BUS 343 Chapter Notes - Chapter 5: Brand Loyalty, Cognitive Dissonance, Customer Relationship Management

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Published on 25 May 2011
School
Simon Fraser University
Department
Business Administration
Course
BUS 343
Professor
Chapter 5: Consumer Buying
Behaviour
Understanding Customers
Consumer behaviour is the process individuals or groups go through to select,
purchase, and use goods, services, ideas, or experiences
Purchasing process problem recognition, information search, evaluation of alternatives,
product choice, and post-purchase evaluation
Researchers have found it convenient to think in terms of an effort continuum
oAnchored on one end is habitual decision making and the other end by extended
problem solving
oFall in the middle means limited problem solving
Involvement determines the extent of effort a person puts into deciding what to buy
oImportance of the perceived consequences of the purchase to the person
We are more involved in the decision-making process for products that we perceive as
being important, pleasurable, or risky in some way
oPerceived risk may be present if the product is expensive, complex, and hard to
understand, or if the purchase of the wrong product could result in
embarrassment or social rejection
If perceived risk is low, consumer feels low involvement in the decision making
oThen the manager has to concentrate on how products are displayed at the time
or purchase to influence the decision maker
Products are not inherently high or low involvement, but the level of involvement
engaged by a consumer is often associated with price, importance, and perceived risk of
the purchase decision
Problem Recognition
Occurs whenever the consumer sees a significant different between their current state of
affairs and some desired or ideal state
Consumer needs to solve a problem, which may be small or large, simple or complex
Although most problem recognition occurs spontaneously, marketers can develop
creative advertising messages that stimulate consumers to recognize their current state
Information Search
Information search the process whereby a consumer searches for appropriate
information needed to make a reasonable decision
Marketing communication helps consumers in this task, and many advertisements are
focused on generating awareness about brands
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Role of marketers during the information search phase of the decision process is to
make sure that information about their brand is available when and where consumers
look
Consideration set the set of alternative brands the consumer is considering for the
decision process
Evaluation of Alternatives
Evaluative criteria the dimensions that consumers use to compare competing product
alternatives
Marketers often play a role in educating consumers about which product characteristics
should be used as evaluative criteria
oUsually emphasize the dimensions in which their product excels
Product Choice
Heuristics a mental rule of thumb that leads to a speedy decision by simplifying the
process
Consumers are brand loyal when they make repeat brand purchases
Brand loyalty a pattern of repeat product purchases, accompanied by an underlying
positive attitude toward the brand, which is based on the belief that the brand makes
products superior to its competition
Loyal customers are very valuable
Many companies are now employing customer relationship management strategies to
help them organize and manage their relationship with their customers
oHelps companies target their best customers and form ongoing relationships with
them in the hope of increasing loyalty and improving customer satisfaction
Post-Purchase Evaluation
Cognitive dissonance the regret or remorse buyers may feel after making a purchase
Cognitive dissonance is greatest when decisions are important and there are other viable
brands in the consideration set
Marketers try to reduce or minimize cognitive dissonance through marketing
communication strategies that reaffirm consumers in what a good decision they made
Customer satisfaction/dissatisfaction the overall feelings or attitude a person has
about a product after purchasing it
When consumers buy a product, they have some expectations of product quality
Consumers assess product quality by comparing what they have bought to a
performance standard created by a mixture of information from marketing
communications, informal information sources, and their own experience with the
product category
Stage in the Decision
Process
Marketing Strategy
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Problem Recognition Encourage consumers to see that existing state doesnt equal
desired state
Information Search Provide information and where consumers are likely to search
Evaluation of AlternativesUnderstand the criteria consumers use in comparing brands and
communicate own brand superiority
Product Choice Understand choice heuristics used by consumers and provide
communication that encourages brand decisions
Post-Purchase Evaluation Encourage accurate consumer expectations
Decision RuleMarketing Implications
CompensatorySimple Additive: Sum the scores of
each brand rating on each attribute,
choose the brand with the highest
overall score
Develop brands with strong overall
value
Help consumers compare brands to
make the overall value choice
Weighted Additive: Give weights to
each criteria, for each brand
multiply the rating and the weight,
sum the scores and choose the
brand with the highest overall score
Understand the criteria weights and
design products that excel on those
criteria. Position your product on
key criteria.
Try to change the weights of criteria
to make them more or less
important in the minds of customers
such as Intel did with the Intel
Inside campaign
Non-
Compensatory
Lexicographic: Rank the decision
criteria; evaluate the brands on the
most important criteria. Choose the
brand with the highest rating on the
most important criteria. If there is a
tie, go on to the next most important
criteria until a brand is chosen
Understand the top three or four
most important criteria for your
target market and continuously
innovate to lead on those criteria. If
you are not the leader, try to change
consumer attitudes about the
importance of the criteria or try to
get them to adopt a different
evaluative strategy
Elimination by Aspects: Rank the
decision criteria, and determine
minimal acceptable levels for each
criterion. Keep in the evoked set
brands that meet the minimum level
of the most important criteria. Go
on to the next most important
criteria until there is one brand in
the consideration set and choose
that brand
Understand the most important
criteria for your target market and
continuously innovate to be close to
the leaders on the top criterion. Try
to establish a criterion in the minds
of consumers where your
competitors are not able to compete
effectively. Demonstrate that your
brand exceeds typical minimum
standards on key criteria
Conjunctive: Determine minimal
acceptable levels for each criterion.
Keep in your evoked set brands that
meet or exceed the minimal level on
Understand the criteria and
minimum levels. Continuously
innovate to meet minimum levels on
all criteria. Innovate to develop
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Document Summary

Encourage consumers to see that existing state doesn"t equal desired state. Provide information and where consumers are likely to search. Understand the criteria consumers use in comparing brands and communicate own brand superiority. Understand choice heuristics used by consumers and provide communication that encourages brand decisions. Simple additive: sum the scores of each brand rating on each attribute, choose the brand with the highest overall score. Weighted additive: give weights to each criteria, for each brand multiply the rating and the weight, sum the scores and choose the brand with the highest overall score. Lexicographic: rank the decision criteria; evaluate the brands on the most important criteria. Choose the brand with the highest rating on the most important criteria. If there is a tie, go on to the next most important criteria until a brand is chosen. Elimination by aspects: rank the decision criteria, and determine minimal acceptable levels for each criterion.