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06-08-2024 Shopper, Buyer, and Consumer Benefits Shopper, Buyer, and Consumer Benefits...

06-08-2024 Shopper, Buyer, and Consumer Benefits Shopper, Buyer, and Consumer Benefits “Influencers” exert various levels of power over the choices People do not buy products, they buy benefits (Practical / a person makes in certain product categories Unusual) Shoppers go into the marketplace through various means; Different types of people seek different benefits they can be “just looking” or purposeful A watch (Student vs Gift) Buyers complete the exchange transaction The shopper is often the buyer, but not always The marketplace is anywhere that a transaction can be Consumers actually use or possess that which is “purchased” completed Benefits and the Total Product Concept Total Product Concept Tangible benefits are in some sense measurable The basic core is the bundle of utilitarian benefits purchased Intangibles are associated with feelings experienced when Examples are laptop design, features, memory, speed, owning or using a product or service operating system, installed software, etc. Total product concept is a broader view of goods and services as a sum of their benefits The accessory ring includes “added-value” benefits Basic core Accessory ring Examples are store reputation, manufacturer prestige, location convenience, salesperson’s friendliness, etc. Psychological ring Time dimensions Total Product Concept Market Segmentation The psychological ring includes benefits resulting from the Different consumers seek different benefits packages in consumer’s feelings associated with the possession or use of a product different situations Examples are a sense of belonging, feeling thrifty, feeling ahead of the crowd, being a good homemaker Consumers usually fall into groups or clusters of individuals seeking similar benefits Perceptions of time affect perceptions of other benefits. Every purchase either saves time or expands time of the prospective consumer. Segmenting markets means identifying like-minded clusters Example eating at fast-food joint saves time as against behaving in similar ways and making similar decisions in eating at restaurant which inflates time. the marketplace in similar situations 1  06-08-2024 Consumer Benefits and Market Segmentation Consumer Benefits and Market Segmentation Segment bounding is a means to differentiate among Marketers do not create market segments; they find them consumers and among market segments Develop a set of descriptors: combinations of characteristics Firms help marketers find and understand market Bound segments to a specific geographic location segments Bound segments in time: relevant and up-to-date data Example: Market segments occur in college education Segment viability requires distinctiveness and sufficient potential to be pursued Sufficient size, measurable, clearly differentiated, reachable Consumer Benefits and Market Segmentation The Consumer Decision-Making Process Segmentation strategies used by marketers Consumer decision models describe the processes Mass marketing or undifferentiated marketing consumers go through before, during, and after making a Concentrated marketing, also known as focused or purchase niche marketing; “segments of one” becoming a reality Differentiated marketing Models map antecedents (causes) of a particular behavior and consequences (results) Countersegmentation reduces the number of market segments served Cause and effect help marketers anticipate and possibly influence consumer actions The Engel, Kollat, and Blackwell (EKB) Model EKB is a multimediation model EKB shows the components of decision making 1.Input 2.Information processing 3.Decision process 4.Decision process variables 5.External influences EKB demonstrates the multiple relationships and interactions among the components 2  06-08-2024 The Engel, Kollat, and Blackwell (EKB) Model Potential consumers are continually subjected to input of all Consumer Decision kinds Process Some input is marketer controlled, such as advertising 1. Problem or need recognition Some input comes from friends or personal recollections 2. Information search 3. Alternative evaluation The EKB model identifies five methods of information 4. Choice processing 5. Outcome 1. Exposure 4. Yielding 2. Retention 5. Comprehension 3. Attention Studying Consumer Behavior Two Types of Outcomes Are Possible The study of consumer behavior is an applied science 1. Positive evaluation leads to satisfaction; negative which draws on knowledge from disciplines such as evaluation leads to dissatisfaction economics, psychology, sociology, & statistics. Methods 2. Dissonance is the feeling of uncertainty that you’ve employed to study consumer behavior are: made the right choice Observation – this approach to study consumer behavior If consumers are satisfied with a purchase, they may consists primarily of observing consumer behavior in become “loyal” different situations. Some common observational techniques are a) in-home observation – which places marketers inside c) physiological observational method – which involves people’s homes to examine exactly how products are techniques borrowed from medicine, psychology and consumed. The observation may be done with personal other sciences. These includes cameras for measuring interviews and surveys, video cameras or other eye movement, galvanic skin response and MRI. technologies that measure actual experience with the product Interviews and Surveys – surveys are an efficient way b) shadowing – in which a researcher accompanies or of gathering information from a large sample of “shadows” consumers through the shopping and consumers by asking questions and recording consumption process, asking questions about each responses. They can be conducted by mail, telephone, step of the process. Internet of in person. Some methods are 3  06-08-2024 Experimentation – as a research, methodology attempts focus groups – usually consists of eight to twelve people to understand cause and affect relationships by carefully involves in a discussion led by a moderator skilled in manipulating independent variables (as number of ads, persuading consumers to discuss thoroughly a topic of packaging design) to determine how these changes interest to the researcher affect dependent variables (as purchase intent or behavior). Two main types of experimentation are longitudinal studies – involve repeated measure of consumer activities over time to determine changes in a) laboratory experimentation – is conducted in a their opinion, buying and consumption behaviors. A physical environment (commercial/academic) that common method of collecting data is through permits maximum control of variables being studied membership clubs or customer loyalty programs b) field experiment – which takes place in natural setting Consumer Decision Process Action Options such as home or a store For a high-involvement product, the consumer will likely use the five EKB model decision process steps 1.Begin the process and stay with it until complete Consumption research – focuses on how people use 2.Start and stop and then complete products rather than how they buy them, and can involve 3.Start and stop and never finish any of the research methods (observation, survey or 4.Start and, because of marketplace changes, return experimentation). This approach requires researchers to to an earlier step get inside people’s homes / places to understand how For low involvement, the consumer typically goes lifestyle, values & societal trends affect consumption directly from problem recognition to choice Problem Recognition: Actual State versus Problem Recognition Desired State 1. We recognize that we need something Psychological process through which we evaluate the difference between our actual state and our desired state 2. We start the process to find the product or service Comparison of our current need or benefits state with that will deliver the benefits to fill the need or solve what we would like it to be the problem The greater the “perceived distance” between these two, the more clearly the consumer recognizes potential need 4  06-08-2024 Problem Recognition: Opportunity Recognition Influences on Problem Recognition You are completely satisfied with your old camera Situational influences Replace products that are broken, lost, or worn out You spot an offer for powerful lens and start imagining Product acquisition leads consumers to recognize new needs The consumer does not perceive a problem, but perceives Changed circumstances lead us to perceive new needs an opportunity that leads to a comparison between actual state and a new desired state Influences on Problem Recognition Influences on Problem Recognition Consumer influences Marketing Influences Actual state consumers look to existing goods and services Marketing information may lead the consumer to reevaluate Desired state consumers look to new products his or her actual and desired states Price information can be influential Sense of drive to action (motivation) a consumer experiences Promotional activities: advertising, coupons, free offers, once a problem or need has been recognized sweepstakes, product demonstrations, rebates 1. Optimize satisfaction 4. Resolve conflict Product or service developments can trigger a reassessment 2. Prevent possible future problem 5. Maintain Satisfaction of actual and desired states 3. Escape from a problem Place actions can trigger need recognition Information Search If We Know... Marketplace information is all around us 1. Why consumers are searching for information Consumers can and do search for and find information 2. Where they are looking on products in many ways 3. What information they are looking for Different consumers look for differing amounts and 4. How extensively they are willing to search types of information We can identify potential customers and their information needs Consumers often combine their information search with alternative evaluation 5  06-08-2024 Types of Information Search Internal Information Search Prepurchase information search Involves no sources other than the consumer’s own Directed information searches are purposeful & deliberate memory, knowledge, and experience Browsing may eventually lead to purchasing Experts are consumers who have gained extensive prior Accidental information search: a consumer who is not knowledge through experience and training looking for anything in particular is drawn to a product Postpurchase information search Novices are consumers who have little or no prior knowledge or experience with a product or service A consumer who has already made a purchase continues to category gather information and/or evaluates other options Ongoing search Consumers observe and stay current with what is happening Quality of Internal Information External Information Search and the Need for External Search Situational Influences Need for External Factor Status Search Components are ability to search, motivation to search, Satisfaction with past costs of search, and benefits of search experience High None to low Time since last decision Long High Changes in alternatives Many High Perceived value of the search (Value of Information) Problem is new Yes High Quality of relevant information High None to low Ease of acquiring and using information Quantity of relevant Information control: Consumers wish to have some control over information Sufficient None to low what information they are exposed to, how long it will be presented to them, and what information will follow External Information Search Two Types of Capital Situational Influences Information capital is information about product attributes, benefits, and prices learned by a consumer Cost of External Search (Benefit vs Price) in the past that can still be used in the current Financial situation Time Skill capital is related to how to search. Consumers Decision delay who have learned how to search from past experience Physical will enjoy lower search costs, and the amount of Psychological information gathered will also be higher Information-overload 6  06-08-2024 External Information Search External Information Search Situational Influence Consumer Influences Actual or Perceived Risk (Purchase decision related risk) Quality of internal information (reliable, trust, quantity, useful) 1. Functional or performance Need to acquire information (Inverted U, Knowledge & Extent) 2. Financial Confidence in decision-making ability (consumer influence) 3. Psychological Locus of control theory (consumer influence) 4. Social Externals believe that events or outcomes are outside their 5. Physiological control 6. Time Internals believe that they are at least in part responsible for 7. Linked-decision the outcome of their actions External Information Search External Information Search Product Influence Purchase Decision Influences Type of Goods or Services Sought Characteristics of the Purchase Decision 1.Specialty goods and services (strong preference) 1. Extent to which the number of possible solutions is limited If the acceptable characteristics sought are narrowly defined, 2.Shopping goods and services (major purchase) consumers are likely to accept the need for an extensive search 3.Convenience goods and services (every day goods) 2. Need for trial Search products: most essential attributes and benefits can If a product needs to be tried out before it is purchased, easily be evaluated prior to the purchase consumers are more likely to engage in external search Experience products: the evaluation cost is so high that 3. Difficulty of trial direct experience results in the lowest expenditure of When prepurchase trial is difficult or impossible, consumers resources search for a reliable, quality supplier External Search Strategy (Limiting Search Activity) Marketplace Information Sources Using sets: groups used to limit external search and alternative evaluation General/Independent Marketer-Controlled/ Sources Advocate Sources Universal set—all options to which the consumer has access Face-to-face Personal influence Salespersons Retrieval set—consumer has front-of-mind awareness Telemarketing Relevant or consideration (evoked) set—consumer accepts Media General purpose Mass advertising media Irrelevant information impact In-store information Consumers selectively look for “confirming” information that the In-store display product or service delivers the desired benefits Package labels Information deemed “irrelevant” by its target market(s) will weaken consumer beliefs concerning the product’s ability “to deliver” 7  06-08-2024 Sources and Uses of Believability of Sources of Information in “U-Commerce” Information on Products and Services U-commerce (Uber-commerce) flows out of the hyper-networking Consumer Reports (58 percent) of computers Recommendation from a friend (52 percent) 1. Ubiquity: networked computers are everywhere Direct-mail piece (4 percent) 2. Universality: access available anywhere Celebrity endorsement (3 percent) 3. Uniqueness: customized to consumer needs 4. Unison or unified: change one, change them all Consumer Benefits and Evaluative Criteria Alternative Evaluation The process through which we compare and contrast different solutions to the same marketplace problem Consideration sets reduce the number of alternatives to a manageable size Usually occurring simultaneously with information searching, it involves comparing different Consumers create consideration sets of heterogeneous Products alternatives when Services 1.They don’t want to miss a viable choice Retail outlets 2.They see some common benefits to make comparison easier Brands 3.Different groups of potential choices offer a benefits Habitual buying skips alternative evaluation trade-off Two Types of Consumer Sets Evaluative Criteria The universal set is made up of all alternatives to which The means through which consumers compare product the consumer has reasonable access, whether she or he is classes, brands, vendors, and so on aware of them or not Tangible benefits are associated with such characteristics A retrieval set is the subset that consumers can bring up as price, color, size, shape, and performance from memory Intangible benefits criteria also may be considered, such as The objective for marketers is to make sure that their whether the consumer’s perceived image matches the products, services, outlets, or brands are part of the image of the brand user or other feelings associated with retrieval set and therefore remembered when it comes ownership or use time to buy 8  06-08-2024 Number of Evaluative Criteria Salience of Evaluative Criteria Consumers typically use 6 or fewer evaluative criteria The more important the consumer considers the purchase and Marketers determine the salience of each evaluative the more experience he or she has with the product category, criterion and identify those characteristics most likely to the greater the number of evaluative criteria used influence target consumers Evaluative criteria are often used in combination, making it Salience varies from consumer to consumer, product to difficult to understand the influence of each on consumer product, and situation to situation choice Some consumers use ethical considerations as evaluative Watch out for feature fatigue criteria The more important the decision is to the consumer, the fewer acceptable alternatives there are Trivial Attributes Determinant Attributes Consumers on occasion treat unimportant attributes as Salient (important) attributes that have a direct influence though they are critically important on alternative evaluation and final choice Are unique to one of the options Draw attention away from more important attributes Product quality risk involves functional, performance, and physical risks to which the consumer may be exposed Dilute the effect of important attributes Personal risk is tied to the negative emotions felt by a The trivial attribute might act as a “heuristic cue” that consumer when the product fails allows the consumer to forgo the more detailed evaluation process of more meaningful attributes Price Brand Reputation For most consumers, and in many buying situations, price is the most significant influencer in alternative evaluation Brand name is frequently perceived by consumers to be an Not used in isolation but one of a mix of evaluative criteria indicator of product or service quality Normative reference price is a price that consumers consider A high-quality position is important in establishing brand “fair” or “just” power, also called “brand equity” Dual entitlement principle is where people expect Brand-quality relationship most likely tied to perceived risks manufacturers will abide by community standards of costs associated with a poor purchase decision and profits Initial Price vs Actual cost of ownership 9  06-08-2024 Country of Origin Consumer Decision Rules The nation where a particular product or service primarily Marketers encourage consumers to make purchase comes from decisions that favor the marketers’ brands Country of design and country of manufacture are now part A noncompensatory consumer decision rule is one in of the country of origin picture which the weaknesses of a possible alternative are not Perceived capacity to manufacture the product category is offset by its strengths more important than the perceived capacity to design or A compensatory consumer decision rule allows for trade- conceive it offs among strengths and weaknesses However, effect of design increases with product complexity If two alternatives are close in evaluation, the one that takes more thought processing effort will be seen more negatively Non-compensatory Rules Non-compensatory Rules Disjunctive rule Lexicographic rule Consumer establishes a minimum “score” or level of benefits to be delivered on each determinant criterion Consumer compares the alternatives based on the most Conjunctive rule important evaluative criterion Consumer considers all criteria as determinant, and a minimum/ maximum acceptable value or score is Elimination-by-aspects rule established for each one Consumer ranks the evaluative criteria and also sets minimum scores that must be met on each of them Compensatory Rules Decision Heuristics Simple additive rule Price can be perceived as an indicator of quality Consumer scores each alternative on each of the Brand reputation shows the power of brand names evaluative criteria and sums the individual evaluative criterion scores Key product signals imply attractive attributes Weighted additive rule Mere-possession can lead to preference for that brand or Consumer assigns a relative weight to each evaluative for that good or service criterion. Then the score on each evaluative criterion is multiplied by the relative weight. These weighted scores are summed for each alternative being considered 10  06-08-2024 Planned versus Unplanned Initial Commitment by Consumers Purchasing During alternative evaluation consumers first commit to a Specifically planned purchase product category and then move toward selecting a specific Consumer decides on the item and even the brand brand or retail outlet before visiting a store or investigating other outlet options Consumers are particularly receptive to messages from marketers during this stage Generally planned purchase The amount of help needed depends on the extent to which Before visiting an outlet, consumer decides to purchase their purchases are planned or unplanned an item from a certain product category; the specific item and the brand are not yet decided Planned versus Unplanned Planned Purchasing Behavior Purchasing Substitute purchase Intervening variables include changes in financial status, Consumer switches from a specifically or generally employment situation, family or household size, social planned item to an altogether different one conditions or norms, and even weather conditions The amount of time a consumer spends deliberating about Unplanned purchase a choice decision affects both the actual purchase and the No conscious prior consideration or need recognition timing of that purchase Deshopping: consumers deliberately plan to return goods after the consumption experience even though there are no actual faults with the items Unplanned Purchasing Behavior Types of Unplanned Purchase When we enter the marketplace, we carry with us a Pure impulse purchases are those bought for the sake of written or mental list of places to go and things to buy novelty When we buy items that are not on either list, the Reminder impulse purchases are usually of routine purchase is considered unplanned or impulse products Unplanned purchases are low-involvement products and A consumer responds to a suggestion impulse when a products we do not routinely purchase product, seen for the first time, stimulates immediate need recognition 11  06-08-2024 Encouraging Unplanned Purchases at Point Types of Unplanned Purchase of Sale In a planned impulse purchase, a consumer responds to a Point-of-purchase Free samples special incentive to buy an item once considered but not displays Free items selected Price reductions Store atmosphere In-store coupons Store layout In scrambled merchandising, a wide variety of unrelated Multiple-item discounts Merchandise shelving product types are offered in close proximity to one another in a single store Packaging display In-store demonstrations Salespeople Choice: Outlet Selection When Brand Choice Drives Outlet Choice Outside the home 1. The consumer has no particular outlet preference or Retail stores, strip malls, discount malls, huge indoor loyalty shopping centers, new “town centers,” flea markets, swap meets, auctions, or even garage sales 2. Brand loyalty is strong Within the home Catalogs, fax machine, telephone, watching television shopping channels, or a variety of sites on the Internet 3. The consumer has sufficient product information to make the expertise of sales personnel or other outlet The challenge for marketers is to understand exactly what characteristics unimportant drives consumer choice When Brand Choice and Outlet Choice Work When Outlet Choice Drives Brand Choice Together 1. Store loyalty or preference is high The consumer seeks to buy a preferred brand at an appropriate outlet 2. Brand loyalty is low The marketer’s best strategy is to be able to have, in 3. The consumer has insufficient product information and the eyes of the target market, the “best” brands and therefore values the characteristics of the outlet—such as the “best” outlet helpful sales staff 12  06-08-2024 Outlet Image Outlet Image Retail outlet image: How does it fit your self-image? Attributes Marketing Functional attributes Merchandise Retailers can adjust outlet Merchandise selection, price ranges, credit policies, store Service image to attract target layout Clientele customers Psychological attributes Physical facilities All marketers, whatever the Convenience medium, seek to achieve a A sense of belonging, a feeling of warmth or friendliness, perfect fit with their target Promotion or a feeling of excitement customers Store atmosphere Consumers form an outlet image based simultaneously on Institutional factors functional and psychological attributes Post-transaction satisfaction How Consumers Choose among How Consumers Choose among Outlets Outlets Image Level of involvement Perceived risk Advertising Price Outlet size and location Why Do We Shop? Personal Motives Why Do We Shop? Social Motives The tendency of people within societies to role-play The desire for social experience outside the The sake of diversion home A means of self-gratification To communicate with others of similar interests To learn new trends Peer group attraction The physical activity A desire for status and authority The sake of sensory stimulation The pleasure of bargaining 13  06-08-2024 Why Do We Shop? Hedonic Motives How Do We Shop? Advantage Shopping orientation is the style or way of shopping Gratification In-store economizers Role Economy planners Value Involved traditionals Idea Homemakers Social Apathetic or mechanistic shoppers Convenience seekers Choice Decisions during The Shopping The Shopping Process Process A surrogate shopper is a person, firm, or other entity paid by the consumer to make or facilitate a product or service 1. Which product type to buy selection decision on behalf of that consumer 2. How many to buy Shopping behavior in different shopping venues 3. Which brand(s) to buy Shopping center traffic primarily consists of women 4. The outlet at which to purchase Both men and women go to the mall mainly to shop 5. When to complete the transaction Catalog shoppers rated retail service contact and unusual 6. How to pay product source benefits higher than did shopping center 7. Other decisions shoppers 14  1 2 -0 9 -2 0 2 4 Product and Service Consumption Consumption and Post- Purchase Behavior Consumption is the possession and/or use of goods and services and the benefits they deliver Consumption set is the mix of goods and services acquired and used Naveen Kashyap, PhD Consumption and lifestyle are inseparable Indian Institute of Technology Guwahati Consumption and the culture in which we live are also Email: [email protected] closely connected Consumption Situation Consumption Situation The consumption situation is the physical and social context Extensive marketer control in which we actually use goods and services purchased The marketer is present during consumption and can both watch and influence how it plays out The physical context is simply the time and place of consumption Limited marketer control Marketers have the opportunity to watch how their The presence of others gives the consumption situation a products are consumed and improve or promote them social context accordingly A consumption episode is defined as “the set of items No marketer control belonging to the same event and occurring in temporal proximity” The act of consumption takes place elsewhere Ritual Consumption Sacred and Profane Consumption Sacred consumption is tied to holidays and rites of passage Consumption of goods and services that is tied to Some marketers give the term a broad application, specific rituals covering any objects, places, behaviors, days, or seasons Rituals are patterns of behavior tied to events that that have special meanings to any individual or group of 1 we consider important in our lives individuals It is important for marketers to understand rituals Profane consumption is part of everyday life and the behaviors they give rise to As cultures and other social groups change over time, the processes of desacralization (losing sacred status) or sacralization (gaining sacred status) occur  1 2 -0 9 -2 0 2 4 Consumption Effects on Consumer Compulsive Consumption Satisfaction “A response to an uncontrollable drive or desire to obtain, use, or experience a feeling, substance, or activity that leads Satisfaction is key to the long-term relationships that the individual to repetitively engage in behavior that will provide benefits to the buyer-seller equation ultimately cause harm to the individual and/or others” If we’re happy with a product or service purchased, Family influences we’re likely to buy it again Abuse of alcohol or other forms of substance abuse, Using “avatars” has a positive effect physical violence, divorce, separation, single parenthood, or other types of emotional conflict Satisfaction versus Dissatisfaction Three Components of Satisfaction The level of satisfaction or dissatisfaction we experience depends on the perceived difference between expected 1. Consumer satisfaction is primarily emotional, performance, called “expectation,” and actual or perceived although sometimes cognitive performance, called “realization” Satisfaction means different things to different people 2. The response has a particular focus, or object, such as the product, its consumption, the purchase One’s level of satisfaction can change, for better or worse, decision, the salesperson, or the store/acquisition over time Satisfaction can change when consumer needs /preferences 3. The timing of the response is an issue change There appears to be a “social dimension” to satisfaction Relationship between Expectation and Satisfaction More on Negative Disconfirmation Expectancy disconfirmation: if realization—actual or Contrast effect: if there is a wide negative disparity perceived performance in terms of possession and/or use— between expectations and actual performance, customers does not match expectation tend to magnify this poor performance With simple confirmation, the purchase performs as Asymmetric effect: If a consumer experiences a certain level 2 expected, resulting in satisfaction of negative disconfirmation with the performance of a Positive disconfirmation occurs when performance is better particular attribute, this has a greater impact on the than expected, leading to a higher level of satisfaction dissatisfaction level than the same level of positive Should the purchase fall short of expectations, a condition of performance of the same attribute would have on the level negative disconfirmation occurs, resulting in some level of of satisfaction dissatisfaction  1 2 -0 9 -2 0 2 4 Ideal, Equitable, and Expected Relationship between Performance Performance and Satisfaction Performance is ideal if a purchase performs as or better Objective performance is service- or product-related than expected It depends on whether the product or service meets all Performance is equitable if it is adequate for the cost and functional (benefits) expectations effort the consumer made to obtain the product Affective performance is consumer-related Expected performance, the lowest level of satisfactory It depends on whether the purchase meets the emotional performance, means that although the purchase works out (benefits) expectations (feelings associated with possession as anticipated, it barely qualifies as satisfactory and use of product or service) of the buyer How Marketers Can Close the Gap Purchase-Associated Cognitive Between Expectation and Performance Dissonance Match product benefits to consumer needs As the consumer makes a commitment to the purchase or Otherwise, there is little point in continuing the selection of the product—in most cases before use or possession—there is a feeling of uncertainty about whether marketing effort the right choice is being made Product information and communications must 1. Importance of the purchase decision clearly describe not only the benefits of the 2. Consumer’s tendency toward anxiety product, but also the way in which it is to be used 3. Finality of the purchase decision 4. Clarity of the final purchase choice How Consumers Attempt To Reduce How Marketers Attempt To Reduce Dissonance Dissonance Consumers try to find ways to reinforce the desirability of Marketers should do everything in their power to match the choice made their products with the appropriate target consumers Consumers may try to make the “losing” choices look weaker The product itself, its packaging, and promotional 3 in comparison to the brand they actually purchased communications should all be developed with this objective Some consumers make a conscious effort after purchase to in mind view the choice decision as less important than they had Return policies, warranties, in-store demonstrations, and originally thought postpurchase installation and service can all serve to increase the consumer’s level of comfort with the purchase  1 2 -0 9 -2 0 2 4 Positive Post-purchase Behavior: Post-purchase Behavior Customer Loyalty Analyzing what happens after a sale is as important as Loyalty is a feeling of commitment to a product, brand, understanding what causes consumers to buy in the first marketer, or outlet that results in high levels of repeat place purchasing or outlet visiting Analyzing both positive and negative post-purchase Consumers might always buy a particular brand, but unless behavior is a very effective means through which... there is commitment, they are not considered loyal Goods and services can be improved The satisfaction trap: just because a customer is satisfied Promotions better targeted does not make him or her loyal Strategies reshaped both to keep current customers and to attract new ones like them Loyalty Phases Factors Influencing Brand Loyalty 1. Cognitive loyalty is based on beliefs about the brand (outlet) only 1. Number of brands available 2. Affective loyalty, a liking or positive attitude toward the 2. Frequency of purchase brand, is developed on the basis of repeated satisfying use 3. Perceived differences among brands 3. Conative loyalty may be thought of as “a good intention” 4. Level of involvement based on repeated episodes where positive affect toward 5. Level of perceived risk the brand is experienced 6. Brand benefits 4. Action loyalty occurs when motivation is converted to readiness to act, with the additional desire to overcome the obstacles that might prevent the act Loyalty to Multiple Brands, Product Brand-Loyal Consumers Benefits, Product Form, and Use Occasion Tend to be self-confident Many consumers are loyal to a group of brands that are Feel capable of making good brand choices in the essentially equal in their eyes marketplace and will stay with the choices they make The consumer makes a decision based on what is happening 4 Tend to perceive quite high levels of risk involved in in the marketplace product purchase and therefore stand by accepted Brand advertising should not star the brand alone, but brands to reduce that risk should also emphasize key product-class benefits, characteristics, and situations of consumption Tend to be outlet loyal  1 2 -0 9 -2 0 2 4 Positive Word-of-Mouth Negative Postpurchase Behavior If consumers have a positive experience with a product or Recovery expectations are tied to customer beliefs about service, they may spread the word to friends and others the level of “reparation” that is appropriate after a failure 1. Consumers are satisfied with the experience Negative word-of-mouth (Friends and Family) 2. Consumers are committed to the product, brand, or Rumor (Maggi, Gillette, Procter & Gamble) outlet Consumer grudge-holding (exit, voice dissatisfaction, 3. There is strong identification on the part of the consumer terminate loyalty) with the product, brand, or outlet Complaint behavior Complaint Behavior No action, private action, public action Complaint Behavior Why some consumers complain? 1. The purchase is important to the consumer 2. The consumer’s level of knowledge of and experience with the product purchased are significant 3. The time, energy, and financial costs of making a complaint 4. Consumers perceive that complaining will lead to a positive outcome Marketer Actions Increase the Complaint Response by Marketers Probability of Customer Satisfaction Distributive justice, where equity in terms of settlement 1. Build realistic expectations about product or versus perceived costs experienced by the person is the service performance issue 2. Demonstrate or explain product use 5 Procedural justice, which is derived from the complaint policies, procedures, and criteria used to make a decision 3. Stand behind the product Interactional justice, which has to do with the way 4. Encourage customer feedback customers are treated during the process 5. Periodically make contact with customers  1 2 -0 9 -2 0 2 4 Product Disposition Role of the Consumer The process of reselling, recycling, trashing, Sell Modify to better perform repairing, trading, and the like associated with the Donate to charity the original task physical product, packaging, and its promotional Give away Repair materials Rent out Throw in the trash Marketers have a joint responsibility with consumers Loan out Recycle to find and/or provide appropriate product Modify to a new purpose disposition methods Role of the Marketer Government regulations lead directly to environmentally Consumer Perception responsible product development and marketing measures Demarketing occurs when sellers attempt to reduce the demand for their goods and services as a result of environmental sensitivity and/or undersupply of their Naveen Kashyap, PhD products or services Indian Institute of Technology Guwahati Green marketers send the message that their products are Email: [email protected] environmentally friendly There frequently is a cost involved to be environmentally conscious Psychophysics Sensory Perception What are the distinguishing features loyal consumers perceive between their preferred brands and the others on the market? 6 Perception is the way in which an individual gathers, processes, and interprets information from the environment Sensory modalities, Gestalt psychology, and consumer interpretations of perceptions  1 2 -0 9 -2 0 2 4 Factors Influencing Gestalt Perception Gestalt Theory of Perception The Gestalt principle can be stated simply as, “the whole adds up to more than the sum of its parts” The most effective point-of-purchase materials are those that use colors and shapes in an arresting way not typically found in the surrounding environment Perception and Cognition: Consumer Consumer Categorization Categorization The psychological process through which a consumer An abstraction, or prototype, of the product is formed in compares the perception of a product with a mental memory by focusing on the product’s important features and representation of that product in memory forming a category that associates those features in relation to the product In analytic categorization, the perceived product has to conform to a set of necessary attributes before it An exemplar is the use of a particular brand that represents can be put into a certain category most other brands In nonanalytic categorization, the consumer focuses on the entire pattern of features in a holistic manner Consumer Categorization Consumer Attributions By understanding how consumers categorize new Attribution is the process through which people products, marketers can select strategies that lead to connect events and behavior with causes correct categorization 7 Shoppers have schemas in their mind representing Consumers seek explanations for marketplace events, prototypical stores, and they compare that and the way they come up with answers affects how prototypical store image with a store they may evaluate they feel toward related products, services, brands, in a shopping situation and firms  1 2 -0 9 -2 0 2 4 Product/Service Perception Product/Service Perception Product/service perceptions—the inferences Attributions of stability refer to the extent to which consumers make about products/services, attributing the consumer attributes the cause of the product or their performance to specific qualities or features service failure to a one-time event versus a “stable” event The extent to which consumers make internal versus external attribution is referred to as the attribution Attributions of controllability refer to the extent to locus of control which the consumer attributes the cause of product or service failure to events that could have been controlled by the firm Self-Perception Person Perception Person perceptions are the inferences consumers The causes to which consumers attribute their make about the reasons behind the actions of others own behavior are a dimension of their self- perception Discounting principle: the consumer decides that external pressures are provoking the salesperson to act Research has shown that brand attitude and a certain way preference is influenced by self-perceptions If consumers perceive themselves as using a Augmentation principle: the consumer augments the weight of the salesperson recommendation specific brand, they infer that they must like it Person Perception Consumer Inferences Consumers also have a tendency to make a Consumers learn about products from various fundamental attribution error in person perception sources (e.g., advertising, promotion, word-of-mouth communication) 8 Positivity bias: positive information about a single employee leads to inferences that the firm’s other But consumers don’t learn everything they need to employees are similarly positive know to help them judge these products So consumers fill in the remaining information by making inferences  1 2 -0 9 -2 0 2 4 Inductive Inferences Inductive Inferences Induction is the process in which consumers Heuristic-based inferences generalize from specific information to general – They use a single piece of information to make conclusions inference about the overall quality of the product Inferences based on information integration – Price-quality inference: Consumers infer aspects – Information integration theory posits that of quality from information about price consumers evaluate each product attribute separately and combine these evaluations into an Inferences based on accessibility-diagnosticity overall evaluation through the use of a simple algebraic rule such as adding or averaging Deductive Inferences Perceptions of Product/Service Quality Deduction is the process of construing specific conclusions from principles or assumptions Attitude-based inferences – Consumers often use their own general attitude toward the brand to make specific inferences about quality of specific brands Category-based inferences – An example of category-based inference is a country-of-origin deduction Factors Influencing Perception Two Conceptualizations of Service Quality Of Quality of Service “Nordic” perspective – Functional quality represents how the service is delivered 9 – Technical quality reflects the outcome of the service act “American” perspective – Reliability Empathy Assurance Tangibles Responsiveness  1 2 -0 9 -2 0 2 4 Risk Perception/Risk Reduction Categories of Risk Perception 1. Performance risk 2. Financial risk 3. Physical risk 4. Social risk 5. Psychological risk 6. Time and convenience risk 7. Opportunity loss risk Perception of Switching Costs Price Perception Consumers perceiving greater switching costs Consumers evaluate the price tag of a specific brand tend to continue using the service provider they by comparing that price with an internal referent price are already doing business with Procedural switching costs Social judgment theory states that people attribute meaning to incoming information by matching this Financial switching costs information to a mental category or referent Relational switching costs Price Perception Referent Price Influences The assimilation region is the area around the Aspiration price Expected price referent in which the incoming information is Previously paid Expected future price categorized as similar to that referent price 10 Normal market price Fair price The contrast region is the area in which the incoming Recalled price Highest and lowest prices information is categorized as different from the Reservation Contextual price referent price  1 2 -0 9 -2 0 2 4 Perceived Value Country Image 1. Overall country image is the total of all beliefs that a consumer has about a particular country 2. Aggregate product country image is the perception of overall quality of the products from that particular country 3. Specific product country image is the overall perception consumers form of a specific product category from a particular country Country-image perceptions influence product evaluations through a halo effect Perception of a Pioneer Brand Memory and Learning A brand that is first to sell in the market in a product category A “me too brand” is typically perceived unfavorably compared with the pioneer brand, Naveen Kashyap, PhD an advantage that has come to be known as the Indian Institute of Technology Guwahati prototypicality explanation of pioneer brands Email: [email protected] Memory Memory Our memory of past experiences with products is the single most influential factor in our future responses to Storing episodes and scripts allows the organization marketing information about those products of information in memory in such a way that it can be easily retrieved when needed in appropriate situations 11 Information is organized in memory in terms of an associative network in which each concept in memory, a node, is connected to other concepts by links  1 2 -0 9 -2 0 2 4 How Information Is Captured And Stored in Memory When information first enters the brain, it is captured by sensory memory, where it may register as little more than a sensation and may last for only fractions of a second Transmitted from sensory memory, information is first analyzed and assigned meaning in short-term memory Information rehearsed in short-term memory is transmitted to long-term memory How Information Is Retained in Memory How Information Is Retained in Memory Retention can be defined as the amount of material – Competing information – previously learned previously learned that is remembered message is forgotten when new learning occurs How retention is influenced by incoming information – Repetition – Repetition of information increases the – Completeness of information – Zeigarnik effect chance of retention and strengthen consumers suggests that if the message is incomplete people belief regarding incoming information will attempt to retain it for future completeness – Relevance – retention is greater when new – Time – forgetting happens as a logarithmic function information fits into array of stimuli the consumer of time elapsed since the information was learned considers important How Information Is Retained in Memory How Information Is Retained in Memory How retention is influenced by the information recipient How retention is influenced by the information recipient – Consumer’s mood – positive mood enhances the – Consumer motivation – motivation consumers encoding of information in memory process information at deeper levels of memory and retain it much longer with higher accuracy than 12 – Consumer familiarity or experience – familiarity unmotivated consumers. Motivation at exposure effects retention as – a) familiar consumers are influences level of retention. more likely to remember new information and b) – Motivated consumers engage in directed learning familiarity improves memory organization (attribute rather than incidental learning which leads to higher based vs brand based categorization) goal-directed learning  1 2 -0 9 -2 0 2 4 How Information Is Retrieved from Memory How Information Is Retrieved from Memory Retrieval cues Consumer’s state of mind – Information retrieval is determined mostly by the – A consumer is more likely to recall product information if particular retrieval cues available at the time his or her mood or level of interest is similar to that of the environment in which the information was first learned Interference from competing cues – Marketers can inhibit the consumer’s ability to recall information on competing brands from memory Storage in Memory How Memory Can Be “Artificially” Reconstructed Recall of numerical coded information is better than verbal information Imagination inflation: when recently generated images become accessible in mind, people forget the Surface-level processing refers to storing information source and retain the new images, overshadowing as is, without analyzing its meaning images from the past Meaning-level processing stores the meaning of the Consumer post experiences can be overshadowed by information, not the “raw” information per se advertising messages Consumers should be encouraged to process Truth effect: message repetition may cause advertising information meaningfully consumers to reconstruct memory Learning: Probability Theory Probability theory treats learning as the formation of habits whose strength depends on reinforcement Brand loyalty (frequent purchasers-brand loyal) 13 Brand acceptance (high volume user-difficult to win) Brand switching (low brand loyal-high switching) New product forecasting (based on new user)  1 2 -0 9 -2 0 2 4 Classical Conditioning Classical Conditioning Number of pairings Strength of the unconditioned stimulus Forward versus backward versus simultaneous conditioning – Forward conditioning occurs when the conditioned stimulus is presented first, followed by the unconditioned stimulus – Backward conditioning occurs when the unconditioned stimulus is presented first, followed by the conditioned stimulus New versus existing products Operant Conditioning Rewards and Punishments Operant or instrumental conditioning is “a process in which the frequency of occurrence of a bit of behavior is modified by the consequences of the behavior” Operant conditioning is especially relevant to low- involvement purchases Behavior is most easily modified when little thought is necessary for adequate decision making How Rewards and Punishments How Rewards and Punishments Influence Consumer Behavior Influence Consumer Behavior Reward and punishment schedule Shaping responses through rewards and punishments – A reinforcement schedule is a schedule of – Shaping is a form of operant conditioning in which rewards or punishments used for learning consumers are gradually trained to produce a 14 – An intermittent reinforcement schedule rewards desired response or punishes at least some responses on a fairly regular basis – With continuous reinforcement the response Quality and quantity of rewards and punishments occurs frequently  1 2 -0 9 -2 0 2 4 Generalization Discrimination Discrimination training involves teaching a person who The tendency to respond in similar ways to similar instinctively responds identically to two stimuli to respond stimuli is known as generalization to each differently An advertiser building up drive for a product must be Discrimination is a process through which consumers careful not to create a desire for just the generic restrict their range of responses and attach themselves to product—the desire must be for the specific brand a particular brand To take advantage of the generalization principle, a When products are generically equal and undifferentiated, company’s product should be readily available the challenge is to encourage consumers to perceive one brand as different from the others Modeling Cognitive Theory Modeling is the process through which an individual Cognitive theory is an alternative to behavior learns a behavior by observing the behavior of others analysis that emphasizes the thinking rather than the and the consequences of this behavior doing aspects of learning Characteristics of the model Formulation of hypotheses Characteristics of the modeled behavior Exposure Characteristics of the observers Encoding Characteristics of the modeled behavior consequence Integration How Consumers Turn The Value of Cognitive Hypotheses into Beliefs Theory to Marketers Familiarity with a product or service affects consumer learning by making the consumer less likely to be influenced Strategies for marketing top dogs by new or conflicting information in the marketplace – Reinforcement When experience is clear (low in ambiguity), the consumer – Blocking 15 learns quickly and information in the marketplace plays only – Explaining a secondary role Strategies for marketing underdogs If experience is unclear (high in ambiguity), however, – Disruption information in the marketplace becomes a primary source of influence – Facilitating trial  1 2 -0 9 -2 0 2 4 Consumer Motivation Motivation, Emotion and Consumer motivation is one of the driving force of consumer behavior Mood The key objective of marketing communication is to Naveen Kashyap, PhD motivate consumers to prefer and purchase Indian Institute of Technology Guwahati Email: [email protected] Closely tied to the concept of motivation is affective states which are emotions, moods and feelings Consumer Motivation Consumer Motivation Consumer motivation is the drive to satisfy needs and wants (physiological & psychological) through purchase and use of products and services Motives are simple (food, water) or complex (status) Need satisfaction through consumer motivation has five stages – need, drive, want, goal, behavior Using Behavior Models To Explain Motivation Maslow’s hierarchy of needs – Personal growth through the identification and satisfaction of a hierarchy of needs, from the 16 basics of food and shelter to sophisticated psychological desires  1 2 -0 9 -2 0 2 4 Using Behavior Models To Explain Motivation Dichter’s major consumption motives – These stem from a study conducted by Dichter on behalf of Proctor & Gamble – The study was on finding motivations behind purchase of ivory soap – Dichter concluded that bathing as a cleansing ritual has a symbolic appeal signifying purification from taints. He proposed 12 key motives to consumption Using Behavior Models To Explain Motivation Sheth’s consumer motives – Developed classification scheme to predict consumer decisions in travel – Isolated five dimensions of motivation each oriented to the achievement of specific goals – Functional (utility), aesthetic/emotional (appearance), social (status), situational (benefit), curiosity (interest) How Consumer Motivation Affects Influence on Consumer Conflict Resolution Marketplace Behavior In an approach-approach conflict, the individual faces a dilemma of choosing between or among alternatives—or approaches—that seem equally attractive 17 In an approach-avoidance conflict, the same goal has both positive and negative characteristics An avoidance-avoidance conflict involves choosing between two undesirable alternatives  1 2 -0 9 -2 0 2 4 Influence on Consumption Patterns Influence on Consumption Patterns Motives for increased involvement include Motives, once activated, shape resulting behaviors flow (a need for intense experience with thrill and 1. Motives for getting started include curiosity, thrill seeking, excitement) social compliance, and a desire for adventure Communitas (a need for a sense of community 2. Motives for sticking with the activity include efficacy, the creation of a new self-identity, group camaraderie, and heightened experience Phatic community (a need for a special means of communication or language that helps the bonding process and that excludes those who do not share the experience) How Marketers Can Emotions Trigger Consumer Motives Emotions are affective responses that reflect the Inducing need recognition activation of deep-seated and value-laden beliefs within the consumer Triggering motivation through need-benefit The evocation of a belief generates a corresponding segmentation emotion Triggering subconscious motivation Different emotions are triggered by different beliefs How Consumers Experience Emotions How Consumers Experience Emotions People purchase and use products and services in order Advertisement to experience certain emotional states or to achieve Content emotional goals Emotions and communication – Emotions play a mediating Emotional Response 18 Emotions and post-purchase evaluation role in consumer responses to – Emotions play an important role in determining the advertising Attitude towards