Commodity Boards and Product Development Authorities

Basic Model of Consumer BehaviorComplete model of consumer behaviorStimuli (marketer dominated, other)External searchMemory

Internal searchExposureAttentionComprehensionAcceptanceRetentionSearchNeed recognitionAlternative evaluationPurchaseOutcomesDissatisfactionSatisfactionIndividual differences resources motivation & involvement knowledge attitudes personality, values, lifestyleInfluences culture social class family situationStart

2IncreaseGapSizeIncrease Intensity of (Need) WantExistentStateDesiredStateStage 1Problem or needrecognitionBuying Process3

4Need Recognition

Preferred StateMarketing helps consumers recognize (or create) an imbalance between present status and preferred stateWhen a current product isnt performing properly

When the consumer is running out of an product

When another product seems superior to the one currently used5ICEBERG EFFECT The act of buying is 10% visible effort90% of buying process is invisible- Problem recognition- Information search- Pre evaluation- Post Purchase educationBuying ProcessStage 2InformationSearchInformation Is knowledgeThe information search stageAn internal search involves the scanning of one's memory to recall previous experiences or knowledge concerning solutions to the problem-- often sufficient for frequently purchased products.An external search may be necessary when past experience or knowledge is insufficient, the risk of making a wrong purchase decision is high, and/or the cost of gathering information is low.Personal sources (friends and family)Public sources (rating services like Consumer Reports) Marketer-dominated sources (advertising or sales people)The evoked set: a group of brands from which the buyer can choose

8Determinants of External Search

9Information GapsExamples of Dells Customer Feedback- Wheres the power button?- Wheres the any key? (Click any key to continue)- fax wont work- I refuse to read manual

Questions and (Sometimes) Answers(All Day Counts Include Weekends)Web siteWhat we asked What happened

Coca-colaHow much caffeine No response.is in coke?

ReebokIs it dangerous to wear Four weeks laterrunning shoes to playbasketball?

Information OverloadWith greater amounts of information available, Consumers make poorer choices (Threshold effects)Tactic:focus on product information (features) that is important (salient) to consumers

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Information Wear outRepetition increases consumer learning

Too much repetition = wear out(consumers decrease attention over time)

Tactic:

Change information and/or format

Pictures are better than words 13All brands in a product classUnknown brandsKnown brandsBrands found accidentallyBrands found through searchEvoked setUnrecalled brandsConsideration set of brand choice alternatives Information search leads to a Consideration Set of Brand Alternatives+ I likeo Neutral- I dislikeBuying ProcessStage 3Evaluation ofAlternativesUtility Theory - Consumers perform rational, quantitative calculations to maximize personal utilities .. economic, behavioral & societal.3 Major Evaluation CriteriaEconomic: cost/performanceBehavioral: prestige/status/peer influence/lifestyle Societal: product externalitiesenvironmental effectssocietys long run welfare

PerformanceSafetyLots of storageVariety ofcolors16 Evaluation Criteria Evaluation criteria change over time and among market segments.

Promotions frame certain product attributes (evaluation criteria) to influence their perceived relative importance

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Stage 4Outlet Selection &PurchaseWHO BUYS?WHAT?WHEN?WHERE?AND WHY?

Influences on Purchase DecisionsPurchase Situation(s)Usage (Social or Private)Time Perspective (long or short)Resource CapabilitiesLevel of personal control19OUTLET - TO ANY SOURCE OF PRODUCTS OR SERVICES FOR THE CONSUMERS

TYPES OF OUTLETS:

STORE BASED (BRICK & MORTAR): RETAIL SHOPS, SUPERMARKETS, MALLS, CHAIN STORES, DISCOUNT STORES ETC NON-STORE BASED: INTERNET PORTALS, CATALOG SHOPS, TELE-SHOPS ETC.

ABOVE DISTINCTION COULD SOMETIMES BE BLURRED (PIZZA, MILK ETC)

OUTLET SELECTIONIN-HOME SHOPPING REFERS TO SHOPPING FROM THE COMFORT OF HOME/ OFFICE AT NON-STORE OUTLETS .

CUSTOMERS INABILITY TO TOUCH & FEEL GOODS ABSENCE OF PHYSICAL ACTIVITY/ EXCITEMENT OF GOING SHOPPING ABSENCE OF SOCIAL INTERACTION (BARGAINING/ INTERACTING WITH FELLOW SHOPPERS ETC.) TRANSACTION SECURITY

DESPITE THESE INHIBITORS, THE SHARE OF NON-STORE BASED OUTLETS, PARTICULARLY THE INTERNET BASED ONES, IS RAPIDLY GROWING.

SOME FACTORS WHICH INHIBIT IN-HOME SHOPPING ARE:

1. Store Location

Intercity Choice (Outshoppers and nonoutshoppers)

Intracity Choice (Shopping Center Model- The model estimates the probability of that shoppers in homogeneous geographical segments will visit a particular shopping center for a particular type of purchase. Two fundamental parameters in this are square feet of floor space in the shopping center and travel time to the center.)

Interstore Choice

Factors Determining the Store Choice2.Store Design and Physical facilities (Positive moods can increase the time spent in the store and willingness to interact with the salesperson).

3. Merchandise (quality, selection or assortment, styling or fashion, guarantees and pricing)

4. Advertising and sales promotion

5. Personnel

6.Customer Services (Increase product satisfaction, increase convenience, provide special benefits)

7. ClienteleGeneral Shopper Profiles (Anti Shoppers)Store specific shoppers profile (Traditional Department, National Chain Department, Discount Department)Store loyalty (Engage in less comparison)

In-store Purchasing Pattern:Merchandising Techniques:Store Layouts and traffic Patterns(Passing and buying Ratio)Point of Purchase mediaProduct Shelving (Shelf height & Shelf space)

Pricing StrategiesPrice AwarenessPromotional PricingCouponing

Packaging

Brand Choice: National Vs. PrivatePosition of Private BrandsGeneric Brands

RISK IN THE CONTEXT OF OUTLETS COULD BE SOCIAL RISK (I.E. NEGATIVELY VIEWED BY FRIENDS/ GROUPS ROADSIDE SHOPS, DISCOUNTS/ SECONDS STORES ETC) OR ECONOMIC RISK (I.E. RELATING TO PRICE, QUALITY ETC HIGH MARGINS, PRICING BASED ON SNOB VALUE, POSSIBILITY OF FRAUD ETC)

RISK PERCEIVED BY THE CONSUMER WITH REF. TO AN OUTLETINHERENT PSYCHOGRAPHIC PROFILE OF THE SHOPPER, LIKE:

INACTIVE SHOPPER (BUY BECAUSE THEY HAVE TO; DO NOT BARGAIN OR ENCOURAGE SALES TALK; JUST PICK-UP, PAY AND GET OUT TYPES)

ACTIVE SHOPPER (OPPOSITE OF ABOVE; LIKE TO SHOP AROUND; ENGAGES STORE ASSISTANTS EXTENSIVELY)

SERVICE SHOPPER (SEEK HIGH LEVEL OF SERVICE/ ATTENDANCE WHILE PURCHASING)

TRADITIONAL SHOPPER (SOMEWHERE IN BETWEEN ACTIVE AND INACTIVE TYPES OF SHOPPERS)

FRINGE SHOPPERS (SEEKING NEW PRODUCTS; LIMITED BRAND/ STORE LOYALTIES)

PRICE SHOPPERS (BARGAIN HUNTERS)

CONSUMERS OWN SHOPPING ORIENTATION/ SHOPPING PROFILE

FROM THE FOREGOING DISCUSSION ON CONSUMER PROFILES, IT ARISES THAT, STORES CAN DESIGN SEGMENT SPECIFIC MARKETING TACTICS: EX: INACTIVE SHOPPERS MIGHT RESPOND WELL TO HOME DELIVERY; ACTIVE ONES MIGHT RESPOND WELL TO LIVELY STORE AMBIENCE.Purchase Decisions Consumers dislike making decisions/choicesTactic: Show satisfied customersordinary peopleexpertscelebrities

29Buyer BehaviorInitiator: the person who first suggests or thinks of the idea of buying a particular product or service.Influencer: a person whose views or advice carry weight in making the final buying decisionDecider: the person who ultimately makes the final buying decision or any part of itBuyer: the person who makes the actual purchaseUser: the person who consumes the product or serviceOther people often influence a consumers purchase decision. The marketer needs to know which people are involved in the buying decision and what role each person plays, so that marketing strategies can also be aimed at these people. (Kotler et al, 1994).

Note: teens are increasingly assuming more of these rolesThink about your past purchase who was in which role?

30WifeDominantHusbandDominantJoint1005007525Womens clothingPots & pansChild clothinggroceriesvacationsTV setsFamily carSport equipmentLawn mowerPaint wallpaperlampsMens leisure clothingMens business clothingcameraFinancial planningfurniturerefrigeratorluggagecarpetNonRxToys/gamesstereohardwareExtent of role specializationRelative influence of husbands & wivesInformationsearchFinal decision31Consumer decision making varies with the level of involvement in the purchasing decision Extensive: problem solving occurs when buyers purchase more expensive, less frequently purchased products in an unfamiliar product category requiring information search & evaluation; may experience cognitive dissonance.

Limited: problem solving occurs when buyers are confronted with an unfamiliar brand in a familiar product category

Routine: response behavior occurs when buyers purchase low cost, low risk, brand loyal, frequently purchased, low personal identification or relevance, items with which they are familiar.

Increase in Consumer evaluation processes

32Factors affecting Consumer involvement Previous experience: low level involvement Interest: high involvement Perceived risk of negative consequences: high involvement Situation: low to high due to risk Social visibility: involvement increases with product visibility Offer extensive information on high involvement products In-store promotion & placement is important for low involvement products Linking low-involvement product to high-involvement issue can increase sales

So33Buying ProcessCognitive dissonance: post-purchase tension .Stage 5Post-PurchaseBehavior

Postpurchase BehaviorCan minimize through:Effective CommunicationFollow-upGuaranteesWarrantiesUnderpromise & overdeliverMarketingCognitive Dissonance?Did I make a good decision?

Did I buy the right product?

Did I get a good value?35

Sour Grapes a story of cognitive dissonanceafter being unable to reach the grapes the fox said, these grapes are probably sour, and if I had them I would not eat them. --Aesop36Post Purchase BehaviorProduct Experience

ActualBenefitsActualExpectationsSatisfiedDissatisfiedGapSize37Post Purchase Behavior Principle: Dissatisfied customers communicate more negative word of mouth than satisfied customers communicating positive word of mouth

38Post Purchase BehaviorCognitive Dissonance

Did I Do the Right Thing?

Lack of confidence (doubts) about the correctness of a prior purchase decision and efforts to reconcile doubts398-12Copyright 2000 by Houghton Mifflin Company. All rights reserved.

Cognitive DissonanceCauses: Perceived Risk Performance risk Physical risk (wear-out) High financial commitment High involvement level High social visibility Information Overload

40Cognitive DissonancePotential ReactionsReturn productSeek confirming informationMarketing TacticProvide post decision positive information41