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Management and Organizational Studies
Management and Organizational Studies 1021A/B

Consumer behaviour: is the actions a person takes when purchasing & using products & service Purchase decision process: the stages that a consumer passes through when making choices abt which products and services to buy. 5-stages: 1. Problem recognition is the initial step in the purchase decision, occurs when a person realizes that the difference between what he or she has & what he or she would like to have is big enough to actually do sth abt it. In marketing, advertisements or salespeople can activate a consumer’s decision process by showing the shortcomings of a consumer’s cellphone and the advantages of owning a smartphone. 2. Info search  1 , internal search: they scan their memory for knowledge of or previous experiences w/ products or brands 2 , external search; this is especially needed when one does NOT have much past experience or knowledge, the risk of making a bad decision is high, and the level of interest in the product is high. The primary sources of external infoPersonal sources: e.g., relatives & friends who the consumer trusts; Public sources: e.g., Google searches on the internet, including various product-rating organizations such as Consumer reports or government agencies Marketer-dominated source: e.g., info from sellers that include advertising, company websites, salespeople, and point-of-purchase displays in stores. Internet is one of the primary info-gathering and search tools used by Canadian consumers. Consumers are relying on social media for info on products & are paying attention to what others are saying abt various brands on these social media sites 3. Alternative evaluation evaluative criteria, which represent both the objective attributes of a brand and the subjective ones you use to compare different products and brands. This criteria determine the brands in your evoked set-the group of brands that a consumer would consider acceptable from among all the brands in the product class of which he is aware 4. Purchase decision • Effects of technology on purchases behaviour  Internet is making it much more convenient to purchase certain products and services. E.g., purchasing vacation but not a travel agent. 5. Post-purchase behaviour after buying a product, the consumer compares it w/ his expectations and is either satisfied or dissatisfied. • Satisfied buyer tell 3 other ppl abt their experience • Dissatisfied buyer tell 9 ppl Consumers who are NOT finding satisfaction when a problem occurs are starting to take thins into their own hands  internet. ' Cognitive dissonance: feeling of post-purchase psychological tension or anxiety. To alleviate it, consumers often attempt to applaud themselves for making the right choice. (e.g., choose buy BlackBerry, you may think should I buy iPhone?) So, after purchase, you may seek info to conrim your choice by asking friends Q like “what do you think of my new BlackBerry?” OR look for negative features abt the brand you didn’t buy. Involvement and problem-solving variation Consumers don’t engage in the 5-step purchase decision process, instead they skip or minimize one or more steps depending on the level of involvement. Involvement a consumer has in a particular purchase depends on the personal, social, and economic consequences of that purchase to the consumer. • Soft drink OR toothpaste low level of involvement for consumers that they may skip or minimize 1 or more steps in the process • High-involvement purchase have 3 characteristics: 1) Purchased is expensive 2) It is bought infrequently 3) Could reflect on one’s social image. For these, consumers engage in extensive info search, consider many product attributes and brands form attitudes and participate in word-of-mouth communication. Marketers who sell high-involvement products (car, home, and computers) must understand the info-gathering & evaluation process of consumers. ▯ Routine Problem Solving Typically the case for low-priced, frequently purchased products. (Product such as table salt and milk, consumers recognizes a problem, make a decision and spend little effort seeking external info and evaluating alternatives.) ▯ Limited Problem Solving characterized by low consumer involvement BUT significant perceived differences among brands. (consumer rely on past experience more than external info BUT they pay attention to new carieties shown in advertising and point-of-purchase displays.) Consumers might use limited problem solving when choosing a pair of jeans, deciding on a restaurant for dinner, and making other purchase estuations in which they have little time or effort to spend researching options. ▯ Extended Problem Solving exists in high-involvement purchase situations for items such as automobiles, houses, and financial investments. Low  Consumer Involvement  High Situational influence 5 situational influences have an impact on your purchase decision process: 1. The purchase task is the reason for engaging in the decision in the first place. Info searching and evaluating alternatives may differ depending on whether the purchase is a gift, which often involves social visibility, or for the buyer’s own use. (e.g., some consumers may be frugal shoppers when it comes to purchasing products for themselves, BUT may spend lavishly if the product is a gift for a friend.) 2. Social surroundings including the other ppl present when a purchase decision is made, may also affect what is purchase. E.g., 2 women shop together spend more time in the store shopping 3. Physical surroundings such as décor, music and crowding in retail stores may alter how purchase decisions are made. Crowding is a 2-edged sword. E.g.,Apple. 4. Temporal effects such as time of day or the amount of time available will influence where consumers have breakfast and lunch and what is ordered. 5. Antecedent states include the consumer’s mood or the amount of cash on hand, can influence purchase behaviour and choice. (e.g., a consumer who procrastinates buying a gift may choose one in a hurried state but may regret the purchase. If that consumer did NOT wait to the last moment, a more satisfying product may have been purchased instead) Psychological influences on consumer behaviour • Motivation and Personality  Motivation is the energizing force that stimulates behaviour to satisfy a need. st  Ppl take care of their lower-level needs 1 and then are motivated to satisfy their higher-level needs 1) Physiological needs are basic to survival and must be satisfied 1 2) Safety needs involve self-preservation and physical well-being 3) Social needs are concerned w/ love and friendship 4) Esteem needs are represented by the need for achievement, status, prestige, and self-respect. Self-actualization needs involve personal fulfillment. 5)  Personality refers to a person’s character traits that influence behavioural responses  Personality characteristics are often revealed in a person’s self-concept, which is the way ppl see themselves and the way they believe other see them  Men are becoming more concerned abt their self-concept when it comes to body image and grooming. • Perception an individual selects, organizes, and interprets info to create a meaningful pic of the world  Selective perception the avg. consumer operates in a complex, info-rich environment. The human brain organizes and interprets all this info w/ a process called selective perception, which filters the info so that ONLY some of it is understood or remembered or even available to the conscious mind.  Selective exposure: occurs when ppl pay attention to msg that are consistent w/ their attitudes and beliefs and ignore meg that are inconsistent. Selective exposure often occurs in post-purchase stage of the consumer decision process, wen consumers read advertisements for the brand they just bought.  Selective comprehension: involves interpreting info so that it is consistent w/ your attitudes and beliefs.  Selective retention: means that consumers do NOT remember all the info they see, read, or hear, even minutes after exposure to it. This affects the internal and external info search stage of the purchase decision process.  Perceived Risk represents the anxieties felt b/c the consumer CANNOT anticipate the outcomes of a purchase BUT believes that there may be negative consequences. The greater the perceived risk, the more extensive the external search is likely to be. Examples & Strategies that make consumers feel more at ease abt their purchases ­ Obtaining seals of approval ­ Securing endorsements from influential ppl ­ Providing free trials of the product ­ Providing illustrations ­ Providing warranties and guarantees • Learning refers to those behaviours that result from repeated experience and reasoning.  Behavioural Learning is the process of developing automatic responses to a type of situation built up through repeated exposure to it. 4 variables are central to how one learns from repeated experience: 1. Drive is a need, such as hunger, that moves an individual to action 2. Cue is a stimulus or symbol that one perceives 3. Response is the action taken to satisfy the drive 4. Reinforcement is the reward  Marketers use 2 concepts form behavioural learning theory 1) Stimulus generalization: occurs when a response brought abt by 1 stimulus (cue) is generalized to another stimulus. (Using the same brand name to launch new products is one common application of this concept) 2) Stimulus discrimination: refers to one’s ability to perceive differences among similar products. Consumers may do this easily w/ some groups of products, such as automobiles. (low-involvement purchases, advertisers work to point out the differences.)  Cognitive Learning learn without direct experience-through thinking, reasoning and mental problem solving, involves making connections between 2 or more ideas or simply observing the outcomes of others’ behaviours and adjusting your own accordingly. Firms also influence this type of learning.  Brand Loyalty is a favourable attitude toward and consistent purchase of a single brand over time. Brand loyalty results from positive reinforcement. If a consumer is satisfied w/ a product, he reduces his risk and saves time by consistently purchasing that same brand • Value, Beliefs, andAttitudes  Attitude Formation  Attitude: is a “learned predisposition to respond to an object or class of objects in a consistently favourable or unfavourable way.” Attitudes are shaped by our values and beliefs, which we develop in the process of growing up. Personal values affect attitudes by influencing the importance assigned to specific product attributes, or features. Beliefs: one’s perception of how a product or brand performs on different  attributes. Beliefs are based on personal experience, advertising, and discussions w/ other ppl. Beliefs abt product attributes are important b/c along w/ personal value, they create the favourable or unfavorable attitude the consumer has toward certain products and services.  Attitude Change marketers use 3 approaches to try to change consumer attitudes toward products and brands 1. Changing belief abt the extent to which a brand has certain attributes 2. Changing the perceived importance of attributes 3. Adding new attributes to the product, • Lifestyle is a way of living that is identified by how ppl spend their time and resources (activities), what they consider important in their environment (interests), and what they think of themselves and the world around them (opinions). The analysis of consumer lifestyles called psychographics. Social-Cultural Influences on Consumer Behaviour Social-cultural influences, which evolve from a consumer’s formal and informal relationships w/ other ppl, also have an impact on consumer behaviour. These include personal influence, reference groups, family, culture, and subculture. • Personal influence  Opinion Leadership individuals who have social influence over others.  Opinion leaders are more likely to be important for products that provide a form of self-expression.  Automobiles, clothing, and club memberships are products affected by opinion leaders, BUT appliances usually are NOT. Word of mouth ppl influencing each other during conversations   Word of mouth is perhaps the most powerful info source for consumers, b/c it typically involves friends or family who are viewed as trustworthy.  The power of personal influence has prompted firms to make efforts to increase positive and decrease negative word of mouth.  The power of word of mouth has been magnified by the Internet. The online version of word of mouth is called VIRAL MARKETING • Reference Groups is a group of ppl who influence a person’s attitudes, values, and behaviour.  Membership group: one to which a person actually belongs, including fraternities and sororities, social clubs, and the family. Such group are easily identifiable and are targeted by firms selling insurance, insignia products, and vacation packages  Aspiration group: one that a person wishes to be a member of or wishes to be identified w/. an example is a person whose dream it is to play in the NHL/ Brands such as Gatorade and Nike frequently rely on spokespeople or settings associated w/ their target market’s aspiration group in their advertising. Dissociative group: one that a person wishes to maintain a distance from b/c of  differences in values or behaviour • Family influence family influences on consumer behaviour result from 3 resources: 1. Consumer Socialization: the process by which ppl acquire the skills, knowledge, and attitudes necessary to function as consumers is consumer socialization 2. Family life cycle: consumers act and purchase differently as they go through life. The family life cycle concept describes the distinct phases that a family progresses through from formation to retirement, each phase bringing w/ it identifiable purchasing behaviours. 3. Family decision-making: 2 decision-making styles : a) Spouse-dominant are those for which either the husband or the wife ahs more influence in the purchase decision. b) Joint decision-making most decisions are made by both husband & wife. Joint decision-making increases w/ the education of the spouses. Roles of individual family members in the purchase process are another element of family decision-making. 5 roles exist: i. Information gatherer ii. Influencer iii. Decision maker iv. Purchaser v. User Family members assume different roles for different products and services. • Culture and subculture  Culture: the set of values, ideas, and attitudes that are learned and shared among the members of a group  Subcultures: subgroups within the larger, or national, culture w/ unique values, ideas, and attitudes.  Subcultures can be defined by regions, by demographic groups, or by values.  The most prominent types of subcultures are racial and ethnic and many of these exist within the Canadian mosaic of ppl  French-Canadian Subculture  Chinese-Canadian Subculture • Global Cultural diversity Cross-cultural analysis: which involves the study of similarities and differences among consumers in 2 or more nations or societies  Values represent socially preferable modes of conduct or states of existence that tend to persist over time. Customs are what is considered normal and expected abt the way ppl do things in  a specific country or culture. Customers are significantly from country to country.  Cultural Symbols are objects, ideas, or processes that represent a particular group of ppl or society. Symbols and symbolism play an important role in cross-cultural analysis b/c different cultures attach different meanings to things.  Language English, French, and Spanish are the principal languages used in global diplomacy and commerce. BUT the best language w/ which to communicate w/ consumers is their own.  Experienced global market use BACK TRANSLATION, where a translated word or phase is retranslated back into the original language by a different interpreter to catch error.  E.g., Kit Kat Japanese “Kitto Katsu,” which mean I will win. Info presents itself to companies in 2 ways 1. Amarketing info system 2. Market research studies Many companies have a marketing info system(MIS), which is a set of procedures and processes for collecting, sorting, analyzing and summarizing info on an ongoing basic. MIS collects information on elements such as: market conditions, competitive marketing actions, and local sales figures, and then analyzes it to provide a current market assessment. What is market research? Market research is defined as the process of planning, collecting, and analyzing info in order to recommend actions to improve marketing activities. It provides managers w/ facts that can be used to make sound decisions. Market researchers use methodical approaches to ensure that research results are as accurate and cost efficient as possible. Research Classification Market research provides marketers w/ info that can be used in different ways. Market research can help identify consumer needs, assess future opportunities, evaluate new ideas, and determine purchase intent. Market research is a tool that clarifies marketing problems and opportunities and provides info for marketing decision-making. Market research can be classified in to 3 basic areas: 1) Exploratory research preliminary research that clarifies the scope and nature of a marketing problem. It provides researchers w/ a better understanding of the dimensions of the marketing problem B4 focusing on areas that require further research It also provides research projects w/ clear direction and identifies where biz problems and opportunities may lie. It often conducted w/ the expectation that subsequent & more conclusive research will follow. 2) Descriptive research research designed to describe the basic characteristics of given population or to clarify its usage and attitudes Descriptive research the researcher has a general understanding of the marketing problem and is seeking more conclusive data that answers particular Q. Magazines, radio stations, and television stations almost always conduct descriptive research to identify the characteristics of their audiences in order to present it to prospective advertisers. 3) Causal research research designed to identify cause-and-effect relationships among variables Exploratory and Descriptive research precedes causal research. W/ causal research there is usually an expectation abt the relationship to be explained, such as predicting the influence of a price change on product demand. Causal research studies examine elements such as the effect of advertising on sales, the relationship between price and perceived product quality, and the impact of package design on sales. The 6-steps market research approach st • Step 1: Define the problem/issue/opportunity the 1 step in the market research process is to clearly define the problem, issue, or opportunity, and to clarify the objectives If objectives are too broad the problem may NOT be tangible If objectives are too narrow the value of the research may be questionable Objectives: are specific, measurable goals that the decision maker seeks to achieve. Common research objectives are to discover consumer needs and wants, and to determine why a product is not selling. • Step 2: Design the research plan is to identify which approach will be taken to complete the project. This include identifying what info is needed, how it will be collected, and whether a sampling plan is needed  Info requirements  Collection methods: in order to collect data in an organized fashion, it is important to have a data collection plan. There are mathematical considerations and operational issues that the researcher must consider. Researchers can purchase data from a pre-existing study, or conduct their own research using a variety of data-collection methods such as in-depth personal interviews, focus groups, telephone surveys, central location surveys, personal questionnaires, or mail surveys. The internet also provides numerous online tools that facilitate the gathering of info.  Sampling: is the process of gathering data from a subset of the total population, rather that from all members of that particular group A properly selected sample should be representative of the population being researched, HOWEVER, sampling errors can occur, and thus the reliability of the data is sometimes an issue. There are 2 basic sampling techniques: 1. Probability sampling involves precise rules to select the sample so that each element of the population has a specific known chance of being selected 2. Non-probability sampling involves the use of arbitrary judgment by the market researcher to select a sample so that the chance of selecting a particular element of the population is either unknown or 0 The research may decide to follow this non-probability sampling approach in the interest of time and to maintain costs. In fact, non-probability samples are often used when time and budgets are limited, OR for exploratory research purposes when conclusions are mostly directional and may require further research. • Step 3: Conduct exploratory and qualitative research if researchers decide to conduct exploratory research, they have 2 avenues from which to glean data: 1 avenue: is to collect exploratory secondary data, which is already available  through internal company documents or external online and offline published reports nd  2 avenue: researchers creating their own data, exploratory primary data, through options such as focus groups, in-depth interviews, online communities online bulletin boards, and social listening research.  Qualitative research focus group research, in-depth interviews, online communities, online bulletin boards, and social listening are forms of research.  Qualitative research provides insightful and directional info to the researcher, w/ the understanding that although the data is NOT gleaned from a large consumer base, it provides useful direction to the research study and may in fact thoroughly answer the Q’s at hand.  Qualitative research may NOT be enough to draw firm conclusions and will be used instead to provide insights and direction for a more detailed quantitative research study.  Secondary Data: secondary data can help illuminate further data requirements. Disadvantages: Secondary data may be out of date and the definitions OR categories may NOT be right for the project and the data may not be accurate or specific enough for the study 1. Internal data exists within a company and includes data such as sales reports, profitability data, and costing info 2. External data comes from published sources outside the organization  Primary data: is data that is original and specifically collected for the project at hand Secondary data is lower in cost and easier to obtain than primary data. ­ Focus groups are an informal interview session in which 6~10 ppl are brought together in a room w/ a moderator to discuss topics surrounding the market research problem. ­ In-depth interviews (another exploratory research technique used to obtain primary data involves the use of in-depth interviews) detailed individual interviews where the researcher discusses topics w/ an individual at length in
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