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Dr. Karim KobeissiIslamic University of Lebanon - 2014Chapter 6: Analyzing Consumer BehaviorConsumer Behavior- Definition Consumer behavior is defined as activities people undertake when (1) obtaining, (2) consuming and (3) disposing of products to satisfy needs and desire. Consumer behavior includes the study of why, where, how often and under what conditions consumers consume different products or brands with the premise that it becomes easier to develop marketing strategies to influence consumers once a marketer knows the reasons why people buy specific products or brands. Consumer Behavior- Definition Obtaining refers to the activities leading up to and including the purchase or receipt of a product.Consuming refers to how, where, when and under what circumstances consumers use products.Disposing refers to how consumers get rid of products and packaging.

Historical Approach

Why Study Consumer Behavior?There are several reasons behind the study of consumer behavior. Below are some important reasons:1) Today, businesses around the world recognize that the consumer is not the king but he is the buddy. In essence, consumer behavior analysis helps firms to know how to please the buddy, not the king and directly impact bottom line profits (both interconnected in the long run).2) The marketing concept stress that a firm should create a marketing mix that satisfies customers. Therefore, a firm need to analyse what, where, when and why customers buy.3) Understanding consumer behavior is essential to the development of marketing strategies, especially in pricing, product design, segmentation, targeting, positioning and promotion.

Market researchMarketing managerConsumer behaviorthe engine of marketingAdvertisingDistributionThe Marketing Car10This example will stress why CB is vital.Market research: showing us the road aheadMarketing manager: in controlAdvertising: the very visible component of marketingDistribution: involves moving products from source to destinationCB: the vital component in marketing

The Consumer Decision Process

The Consumer Decision Process (CDP) model, represents a road map of consumer's minds that marketers and managers can use to help guide product mix, communication, and marketing strategies. The goal in creating the consumer decision process model was to analyze how individuals search through facts and influences to make decisions that are logical and consistent for them.

A Simplified Version of The Consumer Decision ProcessPurchaseNeed RecognitionSearch for InformationConsumptionPost-consumption EvaluationDivestmentPre-purchase Evaluation of AlternativesStage One: Need RecognitionThe starting point of any purchase decision is customer need (or problem) . Need recognition occurs when an individual perceives a gap between what he recognizes to be desired versus the existent state of affairs. Consumers buy things when they believe a products ability to solve a problem is worth more than the cost of buying it, thereby making recognition of an unmet need the first step in the sale of a product. If the perceived gap is low, below a certain level, the need will be inactive.

Need RecognitionCurrent State

Desired State

Stage One: Need Recognition(con)The next slide shows that environmental influences and individual differences or characteristics (UNCONTROLLABLE FACTORS) make up only part of a consumers need, memory also has a large influencing factor, especially if it is for a product that the consumer has purchased before.

Need / Problem RecognitionIndividual Differences- Consumer Resources- Motivation- Knowledge- Attitudes- Personality, Values, and LifestyleEnvironmental Influences- Culture- Social Class- Personal Influence- Family - SituationMEMORYNeed Recognition

Stage Two: Search for InformationOnce need recognition occurs, consumers begin searching for information and solutions to satisfy their unmet needs. * Internal retrieving knowledge from memory or perhaps genetic tendencies.* External- collecting information from peers, family, websites and the marketplace.Search for InformationNeed RecognitionSearchExternal SearchInternal Search MEMORYIndividual DifferencesEnvironmental InfluencesFamily, peers, marketplaceSearch for Information (con)Internal Search

External Search

Stage Two: Search for Information (con)External Search: Sources of Information - StimuliNon Marketer DominatedSuch as friends, family, opinion leaders, etc...

2. Marketer DominatedRefers to anything that products suppliers do for purposes of information and persuasion, such as using advertising, salespeople, websites, and point-of-sale materials. External Search: Sources of Information

Information Processing Beside the external and personal uncontrollable factors influencing the buying behavior, exposure of customers to the companys marketing (controllable factor) can affect the decision-making by providing inputs for the consumers black box where information is processed before the final consumers decision is made. The steps involved in processing information include:1. Exposure First, information and persuasive communication must reach consumers. 2. Attention The more relevant the message and its content, the more likely attention will be attracted.Information Processing(con) 3. Comprehension If attention is attracted, the message is further analyzed against categories of meaning stored in memory. The marketer hopes that accurate comprehension will occur. 4. Acceptance Once comprehension occurs, the message can be either dismissed as unacceptable or accepted. The goal of the message is to change existing beliefs and attitudes , but the message must be accepted before this can happen.5. Retention Finally, the goal of any persuader is for this new information to be accepted and STORED IN MEMORY in such a way that it is ACCESSIBLE FOR FUTUR USE. Information ProcessingM EMORYAttentionComprehensionAcceptanceRetentionExposureStimuli:- Marketer Dominated- Nonmarketer DominatedExamples of Marketer Dominated Stimuli: Ad That Creates Brand Image

25Stage Three: Pre-Purchase Evaluation of AlternativesIn this stage, consumers seek answers to questions such as what are my options?, and which is best? when they compare, contrast and select from various products. Different consumers employ different evaluative criteria the standards and specifications used to compare different products and brands (e.g., price, reliability, and quality) as potentially the most important.

Pre-purchase Evaluation of Alternatives based on:

Salient/ important attributes such as price and reliability are important to the consumer.Determinant attributes such as a cars style and finish usually determine which brand or store consumers choose.Consumers compare what they know about different products and brands with what they consider most important and begin to narrow the field of alternatives before they finally resolve to buy one of them.

Pre-purchase Evaluation of AlternativesSearchInternal Search MEMORYIndividual DifferencesEnviron- mental InfluencesNeed RecognitionAttentionComprehensionAcceptanceRetentionExposureStimuli

Stage Four: PurchaseThe next stage of the consumer decision process is purchase. A consumer might move throughthe first three stages of the decision process according to plan and intend to purchase a particular product or brand. But consumers sometimes buy something quite different from what they intended or opt not to buy at all because of what happens during the purchase stage. A consumer may prefer one retailer but choose another because of a sale or a promotional event at a competitors store, hours of operation, location or credit facilities. Inside the store, the consumer may talk with a salesperson who changes his decision, see an end-of-aisle display that switches his or her brand preference, use a coupon or price discount, fail to find the intended product or brand, or lack the money or right credit card to make the purchase. Pre-purchase Evaluation of AlternativesSearchInternal Search MEMORYIndividual DifferencesEnviron- mental InfluencesNeed RecognitionAttentionComprehensionAcceptanceRetentionExposureStimuliPurchase

What Car Did The Customer Buy?Answer: Ford Focus

Stage Five: Consumption Consumption - the point at which consumers use the product. Consumption can either occur immediately or be delayed. For example, if a consumer sees a sales promotion for frozen food, he or she may stock up buying more than can be used in the normal time frame of consumption and requiring the consumer to warehouse the product in his or her freezer. How the consumer uses the product can also affect their evaluation of the product at the Post-consumption stage (User Guide for best consumption experience). How the product is cared for can also affect how long the product will last until the next purchase(Maintenance Guide - Increase product life).Pre-purchase Evaluation of AlternativesSearchInternal Search MEMORYIndividual DifferencesEnviron- mental InfluencesNeed RecognitionAttentionComprehensionAcceptanceRetentionExposureStimuliPurchaseConsumption

Stage Six: Post Consumption EvaluationConsumers experience a sense of either satisfaction or dissatisfaction. Satisfaction occurs when consumers expectations are matched by perceived performance. When experiences and performance fall short of expectations, dissatisfaction occurs. Did I consider all the alternatives?, Could I have done better? These types of questions are Post-purchase regret or cognitive dissonance and the higher price, the higher the level of cognitive dissonance. Whatever is the final outcome, it is significant because the consumer store this evaluation in his memory and refer to it in future decisions. Pre-purchase Evaluation of AlternativesSearchInternal Search MEMORYIndividual DifferencesEnviron- mental InfluencesNeed RecognitionAttentionComprehensionAcceptanceRetentionExposureStimuliPurchaseConsumptionPost-consumption EvaluationExternal SearchSatisfactionDissatisfactionPost Consumption EvaluationDissatisfaction

Satisfaction

Stage Seven: Divestment (disposal of the product)Consumers have several options, including complete disposal, recycling, or remarketing (selling). In our running example, when the consumer finishes using the car he purchased, he has to dispose of it somehow. He can choose to sell it to another consumer, trade it in for another vehicle, or take it to the junkyard. Pre-purchase Evaluation of AlternativesSearchInternal Search MEMORYIndividual DifferencesEnviron- mental InfluencesNeed RecognitionAttentionComprehensionAcceptanceRetentionExposureStimuliPurchaseConsumptionPost-consumption EvaluationExternal SearchSatisfactionDissatisfactionDivestmentATTENTION !!!A distinction is frequently made between high and low involvement purchasing (e.g., having a hair cut Vs having a medical operation), implying that in practice the actual buying activity can be less or more consistent with this model, depending on the buyers perceived purchasing risks. High or low degree of involvement is also a question of the personal, social, and economic significance of the purchase (e.g., one day Vs twenty days residence at a hotel; a newspaper Vs a house).

How Organizations Use the CDP ModelOne of the goals of the CDP model was to help marketers, consumer analysts, and researchers study consumers and costumers.Manufacturers, large and small retailers, and non-profit organizations use the CDP model to:Identify relationships between variables that affect consumer decision making.Identify topics for additional research. Develop and implement marketing mix strategies.