Consumer Behavior Quiz

Consumer Decision Making

• Stages of Consumer Purchase Process & Experience
  • Need Recognition
    • No need = no purchase
    • How to motivate consumers to recognize the need for a product
    • How sellers can motivate consumers to recognize the importance of a product
    • Avoiding the wrong stage of the purchase process - Consumers can feel rushed when salespeople assume they're ready to buy before they have recognized their needs.
  • Gather Information
    • Collect product attributes
    • Different types of attributes for electric cars
      • Objective attributes: charging time, range, interior space
      • Subjective attributes: styling, comfort, handling, ease of use
    • Information sources
      • Personal (friends, word-of-mouth, family, neighbors)
      • Commercial (advertising, salespeople, company websites)
      • Public/Neutral (media, consumer ratings groups) - Be aware of potential bias in consumer-generated ratings
  • Compare Alternatives
    • Consumers have different preferences, even with similar perceptions of products.
    • The importance of attributes varies among consumers.
    • More than one brand may be acceptable to a consumer.
  • Purchase
    • A sale is not complete until the consumer purchases.
    • Purchase intentions lead to purchase behavior.
    • Consumers might be willing to purchase any acceptable option.
    • Effective sales practices can influence consumers to purchase sooner rather than later.
  • Post-Purchase Evaluation
    • Consumers continue to evaluate a product after purchase.
    • Post-purchase behavior
      • Reducing cognitive dissonance (e.g., "Did I buy the right car?")
      • Satisfaction perceptions: perceived performance vs. expectations
      • Avoiding unrealistic expectations to prevent customer disappointment (e.g., Whole Foods price cuts)
      • Satisfaction fosters customer loyalty, positive word-of-mouth, and high customer value
      • Post-purchase service is important (e.g., Land Rover Experience).

Consumer Involvement

• Involvement increases with consumer need, product performance, personal stake, and personal security.
• Involvement isn't directly related to price; some products are more involved regardless of price.
• Involvement differs across products, people, and usage situations.

Basic Quantitative Language to Communicate

• Understanding monetary sales vs. unit sales (volume).
• When companies increase prices, the number of units sold typically decreases.
• Profit and loss statements show the basics of financial performance, which helps to understand profit and loss.
• Data is often presented in multiple ways; consistent terminology is important.

Formulas

• Sales in units and sales in monetary value (Sales = Quantity * Selling Price)
• Market share in units (Firm Sales/Market Sales) and market share in monetary value (Firm Sales Value/Market Sales Value)
• Profit Margin
  • Gross Margin Ratio per Unit (selling price - cost of goods sold)
  • Gross Margin Ratio (gross margin/cost of goods sold)
  • Gross Margin Ratio on Selling Price (gross margin/selling price)
• Break-even Volume in units and in monetary sales (Fixed Costs/Net profit margin per unit)

Marketing Advantages, Consumer Advantages, Environmental Analysis

Marketing Ethics

• Government standards
  • Examples, Well Fargo fined for mortgage practices or Amazon Issues
  • consumer issues
  • Industry concerns, investors, and ethical standards across regions.

S3 Marketing Math

• Environmental Analysis
  • Relevant factors of environmental changes (demographic, consumer taste, economic issues).

S4 Consumer Behavior

Consumers' Concerns and Risks

• Consumers worry that products may not meet their expectations.
• Satisfaction issues are tied to perceived performance being less than the expectations.
• Consumers develop issues in early stages of purchase process
• This creates perceived risk in consumer.
  • Performance risk: the product doesn't meet expectations. Reduced with guarantees, quality control, and demonstrations.
  • Social risk: others don't approve of the purchase. Reduced with influencer promotions and endorsements.
  • Psychological risk: the product is not appropriate.
  • Financial risk: financial impact of the product. Reduced through return/refund policies.
• Firms should assess the risks consumers associate with their products or competing products; this knowledge can help reduce the risks to increase customer value.

Behavioral Decision Theory

• Framing: Consumer decisions are influenced by the presentation of information. This includes the general price level and price history of existing products.

S6 Customer Segmentation Strategy

• Goals of segmentation strategy
  • Aim to identify target segments instead of mass marketing
  • Create products to meet target segment needs
  • Communicate effectively with target segments.
• Three characteristics of a good market segment.
  • Differential response
  • Differential accessibility
  • High potential

S7 Positioning Strategy

Elements of Market Maps

• Dimensions: Position on a single attribute (easy to communicate).
  • Position on multiple attributes (creates a distinctive position).
• Products: Consumer's perception of products on these attributes (measured by market research surveys).
• Consumers: Represent consumers' ideal products and how liking increases as products approach their ideal points.
• Positioning Strategy
  • Identify potential segments to focus on the positioning, identify best positions for new products, and reposition products facing high competition.

S8 Market Research

• Goals of market research

  • Improve the quality of marketing decisions.
  • Identify the marketing problem (decisions, actions, issues concerning strategy, marketing mix).

• Essential elements for effective market research.

  • Learning about consumers, competitors, and important environmental trends.
  • Examine competitor prices and actions.
  • Examine consumer reactions to current and potential new product positions.
  • Identify and evaluate market segments.

• Types of Market Research Data (Primary and Secondary Research)

• Types of Primary Data Collection

  • Exploratory
    • First look: to establish direction
    • Descriptive: surveys, to numerically describe data
    • Causal: to understand cause and effect with experimental manipulations.

• Focus groups, Depth interviews, Projective techniques, and Observation

• Sampling Consumers

  • Define the target population
  • Understanding existing customer satisfaction
  • The larger a sample, better chances of accurate results.

S10 Pricing I

• Cost-plus pricing: calculating prices based on costs plus a markup.
• Value-based pricing: pricing based on consumer perceived value rather than costs. Consumer surplus (difference betweens price and the willingness to pay). Strategies include Qualitative Steps.

S11 Pricing II

• Segmented Pricing: Different prices for different consumer segments. Examples are coupon usage.
• Price Discrimination: charging different prices to different consumers.
• Conditions for successful price discrimination:
  • Different segments with different price sensitivities.
  • Identification of those segment's to prevent resale between segments.

S13 New Products

• Product Life Cycle (PLC): Stages of product sales (Introduction, Growth, Maturity, Decline).
• Characteristics of successful new products.
  • Relative advantage (better, faster, or cheaper than existing products).
  • Communicability (easy to explain benefits).
  • Minimal behavior change (doesn't force major adjustments to customer's habits/beliefs).
• New product development process:
  • Generates ideas.
  • Evaluates ideas (screen).
  • Tests concept (consumer reactions).
  • Develops the product.
  • Test in market (place into selected cities).

S18 Internal Marketing Partners

• Internal partners
  • Sales, Salesforce, customer service. Essential selling skills include asking questions, active listening, emphasizing benefits, establishing interpersonal influence, and effective negotiation.

S20 Customer Value

• Customer Value: economic value a customer brings to the firm.
  • Includes attracting and retaining costs, profits from sales

S21 Marketing Communications

• Types of marketing communications
  • Unearned media (press coverage).
  • Earned media (organic social media).
  • Paid media (advertising).

Message Strategies

• Rational messages: stressing product attributes and benefits.
• Emotional messages: Creating brand perception.
• Comparative advertising: highlight differences between firm and competition.

Yield Management

• Change pricing based on (current or projected) demand.

Test your knowledge on the consumer purchase process and research methods. This quiz covers topics such as exploratory research, attribute types, and the stages involved in consumer decision-making. Assess your understanding and learn more about consumer behavior!