Mkt3050 – consumer behavior week 7

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MKT3050 – Consumer Behavior Week 7 – April 28, 2013

©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Objectives

• This week, we’ll complete the discussion about the consumer decision process.

– Evaluation models for selecting an alternative

• We’ll apply planning, forecasting and evaluation skills to consumer behavior patterns within the marketing process.

• More specifically, we’ll examine:– Consumer consumption and its effect on satisfaction– The ‘Path to Purchase’ that consumers take when making decisions– Consumer switching behavior and loyalty

• We’ll examine the role that ethics play in marketing and building loyalty

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So how do Consumers make decisions?Consumption Process and Decision-Making

• CHOICE occurs throughout the process.– These choices are

always linked to finding value!

• Doesn’t necessarily lead to a product –– May be a service– Participation– Attendance

• Decision making is also linked to motivation and emotion

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Consumers Develop Criteria to Evaluate Options…

Evaluative Criteria AND Determinant Criteria

Evaluative criteria are the attributes, features, or potential benefits that consumers consider when reviewing possible solutions to a problem.

Evaluative criteria are the attributes, features, or potential benefits that consumers consider when reviewing possible solutions to a problem.

Determinant criteria are the evaluative criteria that are related to the actual choice that is made.

Determinant criteria are the evaluative criteria that are related to the actual choice that is made.

Remember – criteria are ‘built’ around aspects the consumer VALUES !

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Remember that when we are gathering information, we place it into categories….

• So we can understand it and provide meaning.

• With products, we have 2 levels of organization:– Superordinate categories

• Highest level – somewhat abstract – global

– Subordinate categories• More detailed, more

relevant for evaluations

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What determines the type of evaluative criteria consumers use?

• Situational influences• Product knowledge• Expert opinions• Social influences – reference groups• Online sources• Marketing communications

• How many criteria are necessary? –10-15 before overload–Sometimes it’s just ONE!

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How good are Consumers evaluating options? Consumer Judgment

• Consumer judgment is the mental assessments of the presence of attributes and the benefits associated with those attributes.

• Consumers make judgments about:– Presence of features– Feature levels– Benefits associated with features– Value associated with the benefit– How objects differ from each other– http://www.youtube.com/watch?v=4

oQ4hjQ_9Bc

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Issues Affecting Consumer Judgments

Attribute correlation – does long wait = poor service or individual

attention?

Attribute correlation – does long wait = poor service or individual

attention?

Brand name associations

Brand name associations

Just noticeable difference – can

consumers perceive a difference?

Just noticeable difference – can

consumers perceive a difference?

Quality perceptions – does price = quality?

Quality perceptions – does price = quality?

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Consumers have rules for choices…Sometimes we make trade-offs.

Compensatory rules

Allow consumers to

select products that may

perform poorly on one

attribute by compensating

for the poor performance

by good performance on

another attribute.

(Our Fishbein model

exercise)

Compensatory rules

Allow consumers to

select products that may

perform poorly on one

attribute by compensating

for the poor performance

by good performance on

another attribute.

(Our Fishbein model

exercise)

Noncompensatory rulesStrict guidelines are set prior to selection, and any option that does not meet the specifications is eliminated

from consideration.

Noncompensatory rulesStrict guidelines are set prior to selection, and any option that does not meet the specifications is eliminated

from consideration.

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Non compensatory rules for selection

• Lexicographic – Strong performance on most important attribute yields a ‘yes’

• Conjunctive – Acceptable cutoffs established for each important attribute. A

‘miss’ on any one eliminates a brand. Choice must ‘hit’ on all attributes.

• Disjunctive– Minimum cutoff for features… usually high.

• Elimination by Aspects– Measure performance on most important attribute – if more than 1

brand ‘passes’ then compare on next attribute. Continue process of elimination until 1 choice left.

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What is Consumption?And What is the Basic Consumption Process?

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ConsumptionThe process that converts time and goods, services, or ideas into value.

ConsumptionThe process that converts time and goods, services, or ideas into value.

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What are the types of Consumption Behavior?

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Helps with Segmentation

Opportunities for

Expansion

Promo/ Coupons to

Push Consumption

http://www.youtube.com/watch?v=MOBdTP9ZB-I&feature=related

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How can Marketers Change Consumption?

• Increasing Consumption– Increase frequency, sometimes through product

modification– Increase usage per occasion

• Large packages = more consumption!

– Offer greater variety

• Decreasing Consumption– Change location – make it less convenient– Change messaging – warn of risks / danger

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What are the Outcomes of Consumption?

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Satisfaction and DissatisfactionDefined

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SatisfactionA mild, positive emotional state resulting from a favorable appraisal of a consumption outcome.

SatisfactionA mild, positive emotional state resulting from a favorable appraisal of a consumption outcome.

DissatisfactionA mild, negative affective reaction resulting from an unfavorable appraisal of a consumption outcome.

DissatisfactionA mild, negative affective reaction resulting from an unfavorable appraisal of a consumption outcome.

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Consumer Reactions

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Why good / bad happened

Was my experience the sameas others?

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Exhibit 15.3: Factors Contributing to Switching Costs

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Strategies for Keeping Customers

• Offer some type of customization• Demonstrate a commitment to quality• Develop an early warning system (measure

customer satisfaction)• Don’t overpromise• Provide guarantees

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15_ travelocity.wmv.MP4

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Characteristics of Relationship Quality

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Value Types and Loyalty

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Remember that building loyalty also involvesAssociations

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EMPIRE, La. (AP) — BP chief executive Tony Hayward took a day off Saturday to see his 52-foot yacht “Bob” compete in a glitzy race off England’s shore, a leisure trip that further infuriated residents of the oil-stained Gulf Coast.While Hayward’s pricey ship whipped around the Isle of Wight on a good day for sailing — breezy and about 68 degrees — anger simmered on the steamy Gulf Coast, where crude has been washing in from the still-gushing spill.“Man, that ain’t right. None of us can even go out fishing, and he’s at the yacht races,” said Bobby Pitre, 33, who runs a tattoo shop in the crossroads town of Larose, La. “I wish we could get a day off from the oil, too.”

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Loyalty affected by Market Relationships

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Tactics for Building Loyalty

Appreciation(Thank you

‘points’)

Rewards(just because)

Rebates(money back)

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The Underlying Principles of Consumer Behavior

• The Consumer Is Sovereign (King)

• The Consumer Is Global

• Consumers Are Different; Consumers Are Alike

• The Consumer has Rights• President Kennedy introduced the Consumer Bill of Rights in

1962.

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How do Ethics enter in to The Marketing Mix?

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Corporate Social Responsibility

An organization’s activities and status related to its societal obligations.

An organization’s activities and status related to its societal obligations.

Strategic initiativesStrategic initiativesAltruistic dutiesAltruistic dutiesEthical dutiesEthical duties

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Prescriptions for Improved Marketing Ethics

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Major Acts Affecting Commerce and Consumer Safety

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Public Criticism of Marketing

• Deceptive advertising• Marketing to children• Pollution• Planned obsolescence

• True versus artificial needs

• Manipulative sales tactics

• Stealth marketing• Products liability

©MIKE WATSON/MOODBOARD/JUPITERIMAGES

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Influence of Children

• http://www.youtube.com/watch?v=S-KwCNOg0qs• http://www.youtube.com/watch?v=HKH4YGKnOSs&feature=related

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Consumer Value Framework (CVF)