Consumer and Business Decision Making

CONSUMER AND BUSINESS DECISION

MAKING

Explain why marketing managers should understand consumer behavior

Analyze the components of the consumer decision-making process

LOI

LO2

Identify the types of consumer buying decisions and discuss the significance of consumer involvement

Identify and understand the cultural factors that affect consumer buying decisions

Identify and understand the social factors that affect consumer buying decisions

LO4

LO5

LO3

Identify and understand the individual factors that affect consumer buying decisions

Identify and understand the psychological factors that affect consumer buying decisions

Define the business buying behavior & identify the stages of business buying process

LO7

LO6

LO8

ConsumerBehavior

ConsumerBehavior

Consumer Behavior

UNDERSTANDING CONSUMER BEHAVIOR

LOI

Consumer behavior

Consumer behavior

consumers make purchase decisionsconsumers make

purchase decisions

consumers use anddispose of product

consumers use anddispose of product

= HOW

LO2

ConsumerDecision-Making

Process

ConsumerDecision-Making

Process A five-step process used by consumers when buying goods or services.

Consumer Decision-Making Process

LO2

Consumer Decision-Making Process

Postpurchase Behavior

Postpurchase Behavior

PurchasePurchase

Evaluation of AlternativesEvaluation

of Alternatives

Information SearchInformation Search

Need RecognitionNeed Recognition

Cultural, Social, Cultural, Social, Individual and Individual and Psychological Psychological

Factors Factors affect affect

all stepsall steps

Cultural, Social, Cultural, Social, Individual and Individual and Psychological Psychological

Factors Factors affect affect

all stepsall steps

LO2

NeedRecognition

NeedRecognition

Need Recognition

LO2

Need Recognition

Marketing helps consumers recognize

an imbalance between present status and preferred state.

Present

Status

Present

Status

Preferred State

Preferred State

InternalMotivation

Extern

al

Motiv

ation

LO2

Recognition of Unfulfilled Wants

When a current product isn’t performing properly

When the consumer is running out of a product

When another product seems superior to the one currently

used

LO2

Information Search

Internal Information Search

Recall information in memory

External Information search

Seek information in outside environment Non-marketing

controlled Marketing controlled

LO2

External Information SearchesNeed MoreNeed More

Information Information

More Risk Less knowledge

Less product experience

High level of interestLack of confidence

Less Risk More knowledge

More product experience

Low level of interestConfidence in decision

Need LessNeed Less Information Information

LO2

Evoked Set

Evoked SetEvoked Set

Group of brands, resulting from an

information search, from which a buyer can

choose.

LO2

Evaluation of Alternativesand Purchase

Evoked SetEvoked Set

Purchase!Purchase!

Analyze product attributesAnalyze product attributes

Rank attributes byimportance

Rank attributes byimportance

Use cutoff criteriaUse cutoff criteria

LO2

Purchase

To buy To buy or not to buy...or not to buy...

Determines which attributes Determines which attributes

are most important are most important in influencing a in influencing a

consumerconsumer’’s choices choice

REVIEW LEARNING OUTCOMEConsumer Decision-Making Process

LO2C

UL

TU

RA

L SO

CIA

L

PSYCHOLOGICAL

INDIVIDUAL

Need Recognition

1 InformationSearch

2 EvaluateAlternatives

3Purchase

4

LO3

Consumer Buying Decisions andConsumer Involvement

More Involvement

LessInvolvement

RoutineResponseBehavior

RoutineResponseBehavior

LimitedDecisionMaking

LimitedDecisionMaking

ExtensiveDecisionMaking

ExtensiveDecisionMaking

LO3

Five Factors Influencing Decisions

1. Level of consumer involvement1. Level of consumer involvement

2. Length of time to make decision2. Length of time to make decision

3. Cost of good or service3. Cost of good or service

4. Degree of information search4. Degree of information search

5. Number of alternatives considered5. Number of alternatives considered

LO3

Routine Response Behavior Little involvement in selection process

Frequently purchased low cost goods

May stick with one brand

Buy first/evaluate later

Quick decision

LO3

Limited Decision Making

Low levels of involvement

Low to moderate cost goods

Evaluation of a few alternative brands

Short to moderate time to decide

22

LO3

Extensive Decision Making High levels of involvement

High cost goods

Evaluation of many brands

Long time to decide

May experience cognitive dissonance

LO3Factors Determining

the Level of Consumer Involvement

SituationSituation

Social VisibilitySocial Visibility

InterestInterest

Perceived Risk of Negative ConsequencesPerceived Risk of Negative Consequences

Previous ExperiencePrevious Experience

LO3

Marketing Implications of Involvement

High-involvement purchases require:High-involvement purchases require:

Extensive and informative promotion to target market

Extensive and informative promotion to target market

Low-involvement purchases require:Low-involvement

purchases require:

In-store promotion, eye-catching package

design, and good displays.Coupons, cents-off,

2-for-1 offers

In-store promotion, eye-catching package

design, and good displays.Coupons, cents-off,

2-for-1 offers

Factors Influencing Buying Decisions

Social Factors

Individual Factors

Psycho-logical Factors

Cultural Factors

CONSUMERDECISION-

MAKINGPROCESS

BUY /

DON’T BUY

LO4

1) Cultural Factors

CultureCultureSet of values, norms,

attitudes, and other

meaningful symbols that

shape human behavior and

the artifacts, or products, of

that behavior as they are

transmitted from one

generation to the next.

LO4

Components of Culture

MythsMyths

LanguageLanguage

ValuesValues

CustomsCustoms

RitualsRituals

LawsLaws

Material artifactsMaterial artifacts

LO4

Culture is. . .

LearnedLearned

FunctionalFunctional

PervasivePervasive

DynamicDynamic

Value

LO4

ValueValue Enduring belief that a specific

mode of conduct is personally

or socially preferable to

another

mode of conduct.

SubcultureLO4

SubcultureSubculture A homogeneous group

of people who share elements

of the overall culture as well

as unique elements of their

own group.

Social ClassSocial ClassA group of people in a society

who are considered nearly

equal in status or community

esteem, who regularly

socialize among themselves

both formally and informally,

and who share behavioral

norms.

LO4

LO4

Social Class Measurements

WealthWealth

Other VariablesOther Variables

IncomeIncome

EducationEducation

OccupationOccupation

LO5

2)Social Factors

Reference GroupsReference Groups

Opinion LeadersOpinion Leaders

Family MembersFamily Members

LO5

Reference Group

Reference GroupReference Group A group in society that

influences an individual’s

purchasing behavior.

LO5

Reference Groups

Reference Groups

Direct

Indirect

Primary

Secondary

Aspirational

Nonaspirational

LO5

Influences of Reference GroupsThey serve as information sources and influence perceptions.

They affect an individual’s aspiration levels.

Their norms either constrain or stimulate consumer behavior.

LO5

Opinion LeadersOpinion Leaders

Opinion Leaders

An individual who influences

the opinion of others.

LO5

Relationships among Purchasers and Consumers in the Family

LO6

3) Individual Factors

GenderGender Age Life Cycle

Age Life Cycle

PersonalitySelf-Concept

Lifestyle

PersonalitySelf-Concept

Lifestyle

LO7

4) Psychological Factors

PerceptionPerception

MotivationMotivation

LearningLearning

Beliefs & AttitudesBeliefs & Attitudes

LO7

Perception

PerceptionPerception Process by which people

select, organize, and interpret

stimuli into a meaningful and

coherent picture.

LO7

Selective ExposureSelective Exposure

SelectiveDistortionSelectiveDistortion

Selective RetentionSelective Retention

Consumer notices certain stimuli and ignores others

Consumer notices certain stimuli and ignores others

Consumer changes or distorts information that conflicts

with feelings or beliefs

Consumer changes or distorts information that conflicts

with feelings or beliefs

Consumer remembers only that information that

supports personal beliefs

Consumer remembers only that information that

supports personal beliefs

Perception

LO7

Motivation

Maslow’s Hierarchyof Needs

Maslow’s Hierarchyof Needs

A method of classifying

human needs and motivations

into five categories in

ascending order of

importance.

LO7

Maslow’s Hierarchy of Needs

LO7

Types of Learning

ExperientialExperiential

ConceptualConceptual

An experience changes behavior

An experience changes behavior

Not learned through direct experience

Not learned through direct experience

LO7

BeliefBelief

AttitudeAttitude

An organized pattern of

knowledge that an individual

holds as true about his or her

world.

A learned tendency to

respond consistently toward a

given object.

Beliefs and Attitudes

LO7

Changing Attitudes

Change beliefs about the brand’s attributes

Change the relative importance of these beliefs

Add new beliefs

REVIEW LEARNING OUTCOMELO7

Psychological Factors

LearningStimulus

GeneralizationStimulus

Discrimination

Selective ExposurePerception

Selective Retention Selective Exposure

NeedsMotivation

Psychological EsteemSafety Social Esteem

Beliefs &Attitudes

ChangingBeliefs about

Attributes

ChangingImportance of

Beliefs

AddingNew Beliefs

DEFINITION OF BUSINESS BUYER BEHAVIOR

The buying behavior of the organizations that buy goods and services for use in the

production of other products and services or for the purpose of reselling or renting them to others at a profit. (Lamb,

Hair 2008)

LO8

STAGES OF THE BUSINESS BUYING PROCESS:

LO8

THANK YOU…