Understanding Consumer Behavior PDF

Understanding Consumer Behavior What is consumer behavior about and why does it matter to us? Today’s Topic ▪ What is consumer behavior? Definition of consumer behavior ▪ What factors influence consumer behavior? ▪ How do consumers make decisions for goods...

Understanding Consumer Behavior What is consumer behavior about and why does it matter to us? Today’s Topic ▪ What is consumer behavior? Definition of consumer behavior ▪ What factors influence consumer behavior? ▪ How do consumers make decisions for goods and services? The king says, “All of you are right. The reason every one of you is telling it differently is because each one of you touched the different part of the elephant. So, actually the elephant has all the features you mentioned.” 3  Understanding consumer behavior is no more different from guessing what an elephant is like without actually seeing it. By learning various theories of consumer behavior and integrating them in a systematic way, we can gain a comprehensive view of what consumer is like. 4  What is consumer behavior? Consumer behavior is activities people undertake when obtaining, consuming, and disposing products and services. (제품을 구매하고, 소비하고, 처분하는 과정에서 행해지는 일련의 활동들) (Blackwell, Miniard & Engel 2006) Reflects totality of consumer’s decisions with respect to the acquisition (purchase), consumption, and disposition of goods, services, activities, and ideas by (human) decision making units (over time). (Jacoby, 1976) 5  Definition of Consumer Behavior ▪ It involves obtaining, consuming, and disposing. Obtaining: how consumers search for information, evaluate alternatives and make a purchase decision Consuming: how consumers use products, what symbolic meanings are involved in their consumption experience, how they communicate their experience to others Disposing: how consumers get rid of products and packaging, what concerns they have about the consequences of disposition  Definition of Consumer Behavior ▪ It involves products, services, activities, and ideas. (example) ✓ Products: buying toothpaste, shoes, clothes, electronic products ➔ tangible good (유형제품) ✓ Services: visiting dentist, opening bank account, using credit card ➔ intangible good (무형제품) ✓ Activities: exercising and losing weight, joining an on-line community, quitting smoking ✓ Ideas: social campaign(e.g, reducing social discrimination against minorities), health promotion campaign(e.g, vaccination, early cancer screening), public campaign (e.g., fastening seat belt, preventing drinking & driving)  Definition of Consumer Behavior ▪ It involves many parties. ✓ individual decision versus. ✓ group decision (organizational decision, family decision): Information gatherer (정보탐색자), Influencer (영향자), Decider (의사결정자), Purchaser (구매자), User (사용자)  Definition of Consumer Behavior ▪ It involves many decisions. ✓ Whether to buy a product (Would I need a mobile phone?) ✓ What specific features or function to look for (design, size, weight, price, resolution quality, various functions,, etc.) ✓ Why should I buy a product (Should I buy a folder phone? Then why?) ✓ How to search for product information (internet, friends/family, experts, TV ad) ✓ When to buy the product ✓ Where to buy the product  Factors Affecting Consumer Decision Process Environmental Influences culture, social class, reference group, family Consumer Decision Processes and Behavior Individual Differences demographics, Market Factors Psychographics advertising, PR, SP, (personality, value, WOM, display, lifestyles, motivation) packaging, media, Physiology (hormones, independent reports neurotransmitter, genetics) 10  Factors Affecting Consumer Decision Process Environmental Influences Culture Example Culture Messages emphasizing individual benefits (Social Norms, Myths, were more effective in the United States. Rituals) independent norm (독립적 가치) Social Class Messages emphasizing group benefits were preferred in South Korea. Group Influences Interdependent norm (상호의존적 가 ✓ Peer pressure, 치) ✓ Reference group(준거집단) groups that consumers compare themselves to or associate with (e.g., friends, associates, clubs, religious organizations, celebrities, role models) Family  Factors Affecting Consumer Decision Process Environmental Influences Culture Example Consumers in an interdependent culture Culture (e.g. Asians, Indians) are more likely to (Social Norms, Myths, use coupons than consumers in an Rituals) independent culture (e.g., Caucasians, Americans). Social Class The former group is more motivated to Group Influences engage in self-regulation(자기조절) than ✓ Peer pressure, the latter group. ✓ Reference group(준거집단) groups that consumers compare themselves to or associate with (e.g., friends, associates, clubs, religious organizations, celebrities, role models) Family  Factors Affecting Consumer Decision Process Environmental Influences Culture (Social Norms, Social Class Example Myths, Rituals) Working-class people stress inherent product quality(성능), Social Class focus on present, and use concrete symbolism(구체성). Group Influences Upper class people emphasize interrelationship between (Peer pressure, objects, focus on the interplay between present activities Reference group) and future reward, and stress style and fashionability. Family  Factors Affecting Consumer Decision Process Environmental Influences Culture (Social Norms, Myths, Rituals) Social Class Example Social Class Lower-class consumers prefer to donate to urgent causes (e.g.. alleviating hunger), whereas higher-class Group Influences consumers prefer to donate to non-urgent, general (Peer pressure, causes (e.g., encouraging cultural activities). Reference group) Family  Factors Affecting Consumer Decision Process Environmental Influences Social Class Example Culture (Social Norms, The middle class has greater propensity for green Myths, Rituals) consumption compared to the lower and upper classes. Social Class Why? Green consumption satisfies both assimilation(동 Group Influences 화) and differentiation(차별화) needs. (Peer pressure, Reference group) Lower class ➔ high need for assimilation Upper class ➔ high need for differentiation Family Middle class ➔ high needs for both assimilation and differentiation  Factors Affecting Consumer Decision Process Environmental Influences Culture (Social Norms, Myths, Rituals) Social Class Group Influence Example Group Influences (Peer pressure, Teenage smoking is largely determined by peer Reference group) pressure. Family Those who form a positive image of smoking peers are highly likely to become a smoker later.  Factors Affecting Consumer Decision Process Environmental Influences Culture (Social Norms, Myths, Rituals) Group Influence Example Social Class People are less likely to rely on consumer Group Influences reviews for experiential purchases (e.g, gourmet (Peer pressure, foods, personal cares) than for material Reference group) purchases (e.g, shoes, office products). Family Consumers believe that reviews are less reflective of the purchase’s objective quality for experiences than for material goods.  Factors Affecting Consumer Decision Process Environmental Influences Culture (Social Norms, Myths, Rituals) Social Class Family Example Group Influences (Peer pressure, Young adults reared in disrupted families Reference group) (결손가정) are more materialistic and exhibit higher levels of compulsive consumption than Family young adults reared in intact families.  Factors Affecting Consumer Decision Process Environmental Influences Culture (Social Norms, Myths, Rituals) Family Example Social Class ▪ When experiencing a stressful situation, people Group Influences from resource-poor childhoods tend to expect to (Peer pressure, have a shorter lifespan compared to people from Reference group) resource-rich childhoods. Family The shorter lifespan expectancy leads to lower preference for long-term care insurance (장기요양보험), retirement savings (연금) and long-term bonds (장기채권).  Factors Affecting Consumer Decision Process Individual Differences Gender Example Demographics Females tend to engage in thorough (ethnicity, examination of an ad message, age, gender) whereas males are driven by overall themes. Psychographics Parenting motivation(양육동기) (personality, values, activates gender-specific stereotypes of lifestyles) parental roles, leading men to be more future-focused (e.g., preference for larger, future rewards) and women to Physiology be more present-focused (e.g., (Genes, preference for smaller, immediate Neurotransmitters, rewards). Hormones)  Factors Affecting Consumer Decision Process Individual Differences Age Example Older adults exhibit great use of schema-based Demographics decision strategy(기존지식, 고정관념에 기초한 의사결 (ethnicity, 정), whereas younger adults rely on detailed, age, gender) processing strategies(구체적인 정보처리에 의한 의사 결정). Psychographics Older people also like emotional ads (focusing on (personality, values, avoiding negative emotions) more than factual ads. lifestyles) (tv cf) Physiology (Genes, Neurotransmitters, Hormones)  Factors Affecting Consumer Decision Process Individual Differences Demographics (ethnicity, age, gender) Psychographic Example Psychographics People with high need for touch (촉각정보선호도) (personality, values, seek more opportunity to touch a product and lifestyles) experience pleasurable sensory feedback (e.g., rub a soft leather coat) before purchase than those with low need for touch. Physiology (Genes, Neurotransmitters, Hormones)  Factors Affecting Consumer Decision Process Individual Differences Demographics (ethnicity, age, gender) Psychographic Example Psychographics (personality, values, High self-monitoring people (자기검색성향이 높은 사 lifestyles) 람) are more attracted to image ad than factual ad, whereas low self monitoring people tend to prefer factual ad to image ad. Physiology (Genes, Neurotransmitters, Hormones)  Factors Affecting Consumer Decision Process Individual Differences Demographics (ethnicity, age, gender) Psychographics Psychographic Example (personality, values, lifestyles) Romantic stimuli exposure (e.g, scene of lovers) increases sweet food consumption (e.g., ice cream) among abstract thinkers but reduces sweet food intake Physiology among concrete thinkers. (Genes, Neurotransmitters, Abstract thinkers tend to make metaphoric Hormones) association between love and sweetness.  Factors Affecting Consumer Decision Process Individual Differences Demographics (ethnicity, age, gender) Psychographics (personality, values, lifestyles) Physiological Example Near ovulation(배란기), women nonconsciously Physiology choose products that enhance appearance (e.g., (Genes, choosing sexy rather than more conservative Neurotransmitters, clothing). Hormones) Oxytocin increases trust, pair-bonding behavior (배타 적 배우자 관계) and willingness for donation.  Factors Affecting Consumer Decision Process Individual Differences Demographics (ethnicity, age, gender) Psychographics (personality, values, lifestyles) Physiological Example Physiology Celebrity ad becomes more effective when (Genes, physiological arousal level (높은 각성수준) is high, Neurotransmitters, whereas strong argument has a greater persuasion Hormones) impact under low physiological arousal.  Factors Affecting Consumer Decision Process Market Factors Product Strategy (Concept, Naming, Logo, Package) Price Strategy Promotional Strategy (Advertising, PR, SP, Personal Selling, DM, Sponsorship, Event) Distributional Strategy (Channel Selection, Store Design) Why do advertising practitioners love to use humor appeal? Humor advertising: ✓ places people in a good mood, which in turn lowers counterarguments(반박) to the message ✓ attracts attention, increases ad liking, reduces message comprehension ➔ distraction effect (주의분산효과) ✓ more effective when used in low involvement products than in high involvement products ✓ appeals to consumers of younger age, higher education Consumer Decision Processes: How do consumers make decision? Need Recognition Information Search Pre-purchase Stage Alternative Evaluation Purchase Purchase Stage Consumption Post-consumption Evaluation Post-purchase Stage Divestment Consumer Decision Process (CDP) Model (Blackwell, Miniard & Engel 2006) External Search for Need Recognition Marketing & Other Stimuli Information Search Alternative Evaluation Exposure Purchase Attention Internal Memory Search Consumption Comprehension Post-consumption Acceptance Evaluation Retention Dissatisfaction Satisfaction Divestment 30 Consumer Decision Process (CDP) Model (Blackwell, Miniard & Engel 2006) External Search for Need Recognition Marketing & OtherEnvironmental Stimuli Influences Information Search Alternative Evaluation Exposure Purchase Attention Internal Memory Consumer Search Consumption Comprehension Decision Processes and Behavior Post-consumption Acceptance Evaluation Individual Market Factors Differences Retention Dissatisfaction Satisfaction Divestment 31  Who Benefits from studying consumer behavior ▪ Marketing managers (example) Segmentation (시장세분화) Targeting Positioning 4Ps (Product, Place, Price, Promotion) Media & message strategies Case Study: Application of Psychographic Segmentation ▪ VALS (Value & Lifestyles): ✓ Segmentation approach developed by SRI international ✓ Widely adopted by many global companies such as Merrill Lynch and IBM to tailor their products and services in order to appeal to their customers. Merrill Lynch discovered that its clients were mainly achievement- oriented and wanted to be treated singularly, not as a group. As a result, instead of several bulls, only one bull was featured in the subsequent commercials. ✓ https://youtu.be/V4rO1DAj1I0?si=a90GusyE1uTKlKB2 ✓ https://youtu.be/dbBRIzEhbIM?si=Mwp88t7hgNmNy43x  Who Benefits from studying consumer behavior ▪ Ethicists and advocacy groups (사회운동가, 시민단체 등) (e.g., Antismoking Activists, Environmental Groups) A Korean antismoking activist group recently opened a YouTube channel. ✓ It attempts to alert the general public the harmful effects of tobacco and establish a social consensus for the strict regulation of the tobacco industry. ▪ Public policy makers and regulators school meals initiative for healthy children banning deceptive and misleading ads regulation of program-length commercial (i.e., cartoons) ▪ Weekday cartoons were considered as a 30 minute commercial promoting sales of cartoon characters to children in a deceptive manner and widely criticized. ▪ Consumers consumer education avoidance of deviant consumer behavior resistance to negative effects of marketing ▪ Academics teaching, conducting research, consulting various groups of interest