Chapter - 6: Consumer Behavior

Objectives:

• Articulate the steps of consumer buying process,
• Describe the difference between functional and psychological needs,
• Describe factors that affect information search,
• Discuss postpurchase outcomes,
• List the factors that affect the consumer decision process,
• Describe how involvement influences the consumer decision process.

"To understand consumer behavior, we must ask why people buy goods and services."

The Consumer Decision Process: The model that represents what consumers go through before, during, and after making a purchase.

• Need Recognition: The beginning of the consumer decision making process; occurs when consumers recognize they have an unsatisfied need and want to go from their actual, needy state to a different desired state.
• Functional Needs: Pertain to the performance of a product or service. 
• Psychological Needs: Pertain to the personal gratification consumers associate with a product or service. 
• Search For Information: After a consumer recognizes a need, consumer must now search for information about the various options that exist to satisfy the need.
• Internal Search for information: Occurs when the buyer examines his or her own memory and knowledge about the product or service, gathered through past experiences.
• External Search for Information: Occurs when the buyer seeks information outside his or her own personal knowledge base to help make the buying decision. 
• Factors Affecting Consumers' Search Processes: 
• The Perceived Benefits vs. Perceived Cost of Search: Is it worth the time and effort to search for information about a product or service? 
• Locus of Control:
• Internal Locus of Control: Refers to when consumers believe they have some control over the outcomes of their actions, in which case they generally engage in more search activities.
• External Locus of Control: Refers to when consumers believe that fate or other external factors control all outcomes. 
• Actual or Perceived Risk: Five types of risks associated with purchase decision which can delay the purchase.\
• Performance Risk: Involves the perceived danger inherent in a poorly performing product or service. 
• Financial Risk: Risk associated with a monetary outlay; includes the initial cost of the purchase, as well as the cost of using the item or service. 
• Social Risk: The fears that the consumes suffer when they worry others might not regard their purchases positively.
• Physiological/safety Risk:The fear of actual physical harm should a product or service not perform properly. 
• Psychological Risk: Associated with the way people will feel if the product or service does not convey the right image.
• "Recent research suggests that psychological risks might help explain why consumers enjoy supersizing their menu items. Especially when consumers feel powerless or more vulnerable, they equate larger sizes-whether in televisions, houses or menu items- with improved status."
• Evaluating Alternatives: Alternative evaluation often occurs while the consumer is engaged in the process of information search.
• Attribute Sets: How the organization occurs within a consumers mind. 
• Universal Sets: Includes all possible choices for a product-category.
• Retrieval Sets: Includes those brands or stores that the consumer can readily bring forth from memory.
• Evoked Sets: Comprises the alternative brands or stores that the consumer states he or she would consider when making a purchase decision.
• Evaluating Criteria: Consists of a set of salient, or important, attributes about a particular product.
• Determinant Attributes: Product or service features that are important to the buyer and on which competing brands or stores are perceived to differ.
• Consumer Decision Rules: The set of criteria that consumers use consciously or subconsciously to quickly and efficiently select from among several alternatives.
• Compensatory Decision Rule: At work when the consumer is evaluating alternatives and trade offs one character against another, such that good characteristics compensate for bad ones. 
• Multi-attribute Model: A compensatory model of customer decision making based on the notion that consumers see a product as a collection of attributes or characteristics. The model uses weighted average score based on the importance of various attributes and performance on those issues.
• Non Compensatory Decision Rule: At work when consumers choose a product or service on the basis of a subset of its characteristics, regardless of the values of its other attributes.
• Purchase and Consumption: After evaluating alternatives, the consumer is ready to buy.
• Conversion Rate: Percentage of consumers who buy a product after viewing it.
• Post Purchase: Marketers are particularly interested in postpurchase behavior because it involves actual rather that potential customers.
• Customer Satisfaction: Setting unrealistically high consumer expectations of the product through advertising, personal selling, or other types of promotion may lead to higher initial sales, but it will eventually result in dissatisfaction if the product fails to achieve high performance expectations.
• Marketers can take several steps to ensure postpurchase satisfaction such as: 
• Build realistic expectations, not too high and not too low. 
• Demonstrate correct product use - improper usage can cause dissatisfaction.
• Stand behind the product or service by providing money back guarantees and warranties. 
• Encourage consumer feedback, which cuts down on negative word of mouth and helps marketers adjust their offerings.
• Periodically make contact with consumers and thank them for their support. Customers appreciate human contact.
• Postpurchase Cognitive Dissonance: The psychologically uncomfortable state produced by an inconsistency between beliefs and behaviors that in turn evokes a motivation to reduce the dissonance; buyer's remorse.
• Customer Loyalty: Marketers attempt to solidify a loyal relationship with their customers. 
• \Undesirable Customer Behavior: Not always are customers satisfied with their purchases.
• Negative Word of Mouth: Occurs when consumers spread negative information about a product or service or store to others.

Factors Influencing the Consumer Decision Process:

• Psychological factors: A host of psychological factors affect the way people receive marketers' messages.
• Motive: A need or want that is strong enough to cause the person to seek satisfaction. 
• Maslow's Hierarchy of Needs: A paradigm for classifying people's motives. It argues that when lower-level, more basic needs (psychological and safety) are fulfilled, people turn to satisfying their higher-level human needs (social and personal); see psychological, safety, social, and personal needs. 
• Physiological needs: Those relating to the basic biological necessities of life, food, water, rest, shelter.
• Safety Needs: One of the needs in the PSSP hierarchy of needs; pertain to protection and physical well-being.
• Love Needs: Needs expressed through interactions with others.
• Esteem Needs: Needs that enable people to fulfil inner desires. 
• Self-actualization: When a person is completely satisfied with his or her life.
• Attitude: A person's enduring evaluation of his or her own feelings about and behavioural tendencies toward an object or idea; consists of three components: Cognitive, Affective, and Behavioural.
• Cognitive Component: A component of attitude that reflects what a person believes to be true.
• Affective Component: A component of attitude that reflects what a person feels about the issue at hand - his or her like or dislike of something.
• Behavioural Component: A component of attitude that comprises the actions a person takes with regard to the issue at hand.
• Perception: The process by which people select, organize, and interpret information to form a meaningful picture of the world.
• Learning: Refers to the change in a person's thought process or behaviour that arrises from experience and takes place throughout the consumer decision making process.
• Lifestyle: A component of psychographics; refers to the way a person lives his or her life to achieve goals.
• Social Factors: Consists of Customer's family, reference groups, and culture.
• Family:
• Reference groups: One or more persons whom an individual uses as a basis for comparison regarding beliefs, feelings, and behaviours.
• Culture: See previous chapter...
• Situational Factors: Factors affecting the consumer decision process; those that are specific to the situation that may override, or at least influence, psychological and social issues.
• Purchase situation:
• Shopping Situation:
• Store Atmosphere
• Sales People
• Crowding
• In-Store Demonstrations
• Promotions
• Packaging
• Temporal State: Current mood and how it affects your purchasing behaviors.

Involvement and Consumer Buying Decisions: Two types of buying decisions: Extended problem solving and limited problem solving.

• Involvement: Consumer's interest in a product or service.
• Extended Problem Solving: A purchase decision process during which the consumer devotes considerable time and effort to analyzing alternatives; often occurs when the consumer perceives that the purchase decision entails a higher amount of risk.
• Limited Problem Solving: Occurs during a purchase decision that calls for, at most, a moderate amount of effort and time. 
• Impulse Buying: A decision made by consumers on the spot when they see the merchandise.
• Habitual decision making: A purchase Decision process in which consumers engage with little conscious effort.