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Intro to Marketing
Table of Contents
Unit 3 Overview: Consumer Behavior
3.1 Consumer Decision-Making Process
3.2 Factors Influencing Consumer Behavior
3.3 Consumer Motivation and Perception
3.4 Market Segmentation and Targeting

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3.1 Consumer Decision-Making Process

Citation:

Consumer decision-making is a complex process that shapes our buying habits. It involves five stages: recognizing a need, searching for info, evaluating options, making a purchase, and reflecting on the experience. These steps guide us through everyday choices and big-ticket buys alike.

Understanding this process is key to grasping consumer behavior. External factors like ads and social influences play a big role, as do internal needs and personal preferences. By breaking down how we make choices, we can better predict and influence purchasing patterns.

Consumer Decision-Making Process

Five-Stage Model

  • The consumer decision-making process is a five-stage model that describes how consumers make purchasing decisions, including problem recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior
  • The stages of the consumer decision-making process are not always linear and may overlap or be skipped depending on the type of purchase, such as routine purchases (buying groceries) or impulse buys (purchasing a candy bar at the checkout counter)
  • The level of involvement in the decision-making process varies based on factors such as the perceived risk (financial, social, or psychological), cost (high-priced items), and personal relevance of the purchase (products that are important to the consumer's self-image or lifestyle)
  • The length and complexity of the decision-making process can differ significantly between high-involvement purchases (buying a car, which requires extensive research and consideration) and low-involvement purchases (buying a snack, which involves little thought or effort)

External Influences

  • External factors, such as marketing activities (advertisements, promotions), social influences (recommendations from friends or family), and situational factors (time pressure, physical surroundings), can impact the decision-making process at various stages
    • Marketing activities can trigger problem recognition, provide information during the search stage, and influence the evaluation of alternatives
    • Social influences can shape consumer preferences, provide information through word-of-mouth, and impact the purchase decision
    • Situational factors can affect the urgency of the decision, limit the available alternatives, and influence the post-purchase evaluation

Recognizing Needs and Gathering Information

Problem Recognition

  • Problem recognition occurs when a consumer identifies a gap between their current state and desired state, which can be triggered by internal stimuli (hunger, thirst, or boredom) or external stimuli (advertisements, seeing a friend with a new product)
  • Maslow's hierarchy of needs theory suggests that consumers prioritize fulfilling lower-level needs (physiological needs like food and shelter, safety needs like security) before pursuing higher-level needs (esteem needs like prestige and status, self-actualization needs like personal growth and fulfillment)
    • For example, a consumer may prioritize purchasing groceries (physiological need) over buying a luxury watch (esteem need)
  • Marketers can stimulate problem recognition by highlighting the benefits of their products or services, demonstrating how they can address consumer needs or desires, and creating a sense of urgency or scarcity
  • Information search involves gathering data about potential solutions to the recognized problem, which can be internal (recalling past experiences, knowledge) or external (seeking advice from friends, reading product reviews)
    • Internal search relies on the consumer's memory and prior knowledge, such as remembering a positive experience with a particular brand or product
    • External search involves seeking information from outside sources, such as asking for recommendations from family members, searching online reviews, or visiting a store to examine products in person
  • The extent of the information search depends on factors such as the consumer's level of involvement (higher involvement leads to more extensive search), perceived risk (higher risk prompts more search), and time constraints (limited time may reduce the search effort)
  • Consumers may engage in active or passive information search, with active search involving purposeful information gathering (actively researching different car models when considering a purchase) and passive search involving exposure to information without actively seeking it out (seeing a car advertisement while watching television)

Evaluating Alternatives and Purchase Decisions

Evaluation of Alternatives

  • Evaluation of alternatives involves comparing and contrasting the attributes and benefits of different products or services that can potentially satisfy the recognized need
  • Consumers establish evaluation criteria, which are the standards or specifications used to compare different alternatives, such as price (cost of the product), quality (durability, performance), brand reputation (perceived trustworthiness and reliability), or features (specific functions or characteristics)
    • For example, when evaluating smartphones, a consumer may consider criteria such as battery life, camera quality, storage capacity, and operating system
  • The importance of each evaluation criterion varies among consumers and can be influenced by personal values (environmental consciousness may prioritize eco-friendly products), beliefs (brand loyalty may favor a particular company), and experiences (positive or negative past experiences with a product)

Decision Rules and Heuristics

  • Consumers may use decision rules or heuristics to simplify the evaluation process, such as the lexicographic rule (choosing the alternative that performs best on the most important attribute) or the satisficing rule (choosing the first alternative that meets a minimum threshold of acceptability)
    • The lexicographic rule involves ranking the evaluation criteria in order of importance and selecting the alternative that performs best on the most important criterion (choosing the smartphone with the best camera, regardless of other attributes)
    • The satisficing rule involves setting a minimum acceptable level for each criterion and choosing the first alternative that meets all the thresholds (selecting the first smartphone that meets the consumer's requirements for battery life, storage, and price)
  • Other decision rules include the elimination-by-aspects rule (eliminating alternatives that do not meet a minimum threshold for each criterion in a stepwise manner) and the compensatory rule (considering trade-offs among criteria and selecting the alternative with the highest overall score)

Purchase Decision and Post-Decision Dissonance

  • The purchase decision involves selecting the preferred alternative and completing the transaction, which can be influenced by factors such as price (discounts, promotions), availability (in-store or online), and perceived risk (uncertainty about the purchase outcome)
  • Consumers may engage in post-decision dissonance, which is the feeling of doubt or uncertainty after making a purchase decision, particularly for high-involvement purchases (expensive, complex, or personally significant items)
    • Post-decision dissonance can lead consumers to seek information that confirms their decision (reading positive reviews) or to experience regret and consider returning the product

Post-Purchase Behavior and Its Impact

Consumer Satisfaction and Loyalty

  • Post-purchase behavior refers to the actions and experiences of consumers after making a purchase, including consumption (using the product), evaluation (assessing the product's performance), and disposal of the product or service (discarding, recycling, or reselling)
  • Consumer satisfaction is determined by the perceived performance of the product or service in relation to the consumer's expectations, which can lead to confirmation (performance matches expectations), positive disconfirmation (performance exceeds expectations), or negative disconfirmation (performance falls short of expectations)
    • For example, if a consumer expects a new smartphone to have a battery life of 12 hours and it actually lasts 15 hours, they may experience positive disconfirmation and high satisfaction
  • Satisfied customers are more likely to engage in positive post-purchase behaviors, such as repurchasing the product (brand loyalty), recommending it to others (positive word-of-mouth), and developing brand loyalty (consistently choosing the same brand over competitors)
    • Brand loyalty can lead to reduced price sensitivity, increased customer retention, and higher customer lifetime value for companies

Dissatisfaction and Negative Behaviors

  • Dissatisfied customers may engage in negative post-purchase behaviors, such as complaining to the company or others (negative word-of-mouth), seeking redress (refunds, exchanges, or compensation), or switching to competitor brands
    • Negative word-of-mouth can damage a company's reputation and deter potential customers from making a purchase
    • Switching to competitor brands can result in lost revenue and market share for the company
  • Companies can use post-purchase marketing strategies to address customer dissatisfaction, such as providing efficient customer support (helplines, online chat), offering generous return and exchange policies, and proactively seeking customer feedback to identify areas for improvement

Impact on Future Decisions

  • Post-purchase experiences can influence future decision-making by updating the consumer's internal information (product knowledge, brand perceptions) and shaping their evaluation criteria for similar purchases
    • Positive experiences can lead to increased brand trust, loyalty, and a higher likelihood of repurchasing or recommending the product
    • Negative experiences can result in brand avoidance, more extensive information search, and a heightened evaluation of alternatives in future purchase decisions
  • Companies can leverage post-purchase marketing strategies to reinforce positive experiences, foster long-term customer relationships, and encourage future purchases, such as providing personalized recommendations, offering loyalty programs (rewards, exclusive benefits), and maintaining regular communication with customers (newsletters, social media engagement)

Key Terms to Review (27)

User: A user is an individual who interacts with a product or service, particularly in the context of technology and consumer goods. Users are central to the consumer decision-making process, as their preferences, behaviors, and experiences shape how products are designed, marketed, and improved. Understanding users helps businesses cater to their needs and build better relationships through tailored offerings.
Customer feedback: Customer feedback refers to the information and opinions that customers provide about their experiences with a product, service, or brand. This feedback serves as a vital tool for businesses to understand customer needs, preferences, and areas for improvement. Gathering and analyzing customer feedback can lead to enhanced decision-making, innovation in product development, and improved monitoring of performance metrics.
Customer satisfaction: Customer satisfaction is the measure of how well a company's products or services meet or exceed the expectations of its customers. It reflects the customers' overall feelings about their experience and is crucial for building long-term relationships, fostering loyalty, and driving repeat business. High levels of customer satisfaction can lead to positive word-of-mouth and brand advocacy, making it a central goal in marketing strategies and essential for understanding consumer behavior.
Buyer: A buyer is an individual or entity that purchases goods or services to satisfy their needs or wants. Buyers can be consumers, who buy for personal use, or businesses, which purchase for operational purposes. Understanding buyer behavior is crucial as it influences the entire consumer decision-making process and marketing strategies.
Decider: In consumer decision-making, a decider is the individual who has the authority to make the final purchasing choice in a buying situation. This role is crucial because the decider influences which product or service will ultimately be acquired, often based on various factors including personal preferences, budget considerations, and recommendations from others. Understanding who the decider is in a buying scenario can greatly affect marketing strategies and communication efforts.
Influencer: An influencer is an individual who has the power to affect the purchasing decisions of others because of their authority, knowledge, position, or relationship with their audience. Influencers can shape consumer behavior by sharing opinions, recommendations, or insights through various platforms, particularly social media. Their ability to connect with audiences and create trust can drive brand awareness and engagement, making them valuable partners for marketing strategies.
Initiator: The initiator is the person or group that first recognizes a need or problem, prompting the decision-making process in consumers. This role is crucial in influencing purchasing behavior as it sets the stage for the entire consumer journey, leading to research, evaluation of alternatives, and ultimately a purchase decision. Identifying who the initiator is can provide insights into market trends and consumer motivations.
Low-involvement purchases: Low-involvement purchases are consumer decisions that require minimal effort, research, or emotional investment. These purchases typically involve everyday items that are inexpensive and frequently bought, such as snacks or toiletries. Consumers often rely on heuristics or mental shortcuts, like brand familiarity or price, rather than extensive information processing when making these decisions.
High-involvement purchases: High-involvement purchases are significant consumer decisions that require substantial thought, time, and effort before making a choice. These purchases often involve high monetary value, potential for risk, or emotional significance, leading consumers to gather extensive information, weigh options, and consider consequences before finalizing their decisions. The complexity of these purchases typically results in a more structured decision-making process, as consumers seek to ensure satisfaction and avoid regret.
Attitude: An attitude is a learned predisposition to respond favorably or unfavorably to an object, person, event, or idea. It reflects a person's feelings, thoughts, and behaviors towards something and influences their decision-making process. Understanding attitudes is crucial as they shape consumer preferences and choices, driving behavior in the marketplace.
Engel-Kollat-Blackwell Model: The Engel-Kollat-Blackwell Model is a comprehensive framework that outlines the consumer decision-making process. It integrates various psychological, sociocultural, and economic factors that influence how consumers make purchasing decisions, highlighting stages such as problem recognition, information search, evaluation of alternatives, purchase decision, and post-purchase evaluation.
Howard-Sheth Model: The Howard-Sheth Model is a comprehensive framework that explains how consumers make purchasing decisions by integrating psychological and social factors. It emphasizes the role of input variables, which include marketing stimuli and environmental influences, in shaping consumer behavior, as well as the various stages in the decision-making process, such as need recognition, information search, and post-purchase evaluation.
Branding: Branding is the process of creating a unique identity for a product or service through the use of names, symbols, designs, and messaging. It helps to differentiate a company from its competitors while building customer loyalty and recognition. Effective branding influences consumer perceptions and plays a crucial role in their decision-making process, often guiding their choices and fostering emotional connections with products or services.
Positioning: Positioning refers to the strategic process of establishing a brand or product in the minds of consumers relative to competitors. It involves defining how a brand is perceived in relation to others within the market, focusing on attributes that make it unique and desirable to a specific target audience. This concept is crucial as it influences consumer choices, marketing strategies, and overall brand identity.
Segmentation: Segmentation is the process of dividing a broader market into smaller, distinct groups of consumers who have similar needs, characteristics, or behaviors. This approach allows businesses to tailor their marketing efforts more effectively by understanding the unique preferences of each segment, leading to improved customer satisfaction and more efficient use of resources. By identifying specific segments, companies can develop targeted strategies that resonate with each group's specific desires and motivations.
Impulse Buying: Impulse buying is the spontaneous purchase of goods or services without prior planning or consideration of the consequences. This behavior often occurs when consumers are exposed to a product that triggers an emotional response, leading them to make a quick decision. Impulse buying can be influenced by various factors, such as marketing tactics, store layout, and individual emotions, making it an essential aspect of understanding consumer behavior.
Social Influences: Social influences refer to the effects that individuals, groups, or society as a whole have on a person's beliefs, attitudes, and behaviors, especially regarding consumer choices. These influences can shape preferences and drive purchasing decisions through various channels like family, friends, social media, and cultural norms. Understanding social influences is essential for grasping how consumers make choices and how marketers can effectively target their messaging.
Evaluation of Alternatives: Evaluation of alternatives is the stage in the consumer decision-making process where individuals assess different options available to them before making a purchase. This step involves comparing the features, benefits, and costs of various products or services to determine which one best meets their needs and preferences. It plays a crucial role in influencing consumer behavior, as it can lead to a more informed decision that aligns with their expectations and values.
Post-purchase behavior: Post-purchase behavior refers to the actions and reactions of consumers after they have made a purchase. This phase is crucial as it determines customer satisfaction and influences future purchasing decisions, brand loyalty, and word-of-mouth marketing. How consumers feel about their purchases can lead to positive or negative experiences, impacting their likelihood to buy from the same brand again or recommend it to others.
Purchase decision: A purchase decision is the final stage in the consumer decision-making process where an individual chooses whether to buy a product or service after considering various factors. This decision is influenced by personal preferences, social influences, and external factors like marketing and pricing strategies, which ultimately guide consumers toward making their final choice.
Perception: Perception is the process by which individuals interpret and make sense of the information they receive from their senses, influencing how they view products, brands, and marketing messages. This interpretation can be shaped by personal experiences, cultural background, and psychological factors, leading to differences in how consumers react to marketing stimuli. Understanding perception is crucial because it directly impacts consumer behavior, decision-making, and the effectiveness of advertising strategies.
Personal Factors: Personal factors are individual characteristics that influence a person's buying behavior and decision-making process. These include demographics like age, gender, income level, education, and lifestyle, which can all affect preferences and choices. Understanding these factors is crucial as they play a significant role in shaping how consumers perceive products and make purchasing decisions.
Motivation: Motivation refers to the inner drive or desire that prompts individuals to take action towards achieving specific goals or fulfilling needs. It plays a critical role in consumer behavior as it influences the choices and preferences of consumers when making purchasing decisions, ultimately impacting their overall decision-making process.
Cultural Factors: Cultural factors refer to the set of values, beliefs, behaviors, and norms that are shared by a group of people and influence their consumption patterns. These factors play a crucial role in shaping consumer behavior and decision-making, as they reflect the lifestyle and preferences of a particular culture. Understanding cultural factors helps marketers tailor their strategies to align with the expectations and motivations of consumers from different cultural backgrounds.
Brand Loyalty: Brand loyalty refers to a consumer's commitment to repurchase or continue using a brand, often leading to repeat purchases over time. This strong allegiance can result from positive experiences, perceived value, or emotional connections with the brand, which influence how consumers perceive alternatives and make decisions.
Problem Recognition: Problem recognition is the first stage in the consumer decision-making process, where an individual identifies a discrepancy between their current state and a desired state, leading to the realization that a need or want must be addressed. This initial recognition is crucial as it triggers the entire buying process, driving consumers to seek solutions and evaluate options based on their motivations and perceptions.
Information Search: Information search is the process where consumers seek out information to make informed decisions about a product or service. This stage often involves gathering data from various sources to evaluate options and weigh potential outcomes, ultimately influencing their purchasing behavior. The information search phase is essential in shaping consumers' motivation and perception as they navigate their choices, while also being affected by various factors that drive their behavior.