Consumer Behavior the buying behavior of consumers the individuals families and households who buy goods Chapter 6 Buying Process Brands Product Development Learning Objectives Know the 6 steps in buyer decision process Understand a firm s motivation Know 4 steps in product development Know population trends Identify 4 stages of household life cycle and services for personal consumption Buying Process Pre Purchase 1 Assessing need 2 Searching for information 3 Evaluating alternatives o o o o o o 4 Selecting Purchase 5 Buying Post Purchase 6 Evaluating Pre purchase the consumer tries to determine how much pleasure or pain will be derived from a product or service 1 ASSESSING NEED VS WANT Consumers sense a discrepancy between current state and desired state Needs and individuals relationships with their goods 1 Self concept attachment products establish user s identity 2 Nostalgic attachment link to one s past 3 Interdependence part of daily routine 4 Love product elicits strong emotion 2 SEARCHING FOR INFORMATION Involves sorting behavior Information either internally or externally is accessed Internal go over in your mind o o o o o o External looking at outside information say yes to dress In the economic theory of choice the assumption is that the consumer has perfect information Information makes choice meaningful Consumers cannot make a good decision unless they have adequate information Challenges to obtaining information o 1 Number of products or varieties is overwhelming Deregulation has brought with it more choices as well as increased competition It is a sign of a healthy economy to have a larger number of products and services but this diversity may create confusion for consumers Telephone services airlines o 2 Complexity of goods Assessment becomes difficult o 3 Time costs are great It takes time to find information New technology is more complex therefore assessment is more complex and the information is either more complex or not available 2 Increased levels of education translate into consumers who demand more information and Consumers assume that they are protected in the marketplace and do not practice caveat That time has to come from somewhere o 4 Consumers have high expectations accurate information o 5 False sense of security emptor Let the buyer beware o 6 Some information is useless or inaccurate Useless Information On sears hair dyer do not use while sleeping On packaging for Rowenta iron do not iron clothes on body On Nytol sleep aid warning may cause drowsiness Inaccurate Information Sometimes info that is given may be inaccurate It then is up to the consumer to be wary and judge whether the info is correct Consumer information should be o Objective Non biased source of information is not making a profit Consumer Reports is a good source of objective info Does not accept advertisements o Valid credible Information comes from reliable sources Credible research has been done 3 o Complete o Up to date Information could be proven to be correct o Understandable If seller desires to provide the consumer with info then the info should be written so that a consumer can understand what the words mean No double speak nor too technical Incomplete information may actually mislead the consumer Stating only the good points about a product and leaving out the problems gives consumers the impression that the product is without flaws Information about a product should be relevant for now Consumer Reports sometimes reports info on a model that has been discontinued hence information may not be relevant anymore 6th grade level Benefits of Information Search 1 Lower tag price 2 Lower full price or consumer cost 3 Satisfaction from shopping retail therapy 4 Knowledge of what is available Cost of Information Search 1 Time costs 2 Cost of gasoline or public transportation 3 Cost of obtaining info 4 Emotional Costs o o o o o o o o o 4 Consumers will search as long as the cost of the search is less than the expected savings from the When should you search more for information 1 Expensive product 2 Something you will have a long time 3 When there is a large price dispersion in the market 4 When there is a large variation in quality Information search Rule search o CS ES Rule of Thumbs 1 Using seals of approval label 2 Buying top of the line merchandise 3 Buying high priced goods 4 Buying brand names o o o o o o o o o o o 5 Buying the large size because think it has a lower unit price Types of goods 1 Search product or service with features and characteristics easily evaluated before the purchase consumer can gather relevant and pertinent information before purchase Most products fall into this category Appliances cars clothing furniture Stores will cluster to lower consumers information search costs think Lowes and Home Depot being close to each other o 2 Experience consumer obtains the relevant information after purchase 5 Two examples are 1 food 2 entertainment Food you need to taste Entertainment You can t preview the entire event sports movie Cents off coupons taste tests and previews are intended to lower search costs o 3 Credence term used in economics for a good whose utility impact is difficult impossible for the consumer to ascertain Consumer never obtains relevant information Typical consumer does not have the expertise to evaluate information with certain complex goods or services Examples Legal services Mechanic services Prescription and over the counter drugs The gov t helps consumers by policing credence goods more than others e g licensing of service providers drug regulation Passive Information encountered when one is doing something else Banner ads billboards ads on bathroom doors Stall Street Journal Actively Acquired Information information sought for its own sake Test driving a car internet search reading literature asking friends o o 3 EVALUATING ALTERNATIVES Based on information search the person weighs alternatives o Likes dislikes price availability service Evaluation procedure depends on the consumer and the buying situation Most buyers evaluate multiple attributes each of which is weighed differently 6 o o o o o o At the end of the evaluation stage purchase intentions are formed 4 SELECTING 5 BUYING Two factors intercede between purchase intentions and the actual decisions 1 Attitudes of others 2 Unexpected situational factors Ultimately a choice is made to purchase including where when and how Which store to patronize Timing matters post holiday sales