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MKT20025

Consumer Behaviour
Lecture 1
Introduction to CB
Consumer Decision Making Process
CRICOS 00111D
TOID 3069
Textbook

Consumer Behavior,
Global Edition, 11th Edition

Leon G. Schiffman and


Joseph L. Wisenblit
©2015
Pearson
Introduction to Consumer Behaviour
&
Consumer Decision Making Process
Learning Objectives
The evolution of the marketing concept.
How the Internet and related technologies improve
marketing transactions by adding value that benefits both
marketers and customers.
The interrelationships among customer value, satisfaction
and retention.
Consumer behavior as an interdisciplinary area.
The consumer’s decision-making process.
What is consumer behaviour?
Consumer behaviour is the behaviour that consumers
display in searching for, purchasing, using, evaluating and
disposing of the products and services that they expect will
satisfy their needs (Schiffman et al., 2014, p. 4).

The study of consumer behaviour includes:


- how consumers think - what they buy
- why they buy it - how often they buy it
- how often they use it - how they dispose of it.
Consumer roles
The marketplace activities of individuals
entail three functions:
1. the consumer (user) - who consumes or uses
the product
2. the buyer - who undertakes activities to procure
or obtain the product
3. the payer - who provides the money (or other
value) to obtain the product.
Target the consumer
Target the buyer
Target the payer
Why Study Consumer Behaviour?
To understand and gain insights into:
– Consumer decision making process
– What we buy, how we buy, and why we buy

To become better consumers and marketers

To gain a better understanding of consumer related


behaviour and why individuals act in consumer related
ways
Development of the marketing concept

Societal
Marketing marketing
concept concept
Selling
concept
Product
concept

Production
concept
Marketing concept
The essence of marketing consists of satisfying consumers’
needs, creating value, and retaining customers.

– Segmentation: the process of dividing a market into subsets of


consumers with common needs and characteristics.
– Targeting: selecting the segments that company views as
prospective customers and pursuing them.
– Positioning: the process by which a company creates a distinct
image and identity for its products, services and brands in the
consumers’ mind.
– Marketing mix
Societal marketing concept
A restructured definition of the marketing concept:
– Seeks to fulfil the needs of the target audience in ways
that improve society as a whole, while also fulfilling the
objectives of the organisation.

Marketers should adhere to principles of social


responsibility in the marketing of their goods and services
and satisfy the needs and wants of their target markets in
ways that preserve and enhance the well-being of
consumers and society.
Societal marketing concept
Further, not-for-profit advocacy
organizations like PETA
(People for the Ethical
Treatment of Animals) are
driven by a mission to
encourage actions that are
ethically and morally right. The
ad features a celebrity and
urges us to “share the world”
with animals to protect and
improve the natural
environment.
Technology and consumer behaviours
Consumers have embraced technology.

Technology enriches the exchange between consumers


and marketers.

Discussion question: How does technology affect the


Marketing Mix? Provide some examples
Successful Relationships

Successful Relationships
High level of
Customer
Customer value customer
retention
satisfaction
Value, Satisfaction, and Retention
Customer value is defined as the ratio between the customer’s
perceived benefits and the resources used to obtain those
benefits.

Perceived value is relative and subjective.

Developing a value proposition is critical.

How does McDonald’s create value for the consumer?

How do they communicate this value?


Value, Satisfaction, and Retention
Satisfaction refers to an individual's perception of the
performance of the product or service in relation to his or
her expectations.

Customer groups based on loyalty include loyalists,


apostles, defectors, terrorists, hostages, and mercenaries
Value, Satisfaction, and Retention
The objective of providing value is to retain highly satisfied
customers.

Loyal customers are key:


– They buy more products
– They are less price sensitive
– Servicing them is cheaper
– They spread positive word of mouth
Consumer Decision Making
Levels of consumer decision making

Extensive Problem
Solving

Limited Problem
Solving

Routinised Response
Behaviour
Levels of consumer decision making
Extensive problem solving vs. Routinized response behavior
A continuum of buying decision
Routine response Limited Extensive
behavior problem solving problem solving

Low-cost products More expensive products

Frequent purchasing Infrequent purchasing

Low consumer involvement High consumer involvement

Familiar product class Unfamiliar product class


and brands and brands

Little thought, search, or Extensive thought, search,


time given to purchase or time given to purchase
Marketing inputs
Personal selling Brand Pricing Channels
utilised

Direct
marketing
Promotional
strategies
Mass media
advertising
Target
markets
Packaging

Inputs Overall
Product strategies
Sociocultural influence
Internet discussion
Culture
Comments from groups
experts

Subculture
Mass media
editorial

Government
advertising
Usage by
others

Inputs
Discussion Lobbying
with friends
Consumer Decision Making Process
Consumer decision making process
The 5 stages of consumer decision making process:

1. Need recognition
2. Pre-purchase information search
3. Evaluation of purchase alternatives
4. Purchase
5. Post-purchase evaluation
Need recognition
Actual state need recognition

Desired state need recognition


Pre-purchase information search
• Consumers rely on past experiences (memory) as an
internal source of information.
If this is insufficient then consumers undertake an external
search for information.
Contextual factors:
– Task complexity
– Information organization
– Time constraints

Consumers have limited information-processing capacity


Pre-purchase information search
Consumer Involvement
Involvement:
– A person’s perceived relevance of the object based on their inherent
needs, values and interests.
• Object: a good, service, advertisement or purchase situation.

Levels of Involvement—from Inertia to Passion:


– Type of information processing depends on the consumer’s level of
involvement.
• Simple processing: only the basic features of the message are
considered.
• Elaboration: incoming information is linked to pre-existing
knowledge.
Different levels of involvement
Different levels of involvement
occur with different products.
Involvement can also differ at
different stages of the purchase
process.
Consumer involvement is
considered a causal (motivating)
factor that drives attitudes and
decision making.
Is considered to be individual
specific – the consumer
determines the level of
involvement the product has with
them.
Coping with incomplete information
Delay the decision until information is obtained

Ignore missing information

Change the decision strategy to accommodate missing


information

“Construct” the missing information


Evaluation of purchase alternatives
Brand-sets
Evaluation of purchase alternatives
Attributes
Product attribute examples Price less important when
– Size products are “right”.
– Weight
– Sweetness Brand credibility is affected by
– Color – Perceived quality
– Packaging – Information costs saved
Criteria to assess product may – Perceived risk
be advertised
Evaluation of purchase alternatives

Functional risk Physical risk Financial risk


Product will not work as
Product may not be safe Product will not be worth
well as expected (or meet
(for self or family) its cost
the need)

Social risk Psychological risk Time risk


Amount of time spent in
Possible social Risk a poor product
product search will be
embarrassment as a choice will impact on
wasted if product does not
result of the purchase consumer’s self-esteem
perform as expected

Source: Schiffman et al. 2014


Decision rules
Compensatory decision rules Noncompensatory decision rules

Each relevant attribute do not allow consumers to


weighted balance positive evaluations
Summated score for each of a brand on one attribute
against a negative
brand evaluation on some other
attribute.

Affect Referral – no
assessment of individual
attributes
Purchase
Trial

Repeat purchase/brand loyalty

Retail environment

Source: Schiffman et al. 2014


Post-purchase evaluation
Post-purchase evaluation
– Positive/negative disconfirmation of expectations
– Cognitive dissonance
Prior expectations Product performance

Product performance Product performance Product performance


exceeds matches is below
expectations expectations expectations

Satisfaction Neutral feeling Dissatisfaction


Cognitive dissonance
Post-purchase dissonance

Ways to reduce post-purchase dissonance


1. Rationalize decision
2. Seek advertisements that support choices
(avoid competitive ads).
3. “Sell” friends on the positive features of the
purchase.
4. Seek reassurance from satisfied owners