Consumer Behavior

| Models | Influences on CB | Perception | Decision process | Diffusion
We need to ask :
Who are the consumer buyers who comprise what submarkets?
How do the consumers make their buying decisions?
What outside influences are affecting them (us)?
What internal mechanisms operate to affect their buying decisions?

Models of Consumer Behavior

Economic Model
Assumes four things:

Maximize Utility
Rationality
Perfect information
No outside influences
Predicts people will rationally maximize utility subject to a budget constraint.
Stimulus Response Model
Predictable Black Box
stimulus determines behavior

Stimulus Organism Response Model
Predictable effect on oraganism
which influence behavior

A General Model would
Take into account goals (maximize utility)
Take into account constraints (budget)
Take into account stimuli (marketing mix)
Take into account organism (the individual)
Take into account non marketing influences on individual
Predict responses of individuals and groups

A Teleological (goal oriented) model of consumer behavior

O'Shaughnessey's teleological model of Consumer Behavior

Assumes that consumer buying is a goal driven activity.
and deals with the questions of:
Why People Buy
What are the reasons?
How do people buy?
Consumer Decision Processes
Goal of Prediction
Goal of Understanding

Influences on Consumer Behavior

Socio-Cultural influences

Culture
Subculture
Social Class

Social influences

Reference GroupsBenson & Hedges Example
upper crust
Family
Roles and Statuses check your own oil

Personal

Age
Stage in Life Cycle
Occupation
Economic Situation
Life style
Personality and Self-concept

Self Concept -- a special kind of perception
Actual self-concept "If I think about it, what am I like?"
Other self-concept "What do I think that other people think I am like?"
Ideal self-concept "If I could be exactly who I want to be, what would I be like?"
It is possible that none of these accurately represent the actual behavior and personality of an individual.

Much Advertising exploits the  GAP  between what we hold as our actual self-concept and either:

how we want others to think about us
or
how we would be if we could.
See this Page for some preliminary results from an investigation into people's self concept. People were asked to check a place on a scale three times: once for" I am"; once for "other people think I am"; and once for "ideally I would be"
Which is this?
Bacardi Rum banker
Bacardi cubicles (reference group too)
Bacardi Politically correct

Psychological Influences

Consumer Behavior:
Perception and perceptual mechanisms


"All lies in jest 'till a man hears what he wants to hear and disregards the rest."
Simon and Garfunkle (The Boxer)

Perception
The way in which we select, organize and interpret information to create a meaningful mental picture of the world.
Perceptual Contrast
The phenomenon whereby the context in which a stimulus appears affects the perception of that stimulus.
the rule of three in retail sales, ties or belts with suits etc.
Perceptual mechanisms that affect what and how we perceive the world.

Selective Exposure
(also known as selective attention)
determines what we actually notice
(refers to a process of self filtering)
Perhaps a better name would be selective filtering
Things get through our perceptual filters when they:
  • relate to current needs
  • are anticipated
  • are very different from normal

Selective distortion -- distorts input stimuli
Interpret to meet preconceived idea

Selective retention (rehersal) -- affects what is remembered
Support your argument with repetition of the things that do support your pre-concieved ideas or prejudices
Motivation
Freudian theory
Maslow's hierarchical theory
Reinforcement theory
Learning

Beliefs and Attitudes (mental concepts)

Belief-
a descriptive thought held to be true.
Attitude-
a enduring predisposition composed of beliefs about, feelings toward, and action tendencies concerning a subject or object. (cognitive, affective, behavioral)

Situational Influences

The situation
Time pressure
Peer pressure at time of purchase
Mood
Availability / accesibility
Ease or difficulty of obtaining information
Cash in pocket (or budget)

How consumers make decisions

The consumer choice set:

total set: everything
evoked set:
the set of alternatives that would be listed at any point in time.
awareness set:
evoked set plus those alternatives that the person has heard of but do not come to mind immediately
choice set:
the set of alternatives included in deliberations. In most purchase decisions, the choice set is systematically reduced until it consists of only the final choice.

jeans women's market shares
jeans stats
The Attribute Assumption:
Product (offering) is a bundle of attributes.
Further, these attributes have levels which can be measured or at least compared.
Salience vs Importance
Saftey of airplanes is very important, but usually not salient.
The Criteria Assumption:
Product (offering) is a whole and is evaluated using predetermined criteria.

"Special" Attributes

Perceived Risk
Financial (economic)
Performance
Safety
Does what is supposed to...
Psychosocial What will "they" think?
Symbolic value
To show status
To show social role
To express self concept

The general decision process

Problem Recognition
Information Search
Evaluation of Alternatives
Purchase
Post purchase behavior
Dissonance Reduction
Use of product
Repeat purchase -- or not!

Primary rule of consumption is that overall positive experiences are reinforcing and tend to increase the probablity of additional future purchases.

Most purchases have both positive and negative aspects so it is not always easy to determine. The single best predictor of future purchase of a given brand or product is past experience with the brand or product.

Decision rules

Compensatory vs. Non-compensatory rules
In compensatory rules, lacks or shortcomings can be "made up for" by outstanding evaluation of other attributes.

Non-compensatory rules do not allow shortcomings to be compensated for by strengths.
A Compensatory Rule
The usual form is the expectancy value rule, and consumers prefer the alternative that maximizes expected value.
Preference = ax +by +cz +...
where x, y, and z are expected levels of attributes and
where a, b, and c are importance weights
when a = b = c the special case of equal importance.
An on-line example where you set the importance weights and it ranks the products.

Non-compensatory rules
These are algorithmic not algebraic.
Dominance:
remove from the choice set any alternative that is clearly dominated on all attributes.
Conjunctive:
Set minimum standards for each attirbute and drop any that do not meet the standard for any or all attributes.
Disjunctive:
Set ideal standards for each attribute and keep any alternative that meets any of the ideal standards in the choice set.
Lexicographic:
Arrange the attributes in order of importance and then choose the alternative that is best on the most important attribute. If there are ties, go to the next most important attribute.
(Remember that the best known ordered book, the dictionary is also known as a lexicon.)
Complex Iterative schemes:
Apply first one rule then another until finally there is only one alternative left in the choice set.
Example:
Apply dominance to reduce the set.
Apply lexicographic to make a tenative choice.
Test the tentative choice against conjunctive minimum standards for other attirbutes.
If it passes, keep choice, if it fails drop to another level of lexicographic cutoff and re-test.

Disposal of Products

Diffusion of Innovations

    People tend to fall into one of these categories with any innovation
  • innovators
  • early adopters
  • early majority
  • late majority
  • laggards
  • nevers

Characteristics of product that affect the speed of diffusion

  • relative advantage... how much better?
  • compatibility... with values and experience
  • complexity... easy or hard to understand
  • divisibility (aka trialability)... do you have to buy the farm?
  • communicability... can you talk about it?
Return to Notes list.