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Chapter Five: Consumer Behaviour Chapter Objectives Describe the steps a customer goes through when buying a product or service Identify what determines how much time consumers will search for information before buying a product or a service Summarize how psychological, social, cultural, and situational factors influence consumers’ buying behaviour Explain how involvement influences the consumer buying decision process Annotated Chapter Outline PowerPoint Slides Instructor Notes The chapter objectives and roadmap are intended to help students understand the content to be discussed. Opening Vignette: The Prius Identifying a latent customer need and satisfying that need before anyone else could confer several advantages on a company. The Prius is an example of how Toyota recognized the need for fuel efficient car and developed one before its rivals. Toyota not only cornered the market but it acquired the reputation as an innovator and leader in fuel efficient cars. Ask Students: What Toyota needs to do give the Prius mass-market appeal? Possible Answers: May include dropping the prices, adding new features, launch a marketing communications campaign to reposition the Prius as a everyday car for everyone, and even reengineer the design to make it more appealing and more spacious. Theories of consumer behaviour stem from principles of sociology and psychology. Using them, marketers have been able to decipher many consumer actions and develop basic strategies for dealing with their behaviour. *** Extension of the text material This slide and the next set up the discussion for the consumer decision process. Eva illustrates how consumers make decisions because she faces the initial problem of deciding how to obtain access to the latest video releases. Eva must ask these two key questions to make her decision. Ask students: How many of you ask yourselves similar questions when choosing a product or service? Topic One: The Consumer Decision Process This slide introduces the entire consumer decision process. In the following slides we will cover each of the steps in the process. 1. Recognize a Need Consumers with an unsatisfied need or want attempt to move from their needy state to a different, desired state. The greater the discrepancy between these two states, the more salient the need recognition. Functional needs mean that the consumer absolutely must obtain the performance of the product or service. Psychological needs pertain to the personal gratification consumers’ associate with a product and/or service. Ask students: Think about the difference between functional and psychological needs. Consider an example similar to the shoe example in the text. Many basic products (e.g. bleach) represent commodities, but many consumers go beyond their functional needs and purchase Clorox bleach specifically. Another example might address the functional need for water versus the psychological need for Evian or Perrier. Search for Information Consumers seek information about how best to satisfy the need they have identified. The length and intensity of the search depend on the degree of perceived risk associated with the purchase. During an internal search for information, the consumer examines his or her own memory of, knowledge about, and experiences with the product or service. During external search for information, consumers seek information beyond their personal knowledge base to make the buying decision. Information Search can be internal or external. Many factors affect search including: perceived benefits versus cost, locus of control, actual or perceived risk, type of product or service (specialty, convenience, shopping) and are discussed in more detail in the slides that follow. Ask students: As consumers, how have you or your family members gathered information related to the following purchases? A restaurant for a first date. Whether to take a class from a particular instructor. A diamond engagement ring. A new computer. A washing machine. A security system for your home. Various factors affect consumers’ search processes: Perceived benefits of search versus its perceived costs. Ask students: Which purchase situations merit the expenditure of extra search costs? Personal preferences often play crucial roles in how much time and effort consumers are willing to incur. The locus of control can be internal or external. An internal locus of control means consumers believe they have control over the outcomes of their actions. An external locus of control means they believe fate or other external factors control outcomes. Locus of control actually indicates how much control people think they have over the outcomes of various activities, such as purchasing a product or service. Some people sense their own extensive control, whereas others feel virtually powerless. The former engage in more search activities. a. Risk includes actual or perceived factors and can be classified into several categories. Performance risk involves the perceived danger inherent to a poorly performing product or service. Financial risk is associated with a monetary outlay and includes the initial cost of the purchase, as well as the costs of using the item or service. Psychological risks entail the way people will feel if the product or service does not convey the right image. Risk and risk perceptions play crucial roles in determining the extent of consumer search. Ask students to compare the risk levels associated with the following purchase situations: A gift for the grab bag for the office holiday party. A gift for your mother’s birthday. A gift for your future mother-in-law’s birthday. Ask students: What type of risk is associated with each decision? All involve increasing degrees of psychological risk. Ask students: What type of risk is associated with each decision? All involve increasing degrees of psychological risk. The type of product or service also affects search. Specialty goods/services are those toward which the customer shows a strong preference and for which he or she expends considerable effort to find the best options. Shopping goods/services include those for which consumers spend time comparing alternatives, such as apparel, fragrances, and appliances. Convenience goods/services require little or no evaluation effort prior to purchase. The same product can represent different goods categories for different consumers. For example, some consumers consider jewellery a shopping good and therefore visit their local department store or warehouse store (e.g. The Bay or Costco) to find products, whereas others view it as a specialty good that should be purchased from a jewellery store. Answer D A. IV. Evaluate Alternatives Evaluative criteria consist of a set of salient, or important, attributes about a particular product. Determinant attributes are the product or service features important to the consumer and on which competing brands or stores are perceived to differ. Group activity: Walk students through the example of planning a vacation. Have students list all possible choices, and then organize them into categories (e.g. beach versus mountain, domestic versus international, inexpensive versus luxury). Continuing the group activity, ask students to indicate their favourite destinations. Ask: What evaluative criteria and determinant attributes did you use to determine the list of options? What are some of the features of a vacation that would be in your evaluative criteria? If you have a student who recently went on a vacation, you may focus on his or her specific purchase experience. Case In Point Series This slide introduces the Case in Point that follows. When evaluating alternatives, consumers often rely on decision rules. 1. A compensatory decision rule assumes that the consumer, when evaluating alternatives, trades off one characteristic against another, such that good characteristics compensate for bad characteristics. 2. Noncompensatory decision rules cause consumers to choose a product or service on the basis of a subset of characteristics, regardless of the values of other attributes. Ask students: Did you use a decision rule similar to the ones in this chart? How did you weigh your vacation alternative choices? Go to the Toolkits on the OLC. Click on consumer decision rules. Work through one of the three problems provided. The other two could be assigned to students to do. Decision heuristics are mental shortcuts that help consumers narrow down the choices. Price. Consumers can choose the more expensive option, in the belief that they will get better quality along with the higher price Brand. Always buying brand name goods allows some consumers to feel safe with their choices. Product presentation. The manner in which a product is presented often influences the decision process. Ask students: Do you use a particular heuristic when purchasing certain merchandise? What heuristics do you use, and when do you use them? For example, some students will always buy the same brand of personal care products (e.g. deodorant, soap, shampoo.) Ask students: What benefits do you gain from using this heuristic? Answer A V. Purchase Decision Value is a strong driver of consumers’ purchase decisions. Customers seek out and purchase the products and services that they believe provide them with the best value. Consumption: The act or process of using something. Ritual consumption pertains specifically to consumption for symbolic cultural purposes or to habitual consumption, such as stopping at Starbucks every day on the way to work. Consumption experiences vary greatly. A haircut requires consuming the service, whereas eating a candy bar involves consumption of a tangible product. Other consumption experiences, such as eating in a restaurant, mix tangible products (e.g. food) and intangible aspects (e.g. service, décor, other patrons.) All these factors contribute to the consumption experience. . VI. Establish Postpurchase Attitudes Customer satisfaction relates to customers’ expectations. Therefore, to increase satisfaction, firms must: 1. Build realistic expectations, not too high and not too low. 2. Demonstrate correct product use, because improper usage can cause dissatisfaction. 3. Stand behind the product or service by providing money-back guarantees and warranties. 4. Encourage customer feedback to minimize negative word of mouth. 5. Periodically make contact with customers and thank them for their support. Customers appreciate human contact, though it is more expensive than e-mail or postal mail contacts. Remind students that postpurchase satisfaction is particularly important to marketers because it involves actual rather than potential customers. Discuss how firms set customer expectations. Ask students: What are the dangers of setting expectations too high or too low? WestJet offers a good example because it keeps its promises simple: low cost, on-time arrivals, and friendly service. Ask students: What other firms do a good job of managing customer expectations? B. Postpurchase dissonance, also known as buyers’ remorse, is the psychologically uncomfortable state produced by an inconsistency between beliefs and behaviours that in turn evokes a motivation to reduce the dissonance. C. Loyalty can be solidified in the postpurchase stage. D. Undesirable consumer behaviour sometimes occurs as well. Although firms want satisfied, loyal customers, sometimes they fail to attain them. Passive consumers do not engage in repeat purchase or recommend the product to others. More serious and potentially damaging is negative consumer behaviour, such as negative word of mouth and rumours. Some consumers spread negative information about a product, service, or store to others. When firms meet or even exceed consumers’ expectations, they often do not tell anyone about it, but when consumers believe they have been treated unfairly, they often complain. Virtually everyone has experienced postpurchase dissonance. Ask students: Recall a purchase that resulted in a dissonant experience for you. Did the retailer or manufacturer help resolve your dissonant state? Think about ways dissatisfied customers threaten businesses. Which is higher, the number of acquaintances people tell about a positive experience or those they tell about a negative experience? By far, dissatisfied customers tell more people about their negative experience than about any positive experiences. Why is managing this consumer-to-consumer communication so important? Topic Two: Factors Influencing the Consumer Decision Process After examining the five steps in the consumer decision process, students should begin to focus on the aspects that influence that process. This slide can be used to introduce the topic. More detailed slides follow if desired. Remind students that every unique person views a purchase situation differently. 1. Psychological Factors Influence Decisions Motives are needs or wants that are strong enough to cause the person to seek satisfaction of them. Maslow’s hierarchy of needs comprises five categories - physiological, safety, love, esteem, and self-actualization. Physiological needs refer with the basic biological necessities of life. Safety needs pertain to protection and physical well-being. Love needs relate to interactions with others. Self-esteem needs allow people to satisfy their inner desires Self-Actualization occurs when you feel completely satisfied with your life and how you live. Remind students of the discussion in Chapter One related to needs and wants. Ask students: How many times have you experienced a need or want but, for whatever reason, lacked the motivation to act on it. For example, the need for a drink of water at 3:00 am often is not sufficient motivation for people to get out of a warm bed to meet their physiological need. Ask students: What other types of needs psychological needs have they experienced, how they might fill them, and when they are motivated to do so. Answer C An attitude is a person’s enduring evaluation of his or her feelings about and behavioural tendencies toward an object or idea. Attitudes are learned and long lasting, and they might develop over the long term, though they can also abruptly change. There are three components to attitudes: The cognitive component reflects what people believe to be true. Affective components pertain to what people feel about the issue at hand (i.e., likes and dislikes). The behavioural component comprises the action(s) people undertake with regard to that issue. Ask students: Imagine your car breaks down on the way to a date. You are panicked but luckily see a garage right on the same street. The mechanic assists you immediately, and you leave after paying only a $50 charge. The next day, you complete a survey about auto mechanics in the area. How do you rate the mechanic? Ask students: Have you had experiences similar to this scenario? Did it result in a perceptual change about the retailer or service provider? How did that change affect your subsequent purchase decisions? Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world. Perception influences acquisition and consumption because it assigns meaning to such things as color, symbols, taste, and packaging. Just as your perception of the mechanic changed, societies’ perceptions can change. For example tattoos used to be only considered acceptable for unsavoury individuals. There were clearly NOT mainstream, yet today people from a variety of demographic backgrounds get tattooed. Even some parents and children with matching tattoos. A. Learning refers to a change in a person’s thought processes or behaviour that arises from experience; it takes place throughout the consumer decision process. The way consumers spend their time and money to live By experiencing lots of people with tattoos, we learn that they are “OK”. Learning changed our perception. Consumers generally tend to buy products that suit their lifestyles. Those with an outdoorsy and adventurous lifestyle tend to buy sporting goods and luxury items Social Factors Affect Decision Making Family. When families make purchase decisions, they often consider the needs of all family members. Group activity: Ask the students to think about and list the factors that went into their decision about where to go to college. Have one volunteer read his or her list, which likely will include factors such as price, distance, ratings, friends, family recommendations, or suggestions from guidance counsellors. Ask students: How many of these factors are social? Reference group. One or more persons whom a decision maker uses as a basis for comparison in terms of his or her beliefs, feelings, and behaviours. The reference group: Offers information. Provides rewards for specific purchasing behaviours. Enhances a consumer’s self-image. Ask students: How was your choice of college influenced by your reference groups? Answer B Culture. The shared meanings, beliefs, morals, values, and customs of a group of people. Most weddings have four elements: gathering, ritual, vows, and celebration. The expression of these elements, however, varies dramatically. In parts of India, for example, weddings are extremely elaborate and span several days. Even within Canada, different religions and regions embrace unique ceremonial traditions. Group activity: Ask students to consider how these differences affect the way the bride and groom make decisions. Discuss differences they may have observed in various wedding ceremonies they have attended. What effect did these differences have on their behaviour? Situational factors. Specific to the situation, these factors override or at least influence various psychological and social issues. Depending on the purchase situation, customers may be predisposed to purchase certain products or services because of some underlying psychological traits or social factors that change in various purchase situations. Depending on the shopping situation, consumers who seem ready to purchase can be completely derailed once they arrive in the store, or vice versa. Store atmosphere. Some retailers and service providers have developed unique images based at least in part on their internal environment, also known as atmospherics. Salespeople. Well-trained sales personnel can influence sales at the point of purchase by pointing out the advantages of one item over another or encouraging. In-store Demonstrations. The taste and smell of new food items may attract people to try something they normally would not buy. Promotions. Retailers employ various promotional vehicles to influence customers once they have arrived in the store. Packaging. To make their product stand out, marketers spend millions to design and update packages that appeal to and catch the eye of consumers. 3. Temporal state. A person’s state of mind at any particular time can alter his or her preconceived notions of what to purchase. Ask students: How many of you have walked into a store and immediately felt uncomfortable? What made you uncomfortable? For some, the store may have seemed too expensive, whereas others may have perceived themselves as too masculine or feminine, too young or old. Ask students: Now recall a positive experience you have had when you first walked into a store and felt immediately comfortable. What factors made you feel comfortable? Ask students: How many of you have had retail sales or wait staff positions? What training did you receive? How did you contribute to the purchase decisions of the customers? Were you taught ways to influence customers? Many training programs feature “up-selling,” such as offering dessert or suggesting the special entree. In retail settings, many salespeople are trained to suggest accessories or additional pieces that go with a particular outfit or item. Infomercials offer a good example of product demonstrations that attempt to motivate purchase. Ask students: Why do infomercials influence consumers? How? Entrepreneurial Marketing 5.1 BiXi Bicycle System Collaborative consumption is a growing trend born out of the need to reduce our carbon footprint. It is gaining in popularity around the world and in a wide range of products and services. It is based on the notion that consumers pay for the benefit of having access to a product as needed rather than paying more to own the product. It has taken the business models of renting, leasing, and subscriptions to a whole new different level. B. Involvement and Consumer Buying Involvement is the consumer’s degree of interest or concern in the product or service. Consumers may have different levels of involvement for the same type of product. Extended problem solving is common when the customer perceives that the purchase decision entails a great deal of risk. Limited problem solving occurs during a purchase decision that calls for, at most, a moderate amount of effort and time. A common type of limited problem solving is impulse buying , a buying decision made by customers on the spot when they see the merchandise Habitual decision making describes a purchase decision process in which consumers engage with little conscious effort. Ask students: What drives them to make impulsive purchases. And, if they ever bought anything expensive impulsively. Answer: B Instructor Manual for Marketing Dhruv Grewal, Michael Levy, Shirley Lichti, Ajax Persaud 9780071320382, 9780070984929
