Consumer+Psychology+Individual+Assignment REFLECTIVE PAPER

Halifax

Unit2Slides-ConsumerPsychologyFundamentals.ppt

Home >Psychology homework help >Consumer+Psychology+Individual+Assignment REFLECTIVE PAPER

6-*

Consumer Psychology

Jansson-Boyd, Cathrine (2010); “Consumer Psychology”, Open University Press, McGraw Hill

6-*

GSAS 269 Consumer Psychology

Unit 2
Consumer Psychology
Fundamentals

Unit 1: Learning Objectives

Understand the consumer market and the major factors that influence consumer buyer behaviour.

Identify and discuss the stages in the buyer decision process.

Describe the adoption process for new products.

Define the business market and identify the major factors that influence business buyer behaviour.

List and define the steps in the business buying decision process.

Outlines learning objectives from this chapter.

Consumer Markets and Buyer Behaviour

Consumer Behaviour

Individuals and households buying goods and services

Goal

Create marketing programs which trigger desired behaviour

Consumer
Market

How do consumers respond to various marketing efforts the company might use?

LO 1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

- Consumer buyer behaviour: The buying behaviour of final consumers—individuals and households that buy goods and services for personal consumption

- Consumer market: All the individuals and households that buy or acquire goods and services for personal consumption

- The central question for marketers is:

- How do consumers respond to various marketing efforts the company might use?

Consumer Buyer Behaviour

Characteristics Affecting Consumer Behaviour:

LO 1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

- For the most part, marketers cannot control such factors, but they must take them into account

Consumer Buyer Behaviour

Basic trigger of wants & behaviour

Deeply entrenched but when changed – creates opportunity

Shared value systems within groups (E.g. Teenagers, College Students)
Regional, Demographic, Ethnographic
Cultural Marketing

Divisions based primarily on socio-economic status
Combination of occupation, income, education, wealth, and other variables

reflects basic values, perceptions,
wants, and behaviours

people with shared value systems
based on common life experiences

LO 1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

- Culture: Basic trigger of a person’s wants & behaviour

- It is learned from family, church, school, peers, colleagues

- Culture reflects basic values, perceptions, wants, and behaviours

- Cultural shifts create opportunities for new products or may otherwise influence consumer behaviour

- Subculture: Groups of people with shared value systems based on common life experiences

- Major subculture groups:

- Regional subcultures

- Founding nations

- Ethnic subcultures

- Mature consumers

Consumer Buying behaviour

Membership, reference, and aspirational groups vary in how they influence
Word-of-mouth influence/opinion leaders

Household “power-broker(s)” influence buying behaviour (parents, children)

Role = Expected activities (behavior)
Status = Esteem given to role by society

Marketers attempt to reach opinion leaders, people who exert social influence on others

Children have strong influence on
family buying decisions

LO 1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

- Groups and social networks:

- Membership, reference, and aspirational groups

- Marketers attempt to reach opinion leaders, people who exert social influence on others

- Opinion leaders are recruited as brand ambassadors or for buzz marketing

- Online social networks allow marketers to interact with consumers

- Family:

- Strongly influences buying behaviour

- Gender stereotypes for certain types of purchases are changing

- Children have strong influence on family buying decisions

- Roles and status:

- Role = Expected activities

- Status = Esteem given to role by society

Personal Factors

Needs for different products change
Job affects the products & services bought
Personal finances affects buying choices
People buy the lifestyles products represent
Self-concept theory suggests possessions contribute to and reflect personal identities

LO 1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

- Age/life-cycle stage: People change the goods they buy over their lifetimes

- Occupation: Occupation affects the goods and services bought

- Economic situation: A person’s economic situation affects store and product choices

- People within the same subculture, social class, and occupation may have different lifestyles

- Lifestyle: Pattern of living as expressed in his or her activities, interests, opinions

- People buy the values and lifestyles products represent

- Personality: The unique psychological characteristics that distinguish a person or group

- Generally defined in terms of traits

- Self-concept theory suggests that people’s possessions contribute to and reflect their identities

- Brands may also have personalities

Psychological Factors

Motive: a need requiring satisfaction
Process of interpreting information
(through our senses)
Behavioural change based on experience
(we learn a new thing and it then influenced our behaviour)
Personal thoughts on subjects and evaluations thereof
E.g. Superstitious?

Sigmund Freud believed that almost everything we do is motivated by something in our subconscious.

LO 1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

- Motivation:

- A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction

- Maslow’s hierarchy of needs explains why people are driven by needs at particular times

- Perception:

- Process by which people select, organize, and interpret information to form a meaningful picture of the world

- Perception can be influenced by:

- Selective attention

- Selective distortion

- Selective retention

- Learning:

- Changes in an individual’s behaviour arising from experience

- Occurs due to an interplay of drives, stimuli, cues, responses, and reinforcement

- behaviours with rewarding results tend to be repeated

Belief:

- A descriptive thought that a person holds about something

- Attitude:

- A person’s consistently favourable or unfavourable evaluations, feelings, and tendencies toward an object or idea

Psychological Factors
Maslow’s Hierarchy of Needs

LO 1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

- Maslow’s hierarchy of needs:

- Physiological needs

- Safety needs

- Social needs

- Esteem needs

- Self-actualization

- Hierarchy implies that lower level needs (physiological) must be satisfied first

Psychological Factors

Subliminal Advertising

Beliefs & Attitudes

LO 1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

Two examples of psychological factors

Check Your Understanding

It is ironic that a non-marketer gave us one of the most important marketing concepts. Abraham Maslow developed the “hierarchy of needs,” asserting that as we fulfill the most pressing physical needs, we instinctively pursue needs at 4 more increasingly personal levels.

In some ways, the hierarchy runs parallel to our life cycle. A newborn needs only nutrition and rest (physiological). Shortly thereafter, he/she yearns for closeness to mom (safety) and so forth.

Discuss and describe the level of need(s) that have been met with the inception of social media.

The Needy Species

Buyer Decision Process

Five stages in the buyer decision process:

Need recognition

Information search

Evaluation of alternatives

Purchase decision

Post-purchase behaviour

How did you decide on the college or university you are currently attending? What were the factors that influenced your decision and the decision-making process you followed.

LO 2: Identify and discuss the stages in the buyer decision process.

Buyer Decision Process

Need recognition triggered internally or externally.
(recognition of the particular problem or need and here the buyer has a need to satisfy or a problem that needs solving)

Information search (information about the product or service) proceeds through a variety of sources:

Personal sources
Commercial sources
Public sources
Experiential sources

LO 2: Identify and discuss the stages in the buyer decision process.

Buyer Decision Process

Evaluation of alternatives depends on the buying situation and the consumer (the buyer decides upon a set of criteria by which to assess each alternative)

Purchase decision (buyers make the final choice of what to buy and from whom to buy it) further influenced by :

Attitudes of others
Unexpected situational factors

LO 2: Identify and discuss the stages in the buyer decision process.

- Consumer satisfaction is a function of consumer expectations and perceived product performance

- Performance < Expectations = Disappointment

- Performance = Expectations = Satisfaction

- Performance > Expectations = Delight

- Cognitive dissonance:

- Discomfort caused by post-purchase conflict

Buyer Decision Process

Post-purchase behaviour hinges on buyer’s expectations vs. actual
performance of product.
Performance < Expectations = Disappointment
Performance = Expectations = Satisfaction
Performance > Expectations = Delight

Most major purchases result in cognitive dissonance (discomfort caused by post-purchase conflict)

LO 2: Identify and discuss the stages in the buyer decision process.

- Consumer satisfaction is a function of consumer expectations and perceived product performance

- Performance < Expectations = Disappointment

- Performance = Expectations = Satisfaction

- Performance > Expectations = Delight

- Cognitive dissonance:

- Discomfort caused by post-purchase conflict

The Buyer Decision Process for New Products

Stages in the Adoption Process…

Consumer Orientation	Consumer Action
Awareness	Consumer becomes aware of the product, but lacks information
Interest	Consumer seeks information about the product
Evaluation	Consumer considers whether to try the product
Trial	Tries new product in small sample to determine its value
Adoption	Decides to use new product regularly

LO 3: Describe the adoption and diffusion process for new products.

- Awareness: Consumer becomes aware of the new product, but lacks information

- Interest: Consumer seeks information about new product

- Evaluation: Consumer considers whether trying the new product makes sense

- Trial: Consumer tries new product on a small scale to determine its value

- Adoption: Consumer decides to make regular use of the new product

Questions?

The Adoption Process

Individuals adopt new products at varying rates, categorized by the following terms:

Innovators

Early adopters

Early majority

Late majority

Laggards

LO 3: Describe the adoption and diffusion process for new products.

The Adoption Process:
Characteristics Influencing Rate of Adoption

Relative Advantage:

Is the innovation superior to existing products?

Compatibility:

Aligned with values of the market?

Complexity:

Degree of difficulty to use?

Divisibility:

Integrated into regular use?

Communicability:

Benefits easily observed or described?

LO 3: Describe the adoption and diffusion process for new products.

- Relative Advantage: Is the innovation superior to existing products?

- Compatibility: Does the innovation fit the values and experience of the target market?

- Complexity: Is the innovation difficult to understand or use?

- Divisibility: Can the innovation be used on a limited basis?

- Communicability: Can results be easily observed or described to others?

Business Markets and
Business Buyer behaviour

Business-to-Business (B2B):

Buying behaviour of firms that buy products to produce other products or to resell to others

B2B market is huge and involves far more dollars and items than consumer markets

LO 4: Define the business market and identify the major factors that influence business buyer behaviour.

- The buying behaviour of organizations that buy goods and services for the production of other products/services or to resell or rent them to others for a profit

- Business market is huge and involves far more dollars and items than consumer markets

Business Markets

Market Structure and Demand:

Fewer but larger buyers

Demand is derived from consumers

Nature of the Buying Unit:

More decision participants

Professional buying effort

Types of Decisions

More complex & formal decisions

LO 4: Define the business market and identify the major factors that influence business buyer behaviour.

- Market structure and demand:

- Contains far fewer but larger buyers

- Business demand is derived from consumer demand

- Business markets have more fluctuating demand

- Nature of the buying unit:

Business purchases involve more decision participants and a more professional purchasing effort
Types of Decisions and the Decision Process
Business buyers usually face more complex buying decisions than do consumer buyers. Business purchases often involve large sums of money, complex technical and economic considerations, and interactions among people at many levels of the buyer’s organization. The business buying process also tends to be longer and more formalized. Large business purchases usually call for detailed product specifications, written purchase orders, careful supplier searches, and formal approval.

Business Buyer Behaviour

LO 4: Define the business market and identify the major factors that influence business buyer behaviour.

At the most basic level, marketers want to know how business buyers will respond to various marketing stimuli. Figure 6.6 shows a model of business buyer behaviour. In this model, marketing and other stimuli affect the buying organization and produce certain buyer responses.

Major Types of Buying Situations

Straight Rebuy:

Order without any modifications
(Buyer routinely reorders)

Modified Rebuy:

Order with modifications
(Product specifications, prices, terms, or suppliers)

New Task:

First time order of a product
(First time purchase)

Systems (Solution) Selling:

Order including multiple elements

LO 4: Define the business market and identify the major factors that influence business buyer behaviour.

- Straight rebuy: Buyer routinely reorders something without any modifications

- Modified rebuy: Buyer modifies product specifications, prices, terms, or suppliers

- New task: Buyer purchases a product or service for the first time

- Systems (solution) selling is becoming more common

Participants in the Business Buying Process

Buying center includes all individuals that participate in the purchase decision

Not a fixed or formally identified unit

Size and makeup varies

LO 4: Define the business market and identify the major factors that influence business buyer behaviour.

- A buying center is all the individuals and units that participate in the purchase decision-making process

- The buying center is not a fixed or formally identified unit

- The size and makeup will vary for different products and different situations

Major Influences on
Business Buyer Behaviour

LO 4: Define the business market and identify the major factors that influence business buyer behaviour.

Check Your Understanding

Though it is true that total revenue generated between businesses is greater than that of B2C, it is ultimately the demand of the end consumer which actually triggers demand back through the supply chain. This concept, known as derived demand, reminds us that, no matter how big the orders between a steel plant and an auto manufacturer, it is the number of cars demanded by consumers which increases or decreases demand at the production level. This truth also connects us to the macroeconomic concepts of supply and demand and, in turn, recession and inflation.

How is derived demand linked to economic expansion and contraction?

B2B or not B2B

8 Stages of the Business Buying Process

Recognize a problem or need that can be met by acquiring a specific product or service

Describe the characteristics and quantity of the needed item

Decide on the best product characteristics and specify them accordingly

Search to find the best vendors

Invite qualified suppliers

to submit proposals

Review the proposals and select a supplier or suppliers

Make the final order with the chosen supplier or suppliers and lists items such as technical specifications, quantity needed, expected time of delivery, return policies, and warranties

Contact users and ask them to rate their satisfaction. This review may lead the buyer to continue, modify, or drop the arrangement

LO 5: List and define the steps in the business buying decision process.

Figure 6.8 lists the eight stages of the business buying process. Buyers who face a new-task buying situation usually go through all stages of the buying process. Buyers making modified or straight rebuys, in contrast, may skip some of the stages. The next slides examine these steps for the typical new-task buying situation.

E-Procurement and Online Purchasing

Online purchasing (e-procurement) can be implemented in many ways:

Reverse auctions (businesses put their purchasing requests online and invite suppliers to bid for the business)

Trading exchanges (companies work collectively to facilitate the trading process)

Company buying sites (E.g. GE operates a company trading site on which it posts its buying needs and invites bids, negotiates terms, and places orders)

Extranet links with key suppliers (create direct procurement accounts with suppliers such as Dell or Staples, through which company buyers can purchase equipment, materials, and supplies directly)

E-procurement presents several benefits and problems

LO 5: List and define the steps in the business buying decision process.

Reverse auctions – businesses put their purchasing requests online and invite suppliers to bid for the business.

Trading exchanges - companies work collectively to facilitate the trading process.

Companies also can conduct e-procurement by setting up their own company buying sites. For example, GE operates a company trading site on which it posts its buying needs and invites bids, negotiates terms, and places orders.

Companies can create extranet links with key suppliers. For instance, they can create direct procurement accounts with suppliers such as Dell or Staples, through which company buyers can purchase equipment, materials, and supplies directly. Staples operates a business-to-business procurement division called Staples Advantage, which serves the office supplies and services buying needs of businesses of any size, from 20 employees to the Fortune 1000.

Reviewing the Concepts

Understand the consumer market and the major factors that influence consumer buyer behaviour.

Identify and discuss the stages in the buyer decision process.
Need recognition; Information search; Evaluation of alternatives; Purchase decision and Post-purchase behaviour

Describe the adoption process for new products.
Awareness; Interest; Evaluation; Trial and Adoption

Reviewing the Concepts

4. Define the business market and identify the major factors that influence business buyer behaviour.

5. List and define the steps in the business buying decision process.

Questions?