Consumer Behaviour

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Consumer Behaviour

• Marketing for Engineers
• ELE 4EMT

George Alexander G.Alexander_at_latrobe.edu.au http/
/www.latrobe.edu.au/eemanage/
Lecture 5 12 March 2007
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Some marketing-related issues in the news The
Age 11.03.06

• China iron ore price caps
• Coles Myer sale of Myer stores (1.3bn)
• Supermarket chains selling IP telephony packages
  (Tesco) Alan Kohler
• Telstras attack on regulatory regime
• So where the bloody hell are you?

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- and 12.3.07?

• Bingle ad rakes in extra 1.8 billion The Age
  8.3.07
• Hot economy fans rate fears The Age 8.3.07
• Broadband looms as an election issue The Age
  9.3.07
• The great Australian struggle (home ownership)
  The Age 9.3.07
• Ethanol to fuel record corn price The Age
  12.3.07

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The drought winners and losers

• Farmers
• Homeowners
• Plant farms
• Our water tank factories are operating 24 hours
  a day Peter George, Executive Chairman Nylex,
  Sunday Age 11.3.07

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Brief Recap

• Marketing activities, marketing mix 4Ps
• Strategic Marketing SWOT, situation analysis
• Environmental Forces macro, micro
• Global Information systems, market research
  information is the key

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CONSUMER BEHAVIOUR
Objectives

• 1. Understand the basic model of consumer
  behaviour,
• 2. Describe the consumer decision making process,
  and understand the factors that influence it.
• 3. Appreciate the importance of perceived risk,
  choice criteria, purchase satisfaction, and
  cognitive dissonance.

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Effective Marketing

• Effective marketing must begin with careful
  evaluation of the problems faced by potential
  customers.
• Marketing efforts must focus on consumers needs
  and provide answers to their problems.
• A key to understanding consumers needs
  problems lies in the study of Consumer
  Behaviour

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What is Consumer Behaviour ?

• Activities people engage in when
• selecting,
• purchasing, and
• using products
• so as to satisfy their needs and desires.
• Involves mental and emotional processes, in
  addition to physical actions.

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Behavioural Fundamentals
B f (P, E)
where B Human behaviour of any kind, P Person,
and E Environment.
Human behaviour of any kind (B) is a function (f
) of the interaction between the person (P) and
the environment (E)
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Decision Making

• How do consumers make their choices?
• An important determinant is the situation in
  which a decision is made.
• Three categories of consumer decision-making
  behaviour
• Routinised response behaviour,
• Limited problem solving, and
• Extensive problem solving.

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Routinised Response Behaviour

• The least complex type of decision making
• The customer bases choices on past behaviour and
  needs no other information
• Buying bread, milk, petrol, etc.

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Low InvolvementRoutine Decision Making
2. minimal information search
4. Post-purchase consumption, minimal evaluation
3. Choice to buy
1. Problem recognition
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Extensive Problem Solving

• In-depth search for and evaluation of alternative
  solutions to a problem
• Buying a car, house, communication system, etc.

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High InvolvementExtensive Problem Solving
Stop
Go to 1
Dont buy
2. Search for alternatives
4. Purchase Decision
3. Evaluation of alternatives
1. Problem recognition
Buy
5. Post-purchase consumption and evaluation
Dissatisfaction
Satisfaction
Process Complete
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Limited Problem Solving

• An intermediate level of decision making, between
  routinised and extensive problem solving
• The consumer has some purchasing experience but
  is unfamiliar with the store, brand, or price
• Choosing an ISP may be an example
• How about the Home Brand products?

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Influencing Factors

• Factors which influence the decision-making
  process
• A variety of individual factors
• Interpersonal (socioculture) factors
• Environmental factors
• The above factors must be well understood and
  taken into account by marketers.

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Decision Making Process
Individual Factors
Environmental Forces
Purchase Decision
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Consumer Behaviour Model
Environmental Factors
Individual Factors
Purchase Decision
Motives
Culture
Problem recognition
Subculture
Perception
Social Class,
Information search
income, education
Information Processing
Reference groups
Evaluation of Alternatives
Family
Learning
Social values,
Purchase Decision
norms, rules
Attitude
Situational factors
Personality
Post-Purchase Evaluation
Marketing mix
variables
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Culture

• Culture is the source of most of our values,
  norms, and roles.
• The term culture is very difficult to define
  clearly, it encompasses so much about the way a
  society lives.
• A culture consists of values, beliefs, and
  customary behaviours learned and shared by the
  members of a particular society.

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Subcultures

• Within a society there is a dominant culture.
• However, there are also cultural differences.
• Language differences are an example
• Canada - 2 official languages
• Belgium - 2 official languages
• Switzerland - 4 official languages
• China - 5 major and many minor languages
• Australia ?

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Individual Factors

• Motivation - An activated state that causes a
  person to initiate goal-directed behaviour.
• Motive - An aroused need that energises behaviour
  and directs it towards a goal.
• Need - The gap between actual and desired states.
• Incentive - Something believed capable of
  satisfying a particular motive.

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Maslows Hierarchy of Needs
Self-actualisation needs
5
Self-esteem needs
4
Social and love needs
3
safety needs
2
Physiological needs
1
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1. Physiological Needs

• Air,
• Water,
• Food,
• etc.

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2. Safety Needs

• Security,
• Protection from harm,
• etc.

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3. Social Love Needs

• Acceptance,
• Affection,
• Feelings of belonging,
• Friendship,
• etc.

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4. Self-Esteem Needs

• Feeling of self-worth,
• Success,
• Prestige,
• etc.

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5. Self-Actualisation Needs

• Becoming all that one is capable of being,
• Self-fulfilment,
• etc.

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Joint Decision Making

• Can be very effective in a number of buying
  situations.
• The choice is made by groups of two or more
  people.
• Most purchases are dominated by one group member.
• Advantages / disadvantages.

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Risks that concern potential buyers

• Performance May not meet expectations
• Financial May not be getting the best deal
• Physical May be harmful, unhealthy, unsafe
• Social Friends, relatives may not approve
• Time-loss risk Time required to maintain or
  repair may be excessive.

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Post-purchase consumption and evaluation

• Was it the right decision?
• Sometimes consumption and (dis)satisfaction are
  immediate a cool drink or a meal
• Other times, there is a delay resulting in sense
  of uneasiness is it the right car, house etc?
  Did I get a good deal?
• This uncomfortable post-purchase feeling is
  referred to as cognitive dissonance.
• Effective marketers dont like dissatisfied
  customers.
• They try to reassure the customer through
  promises of great after-sales support and the
  like, to try and erase any doubts.

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Reference Book
Zikmund, W. G. dAmico M. Marketing (1996, 5th
Edition), West Publishing Company.
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Thanks for your attention