Consumer behaviour 2e-CHAPTER 1 2e final.pptx

Consumer Behaviour

1. CHAPTER ONE: Introduction to consumer behaviour

2. Explain what consumer behaviour entails Distinguish between the various levels of complexity of consumer decisions Identify and discuss the different stages of an extensive consumer decision-making process Explain how the various stages of the consumer decision-making process differ for consumer decisions in terms of complexity Interpret and apply consumer-related concepts correctly in any discussion of consumer behaviour Discuss the evolution of the marketing concept over time. Learning Outcomes

3. Key terms Cognitive dissonance Compensatory strategy Complex purchase decision Consumer Consumption Controllable market forces Cultural perspective Customer Customer or consumer orientation Decision-maker Decision rules Department store Economic perspective Emic perspective Etic perspective Evoked set of products External influences General dealer Habitual decision Impulsive purchase decision Individual influences Manufacturer Non-compensatory strategy

4. Key terms (cont.). Non-personal information sources Personal or social marketing orientation Personal information sources Production orientation Product orientation Psychological perspective Relationship orientation Retailer Retro marketing Sales orientation Simple purchase decision Societal marketing concept Socio-cultural factors Sociological perspective Uncontrollable market forces.

5. 1.1 Introduction Define and discuss consumer behaviour Dynamic and multi-disciplinary field Consumer choice and buying behaviour best understood within a specific context Must acknowledge and incorporate the characteristics of consumers in less developed markets South African context critical.

6. WATCH: “ Understanding Africa’s consumers and how countries rank” Accessible from: https://www.youtube.com/watch?v=fSSRxMx-6xE (last accessed on 10 February 2023) https://www.globaldata.com/20186-2/ See 2022 Consumer Trends – Blackboard

7. 1.1 Introduction (cont.). 1.1.1 Consumer behaviour defined Simple term Describes multitude of mental and physical processes associated with consumer decision-making All related activities of consumers and buyers of products (pre-purchase, to actual purchase and post-purchase evaluation) Differing perspectives can apply Context driven behaviours.

8. 1.1 Introduction (cont.). 1.1.2 The contribution of multiple disciplines to the field Howard & Sheth (1968): period of increased awareness Perspective Main ideas Economic perspective Consumers formulate needs and wants in terms of concrete and rational criteria Psychological perspectives Individual consumer traits play a role on dictating consumer preferences and behaviour at the personal level. Emotions understood. Sociological perspectives Consumer socialisation and group affiliation shaping behaviour Socio-psychological perspectives Traits and emotions within groups, consumer does not operate in isolation nor purely rationally Cultural perspectives Product needs of specific cultures and sub-cultures. Etic and emic perspectives.

9. 1.2 A critical look at consumer decision-making Consumer decisions are challenging to predict because they differ in terms of: How? Why? Type of decisions? Who? Where?

10. 1.2 A critical look at consumer decision-making (cont.). 1.2.1 Simple versus complex decision-making Process, not a single action Impulsive purchase decision Habitual decision Complex decision Complexity can depend on more than product type: Consumer’s skills and abilities Consumer’s involvement shaped by interest Variety of products available Context in which the decision is made Resulting in a continuum of complexity.

11. 1.2 A critical look at consumer decision-making (cont.). Simple versus complex decision-making (cont .) See Figure 1.5 Simple versus complex buying decisions

12. 1.2 A critical look at consumer decision-making (cont.). Simple consumer decision: Consumer has a reasonable degree of experience & skill Product holds minimal risk Product is easy to replace Product not visibly conspicuous Selection of a reputable brand and managed expectations. Complex consumer decision: Little or no experience (consumer) Some form of risk attached (product uncertainty) Product is novel Many product alternatives exist (confusion in the evaluation process). READ: “To keep your customers, keep it simple”, accessible from https://hbr.org/2012/05/to-keep-your-customers-keep-it-simple (last accessed on 31 December 2018)

13. 1.2 A critical look at consumer decision-making (cont.). READ: “To keep your customers, keep it simple”, accessible from https://hbr.org/2012/05/to-keep-your-customers-keep-it-simple (last accessed on 31 December 2018) “Marketers see today’s consumers as web-savvy, mobile-enabled data sifters who pounce on whichever brand or store offers the best deal. Brand loyalty, the thinking goes, is vanishing. In response, companies have ramped up their messaging, expecting that the more interaction and information they provide, the better the chances of holding on to these increasingly distracted and disloyal customers. But for many consumers, the rising volume of marketing messages isn’t empowering—it’s overwhelming. Rather than pulling customers into the fold, marketers are pushing them away with relentless and ill-conceived efforts to engage .”

14. 1.2 A critical look at consumer decision-making (cont.). 1.2.2 Handling consumer decisions Simple consumer decisions: little external information Complex consumer decisions: more information required (as complexity increases) Sources: Personal information sources (e.g. friends, sales people) Family members can act as gatekeepers Non-personal information sources Technical reports, advertisements etc.

15. 1.3 The consumer decision-making process Inputs Outputs Inputs: Consumer decisions influenced on internal & external levels Internal (personal): consumer’s existing knowledge, which is based on a combination of someone’s learning and prior experiences as well as personal characteristics, intellectual capacity, perception, personality, and attitude, determines the way in which consumer decisions are handled. External : Controllable marketing forces Uncontrollable marketing forces Socio-cultural factors Process

16. 1.3 The consumer decision-making process

17. 1.3 The consumer decision-making process

18. 1.3 The consumer decision-making process (cont.). Inputs Outputs Process: Need recognition Information search Evaluation of alternatives Evoked set (short list/known) of products Decision rules Compensatory (on average…) vs. non-compensatory strategies Process

19. 1.3 The consumer decision-making process (cont.). Inputs Outputs Process: N on-compensatory strategies conjunctive rule - assigns certain minimum acceptable levels (cut-off points) for each product feature that is considered. If a product has any feature that does not meet the minimum requirements, it will be disqualified (for example, a product that is too expensive ). disjunctive rule - products that meet or exceed the minimum cut-off point that was set for every product feature are retained (for example, retaining all products that are cheaper than expected). Process

20. 1.3 The consumer decision-making process (cont.). Inputs Outputs Process: N on-compensatory strategies lexicographic rule - consumer evaluates all potentially suitable products individually by considering product features in order of importance, for example starting with maximum price affordable. Having eliminated all of the products that are too expensive, the consumer then compares the remaining options in terms of the second-most important feature, for example colour. affect referral rule - when a consumer considers an entire product based on overall perceptions gained from experience or prior exposure to similar products (for example, receiving compliments when wearing a specific colour, or winning others’ admiration when wearing a specific brand ). Process

21. 1.3 The consumer decision-making process (cont.). Inputs Outputs Outputs: Actual consumer decision Most suitable choice depends on consumer perception of most important criterion Cognitive dissonance can occur Post-purchase feeling of discomfort Final product represents some sort of compromise Levels may differ Strategies for dissonance reduction. Process

22. 1.3 The consumer decision-making process (cont.). Inputs Outputs Outputs: Strategies for dissonance reduction. Seeking information that supports the purchase decision Gaining confirmation from friends who have had positive experiences Applying a defence technique to justify the purchase Process

23. 1.3 The consumer decision-making process (cont.). Inputs Outputs Process

24. 1.3 The consumer decision-making process (cont.). Source: http://www.experiencetheblog.com/2013/02/how-wearable-tech-and-social-media-will.html on 22 June 2013.

25. 1.3 The consumer decision-making process (cont.). Source: http://www.doctordisruption.com/design/principles-of-design-47-cognitive-dissonance/ on 22 June 2013.

26. 1.4 Marketing and retailing applications Class discussion: “Juggling product attributes during consumer decision-making ”. Page 16

27. 1.5 The evolution of the marketing concept Time period / epoch: Marketing orientation: Second half of 1940s Production orientation: manufacture & sell whatever products the market demanded 1950s Product orientation: focused on product quality 1960s Sales orientation Birth of customer/consumer orientation 1970s ‘So-called’ market orientation (consumer orientation) 1990s Relationship orientation Present Personal/social marketing orientation

28. Consumer behaviour in reality Case study: Exploring the power of conversation in shaping consumer behaviour Clip-to-case: “ 3 Steps to Word Of Mouth Marketing at its Best...” – Ryan McFadyen https://www.youtube.com/watch?v =O8ncsxqUTp8

29. Summary