MGT 252

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MGT 252

• Lecture 3
• Understanding the Consumer

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Some Examples

• McDonalds in China
• Michael Dells secret
• Its really a pretty data-driven process. We
  have enormous amounts of information on what
  customers like and dont like. Michael Dell

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The Buying-Decision Process

• the consumer goes through a series of
  decision-making stages en route to a decision and
  beyond
• recognition of an unmet need
• choice of an involvement level
• identification of alternatives
• evaluation of alternatives
• purchase and related decisions
• postpurchase behaviour

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Figure 3-1 The Consumer Decision Making Process
and Its Environment
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Variations on the Process

• the consumer can withdraw at any stage
• some stages may be skipped
• the stages are generally of varying length
• some stages may be performed subconsciously
• the extent to which all stages are followed
  depends on the circumstances of the particular
  purchase situation

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Need Recognition

• may be aroused internally or as a result of an
  external stimulus
• needs exist at a series of levels
• may be driven by the failure or lack of appeal of
  existing products or services
• Once needs are recognized, we have to make
  trade-offs.

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Level of Involvement

• influences the amount of effort the consumer will
  devote to the purchase decision process
• involvement is higher when
• consumer lacks information about purchase
• product or service is considered important
• risk of a bad decision is perceived to be high
• product or service is socially important
• product or service has the potential to provide
  significant benefits
• Impulse buying is low-involvement

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Identification of Alternatives

• search for alternatives may be limited to options
  close at hand or may be wider
• in some cases, only one alternative is considered
• the search for alternatives is influenced by
• information available
• past experience and other internal information
• confidence in the information
• expected benefit or value of additional
  information

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Evaluation of Alternatives

• various alternatives identified must then be
  evaluated in varying degrees of depth
• evaluation of alternatives is based on certain
  criteria, which vary in importance across
  consumers -- this is what make for the existence
  of market segments
• criteria come from several sources, including our
  own experience and the opinions of others

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Purchasing and Related Decisions

• decision to buy is only the beginning of a more
  complex decision process
• marketers must make it as easy as possible for
  the customer to make these decisions
• the additional decisions that have to be made
  include where to buy, how to pay for the
  purchase, how to take delivery, whether to buy
  the extended warranty, etc.
• purchase decision is influenced by a series of
  patronage motives

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Consumption Experience

• after buying, the consumer has learned factors
  that affect future purchases
• also may go through a period of anxiety known as
  cognitive dissonance not sure whether he or she
  has made the right decision
• dissonance is greater when price is high, when
  alternatives are similar, and when the purchase
  is perceived to be important
• consumers try to reduce dissonance by seeking
  positive reinforcement

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Information and Purchase Decisions

• customer may or may not search for additional
  information -- depends on current knowledge level
  and other factors
• information may come from commercial or
  social/interpersonal sources
• advertising is the most common of commercial
  sources, but also includes sales people, e-mail
  and the Web
• most important form of information comes from
  word-of-mouth

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Cultural Influences on Behaviour

• buying is influenced by social forces and groups
• culture has the most indirect impact we are all
  products of a handed-down culture
• cultural influences change slowly over time
• ethnic subcultures have a profound effect on how
  Canadians lead their lives
• the most obvious subcultural differences are
  between French- and English-Canadians, although
  many other ethnic subcultures exist

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Reference Group Influences

• reference groups are those with whom we interact
  and who influence our attitudes, values and
  behaviour
• small reference groups establish norms that
  influence purchase decisions, and their
  word-of-mouth is considered to be more powerful
  than advertising and other commercial forces
• innovators and opinion leaders are particularly
  influential in small reference groups
• the family is generally considered to be the most
  influential reference group

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Psychological Factors

• a stimulated need is a motive consumers are
  motivated to act by a variety of motives
• consumers process information from their
  environment through perception the result of
  stored experiences and references
• messages are perceived and retained selectively,
  and may be distorted through rationalization
• consumers learn from past experience and from
  information received, and are conditioned to
  respond in a certain way

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Figure 3-2 Maslows Hierarchy of Needs
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Personality and Attitudes

• personality is a pattern of traits that influence
  behaviour but it is not always clear how
  personality affects consumption behaviour
• a consumer tends to act in a way that is
  consistent with his or her self-concept
• attitude is a learned disposition to act in a
  certain way toward objects
• attitudes are formed over time, are slow to
  change, and are excellent predictors of behaviour

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Situational Influences

• purchase situations in which consumers find
  themselves often influence their purchase
  behaviour
• consider how time affects the decision to buy
• physical surroundings often influence purchases
• the terms and conditions surrounding the actual
  purchase will influence the buying decision
• the final buying decision is often influenced by
  the consumers physical and emotional condition
  and mood

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Next Class

• Segmenting, Targeting, Positioning