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Chapter 5

Management and Organizational Studies 2320A/B Chapter 5: Chapter 5 Notes.docx

Management and Organizational Studies
Course Code
MOS 2320A/B

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Chapter 5 Notes
Consumer Behaviour
Chapter Roadmap
The Consumer Decision Process
1. Need Recognition
oConsumers recognize they have an unsatisfied need AND want to go from that needy state to a different,
desired state
oThe greater the difference between the unsatisfied need and the desired state, the greater the need
recognition will be
oIf you’re a little hungry (unsatisfied need) and you want to be full (desired state) you may decide to just
eat later. But if your stomach is growling and you can’t concentrate, the need (difference between your
actual (hungry) state and your desired (not hungry) state) is greater, you’ll want to eat immediately
oConsumer needs can be classified as function and psychological
Pertain to the performance of a product
Pertain to the personal gratification consumers associate with a product or service
Shoes provide a functional need (keep feet clean and protected) but people will buy shoes
for $1500 that do neither because they’re satisfying their psychological need
In a way lots of products are likely to satisfy both functional and psychological needs
oIt all depends on what you value – you can get a haircut for $15 at the corner or for $80 at a salon for the
same haircut. Are they objectively different? The answer varies depending on what you value more – a
good deal or extra amenities?
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2. Information Search
oSearch for information about the various options that exist to satisfy that need
oThe riskier the purchase, the longer this step takes
oTwo types of information; internal and external:
Buyer examines his or her own memory and knowledge about the product or service,
gathered through past experiences
Buyer seeks information outside his or her personal knowledge base to help make the
buying decision
oFactors that affect the search process:
Perceived benefits versus perceived costs of search
Is it worth the time and effort to search for information about a product?
Buying a car, its worth it to shop around, buying a toy car, its not worth it to shop around
The locus of control
Internal locus of control – believe they have control over outcomes and so they engage in
more search activity
External locus of control – believe they aren’t in control (what’s the point in spending time
Actual or perceived risk
5 types of risk that can delay or discourage purchase performance. The higher the risk, the
more likely the consumer is to engage in an extended search
Perceived danger in a poorly performing product (getting a sport car and it
doesn’t turn on)
The monetary risk associated with the purchase (initial cost of product plus
additional costs associated – i.e. if you get in an accident)
Risk that other people might not perceive their purchase as a positive one
What other people think
(safety risk) fear of an actual harm should the product not perform correctly
performance risk is just that the brakes might not work, safety risk is that
you might die because the brakes might not work
Associated with the way people will feel if the product does not convey the
right image
Type of product or service
The type of product affects the depth and type of search carried out
Specialty goods
oCustomer shows a strong preference to, and will expend a considerable effort to
search for the best suppliers
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