CHAPTER 3UNDERSTANDING THE CONSUMER

TIME AND EFFORT: PURCHASE INVOLVEMENT Determinants of the Degree of Purchase Involvement

TYPES OF CONSUMER DECISION PROCESS Routine Response Behavior (Habit) Extensive Decision Making ‐ Limited Decision Making ‐

INFLUENCES ON CONSUMER DECISION PROCESS Psychological Influences Social Influences Situational Influences

CONSUMER DECISION PROCESS Need Awareness (Problem Recognition) Information Search Evaluation of Alternatives (Judgement & Comparison) Purchase (Selection)

Post Purchase‐

TIME AND EFFORT: PURCHASE INVOLVEMENT

Time and effort spent on a decision to purchase the fresh milk is far less than the time and effort spent on a diamond necklace. Therefore, fresh milk is an extreme type of low‐involvement product, whereas a necklace is a high involvement product. Most other products‐ or purchases fall between these two extremes. The degree of product involvement depends on a combination of these 3 factors:

I. Financial Risk of making a wrong purchase decision. Most expensive items are high–involvement. There is a very high financial risk involved in purchasing a new $30,000 motor vehicle with an immediate market value loss of $5,000 upon‐ ownership transfer!

II. Social Risk of making the wrong decision. In some cases, the risk of social disapproval alone (ridicule, exclusion, feeling demeaned or disparaged, etc.), is enough to raise the involvement of some purchase decisions especially socially visible ones. For example, a new hairstyle, an extreme makeover, a new set of furniture. We tend to seek or predict social approval for these types of purchases or decisions.The social expectation for a rich child to be given a private school education is more a social issue than a financial one — especially for a wealthy family.

III. Interest and Personal Importance. A product may be high involvement to one buyer and moderate involvement to another. The‐ ‐ difference could be the interest level. A car enthusiast will spend more time and effort in‐ making a purchase decision relating to a motor vehicle. Some types of low and high‐ ‐involvement products are also known as convenience products.

TYPES OF CONSUMER DECISION PROCESS (Refer the Same diagram)

The degree of purchase involvement and the time and effort spent will dictate the type of consumer decision process the buyer goes through. The five stages of the consumer decision process are;

I. Need awarenessII. Information search

III. evaluation of alternativesIV. purchase V. Post–purchase behavior.

Routine Response Behavior (Habit)This quick process usually applies to low–involvement products, which often are low–priced and are bought frequently and quickly. (Effortless)After need awareness, a consumer will rely mainly on past experience and brand familiarity in place of information search and evaluation before proceeding straight to purchase. Continued product satisfaction during post purchase‐ will ensure of repeat purchase.

Extensive Decision Making‐At the other extreme, extensive decision making applies to high–involvement products,‐ which are normally expensive and of great importance to the buyer. Here, the consumer will spend a considerable amount of time and effort, especially in the information search and evaluation stages, before final purchase. (Jewellery, a house, college education and overseas holiday)

Limited Decision Making‐It is used for products purchased occasionally and/or to acquire information about an unfamiliar brand. The consumer will go through information search and evaluation stages using a moderate amount of time and effort.

INFLUENCES ON CONSUMER DECISION PROCESS

01. INFLUENCING FACTORS

1.1 Psychological Influences

Motivation Motives are driving forces that compel a person to satisfy specific needs. Motives are, therefore, instrumental in influencing need awareness and evaluation. A safety conscious consumer can be motivated to seek products that perform well on safety attributes. Simply stated, motives are “reasons”. Reasons behind the purchase of a particular product.

Perception. Perception is the process by which an individual selects, organizes and interprets information inputs to create meaning. From a business perspective, marketers are concerned about how the consumer interprets messages and, therefore, forms opinions about a given product or brand. (Brands that are “made in Italy”, or electrical goods “of German technology) Again, this emphasizes the importance of marketing (4Ps) in shaping opinions about products and brands.

Learning (past experience). Learning is a change in behavior as a result of actual past experience or practice. Learning can also be based on the learning of others (friends, etc.). A business can assist consumer learning

by providing information from credible salespeople and advertising; and by providing free samples or trial use of the product.Beliefs and Attitudes. At a basic level, beliefs and attitudes are somewhat related to perception. A belief is knowledge about what is deemed to be true. We could simply believe that a Volvo is the safest car. There may be other luxury cars that are just as safe, if not safer, than the Volvo — but why risk it?

Personality and Lifestyle. A person's personality is the makeup of distinguishing character traits and reaction to the environment. While personality traits are hard to identify or evaluate, lifestyles are easier, by examining consumption behavior. Car-makers often use lifestyle characteristics to segment the motor vehicle market identifying. [Adventurous: Land Cruiser, the trend setters: Mini‐ convertible, the conservatives: Volvo or status seekers: BMW 7 series]‐ ‐

1.2 Social Influences

The forces that other people (friends, family members) or groups (society, culture, and peer groups) exert on our individual consumption behavior are called social influences. An individual alone is usually not influential enough to modify the behavior of the group but we have to “behave” like the members of that class and that includes conversational topics, dress manners, interests and activities, and even opinions.

Reference groups can be any group that we want to strongly identify with, but is usually a peer group. Peer group pressure is perhaps the strongest influence on consumer buying behavior.A marketer can attempt to encourage consumer acceptance of its products by promoting the group or social desirability of the brand. The use of celebrity endorsement can be an effective way of reinforcing a trend — Tiger Woods’s Nike Golf.

1.3 Situational InfluencesThere may be some unforeseen circumstances that exist when a consumer is making a purchase decision.

Time factors. A car owner has been carefully planning for a week to have his car repaired but, a suddenly car broke down on the highway would require an emergency repair instead of the earlier planned repair. Decision making is rushed or even compromised when time is‐ restricted as in last minute purchases.

Physical surroundings. This may include the physical environment in which the purchase decision occurs. Some of these surroundings are random like the weather. A sudden change in the weather can lead to the impulsive purchase.

Purchase reasons. Gift stores are primarily in the gift giving business. Such purchase‐ reasons affects the buyer decision process because the gift receiver gets into the process.

Other situations may include temporary stock outs (of products), easy credit (instalment payments). Again, these situations may be unforeseen.

02. CONSUMER DECISION MAKING PROCESS (Need Awareness, Information Search, Evaluation, Purchase, Post-Purchase)

1. Need Awareness (Problem Recognition)

This first stage is also known as need or problem recognition and occurs when the consumer acknowledges a marked difference between current state and a desired state (expectation), or the “gap”. There will be no buying. At this stage, the individual becomes a potential customer entering the market. Marketers partly responsible for the “gap”. A marketer can influence the need awareness stage by marketing a better product. Apart from the marketer’s influence, society can also play a part in need awareness. “Keeping up with the Joneses” demonstrates the point. Society encourages and rewards personal success;

2. Information Search

The information can be new or existing (from past experience, etc.). The duration and intensity of the search

depends on the degree of product involvement, and the consumer's past experience in purchasing the product.

1. Personal experience: Existing information from past experience with the product2. Personal sources: Information including opinions from friends, relatives, associates 3. Market–dominated sources: Information from salespersons, advertising, packaging 4. Public sources: The media, government, universities, professional bodies

Selective Exposure (Attention). This refers to the tendency for consumers to notice only certain information, messages or advertisements. Businesses could increase buyers’ attention through messages that are well positioned (e.g., right hand pages of a newspaper, a billboard at a busy traffic junction), novel‐ (humorous, farcical, outlandish TV and print advertisements), sizeable (larger the better), and repeated often.

Selective Distortion. Buyers are inclined to misinterpret, misunderstand or disbelieve certain messages or advertising claims, largely because these claims are inconsistent with existing beliefs or personal feelings. The information presented should also be consistent with buyers’ existing beliefs. The current view is that German technology is advanced, on the other hand, a claim of “advanced Australian technology” for a locally made car, may be received with suspicion.‐

Selective Retention. Consumers tend to forget information presented to them, or remember only those that they want to. Advertisers usually resort to the use of familiar associations (a jingle, a slogan, a well known celebrity, etc.). We are constantly being reminded on TV that McDonald’s has‐ changed — that the food is now healthier than ever, especially with its new range of sandwiches and salads. Well, remembering that claim is one thing; believing it, is another!Advertising to a select audience can increase retention rate. Interested customers are more receptive to product information and tend to remember it.

3. Evaluation of Alternatives (Judgement & Comparison)

When successful, an information search yields a number of brands or models the consumers view as possible alternatives — the evoked set (or consideration set).

Evaluative CriteriaThis stage involves the consumer establishing a set of criteria (evaluative criteria) against which to compare the attributes of the brands under consideration. Therefore, evaluative criteria are not only product attributes that are important to the buyer but they also enable him to compare. For example, a driver side airbag may be an important safety feature, but it is not an‐ evaluative criterion if it is standard in all new cars — buyers can’t make comparisons.The criteria depend on the specific needs or motives of the consumer. A safety conscious buyer may compare and evaluate the various car models against safety dimensions such as multiple airbags, anti locking brakes, all wheel drive, 5 star safety rating, and other safety‐ ‐ ‐ features.

Relative importance of criteriaThe criteria are often weighted — some being more important than others. Marketers can often influence the relative importance of these criteria. When marketing computers, HP may convince buyers that brand reputation should be the most important attribute (evaluative criterion) followed by customer support and price. A lesser known brand may suggest value for money as the top criterion. ‐ ‐ ‐

New criteriaWhen the evaluative criteria of a given product are fairly stable with only their relative importance changing, a new criterion may be introduced. [That’s perhaps the consumer keeping up with technology]. Full HD and 100 hertz technology are a must for today’s digital ready TV sets. With water‐ ‐ ‐ restrictions across Australia, water saving features are a priority for washing machines,‐ dishwashers, and shower heads.‐

AttitudeFinally, an attitude towards each product under consideration (the evoked set) is formed — and the products ranked. Recall that an attitude is more encompassing (Surrounding) and includes knowledge and feelings (emotions, prejudice, values, etc.) about a product, brand, person or idea, etc., and its response action. Response action can include immediate purchase, delayed purchase, rejection, taking more time to consider, etc., depending on the ranking of each product.

4. Purchase (Selection)

The actual purchase of the product depends on the outcome of the earlier evaluation stage as well as situational factors that may arise unexpectedly. Therefore, there is no guarantee of a purchase immediately after the evaluation stage.

Out of stock: Buyers will either be prepared to wait, go elsewhere or buy the next preferred product. Marketers can minimize this problem through improved stock handling and management. Some store checkout systems are linked directly to the suppliers and stock is replenished regularly. Financial situation: The preferred product may be beyond the means of the buyer, or his financial situation may have suddenly changed — resulting in a lost or postponed sale. With easy credit today, it is common for retailers to offer credit (usually through a financial institution) in the form of instalment payments or deferred payment schemes to facilitate purchase.

5. Post Purchase‐

The consumer begins to assess the purchase decision, this time subjecting the product to actual use — to determine the level of satisfaction/dissatisfaction. This post purchase stage is ‐experienced immediately upon consumption of the product.

Satisfaction: Satisfaction occurs when the product has met the buyer’s predetermined expectation, i.e., desired state has been reached and the “gap” closed. Her positive experience will influence future decisions such as brand loyalty.

Dissatisfaction: This occurs when the purchase fails to meet the expectation of the buyer. Current state is still short of the desired state. The response could include rejection of the product, complaining to the seller, or initiating negative word–of–mouth promotion.

Highlighting the positives: Attempts to justify the decision by highlighting the positive aspects of the product and narrowing the “gap” between the new state and desired state.

Disparaging the rejected alternatives: A buyer may deliberately highlight the faults of the rejected product in order to justify the decision to purchase a perceived lesser quality product. The “tall poppy syndrome” is such a response. Here, we may develop the tendency to‐ disparage a rich and successful individual — so as to justify our personal inadequacies. We

unfairly criticize a friend’s new house, perhaps to feel better about our less desirable old house.