Consumer Behavior: An Introduction

Introduction to Consumer Behavior

• Consumer behavior includes activities related to purchasing, using, and disposing of goods/services.
• It also covers consumers' emotional, mental, and behavioral responses to marketing.
• Consumer responses are classifiable as emotional, mental (cognitive), and behavioral.
• Consumer activities are classifiable as purchasing, using/consuming, and disposing.
• Focus centers around individual consumers buying items/services to satisfy their needs or others' wants rather than organizational consumption.
• Consumers behave predictably, even if their decisions aren't necessarily rational. Understanding the forces influencing their perceptions, decisions, and behaviors is crucial.
• Studying consumer behavior helps us understand human behavior, influence consumers, improve business, anticipate needs and aid in making decisions.

Influence of Price on Consumer Behavior

• Free items grab attention; even a minuscule price reduction to zero can significantly swing consumer choice.
• The relativity phenomenon implies that how much consumers are willing to spend or save is relative to an item's price.

Consumer Decision-Making Journey (CDMJ)

• The traditional consumer decision-making model is linear.
• It begins with problem recognition, which involves perceiving a need or a gap between the ideal and actual situation significant enough to trigger a decision.
• The "Want-Got Gap" refers to problem recognition.
• Needs arise when the actual state declines, while wants elevate the ideal.
• Opportunities arise when the ideal state rises while the actual state drops.
• Information search is the next step, involving seeking potential solutions.
• It can be internal (memory retrieval) or external (seeking outside sources).
• Effort depends on consumer involvement, marketing environment and individual differences.
• Evaluation of alternatives involves forming evaluation criteria (attributes) and creating a short list (evoked or consideration set).
• Consumers utilize different evaluation rules.

Decision-Making Rules

• Non-compensatory rules don't allow trade-offs between attributes.
• The Lexicographic Rule involves choosing the best product based on the most important feature.
• Satisficing involves picking the first product meeting a minimum threshold on all features.
• Elimination by Aspects involves eliminating options not meeting minimum acceptable values on chosen features.
• Compensatory models allow attribute trade-offs, such as Fishbein's Multi-attribute Model.
• The choice between compensatory/non-compensatory rules depends on time, attributes/options, and decision importance.
• Purchase decision involves selecting an alternative from the consideration set.
• Post-purchase evaluation involves assessing value from the product based on experience and expectations which can lead to satisfaction, delight, or dissatisfaction.
• It can also feed back into future purchase decisions.
• Dissonance reduction might occur if consumers doubt their choice.
• The Expectancy Disconfirmation Model states satisfaction depends on whether performance meets, exceeds or falls short of expectations.

Motivational Contexts Affecting Decision Making

• Low Involvement occurs when consumers don't research much and use heuristics like buying what is familiar or cheapest with price being a key factor. Brand saliency and availability are key.
• Brand laziness characterizes habitual choices made without much thought in low involvement decisions.
• High Involvement & Utilitarian/Instrumental decisions are triggered by a problem, involving active search, information use, and problem-solving to optimize the purchase; price is a trade-off variable.
• Product performance and information are key for marketers here.
• High Involvement & Ego-expressive/Hedonic decisions are driven by feelings/impulses, with rationalizing evaluation that focuses on what the buyer loves where price is secondary.
• Clear brand image is key for marketers.
• Brand loyalty, whether emotional or psychological, plays a role.
• Consumers may engage in variety seeking looking for new alternatives intrinsically or extrinsically.
• Problem-solving is the most complex decision-making type, using high information processing, and common for expensive or infrequent purchases.
• Consumers identify key attributes for their decision.

Heuristics in Decision Making

• Heuristics are mental shortcuts to simplify decision-making, often ignoring data that might lead to bias but still be effective.
• The Attraction (or Decoy) Effect makes a brand more attractive when compared to slightly inferior options (decoys).
• The Compromise Effect makes an option more attractive when viewed as a "good compromise" or average of alternatives.
• The Availability Heuristic bases predictions on the ease of recalling relevant examples.
• The Representativeness Heuristic bases predictions are based on perceived similarity between a specific target and a general category.
• The Anchoring and Adjustment Heuristic involves starting with an initial piece of information (anchor) and adjusting, often insufficiently.
• The Price-Quality Heuristic assumes price indicates quality (higher price = higher quality).
• Persuasion Heuristics influence beliefs/attitudes.
• Length-implies-strength means longer messages are assumed of higher quality.
• Liking-agreement means people agree with those they like.
• Consensus-implies-correctness (Bandwagon Effect) means products chosen by many are perceived as good.
• Prediction Heuristics estimate likelihood of events.
• Simulation Heuristic overestimates the likelihood of events easy to imagine.
• Choice Heuristics help in the final choice.
• Lexicographic Heuristic bases decision on the most important attribute.
• Elimination-by-Aspects Heuristic eliminates brands lacking key features.
• Additive-Difference Heuristic compares two brands at a time across attributes.
• Conjunctive Heuristic sets minimum values for all attributes.
• Disjunctive Heuristic sets acceptable values (higher than minimum) for attributes.
• Frequency of Good and Bad Features Heuristic chooses the brand with the most positive features.

Prospect Theory

• Prospect Theory suggests changes are evaluated relative to reference points.
• The marginal effect on value diminishes as the amount of loss or gain increases.
• Losses feel larger than gains (loss aversion).
• Segregating gains and aggregating losses (price bundling) makes small gains pleasant, and large losses less painful.
• Consumers react less negatively to price increases vs quantity decreases.
• The endowment effect causes us to overvalue things we own.
• The status quo bias means we prefer the current state, leveraging defaults.

Attention

• Attention is the process of the mind focusing, and withdrawing from other stimuli.
• Attention is classifiable as limited, selective, and divisible.
• Miller's Rule states short-term memory holds 7 ± 2 chunks of data.
• Salient stimuli are novel, complex, and intense.
• Vivid stimuli are emotional, concrete and proximal.
• Personal stimuli address the individual by showing similar stories, appealing to their needs and values and asking rhetorical questions.
• Adaptation can be avoided by preventing high repetition, simplicity and low intensity.

Sensory Marketing

• Sensory marketing aims to affect perceptions, judgment, and behavior through senses.
• Key components include music, smells, color, etc..
• Sensory elements induce consumers to spend more time, which is a key variable.
• Music can change mood/tempo and has a 'fit' that influences product choice.
• Smell attracts and elicits responses while the fit between scent and product is vital, and olfaction is linked to memory.
• Other key senses includes touch (importance demonstrated), vision (biases affect judgments), and taste (multisensory experience).

Attitudes and Persuasion

• Attitudes are evaluative judgments (good/bad/favorable/unfavorable) with direction and extremity, often relying on beliefs.
• Key attributes are search attributes (judged before buying), experience attributes (judged after use), and credence attributes (judged after extended use).
• Attitudes can be altered by changing beliefs about the product vs. competitors, developing new products or attributes, and shifting perceived attribute importance.
• The Theory of Reasoned Action (TRA) suggests behavior is shaped by attitudes and subjective social norms (what others think, desire to fit in).

Elaboration Likelihood Model (ELM)

• The ELM model has two persuasion routes.
• The Central Route involves high motivation/ability; attitude change comes from careful information processing/strong arguments.
• The Peripheral Route involves low motivation/ability relying on simple cues/heuristics/source attractiveness.

Principles of Persuasion and Social Influence

• The Automaticity Principle means people spend the majority of the day in a mindless stated and make decisions based on heuristics.
• Persuasion tactics are more effective in this state.
• The Because-Heuristic means people tend to comply with requests if they are given a reason, even if the reason is weak.
• The Foot-in-the-Door Technique means compliance with a small request increases the likelihood of agreeing to a larger one later which is an effective tactic.
• In the Door-in-Face Technique, following a large, likely-to-be-rejected request with a smaller more reasonable request increases compliance for the second request.
• The Low-Ball Technique occurs when obtaining a verbal commitment, then making the deal less attractive often results in continued compliance.
• The Reciprocity Principle stipulates that people feel obligated to pay back favors, so giving small gifts often results in larger returns.

Scarcity Principle and Social Validation

• The Scarcity Principle states people have a desire for items that are limited.
• The Social Validation (or Social Proof) Principle states that the perceived validity of an idea grows when the number of people supporting it increases. People often look to others in uncertain situations to determine what behavior is appropriate.
• Norms (descriptive - what is common; injunctive- what is accepted) influence behavior.

Liking, Authority, and Priming

• Liking Principle: People are more likely to comply with requests from people they like; familiarity (mere exposure effect), physical attractiveness (halo effect), similarity and ingratiation.
• The Authority Principle: People tend to comply with those who have some type of authority.
• Priming is the tendency/impact of recently/frequently used concepts coming to mind and influencing decisions which can be conscious or subliminal.
• Subliminal priming involves stimuli presented so faint it is imperceptible, so there is no sense of exposure.
• The Associative Memory Network specifies that memory consists of nodes connected to each other and the activation of a node leads to stimulation in closely tied nodes.