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Chapter 5

ADM2320 Chapter 5

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Department
Administration
Course
ADM2320
Professor
Marzena Cedzynski
Semester
Fall

Description
ADM2320 Chapter 5 Consumer Behaviour Consumer Behaviour  Use principles and theories from sociology, anthropology and psychology  Understand consumer actions  Develop basic strategies to deal with those actions  Understand why people buy products or services The Consumer Decision Process Step 1: Need Recognition  Need recognition: The beginning of the consumer decision process; occurs when consumers recognize they have an unsatisfied need and want to go from their actual, needy state to a different, desired state.  Functional needs: Pertain to the performance of a product or service  Psychological needs: Pertain to the personal gratification consumers associate with a product or service. Step 2: Information Search  Length and intensity of the search are based on: o Degree of perceived risk associated with purchasing the product o Importance of the product to the consumer  Internal search for information: Occurs when the buyer examines his or her own memory and knowledge about the product or service, gathered through past experiences.  External search for information: Occurs when the buyer seeks information outside his or her personal knowledge base to help make the buying decision.  Factors Affecting Consumers’ Search Process o The perceived benefits versus perceived costs of search.  AKA: Is it worth it to research the product first? o The locus of control: refers to when consumers believe they have some control over the outcomes of their actions, in which case they generally engage in more search activities.  External locus of control: refers to when consumers believe that fate or other external factors control all outcomes.  AKA: If you can influence the outcome. (Bargain)  Actual versus perceived risk o Performance risk: involves the perceived danger inherent in a poorly performing product or service. o Financial risk: risk associated with a monetary outlay; includes the initial cost of the purchase, as well as the cost of using the item or service. o Social risk: involves the fears that consumers suffer when they worry others might not regard their purchases positively. o Physiological risk: Risk associated with the fear of an actual harm should the product not perform properly. o Psychological risk: Associated with the way people will feel if the product or service foes not convey the right image.  Type of product or service o Specialty goods/services: Products or services toward which the customer shows a strong preference and for which he or she will expend considerable effort to search for the best suppliers. o Shopping good/services: Products or services, such as apparel, fragrances, and appliances, for which consumers will spend time comparing alternatives. o Convenience goods/services: products or services for which the consumer is not willing to spend any effort to evaluate prior to purchase. Step 3: Alternative Evaluation  Evaluation criteria: Consists of a set of salient, or important, attributes about a particular product that are used to compare alternative products.  Determinant attributes: Product or service features that are important to the buyer and on which competing brands or stores are perceived to differ.  Consumer decision rules: the set of criteria consumers use consciously or subconsciously to quickly and efficiently select from among several alternatives.  Compensation o Compensatory decision rule: Is at work when the consumer is evaluating alternatives and trade offs one characteristic against another, such that good characteristics compensate for the bad ones.  Noncompensatory o Noncompensatory decision rule: is at work when consumers choose a product or service on the basis of a subset of its characteristics, regardless of the values of its other attributes.  Decision Heuristics o Decision heuristics: Mental shortcuts that help consumers narrow down choices; examples include price, brand, and product presentation. o Price: consumers can choose the more expensive option, thinking they are getting better quality along with the higher price. o Brand: Always buying brand name goods allows some consumers to feel safe with their choices. o Product presentation: many times, the manner in which a product is presented can influence the decision process.  The extent of alternative evaluation depends on several factors o Such as the types of products, services, the importance of the purchase, the perceived risks, and the expressive value of the purchase. Step 4: Purchase Decision  Value is a strong driver of consumers’ purchase decisions.  Consumers seek out and purchase the products or services that they believe provide them with the best value.  Ritual consumption: Refers to a pattern of behaviours tied to life events that affect what and how people consume. Step 5: Postpurchase  Marketers are particularly interested in postpurchase behaviour because it entails actual, rather than potential, customers.  Three possible postpurchase outcomes: o Customer satisfaction  Build realistic expectations  Demonstrate correct product use  Stand behind the product or service (money-back guarantee)  Encourage customer feedback o Postpurchase dissonance  An internal conflict that arises from an inconsistency between
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