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Chapter 5
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McGraw-Hill/Irwin McGraw-Hill/Irwin Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved.Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved.
Marketing
Dhruv Grewal
Michael Levy
Chapter 5
Consumer Behavior
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Netflix
1.5 million subscriber households 18,000 titles 25 strategically located distribution centers Changing “in store” to “in home” selection Key partnership promotions
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Consumer Behavior
Use principles and theories from sociology and
psychology
Understand consumer actions
Develop basic strategies to deal with
those actions
Understand why people buy products
or services
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Meet Eva
Alternative Solutions:
1. Join local movie rental (i.e. Blockbuster store)
2. Subscribe to premium cable
3. Subscribe to online movie rental (i.e. Netflix)
Problem: Getting access to the latest video releases and movies.
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Eva’s Questions
Which alternative is more likely to attract friends over to watch movies?
Which alternative gives me the best
overall value?
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The Consumer Decision Process
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Types of Buying Decisions
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Types of Buying Decisions
Limited Problem Solving Habitual Decision Making Extended Problem Solving Impulse Buying
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Test Your Knowledge
What type of buying decision requires the least amount of time and effort?
A) limited problem solving B) habitual decision making C) extended problem solving D) impulse buying
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Need Recognition
Functional needs
Psychological needs
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Search for Information
Internal Search for Information
External Search for Information
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Factors Affecting Consumers’ Search Process
Perceived Benefits versus
Perceived Costs
Discussion question
What is the difference in search time between the following: A wedding gift for a) coworker, b) your brother, c) your best friend?
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
The Locus of Control
Internal Locus of ControlControl = more search activities
External Locus of ControlFate, external factors = why bother
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Actual or Perceived Risk
Financial risk Performance risk Psychological risk
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Type of Product or Service
Specialty goods/services Shopping goods/services Convenience goods/services
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Test Your Knowledge
Consumers can spend considerable time searching for both specialty and shopping goods or services; the difference lies in _______________.
A) the amount of time they haveB) the amount of money they have budgeted C) the psychological risk D) the kind of search
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Evaluation of Alternatives: Attribute Sets
Universal Set
Choice
Retrieval Set
Evoked Set
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Evaluation of Alternatives: Evaluate Criteria
Evaluative Criteria
Determinant Attributes
Discussion question
What are some of the features of a vacation that would be in your evaluative criteria?
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How do consumers begin to evaluate different alternatives, and what important attributes and
criteria do they use?
Evaluative Criteria
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Case in Point: Carnival Connections
Challenge
Answer
Results
To encourage small groups to travel together and understand the preferences of these groups.
Establish a social networking site that allows small groups to plan and coordinate a cruise vacation as well as invite others to participate in the cruise.
A “soft launch” in Jan, 2006 to better understand consumers use and needs from the site.
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Evaluation of Alternatives:Consumer Decision Rules
Entertainment Number of
Days
Meals Price
Importance Weights
0.4 0.1 0.3 0.2
Carnival 10 8 6 8 8.2
Holland America
8 9 8 3 7.1
Celebrity 6 8 10 5 7.2
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Evaluation of Alternatives: Decision Heuristics
?ProductPresentation
Price
Brand
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Test Your Knowledge
Decision heuristics are ________ that help a consumer narrow down his or her choices.
A) mental shortcuts B) breathing exercises C) logical stepsD) compensatory decision rules
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Purchase and Consumption
Ritual consumption
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Understanding Rituals
How does someone plan a ritual event that they have never planned before?
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Case in Point: Grooms Guide to Weddings
Challenge
Answer
Results
To involve the future groom in the wedding planning.
The Knot is a one stop shop for the 2.4 million couples preparing for a wedding in the U.S. The site includes information about customs, traditions and products for any wedding.
3.2 million unique visitors each a month, 3,000 new members per day and growing.
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Postpurchase:Customer Satisfaction
Customer contact Encourage feedback Provide money back guarantee Build realistic expectations Demonstrate correct product use
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Postpurchase: Dissonance
Firm’s attempt to reduce dissonance by reinforcing the decision
Thank you letters, congratulations letters, quality ratings
Discussion question
What other ways do firms reinforce purchase decisions?
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Ethical Dilemma 5.1: Dissatisfied Customers Use ihate____.com
Customer complaint system Customer service failure leads to consumers
seeking other means Effective means of raising complaints The Complaint Station - tribe.net
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Factors Influencing the Consumer Decision Process
SituationalFactors
Psychological Factors
Marketing Mix Elements
SocialFactors
Consumer Decision Process
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Psychological Factors
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Psychological Factors: Motives
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Test Your Knowledge
What psychological factor is a need or want that is strong enough to cause the person to seek satisfaction?
A) learning B) perceptionC) motive D) attitude
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Psychological Factors: Attitude
AttitudeBehavioralCognitiveAffective
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Psychological Factors: Perception
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Discussion question
How has society’s perception of people with tattoos changed in recent years?
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Psychological Factors: Learning
Affects both attitudes and perceptions
Affected by social experiences
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Social Factors: Family
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Decision makers Influencers
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Social Factors: Reference Groups
Family Friends Coworkers Famous
people
Offer information Provide rewards
for specific purchasing behaviors
Enhance consumer’s self-image
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Test Your Knowledge
Which of the following is a way in which reference groups might provide information to consumers?
A) Leading by exampleB) Indirectly, through observationC) Contacting the seller D) Web research
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Social Factors: Culture
GatheringRitualVowsCelebration
Example: Weddings
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Situational Factors
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Entrepreneurial Marketing 5.1:Zipcar – The Urban Rent-a-car
Discussion question
What situational factors led to the creation of Zipcar?
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Extended problem solving: Occurs when a buyer devotes considerable time and effort to analyzing alternatives; common when the customer perceives that the purchase decision entails a lot of risk.
External search for information: The buyer seeks information outside his or her personal knowledge base to help make the buying decision.
Functional needs: Needs that pertain to the performance of a product or service.
Habitual decision making: A purchase decision process in which consumers engage with little conscious effort.
Impulse buying: A buying decision made by customers on the spot when they see the merchandise.
Internal search for information: The buyer examines his or her own memory and knowledge about the product or service, gathered through past experiences.
Limited problem solving: Occurs during a purchase decision that calls for, at most, a moderate amount of effort and time.
Psychological needs: Needs that pertain to the personal gratification consumers associate with a product and/or service.
Ritual consumption: Refers to a pattern of behaviors tied to life events that affect what and how we consume.
Chapter 5 Glossary