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THE CONSUMER DECISION MAKING PROCESS
TYPES OF BUYER
● FRIENDLY/CO- OPERATIVE BUYER
● TIMID/ RESERVED/ SHY BUYER
● SILENT BUYER
● UNDECIDED BUYER
● PRICE OR QUALITY CONSCIOUS BUYER
● ARGUMENTATIVE BUYER
● SUSPICIOUS BUYER
● IMPATIENT BUYER
● BARGAIN BUYER
● IMPULSIVE BUYER
TYPES OF BUYING BEHAVIOR
COMPLEX BUYING BEHAVIOR - Occurs when the consumer is highly involved with the purchase and when there are significant differences between brands. This behaviour can be associated with the purchase of a new home or a personal computer.
DISSONANCE - REDUCING BUYING BEHAVIOR - Occurs when a consumer is worried they will make the wrong choice and will regret their decision later.
HABITUAL BUYING BEHAVIOR - The buying behavior of buyers/consumers where they make repeat purchases several times of an already known brand without the process of high involvement and decision.
VARIETY- SEEKING BUYING BEHAVIOR - Refers to individuals switching among products, categories, or brands to avoid the decreasing utility due to repeat purchases or consumption of the same products
FACTORS INFLUENCING BUYER BEHAVIOR
SOCIAL FACTORS
- Family
- Roles and status
- Reference Groups
ECONOMIC FACTORS
- Size of Family
- Disposable Income
- Prosperity to Consumer
- Consumer Credit
CULTURAL FACTORS
- Sub- culture
- Social Class
- Basic Needs
PHYSIOLOGICAL FACTORS
PSYCHOLOGICAL FACTORS
- Motivation
- Perception
- Learning
- Beliefs
- Attitude
PERSONAL FACTORS
- Age
- Occupation
- Lifestyle
- Personality
BUYING MOTIVES
BUYING BEHAVIOR - Is an aroused need, urge or yearning that commences the succession of events that may motivate a buyer to purchase something.
BUYING MOTIVES - Encompass a wide range of factors, such as the desire for certain products or services based on their suitability, appearance, safety, treatment, or experiences.
before deciding to buy
Accurate Informations - Provide accurate information about product or services so as to build trust and influence customer to buy
Uninformed Choices & Buyer’s Remorse - Without accurate information, consumers may not fully understand the features and limitations of a product, leading to dissatisfaction after purchase
6 UNIVERSAL BUYING MOTIVES
- SECURITY
- BELONGINGNESS
- ESTEEM
- VARIETY
- ECONOMY
- CONVENIENCE
6 BUYING ROLES
- 1. INITIATOR
- 2. INFLUENCER
- 3. DECIDER
- 4. BUYER
- 5. USER
- 6. GATEKEEPER
DECISION MAKING STAGE PSYCHOLOGICAL PROCESS
DECISION MAKING PROCESS
PROBLEM RECOGNITION
INFORMATION SEARCH
SEEKING VALUE - The deliberate attempt to gain knowledge. The goal is to reduce uncertainty and minimize regret in the long run.
INTERNAL - The process of recalling the past information stored in one’s memory
EXTERNAL - Info may come from ads, social media, friends, stores, broadsheets, radio & TV
INFORMATION SEARCH: DETERMINANTS OF EXTERNAL SEARCH
- SITUATIONAL
- CONSUMER
- PRODUCT
- RETAIL
EVALUATION OF ALTERNATIVES
POST PURCHASE BEHAVIOR - is the final stage in the consumer decision process.
The Economic Model of Consumer Decision Making assumes that people make rational buying choices based on logic and complete information about products. It suggests that consumers know what they need, compare all options, and choose the product that gives them the most value for their money.
This model also states that the more a person buys a product, the less satisfaction they get from it over time. Plus, it sees price as the only cost of getting a product and assumes that all consumers behave similarly in the market.
PASSIVE VIEW/ MODEL
sees consumers as easily influenced by marketing and advertising. It assumes that people make impulsive and sometimes irrational decisions, buying products based on how persuasive the ads or sales strategies are. Instead of carefully thinking through their purchases, consumers in this model tend to follow what marketers suggest without much resistance.
COGNITIVE VIEW/ MODEL sees consumers as thinkers and problem solvers when making purchases. They aim to make good choices , even if they’re not always perfect. Consumers process information, but once they feel they have enough details , they stop searching. They also use shortcuts or past experiences to make quicker decisions.
EMOTIONAL VIEW/ MODEL Also known as the IMPULSIVE VIEW or IMPULSIVE MODEL. Feelings and emotions are attached to the way we make decisions. In this scenerio, less emphasis is placed on the search for pre-purchase information and importance is given to the current disposition and vibes of the person.
ROLES & ISSUES IN ADVERTISING CONSUMER
BEHAVIOR
“ Advertere ” Latin = Turn Around “ Advertir ”French = to warn or to give notice
David Mackenzie Ogilvy - the father of advertising
ROLE OF ADVERTISING IN BUSINESS
BRAND POSITIONING - It helps in shaping or improving the image and perception of perspective customers about a product or a brand
REMINDER TO THE AUDIENCE - It is designed to make people recall the brand in case they have forgotten or to instill the brand's name in the people’s mind further.
EXCITE OR CREATE NEED - With the use of graphical arts, it encourages the people and makes them aware that they need a particular product.
GENERATE AWARENESS - Helps in making people aware of the brand in case it is new or when it is not yet popular.
INCREASE REACH - The wider the coverage of an advertisement, the more people are reached out.
9 TYPES OF ADVERTISING
● PRODUCT ADVERTISING
● CORPORATE ADVERTISING
● DIRECT RESPONSE ADVERTISING
● FINANCIAL ADVERTISING
● PRINT MEDIA ADVERTISING
● OUTDOOR ADVERTISING
● BROADCAST ADVERTISING
● COVERT ADVERTISING
● CELEBRITY ADVERTISING
ROLES OF ADVERTISING IN THE ECONOMY
● PROMOTING COMPETITION
● STIMULATING ECONOMIC GROWTH
● BRAND BUILDING
● INFORMATION SHARING
CONSUMER BEHAVIOR MODELS
WHY UNDERSTANDING CONSUMER BEHAVIOR MATTER?
PRODUCT DEVELOPMENT. Businesses can create products and services that align with your preferences and needs when they understand what you want. This leads to better-designed products that are more likely to meet your expectations, resulting in increased satisfaction and loyalty.
TARGET MARKETING. Consumer behavior insights allow companies to tailor their marketing efforts to what resonates with them. This means you’re more likely to come across advertisements and promotions that genuinely interest you, making your experience as a consumer more enjoyable.
PRICING STRATEGY. Knowing how you perceive the value of products or services helps companies set appropriate prices. They can avoid overpricing, making products more affordable, or they can use premium pricing for products that they see as high-quality. This pricing intelligence helps both you and businesses find mutually beneficial deals.
OPTIMIZED DISTRIBUTION. Understanding your behavior helps businesses determine where and how to make their products available. They can ensure that their products are accessible to you where and when you are most likely to buy, whether in physical stores, e-commerce platforms, or other channels.
ENHANCED CUSTOMER EXPERIENCE. By leveraging insights into your purchasing behavior, businesses can provide you with a more personalized and satisfying customer experience. This might involve tailoring product recommendations, streamlining the buying process, or improving customer service. When businesses get you, it leads to a happier and more loyal customer like yourself.
CLASSIFICATIONS OF CONSUMER BEHAVIOR MODELS
TRADITIONAL. Offer linear and focused on rational decision making process. Emphasize on factors like demographics, income and price sensitivity. They assume that consumer make decision based on careful evaluation and alternatives
CONTEMPORARY. Reflect on complexity and dynamism of modern consumer behavior. Acknowledges the role of emotions, social influences and technology in shaping the decisions, recognizing that consumers may not always decide rationaly but influenced by variety of internal and external factors
TRADITIONAL MODELS
1. THE ECONOMIC MODEL. Economic models are like tools that help you make smart choices when you’re shopping. It’s all about finding the best deal for your money. Think of it this way: you want to get the most value from your cash.
This is believed to be the oldest model of consumer behavior. “Principle of Maximum Utility “
2. LEARNING MODEL. The learning model is like a guide that explains how you pick things when you go shopping. It’s all about how you learn and make choices based on your experiences. Think of it like this: when you have a good experience with a product, like a yummy ice cream flavor, you remember it.
Consumers learn basically from experience. Learned drives are also associated with striving for status or social approval.
3. PSYCHOANALYTIC MODEL. The psychoanalytical model is a bit like a detective for your shopping choices. It tries to figure out why you buy certain things based on your hidden feelings and desires. Imagine it’s like there’s a secret shopper inside your head. This model believes that even you might not know why you make some choices. 4. THE SOCIOLOGICAL MODEL. Sociocultural consumer behavior models are like the puzzle pieces that make up your shopping decisions. They focus on how your family, friends, and the world around you influence what you choose to buy. Imagine you’re like a sponge, soaking up ideas from your surroundings.
CONTEMPORARY MODELS
1. THE HOWARD SHETH MODEL. The “Howard Sheth Model” explains that when you make a purchase, there’s a specific decision-making process with certain factors that influence it.
This offers a cohesive framework for a cutting edge comprehensive theory of consumer behavior, exemplifying the coherent brand choice behavior by shoppers when faced with circumstances involving inadequate information and reduced processing capabilities THE 3 LEVELS OF DECISION MAKING:
**1. Extensive problem solving.
- Limited problem solving.
- Habitual response behavior
- THE NICOSIA MODEL.** The Nicosia Model shows the collaborative relation between a firm and a consumer. It explains by forming a link between the organization and its potential customer.
This centered between the individual as a system with stimuli as the input to the system and the individual’s behavior as the output of the system.
Sociological Influences on CONSUMER DECISION MAKING
PROCESS
SOCIAL FACTORS - The aggregate of people living together in a more or less ordered community and social as relating to society or its organization.
REFERENCE GROUPS - are sets of people that the consumer share certain values and beliefs with, and develop specific meanings and behavior norms about things.
TYPES OF REFERENCE GROUP
NORMATIVE REFERENCE GROUP - These are groups that influence in general or broadly defined values or behavior thru direct interactions.
COMPARATIVE REFERENCE GROUP - These are groups that benchmark specific or narrowly defined attitudes or behaviors. They are individuals whom you compare yourself against and may strive to be like.
INDIRECT REFERENCE GROUP - These are made up of individuals with whom a person does not have direct contact such as movie stars, sports heroes etc.
MEMBERSHIP REFERENCE GROUP - These are groups that we may not only belong to, but are also in agreement with regards to attitudes, norms or behavior
ASPIRATIONAL REFERENCE GROUP - This is a sub-category of reference group consisting of individuals with whom a person desires to be associated with, thus tries to copy the attitudes or behaviors of members in this group
DISSOCIATIVE REFERENCE GROUP - This group is portrayed by attitudes, values or behaviors inconsistent with those held by an individual. A person wishes to distance themselves with this kind of group.
“ ROLE is the behavior expected of an individual who occupies a given social position or status.”- BRITANNICA
“ SOCIAL STATUS is “the relative rank that an individual holds, with attendant rights, duties, and lifestyle, in a social hierarchy based upon honor or prestige.”- BRITANNICA
SOCIAL DESIRABLES : Wealth, Power and Prestige
SOCIAL CLASS MOBILITY - is the shifting from one social status to another.
- HORIZONTAL SOCIAL MOBILITY - movement from one position to another but within the same status (ex. moving from one family to another, change of citizenship)
- VERTICAL SOCIAL MOBILITY - moving up and down in the status of hierarchy. Transition from one position to another at different ranks. (ex. promotion to a higher position at work)
- INTER- GENERATIONAL MOBILITY - Intergenerational mobility is the social changes that occur between generations of a family. It can involve changes in career, social status, economics, or politics. (example: a child from a low income family becomes a lawyer or a doctor or graduated in college and got a high paying job)
- OCCUPATIONAL MOBILITY - moving from one job to another (ex. accountant leave his job and picks up a position as computer programmer). Switching from one job to another with a very little adjustment.
LIFESTYLE - The habits, attitudes, tastes, moral standards, economic level, etc. that together constitute the mode of living of an individual or groups.
FAMILY - unique composition of members of the father and mother and all the children living together in the same house (esp. Filipino Family).
THE ROLE OF THE FAMILY IN PURCHASING BEHAVIOR
**1. PROBLEM RECOGNITION
- THE SEARCH OF INFORMATION
- THE FINAL CHOICE OF THE PRODUCT**
THE 4 STAGES OF IN FAMILY LIFE
- BACHELORHOOD - A consumer tends to spend lavishly during this period of life because as an unmarried individual, you are not answerable to anyone else. You buy for yourself and your consumer behavior does not have an impact on anyone else. For example, you will buy whichever brand of instant noodles you like at this stage, irrespective of its price.
- NEWLY MARRIED - Consumers in this stage tend to spend more sensibly as they have become newly answerable to another important person in their lives. For example, you would try to buy instant noodles that both you and your spouse are likely to enjoy eating.
- FAMILY WITH CHILDREN - As you reach this stage, you will try to secure your own as well as your family’s future. For example, you are likely to reduce your monthly budget for instant noodles and focus on the children’s education.
FINALS
Psychological Influences on Consumer Decision Making
PSYCHOLOGICAL FACTORS
- MOTIVATION
- PERCEPTION
- LEARNING
- ATTITUDES AND BELIEFS
ABRAHAM MASLOW - HIERARCHY OF NEEDS PYRAMID
1. SELF ACTUALIZATION
2. SELF ESTEEM
3. LOVE AND BELONGING
4. SAFETY AND SECURITY
5. PSYCHOLOGICAL NEEDS
CONSUMER NEEDS & MOTIVATION, EMOTION & NEEDS
● CATEGORIES OF NEEDS
- Innate Needs - primary needs
- Acquired Needs - secondary needs ● MOTIVATION
- Is the dynamo within each one of us that drives us to take some action. - Drive, Urges, Wishes, Desires
● EMOTIONS
- Are affective responses that reflect the activation within the consumer of beliefs that are deep- seated and value-laden.
- Disgust, Interest, Joy, Surprise, Sadness, Anger, Fear, Contempt, Shame, Guilt
● MOODS
- much less intense than emotions
- On consumer recall - recall increases if mood at time of encoding and retrieval match
- On consumer evaluation - negative mood equals negative product or service evaluation and vice versa
- On consumer behavior - positive mood increases giving encourages consumer to seek variety and their willingness to try new things.
CONSUMER INVOLVEMENT
INVOLVEMENT - A heightened state of awareness based on importance that motivates consumers to seek out, attend to, and think about product information
CONSUMER INVOLVEMENT - Is the state of mind that motivates a consumer to make purchase, or importance a consumer places on a product or service.
TYPES OF INVOLVEMENT
SITUATIONAL - Tied to a particular situation and specific product.
ENDURING - Tied to a product category; presistent over time and across different situations.
IMPORTANCE OF CUSTOMER INVOLVEMENT: BETTER UNDERSTANDING OF CUSTOMER’S NEED - This is securing customer participation by involving them in different parts of their operations. This can help businesses make products and services that better meet customer needs.
IMPROVED CUSTOMER SATISFACTION AND LOYALTY. Customers are likely to be happy with the products and services they receive when they feel their opinions are being heard and valued. Increased loyalty and retention may result from this.
INCREASED IN MOTIVATION. Customer involvement can spur innovation by giving businesses new ideas and insights they might not have thought of otherwise. This can lead to the customer development of new products and services that better meet the needs of customers.
IMPROVED BRAND REPUTATION. Businesses that actively involve customers in their operations are often seen as more customer-centric and innovative, boosting their reputation and attracting new customers.
REDUCED RISK OF PRODUCT FAILURE. Companies can reduce the risk of product failures and expensive recalls by involving customers in product development and testing. In the long run, this can save businesses time and money.
CONSUMER LEARNING AND CONDITIONING
This involves changes in an individual’s behavior arising out of experience. Most of the human behavior is learned over time out of experience. ( Kotler )
This is the process nu which individuals acquire the purchase and consumption knowledge and experience that they apply to future related behavior. ( Schiffman and Kanuk )
Learning can be viewed as relatively permanent change in behavior occuring as a result of experience. ( Loudon and Della Bitta )
PERSONALITY SELF- CONCEPT & SELF IMAGE
PERSONALITY - Refers to enduring patterns of thoughts, feelings and behaviors that characterize an individual and remain relatively stable over time across different situations. Influences how we perceive and interact with the world around us
SELF- IMAGE - Is a specific aspect of self concept that focuses on how individuals see themselves in terms of physical appearance, social roles and other specific characteristics
SELF- CONCEPT - Is the image we have of ourselves. It is influenced by many forces, including our interaction with important people in our lives. It is how we perceive our behaviors, abilities, and unique characteristics. Dynamic can evolve overtime based on experiences and feedback from others
PERSONALITY
Distinct Properties:
- Personality reflects individual preferences. (ex.high or low in venture)
- Personality is consistent and enduring. (ex. loyalty to a certain type or brand)
- Personality can change. (ex. change in career)
PERSONALITY CHARACTERISTICS:
LOCUS OF CONTROL The degree to which individuals perceive control over a situation being internal or external.
SELF- EFFICACY Generalized self-efficacy refers to a belief about one’s own ability to deal with events and challenges.
SELF-ESTEEM An individual’s self-worth is referred to as self-esteem. Individuals with high self-esteem have positive feelings about themselves.
SELF-MONITORING The extent to which people base their behavior on cues from other people and situations is self-monitoring.
POSITIVE/ NEGATIVE AFFECT An individual’s tendency to accentuate the positive aspects of situations is referred to as positive affect, while those accentuating less optimistic views are referred to as having negative affect.
RISK- TAKING People differ in their willingness to take chances. High-risk-taking managers made more rapid decisions and used less information in making their choices than low risk-taking managers.
TYPE A PERSONALITY - individual is aggressively involved in a chronic, struggle to achieve more and more in less and less time, and if required to do so, against the opposing efforts of other things or other persons.
TYPE B PERSONALITY - are rarely harried by the desire to obtain a wildly increasing number of things or participate in an endless growing series of events in an ever decreasing amount of time.
ROLES OF PERSONALITY IN UNDERSTANDING CONSUMER DIVERSITY: TRAIT
THEORIES
● INNOVATIVENESS
● DOGMATISM
● SOCIAL CHARACTER
● NEED FOR UNIQUENESS
● OPTIMUM STIMULATION LEVEL
● SENSATION SEEKING
● VARIETY NOVELTY SEEKING
INNOVATIVENESS The degree to which consumers are receptive to new products, new services or new practices
DOGMATISM A personality trait that reflects the degree of rigidity a person displays toward the unfamiliar and toward information that is contrary to his own established beliefs.
SOCIAL CHARACTER Ranges on a continuum for inner- directedness to other directedness.
Inner Directedness
- rely on own values when evaluating products innovators Other Directedness
- look to others less likely to be innovators
NEED FOR UNIQUENESS Consumers who avoid appearing to conform to expectations or standards of others
OPTIMUM STIMULATION LEVEL A personality trait that measures the level or amount of novelty or complexity that individuals seek in their personal experiences.
