Consumer Behaviour

Question 1

What does consumer behaviour allows us to do?

Answer 1

• Identify target markets and segments
• Identify opportunities and unmet/latent needs
• Discover how attitudes can be changed (through marketing and persuasion)
• Understand how consumers choose products and how they perceive brands and stores

Question 2

What are the 3 consumer roles?

Answer 2

1. buyer
2. payer
3. user

Question 3

What are the 5 decision-making process of consumer behaviour?

Answer 3

1. Need recognition
2. information search
3. alternative evaluation
4. purchase decision
5. post-purchase behaviour

Question 4

What is another name for the decision making process of consumer behaviour?

Answer 4

Hierarchy of Effects Model of Consumer Behaviour

Question 5

What is need recognition?

Answer 5

The process that occurs whenever the consumer sees a discrepancy between a desired state and an actual state that is sufficient to activate/initiate the decision-making process.

Question 6

What are the 2 motives that may originate for a decision or choice of activity?

Answer 6

Negative: involve actively making a decision in order to remove a negative circumstance or solve a problem (informational motives)

Positive: involves sensory gratification, intellectual stimulation/master, and social approval (transformational motives).

Question 7

What is information search?

Answer 7

A process whereby a consumer searches for appropriate information in order to make a reasonable decision.

Question 8

What do a customer’s extensiveness of search depend on?

Answer 8

1. product attributes
2. involvement and memory
3. expertise and experience, including vicarious experience
4. purchase situation

Question 9

What are the 3 product attributes?

Answer 9

1. search goods
2. experience goods
3. credence goods

Question 10

What are search goods?

Answer 10

Those with attributes that can be evaluated prior to purchase or consumption. Consumers rely on prior experience, direct product inspection and other information search activities to locate information that assists in the evaluation process. Most products fall into the search goods category e.g. clothing, office stationery, home furnishings

Question 11

What are experience goods?

Answer 11

Those that can be accurately evaluated only after the product has been purchased and experienced. Many personal services fall into this category e..g restaurants, hairdresser, beauty salon, theme park, travel holiday.

Question 12

What are credence goods?

Answer 12

Those that are difficult or impossible to evaluate even after consumption has occurred. Evaluation difficulties may arise because the consumer lacks the knowledge or technical expertise to make a realistic evaluation or, alternatively because the cost of information-acquisition may outweigh the value of the information available. Many professional services fall into this category e.g. accountant, legal services, medical diagnosis/treatment, cosmetic surgery.

Question 13

What does involvement and memory refer to?

Answer 13

Involvement refers to the perceived relevance of the product to the consumer based on their needs, values and interests. The higher the involvement of the product (more relevant it is to your life), the greater the search

Question 14

What are the 5 types of risk?

Answer 14

Types of risk: functional, financial, social, physical, obsolescence.

Question 15

What does expertise and experience, including vicarious experience mean?

Answer 15

How much expertise/experience you have in regards tot the product — direct (your own experience) or if search is vicarious (through other people), then search is minimised.

Question 16

What does purchase situation mean?

Answer 16

Crowded vs. quiet shopping places e.g. do I need extra warranty?

High vs. Low involvement products: More/less attention, advanced/basic understanding of needs, high/low consumption evaluation, slow/fast decisions.

Question 17

What is alternative evaluation?

Answer 17

Process that involves the consumer identifying a small number of products in which he or she is interested. The consumer narrows down the choices by deciding which of all the possibilities are feasible, and by comparing the pros and cons of each remaining option.

Question 18

What are the 2 consumer mental aids?

Answer 18

1. Evoked Set – refers to a mental list (selective) of acceptable brands.
2. Heuristics – refer to the rules consumers employ to simplify the decision-making process and make alternative evaluation easier (decision rules or “rules-of-thumb”) e.g. satisficing and escalation of commitment

Question 19

What is satisficing?

Answer 19

A situation where people seek solutions or accept choices or judgements that are “good enough” for their purposes (rather than an optimal solution).

Question 20

What is escalation of commitment?

Answer 20

The phenomenon where people justify increased investment in a decision, based on their cumulative prior investment, despite new evidence suggesting that the cost moving forward of continuing the decision outfights the expected benefit.

e.g. Sunk cost fallacy: a cost has already been incurred and cannot be recovered.

Question 21

What is purchase decision?

Answer 21

Encouraging product trial (limited-time exploration) is an important objective for firms. It provides an explanatory phase in consumer behaviour.

Question 22

What is purchase decision affected by?

Answer 22

Attitudes of others and expected situational factors.

Question 23

What is post-purchase behaviour?

Answer 23

Involves the consumer evaluating and thinking about their choice. They evaluate the products’ performance in the light of their own expectations (which change over time), attempt to close the gap between their desired and actual state/experience, and look for evidence that the decision they’ve made is the right one.

Question 24

When is a customer most vulnerable?

Answer 24

Consumers are most vulnerable once they have made a decision to purchase; this is where marketers can help build satisfaction and loyalty.

Question 25

What is customer satisfaction/dissatisfaction?

Answer 25

The overall feelings or attitudes a person has about a product after purchasing it (satisfaction > neutral feeling, dissatisfaction > negative disconfirmation, delight > positive confirmation)

Question 26

What is cognitive dissonance?

Answer 26

The feelings of post-purchase psychological tension, anxiety or regret that results from an imbalance among an individual’s knowledge, beliefs, and attitudes after an action or decision is taken.

Question 27

What is repeat purchase?

Answer 27

What firms hope for from customers, and will result from a positive experience, which leads to brand loyalty, polygamous loyalty (enjoying multiple brands simultaneously and equally), increasing perceived switching costs (customers don’t want to switch to other brands, possibly due to cost of time and effort), and inertia or habit (purchase goods habitually, consistent purchase of a good, e.g. newspaper subscription.

Question 28

What influences the decision making in customers?

Answer 28

1. reference groups and social networks
2. situational factors
3. personal traits
4. culture and socioeconomic factors e.g. cultural norms and social class

Question 29

How do reference groups and social networks influence decision making?

Answer 29

Being influenced by others (socialisation), family and consumer socialisation (e.g. helping parent pick out phone).

Reference group influence will be greater when they are credible, attractive and powerful.

• Credibility is more permanent.
• Attractiveness is only temporary and can wear off over time.

Question 30

What are the 3 situational factors that influence decision making?

Answer 30

• Purchase reason: for you or someone else, people search for products more diligently if they are for other people because they think about how they will be perceived
• Surroundings: e.g. Apple in stores, consumer environment, which increases information search
• Time constraints: e.g. choosing to eat junk food instead of healthy because of convenience

Question 31

What are the 3 personal traits that influence decision making?

Answer 31

1. attitudes
2. beliefs
3. personality

Question 32

What are innovators?

Answer 32

Those who are innovators tend to be novelty seeking and risk taking.

Question 33

What are early adopters?

Answer 33

Those who are early adopters are opinion leading (influence other social groups).

Question 34

What are laggards?

Answer 34

Those who are laggards tend to be suspicious, nostalgic and frugal of new ideas.

Question 35

What are attitudes?

Answer 35

Attitudes: a person’s consistently favourable or unfavourable evaluations, feelings, and tendencies towards an object or idea

Question 36

What are the 3 types of attitudes?

Answer 36

1. cognitive: beliefs, thoughts, and attributes formed through experiences and observations in comparison to others (logical)
2. affective: feelings and emotions associated with personal judgement e.g. strong feelings > strong attitudes
3. behaviour: how we act or would act should the situation arise