Consumer Behavior Models PDF

I.​ THE CONSUMER AND HIS BEHAVIOR Consumer - final users, individual households, who buy goods and services for personal consumption. Human Behavior - range of behaviors exhibited by humans influenced by both internal and external factors. Consumer behavior - consists of actions that consumers ta...

I.​ THE CONSUMER AND HIS BEHAVIOR Consumer - final users, individual households, who buy goods and services for personal consumption. Human Behavior - range of behaviors exhibited by humans influenced by both internal and external factors. Consumer behavior - consists of actions that consumers take in regard to making decisions about purchasing various goods and services. TYPES OF MARKET: -​ Consumers - Personal -​ Resellers - Buy and sell -​ Wholesaler - Sells in bulk -​ Retailer - Sells per unit -​ Business - Use for own operations -​ Institutions - Provide services -​ Government - Public use -​ International - Overseas transactions IMPORTANCE OF CONSUMER BEHAVIOR Understanding consumer behavior is crucial for businesses for several key reasons: ​ Improved Marketing Strategies: By understanding customer needs, preferences, and buying habits, businesses can tailor their marketing messages and campaigns to resonate with their target audience. This leads to more effective advertising, targeted promotions, and ultimately, increased sales. ​ Product Development & Innovation: Insights into consumer behavior help businesses identify gaps in the market, develop new products that meet unmet needs, and improve existing offerings based on customer feedback. ​ Enhanced Customer Experience: By understanding customer preferences and expectations, businesses can create a more personalized and satisfying customer experience. This includes everything from customer service interactions to the overall shopping experience. ​ Increased Customer Loyalty: By building strong relationships with customers and understanding their needs, businesses can foster customer loyalty and repeat business. ​ Competitive Advantage: Businesses that understand consumer behavior better than their competitors can gain a significant competitive advantage in the marketplace. CONSUMPTION STAGES The consumer decision-making process typically involves the following stages: 1. Pre-Purchase: ​ Problem Recognition: This is the initial stage where the consumer recognizes a need or want. This could be triggered by internal factors (e.g., hunger) or external factors (e.g., seeing an advertisement). ​ Information Search: The consumer actively seeks information about potential solutions to their problem. This can include internal searches (recalling past experiences) and external searches (consulting friends, family, reviews, etc.). ​ Evaluation of Alternatives: The consumer evaluates different options based on criteria such as price, quality, features, and brand reputation. They may create a shortlist of potential choices. 2. Purchase: ​ Purchase Decision: The consumer makes a decision to purchase a particular product or service from a specific vendor. This decision can be influenced by various factors, such as price, availability, and promotions. ​ Actual Purchase: The consumer completes the transaction, whether it's an in-store purchase, online purchase, or other methods. 3. Post-Purchase: ​ Post-Purchase Behavior: This stage encompasses the consumer's feelings and actions after the purchase. ○​ Customer Satisfaction: How satisfied the consumer is with the product or service. ○​ Product Use and Disposal: How the consumer uses the product and how they dispose of it after use. ○​ Post-Purchase Dissonance: This refers to the anxiety or regret that a consumer may experience after making a purchase, especially for high-involvement purchases. ○​ Word-of-Mouth: The consumer may share their experiences with others, influencing their purchasing decisions. ○​ Repeat Purchases: The consumer may repurchase the same product or service from the same brand in the future. CONSUMER BUYING DECISION PROCESS Need Recognition -​ Need, state of deprivation -​ Want, based on preference -​ Demand, purchasing power Information Search -​ Personal -​ Non-personal Evaluation of alternatives -​ Options, decision criteria Purchase decision Post-purchase behavior -​ Satisfaction - Retention (repeat purchase) - loyalty (choose over other options) -​ Dissatisfaction ​ ​ ​ High Involvement​ Low Involvement Significant Differences Between Complex Buying Behavior Variety Seeking buying Brands Behavior Few Differences​ Between Dissonance Reducing Habitual Buying Behavior Brands Buying Behavior Complex Buying Behavior - occurs when consumers are highly involved in a purchase and perceive significant differences between brands, often for expensive, infrequent, or risky purchases.​ Dissonance-Reducing Buying Behavior - arises when consumers are highly involved in a purchase but perceive little difference between brands, leading to post-purchase anxiety and a search for reassurance.​ Habitual Buying Behavior - involves low consumer involvement and little perceived brand differentiation, leading to routine purchases with little conscious effort.​ Variety-Seeking Buying Behavior - is characterized by low consumer involvement but a high perception of differences between brands, often driven by a desire for change and novelty rather than dissatisfaction. Impulse Buying Behavior - No behavior. APPROACHES TO CONSUMER BEHAVIOR Managerial Approach - This approach focuses on practical applications for businesses. It aims to understand consumer behavior to improve marketing strategies, product development, and customer relationships, ultimately increasing sales and profitability.​ Holistic Approach - This broader perspective considers consumer behavior within a larger social and cultural context. It examines the psychological, sociological, cultural, and environmental factors that influence consumer decisions and actions. This approach emphasizes the interconnectedness of individual consumers with society and the environment. II.​ FACTORS AFFECTING CONSUMER BEHAVIOR Cultural Culture & Subculture - Collection of norms, values, traditions, and behavior that are being shared by the members of the society. Groups of people within a culture with shared value systems based on common life experiences & situations. Social Class -​ AB -​ Has more capacity to focus on the ‘self -​ Don’t read other people’s emotions -​ Less empathic -​ Tendency to be happier as they rise in wealth -​ C -​ Strive for more economic stability -​ They are aware of the result of working hard -​ Has the capacity to meet their personal needs -​ DE -​ Depend more on other people -​ Greater empathy -​ More anxiety  -​ Less physically healthy Social Family - The most important consumer-buying organization in society. Social Roles & Status -​ AB -​ Upper Class -​ Investor, CEO, Business Owners -​ Generate Jobs -​ C -​ Working Class -​ C1 (White Collar Workers) -​ Professionals -​ C2 – Blue Collar Workers -​ Skilled Laborers -​ DE -​ Lower Class -​ Underclass -​ Unemployed -​ Unskilled Laborers -​ Government Welfare-Dependent Groups Membership Groups - Groups with direct influence and to which a person belongs to. Aspirational Groups - Groups an individual wishes to belong to. Reference Groups - Groups that form a comparison or reference in forming attitude/behavior. -​ Opinion Leaders -​ Influencers -​ Online Social Networks Personal Factors Age & Life Cycle -​ BABY BOOMERS – 1946-1964 -​ GENERATION X – 1965-1979 -​ XENNIALS – Late 1970s-Early 1980s -​ GENERATION Y (MILLENNIALS) – 1980-1995  -​ Gen Y.1 – Older Millennials -​ Gen Y.2 – Younger Millennials -​ GENERATION Z (iGEN/Centennials) – 1996-2010 -​ GENERATION ALPHA (The Children of Millennials) – 2010-2025 Occupation - A job or profession of an individual. Affects goods and services bought by consumers. Lifestyle - An individual’s pattern of living -​ Captured through his/her AIO: -​ Activities -​ Interests -​ Opinions Personality - The unique psychological characteristics -​ Leads to consistent and lasting responses to environment -​ Myers-Briggs Personality Type Indicator: -​ Extraversion/Introversion – how we relate to others -​ Sensation/Intuition – how we gather information -​ Thinking/Feeling – how we evaluate information -​ Judging/Perceiving – how we react to the outside world Psychological Factors Beliefs vs Attitudes Beliefs - a descriptive thought that a person has about something based on knowledge, opinion, faith. Attitudes - describes a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea. Learning - The change in an individual’s behavior arising from experience. Perception - The process by which an individual selects, organizes, and interprets information from a meaningful picture of the world. -​ Selective Attention - The tendency to focus on certain stimuli while ignoring others. It's like having a spotlight that you can shine on specific things, but everything outside that beam becomes less noticeable or even invisible. -​ Selective Distortion - The tendency to interpret information in a way that aligns with your existing beliefs or expectations, even if it contradicts the actual information. -​ Selective Retention - The tendency to remember information that is consistent with your existing beliefs and values, while forgetting or downplaying information that contradicts them. Motivation - A drive that causes a person to do something -​ In consumer behavior, the motivation of a person is his need which needs to be fulfilled. ECONOMIC MAN -​ Decisions are based on the ability to maximize utility while spending the minimum effort. -​ Utility theory - a fundamental concept in economics that attempts to explain how individuals make choices. It's based on the idea that people make decisions by trying to maximize their own satisfaction or "utility." -​ Diminishing Marginal Utility - satisfaction is diminishing due to easier access. Thus, wanting a different source of satisfaction. PSYCHOLOGICAL APPROACH -​ Behavior is a subject to biological influence through “instinctive” forces or drives which act outside of the consciousness of thought -​ Behaviorist - explained by external events. -​ Actions, thoughts, and feelings can be regarded as behaviors. -​ classical conditioning COGNITIVE -​ Behaviors are related to the interpersonal cognition -​ Individual is viewed as an “information center” -​ Aids in internal decision making -​ Stimulus-organism-response model HUMANISTIC  -​ Emotions play an important role in decision making which is neglected by the cognitive approach. -​ Volition - consumers ability to exercise willpower, self control, and intentionality in their actions or purchasing behavior. -​ Altruistic motives - focused on the desire to change others, even if it comes at a personal cost or without direct personal gain. III.​ CONSUMER BEHAVIOR MODELS PAVLOVIAN MODEL -​ also known as classical conditioning, is a learning theory developed by Russian physiologist Ivan Pavlov. It explains how organisms learn to associate two stimuli, so that one stimulus comes to elicit a response that was originally caused by the other stimulus. -​ Unconditioned Stimulus (UCS): A stimulus that naturally and automatically triggers a response without any learning needed. In Pavlov's famous experiment, the food was the UCS. -​ Unconditioned Response (UCR): The natural and automatic response to the UCS. In Pavlov's experiment, the dog's salivation in response to the food was the UCR. -​ Neutral Stimulus (NS): A stimulus that initially does not elicit the response of interest. In Pavlov's experiment, the bell was the NS. -​ Conditioned Stimulus (CS): A previously neutral stimulus that, after being repeatedly paired with the UCS, comes to elicit a response. In Pavlov's experiment, the bell became the CS. -​ Conditioned Response (CR): The learned response to the CS. In Pavlov's experiment, the dog's salivation in response to the bell was the CR. ECONOMIC MODEL -​ Price Effect - lesser the price, more quantity will be purchased. -​ Substitution Effect - lesser the price of substitute product, the lesser will be the utility of the original product brought. -​ Income Effect - when more income is gained, more quantity will be purchased. INPUT-PROCESS-OUTPUT MODEL (IPO) Input - the environment stimuli. Marketing 4Ps (Product,Price,Place,Promotion) Process - the buyer’s “black box”. This is the buyer’s decision process based on their characteristics. Output - The buyer’s responses. Purchase decision and the Post-Purchase behavior. PSYCHOLOGICAL MODEL -​ Learning is change in behavior -​ The perception of the customers vary: -​ Selective Attention - The tendency to focus on certain stimuli while ignoring others. It's like having a spotlight that you can shine on specific things, but everything outside that beam becomes less noticeable or even invisible. -​ Selective Retention - The tendency to remember information that is consistent with your existing beliefs and values, while forgetting or downplaying information that contradicts them. -​ Selective Distortion - The tendency to interpret information in a way that aligns with your existing beliefs or expectations, even if it contradicts the actual information. MOTIVATION PERCEPTION LEARNING BELIEFS & ATTITUDES HOWARD-SHETH MODEL -​ a comprehensive model of consumer behavior that attempts to explain the complex decision-making process involved in purchasing goods and services. -​ Inputs: Consumers are exposed to various stimuli from marketing efforts and their social environment. -​ Perceptual and Learning Constructs: These inputs are processed through the consumer's internal psychological filters, influencing their perception, attitudes, and learning about the product or brand. -​ Outputs: The consumer's internal processes lead to observable responses, such as developing a preference for a particular brand, forming an intention to purchase, and ultimately making a purchase decision. -​ Exogenous Variables: External factors can influence any stage of the decision-making process.​  -​ Significative Stimulus - refers to any element in the environment or marketing mix that is capable of capturing a consumer's attention and influencing their perception, attitudes, or behavior. -​ Quality -​ Price -​ Distinctiveness -​ Service -​ Availability - Overt Search (Actual) - refers to the active and conscious effort consumers make to seek out information about a product or service. It's a deliberate process where they actively look for details to help them make a purchase decision. -​ Stimulus Ambiguity (Perception) - occurs when a stimulus, such as a product, advertisement, or message, can be interpreted in multiple ways. This lack of clarity can arise from various factors, leading to different perceptions and responses from consumers. -​ Significative Stimulus & Stimulus Ambiguity comparison - Feature Significative Stimulus Stimulus Ambiguity Primary Goal Capture attention and influence Create multiple interpretations (can be perception intentional or unintentional) Characteristics Relevant, novel, intense, emotional, Vague, symbolic, culturally influenced, symbolic individually interpreted, context-dependent Impact Increased attention, shaped perception, Confusion, varied responses, increased influenced attitudes, triggered cognitive effort, delayed decisions, motivation, enhanced memory potential negative perception SOCIOLOGICAL MODEL -​ Beliefs that a consumer is part of a society and may be a member of different groups. -​ Types of groups: -​ Membership Groups - Groups with direct influence and to which a person belongs to. -​ Aspirational Groups - Groups an individual wishes to belong to.  -​ Reference Groups - Groups that form a comparison or reference in forming attitude/behavior. FAMILY DECISION MAKING -​ -​ ENGEL-KOLLAT-BLACKWELL MODEL (EKB) -​ Process is the consumer decision process. -​ Shows the consumer decision process is affected by external forces. -​ Decisional variables and external factors affect the decision process. EXPECTATION CONFIRMATION MODEL  -​ Focused on Information system models -​ Used on technological items and models NICOSIA MODELS -​ Model to use if testing new products.