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Chapter 4

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Business Administration
BUS 343
Jason Ho

CHAPTER 4- Consumer behavior Objective: -will look at the customer decision-making process and the multitude of factors that influence those choices - show how understanding consumer boosts ROI -help markets to figure out the best way to win customers by meeting their needs The Consumer Decision-Making Process( see figure 4.1 pg.122) Consumer Behavior: The process involved when individuals or groups select, purchase, use and dispose of goods, services, ideas or experience to satisfy their needs and desires.* its an ongoing process  They need to know how and when consumer consume their products  Understand the many factors that influence each of these steps in the consumer behavior process- internal factors to each of us, situational factors at the time of purchase and the social influence of people around us. Not all Decisions are the same  Depends on the importance of what they are buying and how much effort they choose to put into the decision(see figure 4.2 pg.122): 1-habitual decision making: make little or no conscious effort 2-extended problem solving : go through steps- high effort 2-limited problem sovling: somewhere in the middle – some effort Involvement: The relative importance of perceived consequences of the purchase to a consumer. Perceived risk : The belief that choice of product has potentially negative consequences, whether potentially negative consequences, whether financial physical , and/or social. See figure 4.3 pg.124 Step 1: Problem recognition: the process that occurs whenever the consumer sees a significant differences between his current state of affairs and some desired or ideal stat; this recognition initiates the decision-making process. Step 2: Information search: the process whereby a consumer searches for appropriate information to make a reasonable decision.  The internet as a search tool Search marketing: marketing that involve the use of internet search engines Search engine optimization(SEO): a systematic process of ensuring that you firm comes up at or near the top of lists of typical search phrases related to you business. Search Engine Marketing(SEM): Search marketing strategy in which marketers pay for ads or better positioning Sponsored search ads:Paid ads that appear at the top or beside the internet search engine results Comparison shopping agents(shopbots): Web applications that help online shoppers find what they are looking for at the lowest price and provide customer reviews and ratings for products and sellers.  Behavioral targeting: The Marketing practice by which marketers deliver advertisements for products a consumer is looking for by watching what the consumer does online. Step 3: Evaluation of alternatives Two components: 1-consumer armed with info identifies a small number of products in which he is interested 2- he narrows down his choices by first deciding which of the possibilities are feasible and then comparing the pros and cons of each remaining option. Evaluative criteria: The dimensions consumers use to compare competing product alternatives. Step 4: Product Choices Heuristics: Metal rules of thumb that leads to a speedy decision by simplifying the process  Brand loyalty: A pattern of repeat product purchases, accompanied by an underlying positive attitude toward the brand , based on the belief that the brand makes products superior to those of its competition  Country-of-origin : we assume that a product has certain characteristics if it comes from a certain country Step 5: Post purchase Evaluation  Consumer satisfaction/dissatisfaction: the overall feelings, or attitude , a person has about a product after she purchases it  Cognitive dissonance: the anxiety or regret a consumer may feel after choosing from among several similar attractive choices  Influence in consumers’ lives affect this process (figure 4.4 pg.128): 3 main categories: 1. Internal factors like connection between name and image 2. Situational factors such as salesperson treatment 3. Social influences such as prediction that his friends will be impressed Internal Influences on Consumers’ Decision:  Perception :the process by which people select, organize and interpret information from the outside world. 1. Exposure: the extent to which a stimulus is capable of being registerd bya person’s sensory receptors.* in other words physically able to see, hear.. Subliminal advertising: supposedly hidden messages in marketer’s communication Consideration set: The set of alternatives brands the consumer is considering for the decision process. 2. Evaluation of alternatives Clickstream analysis: a means of measuring a web site’s success by tracking customers’ movement around the site. 3. Attention: the extent to which a person devotes mental processing to a particular stimulus.* consumers are more likely to pay attention to messages that speak to their current needs. 4. Interpretation: The process of assigning meaning to a stimulus based on prior associations a person has with it and assumptions he or she makes about it. 5. Motivation: an internal state that drives us to satisfy needs by activating goal-oriented behavior stimulus. Hierarch of needs: an approach that categorizes motives according to five levels of importance, the more basic needs being on the bottom of the hierarchy and the higher needs at the top. (see figure 4.5 pg.131)* firs must meet the lower level needs  Learning: a relatively permanent change in behavior caused by acquired information or experience.*marketers teach consumers to prefer their products 1. Behavioral learning theories:Theories of learning that focus on ho
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