Consumer Economic Decisions - Student Notes

Directions:
Fill in the blanks.

Consumer Behavior & Influences Segment

1. Consumers
• Are individuals who purchase and use goods and services to
____satisfy wants and needs___
− goods are produced, physical products
− services are actions performed for a client.
2. Goods & Services

• Can be classified as:

− _necessities
• a good for which demand will not change in relation to price
− _normal goods
• goods whose demand increases with an increase in income

3. Goods & Services

• Can be classified as:

− inferior goods
• goods whose demand decreases when income increases
− __luxuries _
• goods and services whose demand increases when income
increases and demand decreases when the price rises

4. Consumer Decision Making

• Refers to the thought process of a purchasing decision _

• Can be determined by various mental and social factors
• Research helps businesses gain knowledge to provide _value to
consumers_____
• Research helps consumers make wise choices

5. Consumer Decision Making Process

• Includes five stages:

− need identification
− information searching
− alternative evaluation
− purchase decision
− __post-purchase____ evaluation
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 Consumer Economic Decisions - Student Notes
6. Consumer Behavior
• Can be influenced by personal factors, such as:
− demographic status
− lifestyle
− personality
7. Demographic Status
• Refers to the quantifiable statistics detailing an individual’s current
status, such as age, gender, ethnicity, occupation and income
• Helps marketers determine the __target market___ of a business
− for example, the target market of a clothing store can be female,
ages 35 to 55, from middle-class families

8. Demographic Status
• Affects a person’s product choices
• Examples include:
− age
• tastes in clothes, furniture and recreation are often
age related
− occupation
• white-collar workers tend to purchase business suits,
whereas blue-collars workers buy rugged work clothes
− economic situation
• person with a low income tends to purchase less
expensive products

9. Lifestyle
• Refers to a mode of living which reflects the attitudes and values of
an individual or group
• Is identified by activities, interests and opinions (AIO):
− activities
• how a person spends time and resources
− interests
• what a person considers important
− opinions
• what a person thinks of self and the world
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 Consumer Economic Decisions - Student Notes
10. Lifestyle
• Impacts consumer decision making process to a large extent
• Can be measured by asking AIO questions, such as:
− activity
• how often do you visit shopping malls
− interests
• how important is it to try new food
− opinion
• do you agree the U.S medical system needs reform
11. Personality
• Refers to an individual’s consistent pattern of interactions in
response to recurring situations which forms a distinctive
character, examples include:
− reserved vs. outgoing
− docile vs. aggressive
− trusting vs. suspicious
− practical vs. imaginative
12 Personality
• Is the key set of traits which affects brand and product preference
• Can be used to determine whether a customer:
− is a practical shopper
− likes to own things which impress people
− is loyal to certain brands
− has concerns about product quality more than price
− tends to use coupons
13. Consumer Behavior
• Can be influenced by psychological factors, such as:
− perception
− motivation
− attitudes, beliefs and values
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14. Perception
• Refers to the process in which an individual creates personal
experience by selecting, organizing and interpreting information
available to him or her
• Is crucial to customer decision making
− people selectively perceive what they want to hear or see,
such as:
• buying a particular product or brand
• shopping in a particular business
• paying attention to a particular ad
15. Selective Perception
• Include the following situations:
− selective exposure
• consumers actively choose messages which they want to
see
− selective attention
• consumers decide how much attention they would like
to give to a message
− selective attention
• consumers interpret information, so it is consistent with
their beliefs and values

16. Motivation
• Refers to the energizing force which causes an action to satisfy a need
• Is a critical element of customer purchasing behavior
• Can be explained by Maslow’s Hierarchy of Needs
− includes five stages
− each stage must be met before the other needs can be achieved
− people move to a higher stage of needs once the lower needs are
met
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 Consumer Economic Decisions - Student Notes
17. Maslow’s Hierarchy of Needs

• Includes five stages:

− physiological
• needs for food, water and shelter
− safety
• needs for security and stability
− love
• needs for love from family, spouse and friends
− esteem
• needs for recognition and respect
− self-actualization
• needs for self-fulfillment

18. Maslow’s Hierarchy of Needs

19. Attitudes & Beliefs

• Are defined as:

− attitude
• predisposition to respond to a product or brand in a
favorable or unfavorable way

− belief
• subjective perception of how well a product or brand
performs
• Are both shaped by values
− the most enduring judgment of good or bad
− cannot easily be changed
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 Consumer Economic Decisions - Student Notes
20. Attitudes & Beliefs
• Can be shaped by marketers by using promotional tools, such
as broadcasting advertisements and public relations campaigns
• Can be changed by:
− changing thoughts about the extent to which a brand has certain
attributes
− changing the perceived importance of attributes
− adding new attributes to the product
21. Consumer Behavior
• Can be influenced by socio-cultural factors, such as:
− culture
− reference groups
− family
22. Culture
• Can be defined as a set of symbols rules, rules and values which
are formed by a homogenous group of people and transmitted to
the next generation

23. Culture
• Manifests itself in four layers:
− symbols
• such as the stars-and-stripes flag and the bald eagle
− heroes
• such as George Washington and Franklin Roosevelt
− rituals
• such as Independence Day and the Mardi Gras
− values
• such as individualism and equality
24. Culture
• Has a direct effect on consumer purchase patterns
• Examples include:
− buying a Christmas tree for the holiday
− celebrating a boy’s coming-of-age at a Bar Mitzvah
− wearing a Batman costume for Halloween
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 Consumer Economic Decisions - Student Notes
25. Reference Groups
• Are groups to which an individual looks as a source for
personal standards
• Include:
− membership group
• an individual actually belongs
− aspiration group
• a person wishes to be identified
− dissociative group
• a person wants to stay away because of differences
in values or behaviors

26. Reference Groups

• Have potential in forming consumers attitudes and behaviors
− have a direct influence on visible items, such as a dress, shoes,
cars, etc.
• Influence people with:
− opinion leaders
• person who exerts direct or indirect social influence over
others

− word of mouth
• people influence each other through various communication
tools such as face-to-face conversations and social media

27. Family
• Refers to a group consisting of parents and children living together in a
_______household______
• Continues to change and adapt as they progress through
__________the family life cycle___
− family life cycle refers to the different stages of a family
experience, such as marriage, birth and retirement
− each stage presents identifiable purchasing behaviors
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 Consumer Economic Decisions - Student Notes
28. Family Life Cycle
• Includes the following stages:
− __single individuals ___________
• typically rents instead of owning a house
• uses more affordable goods and services
− _____newlyweeds________
• some become first-time homeowners
• starts to develop some financial discipline
29. Family Life Cycle
• Includes the following stages:
− ___early parenthood__________
• needs more space for the increased number of family
members

• purchases goods for young children

− ________late parenthood_____
• pays for children’s education and activities
• needs more space for privacy of each family member
30. Family Life Cycle
• Includes the following stages:
− _____empty nest________
• recovers after paying for children’s education
• refocuses on personal interests
− ___ retirement __________
• downsizes the house
• pays for medical expenses
31. Consumer Behavior
• Is tremendously impacted by ___technology and media__________
• Has changed due to the impact of technology and media resulting in:
− consistent overload resulting in distracted consumers
− need for more __personalization of content___________,
products and services to fit consumer needs
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 Consumer Economic Decisions - Student Notes
32. Consumer Behavior
• Has changed due to the impact of technology and media resulting in:
− __________ease of access___ to information facilitating more
product research prior to making a purchase

− increased importance of brand trust and likability

− increased customer expectations of products to _update and meet
their needs.____________
33. Technology
• Impacts the spending habits of consumers through:
− _automated____________ spending
• purchasing goods or services online and having them
delivered
− increased access to ___discounts and deals__________
• push notifications on cell phones can instantly alert to a sale
or customers can search deal websites and blogs to get the
most for their money

34. Technology
• Impacts the __spending habbits___________ of consumers through:
− created social marketplaces
• consumers previously relied on ___traditional media
source__________ to influence purchasing behaviors, now
social influencers and reviews from peers can drive
marketing efforts

35. Media
• Allows companies to __inform and persuade___________ consumers
regarding its products
• Allows multiple consumers to post and share reviews of products
− reading good reviews for a product can increase the likelihood of a
consumer purchasing it for themselves
• Uses ________marketing tactics_____ to target consumers
− marketers focus on consumer needs to persuade them to buy their
product over a competitor’s
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 Consumer Economic Decisions - Student Notes
Consumer Economics Segment
1. Economics
• Is the study of:
− the production, distribution and _______consupation_____ of
goods and services
− how an individual ______organizies_______ his or her limited
resources to meet unlimited wants and needs

2. Economics & the Consumer

• Have an ___interdependent__________
− economy of the United States depends on individual participation
− every consumer participates in and ___directly__________
consumer economic systems in one way or another
• simply by shopping, paying bills or having a checking
account, individuals are participating in the consumer
economic system
The choices consumers make combine to strongly influence the
entire economic system.

3. Demand
• Is the consumer's _____desire and ability________ to purchase a good or
service
• Is a schedule of the quantities to be purchased at ___several different
prices__________
• Example schedule:

• Law of demand

− as the price of any good falls, the quantity demanded will increase
(and vice versa)
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 Consumer Economic Decisions - Student Notes
4. Consumer Demand

• Influences economics
− each ____indivisual decision _________ made by
consumers drives demand accordingly, which can be seen

through _____________

To arrive at the market demand, add each individual’s demand across

the table

5. Five Factors Changing Demand

• Include:
− change in the _____number of people________ in the market
− change in taste or preferences
− expectations of the future
− change in ____income_________
− change in the price of a substitute or complementary product

6. Supply
• Is the amount of a good or service _available for purchase____________
• Is a schedule of the quantities to be supplied at __several different
prices___________
• Example schedule:
 • Law of supply

− as the price of any good rises, the quantity supplied will

increase (and vice versa)

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 Consumer Economic Decisions - Student Notes
16. Laws for Consumer Protection
• Include the Federal Food, Drug and ______Cosmetic0.
• _______ Act
− this act is administered by the Food and Drug Administration
• provides a basis for the regulation of
•
•
• the testing, manufacture, distribution and
__destribution and sale of foods___________, drugs,
cosmetics and medicinal products in the United States

17. Laws for Consumer Protection

• Include the Consumer Product Safety Act
− _interpreted and enforcment____________ with the adoption of
rules and regulations by the Consumer Product Safety
Commission

• an _independent regulatory agency____________

composed of five commissioners and empowered to
conduct research on safety and collect data regarding
injuries

18. Services for the Consumer

• Are also provided by entities _____other than________ the national
government, including:
− Better Business Bureau
− Renters’ Associations
− States’ Departments of ___Consumer Services__________
19. Laws
• Have a direct impact on ____providers of service_________
• Affect providers:
− future production
− obligations
− _complient processes ____________
• Should be directly communicated to all employees
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