Send Ms. Adame & Mr. Velarde which office you

intend to run for by Tues 11/17 (extended)2. Indicate if you have a webcam or mic in the webmail3. Prepare a presentation or flyer as a candidate4. Present on 11/18 at the 3 pm FBLA meeting + votes

FBLA Club MeetingMs. Adame’s LiveLesson RoomWednesday 11/18 at 3 pm

LiveLesson AttendanceAttend the LiveLesson if:

● You are invited personally by the teacher● Your last quiz score was 7/10 or less.● You want 5 points for participation. You must respond to

the code activity from the LL to get credit.

We go into more detail during the LiveLesson and bring these topics to life!

There will not be lesson/grade replacement activities in this section - you must pass the quizzes and understand the non-assessment lessons to prepare for the comprehensive final exam.

COURSE TIMELINE

Lesson 8 - Consumer Behavior

LESSON 8 NOTES:CONSUMER BEHAVIOR

Lesson 8 - Consumer Behavior

Objectives

At the end of this lesson, you will be able to:

● Outline the consumer decision process● Explain each step of the consumer decision process● Describe how consumers’ social and cultural behaviors affect

marketing● Describe how consumers’ personal characteristics affect

marketing● Identify product adoption rates and processes

TOPICS IN LESSON 8CONSUMER BEHAVIOR

LESSON 8 NOTES: CONSUMER BEHAVIOR

Interactive Presentation Topic

Corresponding Reading

ReviewActivities

Topic 1: Consumer Decisions

pp. 126–129 Objectives p. 158 (#1) Discussion Questions p. 159 (#1)

Topic 2: Consumer Behavior Characteristics

pp. 129–142 Objectives p. 159 (#1) Discussion Questions p. 159 (#2)

Topic 3: Adoption Rates and Processes

pp. 145–147 Discussion Questions p. 159 (#3)

What Determines Consumer Behavior?

Is it random?

Do discernible trends exist?

Let’s dissect consumer behavior trends by considering the consumer decision-making process, discussing external and internal influences on consumer behavior, and taking a look at product adoption rates and processes.

Consumer Decisions

Different processes exist fordifferent types of purchases.

Everyday PurchaseJeans, Ballpoint pens, things for the house

Special PurchaseA new car, house, boat, computer

Consumer Decisions

PERCEIVED RISK FACTORSThe perceived risk of purchasing a car is much greater than everyday purchases like jeans. Choosing the wrong vehicle could amount to breakdowns, accidents or even embarrassment if others chide you about your bad decision. All consumers want to buy something that achieves their goals for reliability, safety, speed and comfort. These goals are different for everyone.

Consumer Decisions

Consumer Decisions

Problem Recognition● Consumers recognize that there is something that they need or want but do not

have. ● There is a difference between where customers find themselves and where they

would like to be. They recognize that there is a problem.● They might look in the drawer and realize that they only have three pairs of jeans

but want seven. ● In the car example, they might be tired of owning a car that continually breaks

down and want to get a reliable car instead.

Mary bought a used car and wants to change the seat covers. Mary has awareness of the need or desire to buy and has discovered what is called problem recognition.

Consumer Decisions

Information Search● After recognizing that there is a problem, consumers embark on a search for

information. ● In the jeans example they may skip this step and opt to purchase seven more

pairs of their favorite brand. ● With the car purchase, however, they might visit several dealerships, websites

and car auctions to gather data on what is available.

Mary begins to search for the right seat covers for her car.

Consumer Decisions

Evaluation of Alternatives● After the information has been gathered, consumers make comparisons and

most likely trade-offs. ● In our jeans example, they might consider trading all cotton for a blend because

there is a sale. ● With the new car purchase, the evaluation of alternatives is much more

complex. After researching safety records for sports cars, for example, they might think about purchasing and SUV instead. Or they might trade-off speed for fuel efficiency.

Mary begins sees several seat covers she likes on Amazon.

Consumer Decisions

Product Choice● After the alternatives are evaluated and assessed, it's time for consumers to

make a decision. Consumers use rules to help them choose. ● One of the most common rules says the more money you spend, the higher

quality the product. Most of us know that that is not always the case. ● Another example of a rule is brand loyalty. To the extent that marketers can

persuade people to buy their product without looking at alternatives or considering other brands, the marketer has succeeded in truly winning over that customer.

● Another common example of a rule is country of origin. If in doubt, choose Italian leather, German engineering and Japanese electronics.

Mary selects the seat covers on Amazon she wants to buy.

Consumer Decisions

Post-purchase evaluation. Post-purchase evaluation, we all do it. As soon as we buy the product, we ask ourselves, Did I make the right decision? Cognitive dissonance is the worry and regret that a consumer feels after making a purchase decision. Did I buy the right car? Is it really the best for me? Chances are that the jeans purchase does not lead to too much cognitive dissonance except if they are uncomfortable, but the purchase of a new motor vehicle might. How many times have you continued to shop for something after you have made your purchase?

Mary decides she made the right decision once she puts the seat covers on her car.

Consumer Behavior Characteristics

Consumers are influenced by their own personal characteristics, as well as by external factors when making purchasing decisions.

CULTURES● Everyone lives within a larger social organization called a culture. ● Cultures are what help to identify groups of people and to

create a sense of belonging. ● People often attribute buying to cultural factors. ● In all cultures, there are subcultures. You might identify yourself as

part of a national culture such as American, Japanese, Indian, etc. ● You might be a rugby player and follow the sport closely on TV,

going to matches whenever you can. In many countries like England, South Africa, and Australia, rugby players and those interested in rugby form their own subculture.

Consumer Behavior CharacteristicsSUBCULTURES● Subcultures can exist around any bond that its members share. ● People can also belong to many different subcultures. ● It's really a matter of finding people with interests, habits, and

preferences in common with yours. ● Ethnic groups also form subcultures. Although the distinction

might seem unimportant to you, to a marketer, it might influence packaging and labeling decisions.

SOCIAL CLASS● Social class is how people fit in to society. Although this is often

driven by financial measures, it is important to be aware that in some cultures, lineage plays an important role.

● Social class can also be influenced by education type of work.

Consumer Behavior Characteristics

GENDER● From the time we are young, we are conditioned to adhere to gender norms. ● Girls get pink booties and play with dolls. ● Boys get blue ones and play with trucks.● Society shapes us as males and females to act in certain ways, and to adopt or not to

adopt certain behaviors. ● Boys don't cry vs. girls are not good at math. ● What does this mean to marketers? Products and

services are often created with gender in mind. IE pink for girls and blue for boys. There are also lines of power tools targeted specifically for women.

Consumer Behavior Characteristics

PRODUCTS THAT GO AGAINST SOCIETAL EXPECTATIONSMarketers do not necessarily follow the expectations of society, but rather use them to help guide the creation of new products so that different groups of people can be served.

ONLINE INFLUENCE● Online exchanges have a larger influence than ever before. ● It's easy to go online and read literally thousands of product

reviews that may influence your opinion. If you are planning a trip, you can go on Trip Advisor to see what others say about the hotel you are considering booking. You can follow your favorite bagel bakery on Facebook. You can get a tweet about the latest movie release. Services like Groupon negotiate discounts with local businesses and send the information to thousands of people.

Consumer Behavior Characteristics

PERSONAL CHARACTERISTICS● The study of consumer behavior is rooted in psychology. ● As with social and external influences, there are many personal

and internal characteristics that affect consumer buying behavior including perception, motivation, attitudes, personality, and age.

INTERNAL INFLUENCES● Consider the following personal characteristics and how they

would affect the behavior of a consumer buying a product.

Consumer Behavior CharacteristicsATTITUDES● Attitudes are evaluations of products, people, and other things. These are important.● Marketers often consider the three components of attitude when discussing how to

market a product:○ Affect, the feeling part of an attitude, and is often associated with sensory products

like food. Do we like it? Does it taste good? Does it smell good? It's an emotional response.

○ Cognition forms the knowledge part of attitude. For example, we know that Samsung makes the best flat screen TVs, while other manufacturers do not offer as high quality TVs.

○ Behavior is the action portion of attitude. A consumer might intend to buy a product after reading a favorable review such as a movie. The marketing of some products like cosmetics or other personal care items emphasizes affect.

○ Motivation comes from inside a person. It's what gets you to move forward on a hunt for a new job or to lose weight.

Consumer Behavior CharacteristicsPERCEPTION● How we interpret a sensation is a reflection of our individual prior experiences. Jane

might love Hawaiian Punch, but Joe might have a different perception about the product because he drank too much of it when he was young and got sick.

● Marketers are interested in how these messages are perceived by consumers. What sticks? How is it interpreted? Was the intended meaning what was actually perceived?

● Think of a time when you gave someone a message and the meaning came out different from what you intended. Marketers work hard to ensure that the message that is intended to be delivered is the message that is delivered.

Consumer Behavior CharacteristicsPERSONALITY● Personality is what makes you you, an internal set of characteristics that describe who

you are and how you respond to various situations. ● A few of the characteristics may include confidence, materialism, the need for

recognition, and innovativeness.

AGE● Various products appeal to people at different stages in their lives.● Take the re-release of Star Wars. For many people who grew up

during the 1970's, the movie is iconic. By re-releasing it, marketers want people to remember their lives the first time they saw the movie, see it again, share it with their families, and hopefully,buy related merchandise as well.

Adoption Rates & Processes

Some products spread like wildfire whereas others are slower to be adopted by users. What accounts for these differences?

1. Awareness

2. Interest

3. Evaluation

4. Trial

5. Adoption

6. Confirmation

Adoption Rates & ProcessesPRODUCT ADOPTION RATES● Consider the following types of consumers

that are present in each area of the product adoption curve.

● People often have different adaptation rates depending on their interests and motivations.

INNOVATORS● Innovators are people are usually well-educated and have adventurous

consumer-spending habits. ● They often buy the product as soon as it is available. ● Innovators represent about 2.5 percent of the population.

Marketing strategies should be targeted to innovators & early adopters.

Adoption Rates & ProcessesEARLY ADOPTERS● Early adopters comprise about 13.5 percent of the population. ● Early adopters are not as adventurous as innovators to have the product and enjoy

showing it off. ● Marketers like early adopters because if they like the product, they help spread the

excitement by being enthusiastic with their friends, family and colleagues. ● Early adopters also tend to be well-educated and have incomes well above the

average. ● Most important for marketers, early adopters help a product gain traction in the market.

If the market settles at innovators only, it is likely that the economics of the product will cause the product to fail.

Adoption Rates & Processes

EARLY MAJORITY ADOPTERS● Early majority adopters account for about 34 percent of product adopters.● Characteristics of this group include being middle-class, analytical in purchasing habits

and cautious. This group is also well-educated but less so than the innovators and the early adopters.

● Early majority adopter income is also less than innovators and early adopters, but generally still above average.

● When the early majority begins to adopt the product, that's when marketers know they are getting mainstream traction.

● Think of people you know who buy a product after several versions have been released and the product is no longer considered new or innovative. Not everyone has one yet, but the product does not generate that buzz any longer.

Adoption Rates & ProcessesLATE MAJORITY ADOPTERS● Late majority adopters also account for about 34 percent of product adopters. ● The difference between early majority adopters and late majority adopters is that the

latter are generally older and have lower than average education levels and income. ● Late majority adopters want to be certain that the product works perfectly and that the

prices drop from when they initially became aware of it. ● Sometimes a late majority adopter delays buying until its purchase is unavoidable.

LAGGARDS● Laggards account for about 16 percent of adopters. ● In general education and income levels in this group

are quite low.● They might adopt a new product because the old

one they were using became unavailable.

Adoption Rates & ProcessesTHE ADOPTION PROCESS● Unless you have a shopping addiction there is probably a big difference between the

number of products of which you are aware and the number of products that you buy.● It might be helpful to think of a funnel when considering the product adoption process.

At each stage the number and type of buyers become more and more narrow.

AWARENESS● It stands to reason that if you are not aware of a product you

cannot buy it. ● Marketers market new products in an effort to expose the

product to people who might be interested in buying it.

Adoption Rates & ProcessesINTEREST● For some people that receive the message their interest will be peaked. For others;

however, the information although noticed might not be retained. ● Going back to the camera lens example, if the lens is super strong with great resolution

and other highly technical factors it might be suitable only for professional photographers rather than amateurs.

EVALUATION● During the evaluation stage costs and benefits are weighed. ● Once aware and interested in the new super lens, the photograph might weigh the pros

and cons of the lens: How heavy is it, how durable is it, how much money does it cost, will the newspaper for which the photographer works subsidize the cost of the new lens?

● As part of the evaluation process, the photographer might become aware of competing similar products as well. This is the risk that all marketers take.

Adoption Rates & ProcessesTRIAL● People often want to test something to determine whether they like it. They want to

touch it, turn it around and see what it can do. ● Apple is the master of the trial concept. If you doubt this, go into any Apple

Store and play with iPods, iPads, laptops, desktops and every other kind of product that Apple makes.

● Walk through a supermarket or Costco on a Saturday (non Covid) where they often have several items to test. If you like what you test, you move on to the adoption phase.

Adoption Rates & ProcessesADOPTION● The decision has been made to buy the product, and the marketer is grinning now. ● The photographer bought the lens. ● The high-tech Guru bought the latest product. ● A hungry consumer bought the new flavor of potato chip even if she was unaware of it

five minutes earlier and only had celery on the shopping list. ● When the product is in hand or in the tummy, the final

phase confirmation beings.

Adoption Rates & ProcessesCONFIRMATION PHASE● "Did I make the right decision?" ● We often reassess the original evaluation and weigh it against an extended experience

with the product.

● Sometimes, we experience cognitive dissonance, or buyer discomfort after purchasing.● Does the camera lens perform as it seemed to during the trial and as the sales person

said it would? If the adoption phase gets a grin for marketers, the confirmation phase if positive earns a huge smile and a thumbs up.

● Marketers then want the golden egg of repeat purchases and often provide ongoing support like promotional campaigns, advertising and so forth to reinforce to the consumer that the right decision was made when purchasing the product.

● Successful marketing continues long after the product is purchased.

Crash Course Review

Lessons 1, 2, 3, 4, 5 & 8

Watch past recordings for full presentations - on class website

Let’s Review!

Lesson 1 Quiz Review

Lesson 3 Quiz Review

Lesson 4 Quiz Review

Lesson 5 Quiz Review

Lesson 8 Quiz Review

Lesson 1 - INTRODUCTION TO MARKETING

LESSON 1 NOTES:INTRODUCTION TO MARKETING

Lesson 2 - STRATEGIC PLANNING

LESSON 2 NOTES:STRATEGIC PLANNING

Lesson 3 - The Planning Process

LESSON 3 NOTES:THE PLANNING PROCESS

Lesson 4 - Analyzing the Business Environment

LESSON 4 NOTES:ANALYZING THE BUSINESS ENVIRONMENT

Lesson 5 - Market Research & Intelligence

LESSON 5 NOTES:MARKET RESEARCH & INTELLIGENCE

Lesson 6 - Market Analysis & Strategy

LESSON 6 NOTES:MARKET ANALYSIS & STRATEGY

Lesson 7 - Market Analysis & Differentiation

LESSON 7 NOTES:MARKET ANALYSIS & DIFFERENTIATION