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Factors Influencing Consumer Purchase Decisions: Understanding Behavior - Prof. Charles F., Exams of Principles of Marketing

Consumer behavior and decision making, focusing on the various stages of the process, from need recognition to post-purchase behavior. It covers internal and external information search, evaluation of alternatives, and the influence of cultural, social, and individual factors. The document also touches upon business buying behavior and market segmentation.

Typology: Exams

2010/2011

Uploaded on 02/22/2011

robert-fisherwa
robert-fisherwa 🇺🇸

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Chapter 6
LO1 The Importance of understanding consumer behavior
Consumer behavior: how consumers make purchase decisions and how the use and dispose of
the purchased goods or services; also includes factors that influence purchase decisions and product
use.
LO2 Consumer Decision Making Process:
1. Need Recognition: occurs when consumers are faced with an imbalance between actual and
desired states that arouses and activates the consumer decision-making process.
a. A Want is the new way that a consumer goes about addressing a need.
i. Need recognition is triggered when a consumer is exposed to either an internal
or an external stimulus.
1. Internal stimuli: occurrences you experience, such as hunger or thirst.
2. External stimuli: influences from an outside source such as someone’s
recommendation of a new restaurant, the color of an auto or a brand
name mentioned by a friend, or an advertisement on television or radio.
a. A marketing manager’s objective is to get consumers to
recognize an imbalance between their present status and their
preferred state.
2. Information Services: after recognizing a need or want, consumers search for information about
the various alternatives available to satisfy it.
a. For examples, as gasoline prices increase, many people searching for information on
vehicles that use alternatives to gasoline.
i. Internal information search: person recalls information stems largely from
previous experience with a product.
ii. External information search: outside environment:
1. Nonmarketing-controlled: not associated with marketers promoting a
product: personal experience (family, friends, acquaintances, and
coworkers who may recommend a product or service; Consumer
Reports
2. Marketing-controlled: biased toward a specific product because it
originates with marketers promoting that product: mass media, sales
promotion, sales people
b. Three factors influencing the external information search
i. Consumer’s knowledge about the product or service will also affect the extent
of a search.
ii. Affected by confidence of the consumer in one’s decision making process.
iii. Product experience: prior experience with product: likely to limit their search to
items related to the positive experience.
c. The extent of the search is positively related to the amount of interest a consumer has
in a product.
d. The search should yield a group of brands (Evoke Set) or (Consideration Set)
3. Evaluation of Alternatives and Purchase: after gathering information and constructing an evoked
set of alternative products, the consumer is ready to make a decision.
a. Develop a set of criteria
i. using conceptual cues or primers that can influence the decision
ii. pick a product attribute and then exclude all products in the set that don’t have
that attribute
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Chapter 6 LO1 The Importance of understanding consumer behavior Consumer behavior: how consumers make purchase decisions and how the use and dispose of the purchased goods or services; also includes factors that influence purchase decisions and product use. LO2 Consumer Decision Making Process:

  1. Need Recognition: occurs when consumers are faced with an imbalance between actual and desired states that arouses and activates the consumer decision-making process. a. A Want is the new way that a consumer goes about addressing a need. i. Need recognition is triggered when a consumer is exposed to either an internal or an external stimulus. 1. Internal stimuli: occurrences you experience, such as hunger or thirst. 2. External stimuli: influences from an outside source such as someone’s recommendation of a new restaurant, the color of an auto or a brand name mentioned by a friend, or an advertisement on television or radio. a. A marketing manager’s objective is to get consumers to recognize an imbalance between their present status and their preferred state.
  2. Information Services: after recognizing a need or want, consumers search for information about the various alternatives available to satisfy it. a. For examples, as gasoline prices increase, many people searching for information on vehicles that use alternatives to gasoline. i. Internal information search: person recalls information stems largely from previous experience with a product. ii. External information search: outside environment:
  3. Nonmarketing-controlled: not associated with marketers promoting a product: personal experience (family, friends, acquaintances, and coworkers who may recommend a product or service; Consumer Reports
  4. Marketing-controlled: biased toward a specific product because it originates with marketers promoting that product: mass media, sales promotion, sales people b. Three factors influencing the external information search i. Consumer’s knowledge about the product or service will also affect the extent of a search. ii. Affected by confidence of the consumer in one’s decision making process. iii. Product experience: prior experience with product: likely to limit their search to items related to the positive experience. c. The extent of the search is positively related to the amount of interest a consumer has in a product. d. The search should yield a group of brands (Evoke Set) or (Consideration Set)
  5. Evaluation of Alternatives and Purchase: after gathering information and constructing an evoked set of alternative products, the consumer is ready to make a decision. a. Develop a set of criteria i. using conceptual cues or primers that can influence the decision ii. pick a product attribute and then exclude all products in the set that don’t have that attribute

iii. rank the attributes under consideration in order of importance and evaluate the products based on how well each performs on the most important attributes. iv. Brand extensions: well-known and respected brand name from one product category is extended into other product categories, is one way companies employ categorization to their advantage.

  1. To Buy or Not to Buy: the ultimate decision. Consumers must decide: a. Whether to buy b. When to buy c. What to buy (product type and brand) d. Where to buy (type of retailer, specific retailer, online or in store) e. How to pay
  2. When a person is buying an expensive or complex item, it is often a fully planned purchase
  3. Partially planned purchase : where people buy on impulse: 68% on major shopping trips / 54% on smaller trips LO3 Postpurchase Behavior: When buying products, consumers expect certain outcomes from the purchase.
  4. It is important for a marketer to reduce any lingering doubts that the decision was sound.
  5. Cognitive Dissonance : inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions. a. Consumers try to reduce dissonance by justifying their decision.
  6. Uses of post-purchase letters, dissonance-reducing statements in instruction booklet, ads that display the product’s superiority relieve dissonance. LO4 Types of consumer Buying Decisions and Consumer Involvement: All consumer buying decisions generally fall along a continuum of three broad categories
  7. Involvement: the amount of time and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior.
  8. Types of Buying Decisions a. Routine Response Behavior: frequently purchased, low-cost goods and services. (Orange Juice) b. Limited Decision making: the type of decision making that requires a moderate amount of time for gathering information and deliberating about an unfamiliar brand in a familiar product category. (normal brand is sold out, must make a new decision) c. Extensive Decision making: when buying an unfamiliar, expensive product or an infrequently bought item. Includes steps of Decision making process.
  9. Factors Determining the Level of Consumer Involvement: 5 factors i. Previous experience ii. Interest iii. Perceived risk of negative consequences – (High price = high risk) (financial risk, social risk, and psychological risk) iv. Situation – (wine) v. Social visibility – (items that make a statement about the purchaser)
  10. Marketing Implications of Involvement: marketing strategy varies according to the level of involvement associated with the product. a. Marketing responsibilities of high involvement products i. Promotion to the target market should be extensive and informative. ii. Specific benefits and unique advantages of owning the product.

LO7 Individual Influences on Consumer Buying Decisions: A person’s buying decisions are also influenced by personal characteristics that are unique to each individual, such as gender; age and life cycle stage; and personality, self-concept, and lifestyle.

  1. Gender- trends in gender marketing are influenced by the changing roles of men and women in society.
  2. Age and family life cycle stage – an orderly series of stages through which consumers’ attitudes and behavioral tendencies evolve through maturity, experience, and changing income and status.
  3. Personality – a way of organizing and grouping the consistencies of an individual’s reactions to situations.
  4. Self-concept – how consumers perceive themselves in terms of attitudes, perceptions, beliefs, and self-evaluations.
  5. Ideal self-image – the way that an individual would like to be
  6. Real self-image – the way an individual actually perceives himself or herself LO8 Psychological Influences on Consumer Buying Decisions: An individual’s buying decisions are further influenced by psychological factors: perception, motivation, learning, and beliefs and attitudes
  7. Perception – the process by which people select, organize, and interpret stimuli into a meaningful and coherent picture
  8. Selective exposure – the process whereby a consumer notices certain stimuli and ignores others
  9. Selective distortion – process whereby a consumer changes or distorts information that conflicts with his or her feelings or beliefs
  10. Selective retention – a process whereby a consumer remembers only that information that supports personal beliefs
  11. Motivation – a driving force that causes a person to take action to satisfy specific needs Maslow’s Hierarchy of Needs – a method of classifying human needs and motivations into five categories in ascending order of importance:
  12. Physiological – needs for food and water and shelter
  13. Safety – security and freedom from pain and discomfort
  14. Social – love and a sense of belonging
  15. Esteem – acceptance based on one’s contribution to a group: self-esteem, recognition, status
  16. Self-actualization – refers to finding self-fulfillment and self-expression: people are what they should be. Learning
  17. Learning – a process that creates changes in behavior, immediate or expected, through experience and practice.
  18. Stimulus generalization – form of learning that occurs when one response is extended to a second stimulus similar to the first.
  19. Stimulus discrimination – a learned ability to differentiate among similar products Beliefs and attitudes: closely linked as values
  20. Belief – an organized pattern of knowledge that an individual holds as true about his or her world
  21. Attitude – a learned tendency to respond consistently toward a given object a. Changing Beliefs and Attitudes: i. Turn negative, neutral or incorrect into positive ii. Modify by changing the importance iii. Add new beliefs

Chapter 7 LO 1 Business Marketing: the marketing of goods and services to individuals and organizations for purposes other than personal consumption. : The key characteristic distinguishing business products from consumer products is intended use, not physical form. LO

  1. B2B electronic commerce – the use of the internet to facilitate the exchange of goods, services, and information between organizations
  2. Stickiness – a measure of a website’s effectiveness; calculated by ( stickiness = frequency x duration x site reach) multiplying the frequency of visits times the duration of a visit times the number of pages viewed during each visit
  3. Trends in B2B Internet Marketing: 90% of buyers go to the internet at some point during the buying process.
  4. Disintermediation – (Cut out the middle man) the elimination of intermediaries such as wholesalers or distributers for the marketing channel
  5. Reintermediation – the reintroduction of an intermediary between product and user LO3 Relationship Marketing and Strategic Alliances: relationship marketing is a strategy that entails seeking and establishing ongoing partnerships with customers
  6. Strategic alliance (partnership) – a cooperative between business firms (licensing, distribution, R&D, joint ventures)
  7. Relationship commitment – a firm’s belief that an ongoing relationship with another firm is so important that the relationship warrants maximum efforts at maintaining it indefinitely
  8. Trust – the condition that exists when one party has confidence in an exchange partner’s reliability and integrity
  9. Keiretsu – a network of interlocking corporate affiliates: executives sit on boards of their customers or suppliers LO4 Major Categories of Business Customers: The business market consists of four major categories:
  10. Producers – OEM (Original equipment manufacturers) – profit oriented individuals and organizations that use purchased goods and services to produce other products, to incorporate into other products, or facilitate the daily operations of the organization.
  11. Resellers – retail and wholesale businesses that buy finish goods and resell them for a profit
  12. Governments – federal, state and local (largest business segment in the world)
  13. Institutions – seek to achieve goals other than the standard business goals of profit, market share, and ROI (schools, hospitals, churches, labor unions) LO5 The North American Industry Classification System (NAICS): an industry classification system introduced in 1997 to replace the standard industrial classification system (SIC) : developed due to NAFTA : Goods or service producing firms that use identical or similar production processes are grouped together

Chapter 8 LO1 Market Segmentation: market means different things to different people

  1. Market – people or organizations with needs or wants and the ability and willingness to buy
  2. Market segment – a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs LO2 Importance of Market Segmentation: plays a key role in the marketing strategy of successful organizations. LO3 Criteria for Successful Segmentation: segment markets for three reasons
  3. Substantiality – segment must be large enough to warrant developing and maintaining a special marketing mix
  4. Identifiability and measurability – data about the population within geographic boundaries, age categories, and social and demographic characteristics
  5. Accessibility – must be able to reach members of the targeted segments with customized marketing mix
  6. Responsiveness – unless one market segment responds to a marketing mix differently from other segments, however, that segment need not be treated separately. LO4 Bases for Segmenting Consumer Markets:
  7. Segmentation bases (variables) – characteristics of individuals, groups, or organizations, to divide a total market into segments
  8. Geographic segmentation – markets by region of a country or the world, market size, market density, or climate
  9. Demographic segmentation – age, gender, income, ethnic background, and family live cycle a. Family life cycle (FLC) – a series of stages determined by a combination of age, marital status, and the presence or absence of children
  10. Psychographic segmentation – personality, motives, lifestyles and geodemographics a. Geodemographics – segmenting potential customers into neighborhood lifestyle categories
  11. Benefit segmentation – grouping customers into market segments according to the benefits they seek from the product
  12. Usage-rate segmentation – by the amount of product bought or consumed a. 80/20 Principle LO5 Bases for segmenting business markets: Four broad segments:
  13. Producers
  14. Resellers
  15. Government
  16. Institutions LO6 Steps in segmenting a market
  17. Select a market or product category of study
  18. Choose a basis or bases for segmenting that market
  19. Select segmentation descriptors
  20. Profile and analyze segments
  21. Select target markets
  22. Design, implement and maintain appropriate marketing mixes