Consumer Behavior 5th P – “People” Chapter 5 Consumer buyer behavior refers to the buying behavior of final consumers—individuals and households who buy goods and services for personal consumption (Chapter 5) Business buyer behavior refers to the buying behavior of the organizations that buy goods and services for use in production of other products and services that are sold, rented, or supplied to others (Chapter 6) Model of Consumer Behavior 2 2 Consumer Decision-Making Process Problem Recognition Information Search Evaluation Of Alternatives Purchase Decision Post-purchase Evaluation Also post purchase….. Cognitive Dissonance: Discomfort caused by postpurchase conflict Holding of two contradictory ideas Consumers try to reduce dissonance by changing one of the two attitudes Not sure if I got a good deal or made the right choice As a marketer we want to reduce dissonance Types of consumer decisions Three major types of decision processes: Extended Problem Solving Limited Problem Solving Routine Problem Solving Variety Seeking Behavior 5 Extended Problem Solving (High Involvement) Product category or brand is new or purchase in the category is infrequent More risk involved (financial, social, physical) Decisions require more time and effort 6 High Involvement Strategies for Marketers Provide a wide depth of product information through multiple formats Engage with customers through social media and personal selling to answer questions and provide customer service Market Challengers – compare their products to leader Limited problem solving (Low Involvement) Consumers are not motivated, able or lack the opportunity to search for information extensively Alternatives are analyzed superficially Some brands may be new, but category is familiar Alternatives are weighted using heuristics Low or no information search 8 Routine Problem Solving (Low Involvement) Decisions are made with little or no conscious effort (Auto-pilot) Consumer is familiar with brand and category Decisions are low risks 9 Variety-seeking Behavior (Low Involvement) Brands still play an important role, but consumer is motivated to try different products Not necessarily dissatisfied with a brand or product 10 Low Involvement Strategies for Marketers Maintain product quality Avoid stockout situations Repetitive/reminder advertising messages Situational Influences Purchase task - reason for decision Social surroundings – presence of others Physical surroundings – décor, music, etc. Temporal effects - time Antecedent states – mood, budget Psychological Factors Lifestyle 13 13 Motivation and Personality Perception Learning Values, Beliefs and Attitudes In order to be persuaded need MAO Motivation – inner state of arousal directed to achieve a goal Drives processing of information Felt involvement Cognitive Affective 14 What Affects Motivation? Personal relevance Values, Goals, Needs Perceived Risk Inconsist.

1. Consumer Behavior
5th P – “People”
Chapter 5
Consumer buyer behavior refers to the buying behavior of final
consumers—individuals and households who buy goods and
services for personal consumption (Chapter 5)
Business buyer behavior refers to the buying behavior of the
organizations that buy goods and services for use in production
of other products and services that are sold, rented, or supplied
to others (Chapter 6)
Model of Consumer Behavior
2
2
Consumer Decision-Making Process
Problem
Recognition
Information
Search
Evaluation
Of
Alternatives
Purchase
Decision
Post-purchase
Evaluation

2. Also post purchase…..
Cognitive Dissonance: Discomfort caused by postpurchase
conflict
Holding of two contradictory ideas
Consumers try to reduce dissonance by changing one of the two
attitudes
Not sure if I got a good deal or made the right choice
As a marketer we want to reduce dissonance
Types of consumer decisions
Three major types of decision processes:
Extended Problem Solving
Limited Problem Solving
Routine Problem Solving
Variety Seeking Behavior
5
Extended Problem Solving (High Involvement)
Product category or brand is new or purchase in the category is
infrequent
More risk involved (financial, social, physical)
Decisions require more time and effort
6

3. High Involvement Strategies for Marketers
Provide a wide depth of product information through multiple
formats
Engage with customers through social media and personal
selling to answer questions and provide customer service
Market Challengers – compare their products to leader
Limited problem solving
(Low Involvement)
Consumers are not motivated, able or lack the opportunity to
search for information extensively
Alternatives are analyzed superficially
Some brands may be new, but category is familiar
Alternatives are weighted using heuristics
Low or no information search
8
Routine Problem Solving (Low Involvement)
Decisions are made with little or no conscious effort (Auto-
pilot)
Consumer is familiar with brand and category
Decisions are low risks
9
Variety-seeking Behavior (Low Involvement)
Brands still play an important role, but consumer is motivated
to try different products

4. Not necessarily dissatisfied with a brand or product
10
Low Involvement Strategies for Marketers
Maintain product quality
Avoid stockout situations
Repetitive/reminder advertising messages
Situational Influences
Purchase task - reason for decision
Social surroundings – presence of others
Physical surroundings – décor, music, etc.
Temporal effects - time
Antecedent states – mood, budget
Psychological Factors
Lifestyle
13
13
Motivation and Personality
Perception

5. Learning
Values, Beliefs and Attitudes
In order to be
persuaded need MAO
Motivation – inner state of arousal directed to achieve a goal
Drives processing of information
Felt involvement
Cognitive
Affective
14
What Affects Motivation?
Personal relevance
Values, Goals, Needs
Perceived Risk
Inconsistency with attitudes
15
Needs, Wants & Demands

6. All purchases are driven by needs
Maslow’s Hierarchy of Needs explains how needs are
prioritized
Physiological
Safety
Social
Self-Actualization
Personal/Esteem
In order to be
persuaded need MAO
Ability – resources to act
Knowledge and experience
Intelligence, education, age
Monetary resources
17
In order to be
persuaded need MAO
Opportunity
Time
Distraction free
Information
Amount, Complexity, Repetition, Control
18

7. Personality and self-concept
Personality refers to the unique psychological characteristics
that lead to consistent and lasting responses to the consumer’s
environment
19
19
Individuality Personality Traits often seen in Brands
Dominance
Autonomy
Defensiveness
Adaptability
Aggressiveness
20
20
Perception
The process by which people select, organize, and interpret
information to form a meaningful picture of the world from
three perceptual processes
21
21
Types of Perception
Selective attention is the tendency for people to screen out most

8. of the information to which they are exposed
Selective comprehension is the tendency for people to interpret
information in a way that will support what they already believe
Selective retention is the tendency to remember good points
made about a brand they favor and forget good points about
competing brands
22
22
Role of Perceived Risk
Perceived Risk represents the anxiety felt because the consumer
cannot anticipate the outcomes of a purchase but believes there
may be negative consequences
Greater risk, greater time spent researching
23
23
Learning
The change in an individual’s behavior arising from experience.
Occurs through interplay of:
Behavioral Learning
Cognitive Learning
Brand Loyalty
24

9. 24
Attitudes, Values, & Beliefs
Attitude – learned predisposition to respond to an object or
class of objects in a consistently favorable or unfavorable way
Relatively global and enduring evaluation
Object
Issue
Person
Action
25
Attitudes are learned over time
Attitudes can be based on:
Experience, exposure, beliefs, etc.
Cognitions and Affect
26
Characteristics of Attitudes
Favorability
Accessibility
Confidence
Persistence
Resistance
27

10. We can have attitudes toward…
Companies and Brands
Ads
People and Stores
28
How do we change attitudes?
Change beliefs about the extent to which a brand has certain
attributes
Change the perceived importance of attributes
Add new attributes
29
Attitudes shaped by…
Values
Strongly held beliefs (priorities) about various topics or
concepts
More enduring than attitudes
Shaped during childhood, informative years
Affected by personality
30
Attitudes shaped by…
Beliefs – consumer’s subjective perception of how a product or
brand performs on different attributes

11. Based on personal experience, advertising, WOM
31
Persuasion (cont)
Beliefs can be created/influenced by:
Inference: A process of “filling in” missing
information/conclusion making
Attribution: An inference of the reason for a person’s behavior
or outcome
Heuristics: rules of thumb
32
Lifestyle
A person’s pattern of living as expressed in his or her
psychographics
Measures a consumer’s AIOs (activities, interests, opinions) to
capture information about a person’s pattern of acting and
interacting in the environment
Activities (work, hobbies, social events, memberships, sports)
Interests (family, job, recreation, food, media)
Opinions (social issues, politics, products, environment)
33
33
Sociocultural Influences on CB

12. Opinion leadership – exert direct or indirect social influence
Also called influentials or leading adopters
WOM
Family Influence
Reference Groups
34
34
Types of Reference Groups
Aspirational Groups
Groups an individual wished to belong to
Membership Groups
Groups with direct influence and to which a person belongs
35
35
Negative Reference Groups
Dissociative Groups
Groups with which a person wishes to maintain a distance from
because of differences in values or behaviors
36
36
Social classes are society’s relatively permanent and ordered
divisions whose members share similar values, interests, and
behaviors

13. Measured by a combination of occupation, income, education,
wealth, and other variables
Sociocultural Influences on CB
37
37
Culture is the learned values, perceptions, wants, and behavior
from family and other important institutions
Sociocultural Influences on CB
38
38
Characteristics Affecting Consumer Behavior
Subculture are groups of people within a culture with shared
value systems based on common life experiences and situations
African American (AACM)
Hispanic
Asian
GLBT
Mature consumers
39
39

14. Scanning the Marketing Environment
Chapter 3
Environmental Forces
Social Forces
Demographic Trends – Graying of America/World
Changing meaning of “family”
Population shifts
Racial and Ethnic Diversity
Social Forces
Demographic Trends
Changing age structure of the population
Baby Boomers (1946-1964)
Generation X (1965-1976)
Millenials (Gen Y) (1977-2000)
Deciding on generational marketing
Not just about age, more about lifestyle or life stage
Social Forces
Cultural Shifts
Evolving gender roles
Changing values
Equality, individuality
Economic Forces

15. Macroeconomic Conditions – Nation by Nation
GDP
Unemployment rates
Price changes (inflation and deflation)
Consumer expectations
Consumer Confidence Index
Index of Consumer Sentiment
Economic Forces
Consumer Income
Gross
Disposable
Discretionary
Technological Forces
Technology of tomorrow
Social networks
Natural user interfaces
Green technologies
Biotech – genetically modified crops
Technological Forces
Technology’s Impact on Customer Value
Technology costs declining
New product development
http://www.youtube.com/watch?v=3xaj9jx7648&feature=relmfu
Competitive Forces
Forms of competition
Pure competition
Monopolistic competition

16. Oligopoly
Pure monopoly
Competitive Forces
Components of competition
Entry – ease and barriers
Power of Buyers and Suppliers
Existing Competitors and Substitutes
Small Business as Competitors
Regulatory Forces
What is regulation?
Restrictions state and federal laws place on business with regard
to the conduct of its activities
Protects companies and consumers
Ensures comp and fair business practices
Protecting Competition
Sherman Antitrust Act (1890)
Clayton Act (1914)
Robinson-Patman Act (1936)
Prevents unfair price discrimination by ensuring that the seller
offer the same price terms to customers at a given level of trade
Regulatory Forces
Robinson-Patman Act
Price discrimination is allowed:
If the seller can prove that costs differ when selling to different
retailers

17. If the seller manufactures different qualities of the same product
for different retailers
Product Related Legislation
Patents
Copyrights laws
Digital Millennium Copyright Act (1998)
Trademarks
Pricing Related Legislation
Price fixing: Sellers must set prices without talking to
competitors
Predatory pricing: Selling below cost with the intention of
punishing a competitor or gaining higher long-term profits by
putting competitors out of business
Advertising and Promotion Related Legislation
FTC – deceptive or misleading advertising
Cease and desist
Corrective advertising
Self-Regulation
Industries attempt to police themselves
BBB – best known self regulatory group

18. PRINCIPLES OF MARKETING – BRAND ANALYSIS
PROJECT
Overview
You will analyze a brand’s marketing strategy and tactics, then,
based on your findings, you will make three recommendations
for improving the brand’s competitive position in the
marketplace.
Objectives
In this individually-written report (note that this is not a team
project), you will demonstrate your writing, research abilities,
and knowledge of concepts presented in this course. The
assignment also gives you the chance to practice using charts
and exhibits. As a bonus, the completed report can serve as your
writing sample for internships and jobs.
Situation & Assignment
You’ve landed your first job as an assistant to a brand manager.
Your boss, Miranda Priestly, wants to make sure your
company’s brand is remaining competitive, so she assigns you
this project:
· Review all publically available information related to your
focal brand and the product category
· Prepare a detailed analysis of your focal brand and product
category, and
· Make three recommendations to improve your focal brand’s
competitive position based on the findings of your research.
(recommendations should be specific to the US market)

19. Important First Steps
Each student should pick a brand within the assigned product
category. No two students can use the same brand so selections
will be first come first serve. For those not in class on
September 6th, or unable to make a selection, the sign-up sheet
will be posted on my office door for the upcoming week.
Important Dates
Deliverables
Due Date
Description
Part 1
9/23
Market analysis of product category
2 components – complete an “environmental scan” of macro
issues and complete an “industry analysis”
Writing Intensive Requirements
For each deliverable please lead with a memo to your boss,
Miranda Priestly. This one-page document should include all
pertinent info: to whom, from whom, date, subject, and a brief
description of what is attached, and any pertinent info your boss
should be aware of regarding your progress. This should be a
stand alone page, meaning do not start your actual report below
this information. (search google for memo templates) Remember
you want to inspire confidence in your boss that you’re on the
right track and will deliver the final report on time.
Part 1: Market Analysis of Product Category—1250 words (due
9/23)
What is the market situation for the category and your brand?

20. Provide a short review of the market situation facing the brands
in your competitive “space” (your brand and its direct
competitors). You should examine sales at either unit level or
monetary level for the most recent 3-5 years, and trends within
subsectors of your industry and market shares of main players.
This section should address issues happening at the macro level,
also known as an “environmental scan.” Topics such as; key
consumer trends, a crucial political issue, a critical
technological change, a shift in the nature of the competitive
landscape, and/ or a key environmental force affecting the
segment and competition. Choose issues that generally affect
the performance of all players (i.e., some brands are affected
more and some less, but the issues affect the group as a whole).
· You will want to refer primarily to the concepts discussed in
Ch. 3 on Marketing Environment, Ch. 5 on Consumer Behavior.