Consumer Behaviour: An Overview

Consumer Behaviour

• Studies the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and wants
• It is an ongoing and dynamic process
• Marketers can leverage the 4 Ps (Product, Price, Place, Promotion) to cater to consumer wants

Consumer Behaviour as a Process

• It goes through stages: pre-purchase, purchase, and post-purchase issues
• Each stage has its own consumer and marketer perspective

Customer Experience Journey

• To fully understand consumer behavior, it is critical to consider the entire journey
• This includes the stages before and after the purchase or consideration phase
• Key stages: awareness, consideration, convert, loyalty, and advocacy

Big Data in Consumer Behaviour

• Big Data involves collecting data from various sources like the internet
• Marketers use it extensively
• It is used in to analyze and interpret consumer behavior

Data Analysis Pyramid

• Each step up the pyramid answers questions about and adds value to the initial data
• The base of the pyramid: data progresses to information
• The pyramid then progresses to knowledge, and ultimately, wisdom

Consumer Behavior Actors

• Influencers, decision-makers, purchasers, and users all play different roles in the consumer process

Influencer Marketing

• Influencers utilize social media to market products to their followers, employing social selling tactics through platforms like TikTok
• Tactics include: using a social network, leads, personal branding, crm and ssi
• Influencer marketing, including affiliate marketing, accounts for a substantial portion of marketing budgets

Consumers affect Marketing Strategy

• The impact on marketing and macro-economics leads to changes in consumer behavior and marketing strategies

Segmenting Consumers

• Segmenting consumers has evolved into personalization and individualization: often driven by AI
• Early adopters gain a competitive advantage, for example personalization drives Generative AI decisions
• Relationship marketing involves recruiting likeable individuals and utilizing data-driven approaches to predict consumer interests

Relationship Marketing with AI

• Candidates with expertise in statistics and data-mining
• They are adept at collecting data
• Collect data is used to segment consumers based on their needs, wants, and situations
• AI enhances the accuracy of segmentation

Marketing Goals

• Gain market share
• Increase share of wallet
• Develop share of heart

The Trilogy - Philip Kotler's Books

• Marketing 3.0 views consumers as human beings, adopting a holistic approach
• Marketing 4.0 focuses on integrating digital platforms into marketing strategies
• Marketing 5.0 explores how technology can interact with humanity

Customer Service

• Collaborative customer care is crucial
• Marketers treat consumers as equals

Post-COVID Consumer Behaviour Shift

• Changes in marketing strategies (a major shift) in areas such as:
• Increased online shopping and delivery systems
• Recognition of mortality and coping mechanisms through consumption
• Increased sales of traveling packages and luxury products
• Shift in brand appreciation towards local artisans
• Consideration of Environmental, Social, and Governance (ESG) factors

Marketing and Culture

• Culture includes shared characteristics of a group (organization, country) related to religion and food, etc.
• Culture is deeply ingrained - diamond engagement ring ritual was created by marketers
• Marketers can create (and influence) culture

Web Evolution

• Previous web models: consumers were passive recipients of marketing
• There has been a shift as consumer bases have grown
• Web 3.0 is more user-generated
• Web 4.0 consumer behavior is more complex

Consumer Motivations

• Products are often purchased for their symbolic meaning (not utility)
• It is about what products "mean"

Brand building

• Requires brand differentiation to assign distinct meanings to brand consumption
• Branding helps establish the power of different meanings for consumers

Brands - Image and Meaning

• Conveys image/personality, defines one's place in society, and facilitates bonds with others sharing similar preferences
• The concept is about meaning: associating products with joyful experiences to create happiness
• This creates symbolic meaning

Brand Laddering

• Brand laddering utilizes emotional benefits, consumer rewards, product benefits, and features
• Celebrity endorsements emphasize meaning over function to enhance product appeal

Global Consumer Characteristics

• Global consumers are more connected than ever
• they share common devotions, loyalty to brand name and consumer goods
• They are interested in movie stars, celebrities, and leisure activities

(Ethical) Marketing tactics

• Deceptive marketing: does exist
• Creating artificial needs: may or may not be ethical

Needs versus Wants

Needs: Basic biological motives that is innate Wants: How society teaches us to satisfy those needs, shaped and influenced by marketers

• Marketers aim to satisfy our wants by selling us our needs

Marketing Objectives

• The goal is to create awareness of existing needs rather than creating new needs

Consumerism

• A social and economic order based on creating and fostering the desire to purchase goods/services in even greater amounts

Planned and Perceived Obsolescence:

• Planned obsolescence manufacturers may limit a product's lifespan to drive sales
• Perceived obsolescence the fashion industry creates premium pricing

Social Marketing

• Techniques to encourage positive behaviours and is utilized by non-profits and corporations for the good of others

Dark Side of Consumer Behavior

• Consumers can be their own worst enemies, impacting consumption, well-being, and health
• Smaller countries that prioritize social connection and environmental aspects tend to have a higher Gross National Happiness Index

Addictive Consumption

• Psychological or physiological dependency on products or services
• Addiction to technology results in diminished brain areas responsible for speech, memory, and motor control

Compulsive Consumption

• Repetitive or excessive consumption: "Shopaholics” engage in compulsive buying disorder (CBD), with 80% of sufferers being women
• Women are more susceptible due to gender roles and societal pressures
• Evolutionary psychology explains women depended on men for survival so they learned to appear more attractive to survive
• Compulsive behavior: A cannot be stopped
• Impulsive (temporary) behavior is the goal of most marketers

AMA’s Code of Ethics

• Disclose all substantial risk with product
• Identify optional features that add to price
• Avoid false and misleading advertising
• Reject high-pressure and misleading sales tactics
• Prohibit selling under the guise of market research

Consumer Behavior as a Field

• It is a pyramid: from micro consumer behavior (individual focus) to macro consumer behavior (social focus)

Research Methodologies

• Consumer research involves pairing interviews and AI for data gathering and analysis

Positivism and Interpretivism

• Positivism (Modernism):*
• Holds human reason as supreme, with a single objective truth discovered by science
• Assumes rationality and order in the world, defined by a clear past, present, and future
• Interpretivism (Postmodernism):*
• Suggests individuals construct meanings based on cultural experiences, with no single right answer
• Views everything as intertwined and subject to individual interpretation

Pets and Consumerism

• Neutering pets is a consumption behavior used to satifying pet owners' wants & needs
• Entrepreneurship creates testicular implants
• Pets are given strong emotional support

Studying (research) consumer motivations

• The question explored is why pet-owners are willing to install Neuticles on their pets

Positivist Approach:

• It is based dog owner's self-esteem compared to dog's perception of neutering
• The theory is owners with higher need for self-esteem bolstering are likely to purchase the testicles
• Marketers craft “quantitative approach" based on owner's self-esteem

Interpretivist Approach

• It involves in-depth interviews gathering data from vet offices, dog parks, etc to get anecdotes
• Their data is influenced by how the interviewer interacts with the interviewees
• They are trained to ask the right questions to guide the “qualitative research”

(Research) Analogy

• Positivist approach involves finding the cause and knowing the effect
• Interpretivist approach involves learning from others

Kunoji Double Knot Stone

• $440 CAD
• An example of conspicuous consumption.
• It aims to convey "luxury brand", that the possessor can afford "buying for the meaning"

Positivist vs Interpretivist

Perception

• The process by which sensations are selected, organized, and interpreted
• After this chapter, we'll understand Gestalt Psychology

Sensation

• The response of sensory receptors (eyes, ears, nose, mouth, and fingers) to stimuli (light, color, and sound)

Hedonic Consumption

• Hedonic is related to pleasure (tastes, smells, and feels)
• Apple Products are visually appealing
• Sensory experience stir emotions
• 'Trust' -> tapping into the rational mind
• emotional Reaction leads to customer loyalty

Design Economy

• Form is function; Design is substance
• Design is a MUST (offers competitive advantage)
• High quality design, consumers are prepared to pay a premium price
• Simple is best

Sensory Marketing

• New era focused on the impact of sensation on product experiences
• It involves sight, sound, touch, smell and taste
• Examples include 3D movie theatres, VR experiences, Meta Verse experiences
• At museums, the walls are typically bare with limited background music

Vision - Focusing on Colour

• Vision can be visually overstimulated
• Colour provokes emotion
• Colour preferences are shaped by cultural and biological influences
• Colour is linked to brands

Smell

• Scents stir emotion
• Scent marketing can create feelings
• It uses smells in specific locations such as a “new car smell” in dealerships
• Supermarkets put bakeries close to the entrance

Sensory details

• The smell makes shoppers hungry, facilitates more purchasing
• Highest profit margin exists in the bakery
• To know if marketing is effective = recall rate
• There are branded smells for memorability and signature scents

Scents and the brain

• All our other senses, you think before you respond, but with scent, your brain responds before you think
• Subtlest of aromas can have a potent effect
• Fragrances, like vanilla, is connected to breast milk, adding a sense of being cared for, as well as an endearing sentiment

Hearing

• Hearing affects behavior for instance:
• Fast tempo music speeds up passengers whereas slower music drives customers to shop longer

Sound: a brand's identity

• Examples include: McDonald's jingle, Harley Davidson
• perception: it is a consumer's PERCEPTION of your product all influence your perception

Haptic Senses (Touch)

• Touch: is most basic sense, learned before vision and smell
• Touch affected the product experience and perceived product quality
• Touch is an important factor in sales
• Vendors encourage touching products to show registration of "mine"

Taste

• Food & Colour Test
• There are cultural influences
• There can be confusion from our vision

Perceptual Illusions

• We lead in our in our perceptions
• A higher priced wine is seen as better

Exposure

• The degree to which people notice a stimulus that is within range of their sensory receptors
• Absolute Threshold: minimum stimulation amount that can be detected on a sensory channel
• Differential Threshold: Ability to detect changes between two stimuli
• Minimum difference between two stimuli is the 'JND' (Just Noticeable Difference)

When consumers should/shouldn't notice change

• Marketers want consumers to notice the change (like rebranding and expanding)
• Marketers do NOT want consumers to notice pricing changes: shrink-flation

Subliminal Perception

• When a stimulus is below a consumer's awareness
• The (unnoticeable) stimulus can still influence behaviour and impact perception

Weber's Law

• It states the stronger the initial stimulus, the greater its change must be for it to be noticed

Competition

• Competition is on our perception of products - not the products

Attention

• The extent to which the brain's processing activity is devoted to a particular stimulus
• It involves Attention Economy (a scarce commodity)
• It is an effective marketing strategy

5 A Model

• This involves in-bound marketing: Attracting consumers by being Attentive, generating Interest, creating Desire and instigating Action
• All models start with attention

Bitter facts to marketers

• It can be hard: due to sensory overload and processing, and the need to multi-task

Marketing strategies

• Marketers break through the clutter
• Involves paying attention to a small portion of stimuli that are exposed

Personal Selection Factors

• Perceptual filters are based on past experiences
• Perceptual vigilance: Awareness is determined by their current needs

Defensive Strategies

• Perceptual defence: See what you want to see and ignore what they don't want to see
• Adaptation: This leads consumers to continue to notice a stimulus over time or eventually stop

How Adaption happens

Adaptation is based on factors like:

• Intensity of stimuli
• The length of Duration span
• The ability to discriminate differences
• The exposure to frequent stimuli
• The (ir)relevance

Stimulus Selection Factors

• Contrast (size, colour, position, and novelty)

Interpretation

• Meanings are assigned to sensory stimuli
• These can cause individual difference in interpretation

Interpreting meaning

• Consumers assign meaning to stimuli
• Meaning is assigned based on pre-concieved ideas (schema)

Stimulus organization

• We don't perceive the whole - just select stimuli

Organization and Psychology

• Gestalt psychology: people derive meaning from the totality of a set of stimuli

Principles of Psychology

The Gestalt Principle of:

• Closure (the picture is complete)
• Similarity
• Figure-Ground Principles

Learning and Memory

• Learning is change due to experience
• Cognitive learning watches others learning
• Behavioural learning experiences personal learning

The learning process

• Black box theory of understanding learning includes observable behaviors
• Learning = responses to external events
• Classical Conditioning
• The process of learning associations between stimuli and responses
• It occurs when a stimulus that elicits a response is paired with another stimulus
• Then the second stimulus causes a similar response

How to apply Classical Condition

• Unconditioned Stimulus (UCS) = McDonald's food (e.g., burgers, fries, the smell of food)
• Unconditioned Response (UCR) = Hunger or craving
• Conditioned Stimulus (CS) = McDonald's logo (golden arches "M")
• Conditioned Response (CR) = Hunger or craving

Brand Equity

• Brands who create stronger connections create product better than other brand equity
• This needs to increase brand awareness
• It has important presentation: Sequential presentation
• Repetition is needed

Extinction

• Consumer will no longer be conditioned
• The card itself becomes stimulus and urge

Headaches

• Consumer price impacts how effective the products seems
• Conditioned stimulus: the pill has been used
• Conditioned stimuli: The pill taken is effective but not enough medication

Stimulus generalization

• Tendency of similar stimuli to a conditioned stimulus "pills"
• Family is the power of the brand

Types of Branding

• Includes brand:
• lots of snacks
• all under the same brand
• that covers different product categories
• Product line extensions & always in the same product category Licensing = Disney

Stimulus Discrimination

• Not similar stimuli does not evoke

Types of consumers

• economic
• Stimulus Discrimination Similar stimuli do not evoke similar responses tough to be a copycat because if the quality is not the same, it doesn't evoke the same positive response/perception of the consumer Serves a better purpose for the leading brand.

Instrumental Conditioning

• Focus is on the individual to perform behaviour/act and avoid negative outcomes

Learning outcomes

• Instrumental Learning involves positive and negative reinforcement and how to strengthen connects
• Strengthening involves strengthening the links
• Conditioning involves reward and punishments
• Conditioning happens through operant conditioning chamber (Skinner box)

Application Example

• The following process: - Crying, giving chocolate, and finally a stop to crying
• This rewards and makes baby want chocolate
• For mom is an example that is not reinforced

Behaviour and reinforcement

• Punishment: Beating and negative reinforcement for negative outcome

Reinforcement Schedule

Shaping:

• Desired behaviour learned over time with rewards and punishments
• Reinforcement Schedule = the rules
• Fixed-interval = on a schedule (Ex Black Friday)
• Variable-interval = There is no schedule. (Ex Sale on a random Tuesday)
• Fixed-ratio = Based on TIMES do frequency (if something is done, it is certain) ( Ex Starbucks points)
• Variable-ratio = Can't predict but getting something (sometimes after certain amount of trials (Ex: Gambling)

Cognitive Learning Theories

• Stress on the importance of process of making mind and consumer is active
• We watch others earn rewards and imitation
• Indirect/ model (Ex: Athletes)

Memory

• How well you remember
• Memory is the long term store of information
• Mind as the computer
• There is link to it with sense

Sensory Memory

System Memory

• Furniture memories
• Visual art can evoke memory and Power of Nostalgia
• Tendency to be notalgic when unhappy or in pandemic
• To bring back old days

Retrobrands with results

• People into good days which create better results
• Nostalgia, retro can be effective

Definition of Motivation

• Is the desire/ willingness to want to achieve a goal
• Drives consumers to act via incentives

consumer Behavior

• The end-state Marketers crate needs (but the WANT has to be shaped by culture)

Types of Needs

• Biogenic: Air and Water
• Psychogenic: Need For status

Self actualization

• Power (control), affiliation and achievements
• Needs for power are needed.
• Needs can bring creativity. Ex: Netflix, Spotify

Types of Values

• There different kinds
• Individualism v,s Collectivism & the one needs to be unique.

Maslow

Levels in the Maslow Hierarchy:

• Physiological
• Safety
• Belongingness
• Ego Needs
• Self-Actualization One level has to be met before the next is activate,

Motivated

• Your level of active to satisfy need
• Celebrity has role
• There is Axe or Dove ad to activate

Motivational Strength and Conflict:

Drive and Expectancy Theories

• Theory of Arousal
• Instrumental Conditions
• If you value the goal -> approach it, if devalue -> avoid it

Motivations and Conflict

• Cognitive Dissonance can provide two desirable alternatives
• With approach avoidance "guilty of desires", you want to avoid

Theory of Cognitive Dissonance

• Premise is the to order
• Tension is beliefs and behaviors
• Retailers must affirm and lower the price
• All the needs lead to better products
• All should allow consumers to achieve their motivation

Consumer Marketing

• Companies dealing with guilt
• If you you get more health will lead to guilt
• What you present on your products

Perceptions

• By managing vegetables perception, one is likely to eat it

Communication

• Make carrots in a way children are more likely
• Talk about consumer to motivation.
• Persuasion should work
• All needs to be clear

How To Improve?

• A person should know and perceive to obtain the correct attitude.

What is relevant?

• The correct amount Motivation
• It involved simply processing vs Passion

Flow State

• The costumer loyalty must come first and stay immersed in action
• People is action for a period

Types of State

• This includes lost in self conscious
• Power is altered and intrinsically rewarding
• Types comes the consumer
• Situational difference
• Consumer is interest

Affect

• A tool that determines how consumers feel
• Includes Evaluations
• They give reaction and emotion

What about Moods?

• Involve reactions
• Triggering event
• How marketers use Affect

Product Marketing

• They make you happy when use the product "Snickers Campaign"
• Some state the ideal that they can do
• Most campaigns happy
• Is the weather nicer, more attractive

What about social media marketing?

• Sentiment and emotion
• Tools used is a the AI to find correct
• Sentiment drivers demographics
• AQ comments

The Brand

• Involves comments made made for this
• Find competitors

The Model of Brand

• It the attitude the complexity or attributes
• Has a way to make evaluations

It must be good that

Attitude for this model must have Multi Attribute-

• Modellers
• Objects attribute that tell how buyer is good
• Objects are to predict

How the AO happens again

• Attribute person examples
• Extrovert or phD
• Must stress the weights or example
• One type only work in one way. Must choose
• Consumers must get the attributes to target
• Content
• Weightage depends on the people. Use 30 to get correct

Economic

• Decisions are done the maximize all thing
• The must ABC as result for each component
• Must make the most in product to help get there
• If more you get from the store will rise (Air BNB)s

How can product go around the way

• Must test others power as well
• It all depends on past
• There are few to test and see

If there is a problem you must fix

• The time as well that is use
• What about consumers
• That attitudes does apply

Factors that work

Attitudes can be complex and inconsistent with actions depending on the situation, social norms, personal motivations, and other external factors

• Does no lead and want
• Does no want what wants

To do better