Topic 3

CHAPTER 6
Knowing your Customer: Consumer
Markets

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 Learning Objectives
By the end of this chapter, you should be able to:
1. Explain why marketing managers should understand consumer behavior

2. Analyze the components of the consumer decision-making process

3. Explain the consumer’s post-purchase evaluation process

4. Identify the types of consumer buying decisions and discuss the significance of consumer involvement

5. Describe how some marketers are re-conceptualizing the consumer decision-making process

6. Identify and understand the cultural factors that affect consumer buying decisions

7. Identify and understand the social factors that affect consumer buying decisions

8. Identify and understand the individual factors that affect consumer buying decisions

9. Identify and understand the psychological factors that affect consumer buying decisions

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 Consumer Behavior
Consumer buyer behavior :

• the buying behavior of final consumers,

individuals and households, who buy
goods and services for personal
consumption

Consumer market :

• all the personal consumption of final

consumers
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 6.1 The Importance of
Understanding Consumer Behavior

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 6.1 The Importance of Understanding
Consumer Behavior
• To create a proper marketing mix, marketers
must understand:
− That consumer preferences are constantly changing
− How consumers make purchase decisions

• Consumer behavior – processes a consumer

uses to make purchase decisions, as well as
to use and dispose of purchased goods or
services; also includes factors that influence
purchase decisions and product use

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 6.1 The Importance of Understanding
Consumer Behavior
• Deciding to purchase any product or service is based on:
1. Value – a personal assessment of the net worth one obtains
from making a purchase, or the enduring belief that a specific
mode of conduct is personally or socially preferable to another
mode of conduct
2. Perceived value – the value a consumer expects to obtain
from a purchase
3. Utilitarian value – a value derived from a product or service
that helps the consumer solve problems and accomplish tasks
4. Hedonic value – a value that acts as an end in itself rather
than as a means to an end (Hedonic goods are associated with
fun, pleasure, and excitement . Typical examples of such
products are perfumes, flowers, luxury watches, and sports
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6.2 The Traditional Consumer
Decision-Making Process

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 Exhibit 6.2 The Consumer
Decision-Making Process
This model represents the
steps that consumers go
through before, during, and
after making purchasing
decisions.

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 6.2 The Traditional Consumer
Decision-Making Process
1. Need Recognition (1st stage in the decision-making
process)
i. Need recognition – result of an imbalance between
actual and desired states
ii. Want – recognition of an unfulfilled need and a
product that will satisfy it
iii. Stimulus – any unit of input affecting one or more of
the five senses: sight, smell, taste, touch, hearing
• A marketing manager’s objective is to get consumers
to recognize the “want–got gap.”
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 6.2 The Traditional Consumer
Decision-Making Process
2. Information Search (2nd stage in the decision-making
process)
1. Internal information search – the process of recalling
information stored in the memory
2. External information search – the process of seeking
information in the outside environment
a. Non-marketing-controlled information source – a product
information source that is not associated with advertising or
promotion
b. Marketing-controlled information source – a product
information source that originates with marketers promoting the
product
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 6.2 The Traditional Consumer
Decision-Making Process
 Internal and external searches for information

i. internal search
 the buyer examines his or her own memory and
knowledge about the product or service gathered through
past experiences.
ii. external search
 the buyer seeks information outside his or her
personal knowledge base to help make the buying
decision.
 Where did you look for external information when
conducting a search for colleges?
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 6.2 The Traditional Consumer
Decision-Making Process
THE EXTENT OF INFORMATION SEARCH
• The extent to which an individual conducts an external search
depends on his or her:
i. Perceived risk
ii. Knowledge
iii. Prior experience
iv. Level of interest in the good or service
• Searching yields an evoked set – a group of brands resulting
from an information search from which a buyer can choose
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 6.2 The Traditional Consumer
Decision-Making Process
3. Evaluation of Alternatives and Purchase (3rd
stage in the decision-making process)
• consumer’s mind organizes and categorizes
alternatives to aid his or her decision process.
• A consumer will use the information stored in
memory and obtained from outside sources to
develop a set of criteria.

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 6.2 The Traditional Consumer
Decision-Making Process
3. Evaluation of Alternatives and Purchase
(3rd stage in the decision-making process)
• The environment, internal information, and
external information help consumers evaluate
and compare alternatives.
• The process is not always rational.
− Nudge – a small intervention that can
change a person’s behavior

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 6.2 The Traditional Consumer
Decision-Making Process
TO BUY OR NOT TO BUY
• Ultimately, the consumer has to decide:

1. Whether to buy
2. When to buy
3. What to buy (product type and brand)
4. Where to buy (type of retailer, specific
retailer, online or in store)
5. How to pay
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 6.2 The Traditional Consumer
Decision-Making Process
PLANNED VERSUS IMPULSE PURCHASE
• Three types of purchases:
1. Planned purchase – typically made after the consumer has
collected a large amount of information (home, car)
2. Partially planned purchase – typically made when the
consumer knows the product category but waits until
shopping to choose a specific style or brand (clothing,
furniture)
3. Impulse or unplanned purchase – often low-priced items
or items on sale or purchased with a coupon, sometimes
triggered by a nudge (food or snack item)
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 6.2 The Traditional Consumer
Decision-Making Process
PSYCHOLOGICAL OWNERSHIP
• When consumers feel a sense of ownership of a
product, they are willing to pay more for it and
are more likely to tell other consumers about it.
• Consumers develop this kind of relationship with
a product when they are able to control it, when
they invest themselves in it, or when they come
to know it intimately.

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 6.2 The Traditional Consumer
Decision-Making Process
4. Post Purchase Behaviour(4th stage in
the decision-making process)
• The satisfaction or dissatisfaction that the
consumer feels about the purchase
• Relationship between:
i. Consumer’s expectations
ii. Product’s perceived performance
• The larger the gap between expectation and
performance, the greater the consumer’s
dissatisfaction

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6.3 Post-purchase Behavior

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 6.3 Post-purchase Behavior
• How well consumers’ expectations of a purchase are met
determines whether the consumer is satisfied or
dissatisfied with the purchase.
− Jilting effect – anticipation of receiving a highly
desirable option only to have it become inaccessible
− Jilting occurs in marketing contexts when a consumer anticipates that she
or he will receive a desirable product or service but then loses access to
that option before actually receiving it.
− Consider how marketing messages excite consumers with promises of
new and better products only to have those products become inaccessible
through stockouts, launch delays, cancellations, and other breakdowns in
product availability.

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 6.3 Post-purchase Behavior

DATA BREACHES
• Data breaches within online retailers often result
in a significant decrease in consumer spending
with the breached company.
• Loyal customers will often change to a different
channel of distribution (such as the brick-and-
mortar store) for the breached firm.
• Heavy users of a retailer are often more forgiving
of a data breach than those who patronize the
firm infrequently.
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 6.3 Post-purchase Behavior
COGNITIVE DISSONANCE
• Cognitive dissonance – inner tension that a consumer
experiences after recognizing an inconsistency
between behavior and values or opinions
• Cognitive dissonance is the discomfort caused by a
post-purchase conflict
• Marketers can reduce any lingering doubts about the
purchase decision in the mind of the buyer by:
i. Engaging in postpurchase communications
ii. Providing excellent postpurchase customer
service
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6.4 Types of Consumer Buying
Decisions and Consumer
Involvement

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 Exhibit 6.2 Continuum of
Consumer Buying Decisions
All consumer buying decisions generally fall along
a continuum of three broad categories:
A. routine response behavior,
B. limited decision making,
C. extensive decision making

Goods and services in these three categories can

best be described in terms of five factors
i. Level of consumer involvement
ii. Length of time to make a decision
iii. Cost of the good or service
iv. Degree of information search
v. Number of alternatives considered

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6.4 Types of Consumer Buying Decisions and
Consumer Involvement
The three categories (routine, limited and extensive) of buying
decisions can best be described in terms of 5 factors:
1. Involvement – the amount of time and effort a buyer
invests in the search, evaluation, and decision processes
of consumer behavior.
2. Routine response behavior – the type of decision making
exhibited by consumers buying frequently purchased, low-
cost goods and services; requires little search and decision
time. For example, a person may routinely buy Tropicana
orange juice

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6.4 Types of Consumer Buying Decisions and
Consumer Involvement
3. Limited decision making – the type of decision making that
requires a moderate amount of time for gathering information and
deliberating about an unfamiliar brand in a familiar product
category. For example, what happens if the consumer’s usual
brand of whitening toothpaste is sold out? Assuming that
toothpaste is needed, the consumer will be forced to choose
another brand.

4. Extensive decision making – the most complex type of

consumer decision making, used when buying an unfamiliar,
expensive product or an infrequently bought item; requires use of
several criteria for evaluating options and much time for seeking
information. For example, when a family gets a new car, they will
spend a lot of time and energy trying out different cars to
determine which one is the best.
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6.4 Types of Consumer Buying Decisions and
Consumer Involvement
Factors Determining the Level of Consumer Involvement

1. Previous experience: When consumers have had

previous experience with a good or service, the level of
involvement typically decreases.

2. Interest: Involvement is directly related to consumer

interests. A person highly involved in bike racing will be
more interested in the type of bike she owns and will
spend quite a bit of time evaluating different bikes.

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6.4 Types of Consumer Buying Decisions and
Consumer Involvement
Factors Determining the Level of Consumer Involvement

3. Perceived risk of negative consequences: As the

perceived risk in purchasing a product increases, so does a
consumer’s level of involvement. The types of risks that
concern consumers include financial risk, social risk, and
psychological

4. Social visibility: Involvement also increases as the social

visibility of a product increases. Products often on social
display include clothing (especially designer labels), jewelry,
cars, and furniture. All these items make a statement about
the purchaser and, therefore, carry a social risk.

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6.4 Types of Consumer Buying Decisions and
Consumer Involvement
Factors Determining the Level of Consumer
Involvement
• When consumers have had previous experience with a
good or service, the level of involvement typically
decreases.
• Involvement is directly related to consumer interests
and the degree of interest.
• As the perceived risk (loss of wealth or status, or
increased anxiety) in purchasing a product increases,
so does a consumer’s level of involvement.
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6.4 Types of Consumer Buying Decisions and
Consumer Involvement
Types of involvement:

1. Product involvement means that a product category has

high personal relevance. Product enthusiasts are
consumers with high involvement in a product category.

2. Situational involvement means that the circumstances of

a purchase may temporarily transform a low-involvement
decision into a high involvement one. High involvement
comes into play when the consumer perceives risk in a
specific situation. For example, an individual might routinely
buy low-priced brands of liquor and wine. When the boss
visits, however, the consumer might make a high-
involvement decision and buy more prestigious brands

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6.4 Types of Consumer Buying Decisions and
Consumer Involvement
Types of involvement:

3. Shopping involvement represents the personal relevance of the

process of shopping. Some people enjoy the process of shopping
even if they do not plan to buy anything

4. Enduring involvement represents an ongoing interest in some

product, such as kitchen gadgets, or activity, such as fishing. The
consumer is always searching for opportunities to consume the
product or participate in the activity

5. Emotional involvement represents how emotional a consumer gets

during some specific consumption activity. Emotional involvement is
closely related to enduring involvement because the things that
consumers care most about will eventually create high emotional
involvement.
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6.4 Types of Consumer Buying Decisions and
Consumer Involvement
Marketing Implications of Involvement
• For high-involvement product purchases, marketing
managers should engage in extensive and informative
promotions.
• For low-involvement product purchases, in-store
promotion and targeted mobile ads are important tools.
• Offering products on a “limited availability” basis is one
of the ways marketers can increase involvement.

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 6.5 Reconceptualizing the
Consumer Decision-Making
Process

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Exhibit 6.3 The Consumer Decision Journey

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 6.5 Reconceptualizing the Consumer
Decision-Making Process
The Consumer Decision Journey
• The consumer decision journey
1. First Phase: begins when an advertisement or other
stimulus causes a consumer to research a number of
products or services to meet his or her needs.
2. Second phase: begins when the consumer evaluates the
alternatives, using input from peers, reviewers, retailers,
the brand itself, and competitors.
3. Third Phase: The consumer then buys (or doesn’t buy)
the product and, if he or she enjoys the purchase, may
advocate and bond with the brand.
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 6.5 Reconceptualizing the Consumer
Decision-Making Process
• To minimize or eliminate the “consider and evaluate”
phases, a company must:
Automate to streamline journey steps, including re-
ordering
Proactively personalize by using info to instantaneously
customize the customer experience
Contextualize interaction by delivering a consumer to
the next set of interactions
Innovate by extending customer interactions to new
sources of value, such as related products or partnered
businesses
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 6.5 Reconceptualizing the Consumer
Decision-Making Process
• Researchers have found two loyalty levels among
customers:
1. The “satisfied” are those who buy regularly,
often out of habit, because they are satisfied
with the brand’s performance over a long
period.
2. The “committed” have a more intense,
involved, emotional relationship with the
brand, often becoming brand ambassadors.

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6.5b Factors that Affect the Consumer
Decision Journey

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 6.5b Factors that Affect the Consumer
Decision Journey
• Cultural, social, individual, and psychological factors
strongly influence the decision process.
• These factors have an effect from the time a
consumer perceives a stimulus and considers the
product or service through postpurchase evaluation
1. Cultural factors, which include culture and values,
subculture, and social class, exert a broad influence
over consumer decision making.

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 6.5b Factors that Affect the Consumer
Decision Journey
4. Social factors sum up the social interactions between
a consumer and influential groups of people, such as
reference groups, opinion leaders, and family
members.
5. Individual factors, which include gender, age, family
life cycle stage, personality, self-concept, and lifestyle,
are unique to each individual and play a major role in
the type of products and services consumers want.
6. Psychological factors determine how consumers
perceive and interact with their environments and
influence the ultimate decisions they make
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 6.6 Cultural Influences on
Consumer Buying Decisions

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 6.6 Cultural Influences on Consumer
Buying Decisions
1. Culture and Values
• Culture – the set of values, norms, attitudes, and
other meaningful symbols that shape human behavior
and the artifacts, or products, of that behavior as they
are transmitted from one generation to the next
• Cultural factors exert the broadest and deepest
influence on purchase decisions.
• Underlying elements of culture are the values,
language, myths, customs, rituals, and laws that
guide consumer behavior.
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 6.6 Cultural Influences on Consumer
Buying Decisions
• Culture is:
a. Pervasive – so ingrained that we
are unaware of it
b. Functional – giving order to society
c. Learned – handed down through
generations
d. Dynamic – adaptive and evolving

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 6.6 Cultural Influences on Consumer
Buying Decisions
2. Subculture
• Subculture – a homogeneous group of people who
share elements of the overall culture as well as
unique elements of their own group
• By understanding subcultures, marketers can
design special marketing strategies to serve the
needs of a subculture.
• Subcultures are distinguished by identifiable
attitudes, values, and needs.

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 6.6 Cultural Influences on Consumer
Buying Decisions
3. Social Class
• Social class – a group of people in a society who are
considered nearly equal in status or community esteem, who
regularly socialize among themselves both formally and
informally, and who share behavioral norms
• Social class is typically measured as a combination of
occupation, income, education, wealth, and other variables.
• Social class is important to marketers for two main reasons:
− Often indicates which medium to use for promotion
− Helps determine where to best distribute products
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6.7 Social Influences on Consumer
Buying Decisions

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 6.7 Social Influences on Consumer
Buying Decisions
1. Reference Groups
• Many consumers seek out the opinions of direct reference groups to reduce their
search and evaluation effort or uncertainty.
− Reference group – all of the formal and informal groups in society that
influence an individual’s purchasing behavior
− Primary membership group – a reference group with which people interact
regularly in an informal, face-to-face manner, such as family, friends, and
coworkers
− Secondary membership group – a reference group with which people
associate less consistently and more formally than a primary membership
group, such as a club, professional group, or religious group
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 6.7 Social Influences on Consumer
Buying Decisions
• Indirect reference groups include:
− Aspirational reference group – a group that someone would like to join
 Norm – a value or attitude deemed acceptable by a group
− Non-aspirational reference group – a group with which an individual
does not want to associate

• For marketers, reference groups have three important

implications:
− They serve as information sources and influence perceptions.
− They affect an individual’s aspiration levels.
− Their norms either constrain or stimulate consumer behavior.
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©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 49
 6.7 Social Influences on Consumer
Buying Decisions
2. Opinion Leaders
• Opinion leader – an individual who influences the
opinions of others
• People often rely on each other’s opinions more than
marketing messages when making purchase decisions.
• Thus, marketing managers must persuade opinion
leaders to purchase their goods or services.
• Given the volume of online content, it can be challenging
to identify true opinion leaders.

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 6.7 Social Influences on Consumer
Buying Decisions
3. Family
• For many consumers, the family projects the
strongest influence on values, attitudes, self-concept,
and buying behavior.
• Children learn by observing their parents’
consumption patterns, so they tend to shop in similar
patterns.
• Socialization process – how cultural values and
norms are passed down to children

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 6.7 Social Influences on Consumer
Buying Decisions
• Marketers should consider family purchase situations along with
the distribution of consumer and decision-maker roles among
family members:
− Initiator – suggests or initiates the purchase process
− Influencer – offers valued opinions
− Decision maker – the family member who actually makes
the decision to buy or not to buy
− Purchaser – the one who exchanges money for the product
− Consumer – the end user

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 6.7 Social Influences on Consumer
Buying Decisions
Individual Differences in Susceptibility to Social
Influences
• Not all persons are equally influenced in their purchase
decisions due to differences in their feelings of
connectedness to other consumers.
− Separated self-schema – a perspective whereby a consumer
sees himself or herself as distinct and separate from others
− Connected self-schema – a perspective whereby a consumer
sees himself or herself as an integral part of a group

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6.8 Individual Influences on
Consumer Buying Decisions

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 6.8 Individual Influences on Consumer
Buying Decisions
1. Gender
• Distinct cultural, social, and economic roles played by
men and women often affect their decision-making
processes.
• Statistics show that women are often the primary
decision makers when purchasing furniture, home
accessories, and small appliances.
• Similarly, men are often the primary decision makers
when purchasing electronics, power tools, auto tires,
and batteries.
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 6.8 Individual Influences on Consumer
Buying Decisions
2. Age and Family Life-Cycle Stage
• How old a consumer is generally indicates what
products he or she may be interested in purchasing.
• Related to a person’s age is his or her place in the
family life cycle, an orderly series of stages through
which consumers’ attitudes and behavioral
tendencies evolve through maturity, experience, and
changing income and status.

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 6.8 Individual Influences on Consumer
Buying Decisions
Marketers should be aware of special situations:
NONTRADITIONAL LIFE CYCLES
• Many nontraditional life-cycle paths are common today, such
as divorced parents, lifelong singles, and childless couples.
SINGLE PARENTS
LIFE EVENTS
• Life-changing events, such as the death of a spouse, moving,
birth or adoption of a child, retirement, job loss, divorce, and
marriage, may mean new consumption patterns.
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 6.8 Individual Influences on Consumer
Buying Decisions
3. Personality, Self-Concept, and Life Cycle
• By influencing the degree to which consumers perceive a good
or service to be self-relevant, marketers can affect consumers’
motivation to learn about, shop for, and buy a certain brand.
• Personality – a way of organizing and grouping the
consistencies
of an individual’s reactions to situations
• Self-concept – how consumers perceive themselves in terms
of attitudes, perceptions, beliefs, and self-evaluations
− Through self-concept, people define their identity, which in turn provides
for consistent and coherent behavior.
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6.9 Psychological Influences on
Consumer Buying Decisions

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 6.9 Psychological Influences on Consumer
Buying Decisions
1. Perception
• Perception – the process by which people select, organize, and
interpret stimuli into a meaningful and coherent picture
• Selective exposure – a process whereby a consumer notices
certain stimuli and ignores others
• Selective distortion – a process whereby a consumer changes or
distorts information that conflicts with his or her feelings or beliefs
• Selective retention – a process whereby a consumer remembers
only that information that supports his or her personal beliefs

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 6.9 Psychological Influences on Consumer
Buying Decisions
MARKETING IMPLICATIONS OF PERCEPTION
• Marketers must:
− Recognize the importance of cues, or signals, in consumers’
perception of products
− Identify the important attributes that the targeted consumers
want in a product and then design signals to communicate
these attributes
− Watch their brand identity closely to maintain strong links
between perceived brand value and customer loyalty
− Take care when changing such stimuli as price, package size,
product, or product position or brand
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 6.9 Psychological Influences on Consumer
Buying Decisions
2. Motivation
• Needs become motives when they are
aroused sufficiently.
− Motive – a driving force that causes a person to
take action to satisfy specific needs

• By studying motivation, marketers can

analyze the major forces influencing
consumers to buy or not buy products.

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 6.9 Psychological Influences on Consumer
Buying Decisions
3. Learning
• Learning – a process that creates changes in behavior,
immediate or expected, through experience and practice
• Two types of learning:
− Experiential learning occurs when an experience changes your
behavior.
− Conceptual learning is based on reasoning, not acquired through direct
experience

• Learning theory is helpful in reminding marketers that concrete

and timely strategies are what reinforce desired consumer
behavior. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 63
 6.9 Psychological Influences on Consumer
Buying Decisions
The Future of Consumer Behavior—Mega
Shopping Bots?
• We already have shopping bots such as
5Gifts4Her, Waylo, PenneyCat, Magic, Kayak,
Snaptravel, Hipmunk, and PricingCentral.
• Future shopping bots will have even greater
memory, computer power, and the
enhancement of artificial intelligence (AI).

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