Consumer Behavior

We need to ask :: How do the consumers make their buying decisions?; What outside influences are affecting them (us)?; What internal mechanisms operate to affect their buying decisions?; Who are the consumer buyers who comprise what submarkets? (segments)

Models of Consumer Behavior

Economic Model Assumes four things: U R I O Maximize Utility Rationality Perfect information No outside influences The Model predicts: that 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 organism 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
Socio-Cultural influences: Culture; Subculture; Social Class

Social influences

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

Personal

: Age; Stage in Life Cycle; Occupation; Economic Situation; Life style -- As measured by psychographics -- Vals etc.; Personality (survey -- are you a tightwad or a spendthrift?) and Self-concept
Self Concept -- a special kind of perception: Actual self-concept "If I think about it, what am I really 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. They are a form of self-perception (see below)

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

how we want others to think about us (other)
or
how we would be if we could be any way that we want to be. (ideal)

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"

A recent campaign by Unilever for it's Dove brand has been called the "Campaign for Real Beauty" Some of the Print ads and TV ad How is this different from other beauty ads? Is it something we should applaud?

More examples

Which is this?
or this Playstation ad from Cosmo?

These Bacardi ads explicit in their comparisons of self concepts. Is it possible to know which is being used here?
Bacardi Rum banker
Bacardi cubicles (reference group too)
Bacardi Politically correct
Bacardi cat day nite
Bacardi Deadlines
Bacardi Lite FM
Bacardi Pinstripes
Bacardi Trading Floor

Automobile ads often use explicit other self concept comparisons. Jeep

Ideal self-concept can happen, but is quite rare. These come close: evian wildcat

Ads that don't exploit a self-concept "gap" are even rarer. These come pretty close to actual self-concept presentation. Chic

Note: The difficulty with these "gap" analyses occurs because over long periods of time, many of us take ideals of self that were once clearly defined as "other", that is as how we want others to see us, and internalize these ideas so that we become our own audience for whom we try to correct the gap.

Psychological Influences on 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.

Problematic Perceptual mechanisms that affect what and how we perceive the world.

Selective Exposure
(also known as selective attention and selective filtering)
determines what we actually notice
(refers to a process of self filtering)
Perhaps the best name would be selective filtering
(The new car effect)

IN order to make sense of the world, we must block from consciousness most of the stimuli that we encounter. Perceptual filters do this for us.
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 --- What are the most important reinforcers in the Marketing System?: Learning; (Notice that reinforcement theory is both a learning theory and a theory of motivation!); The most important skill to have mastered before leaving the University is the skill of learning what you need to learn when you need to learn it. That is, you should before graduating have learned how to learn.

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:

evoked set:

total setthe 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
Example of Web promotion for jeans -- Deisel

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

( Everett Rogers, Diffusion of Innovations 4th. ed.)

relative advantage... how much better is it?
compatibility... with values and experience (compare to disruptive innovations photovoltaics.
complexity... easy or hard to understand -- more likely to be a barrier to diffusion.
trialability (aka divisibility )... Try with limited committment. Do you have to buy the farm?
observability a generalization of communicability... Can people see it for themselves? Can you talk about it in ways that are understood.

The development of the Xerox machine -- before the growth phase. AVI video 63MB! ~7min

organizational buying behavior