Your Federal Quarterly Tax Payments are due April 15th Get Help Now >>

CONSUMER BEHAVIOUR - DOC by gC055xCN

VIEWS: 50 PAGES: 13

									CONSUMER BEHAVIOUR

Chapter 3
Consumer Decision-Making Process

CHAPTER OVERVIEW
Consumers are problem solvers, and make decisions about what to buy or not to buy in order to solve
problems and satisfy needs. Typically consumers go through a number of different steps in making a
decision about a purchase. The steps involved include need recognition, information search, and evaluation
of alternatives, purchase and post-purchase. The amount of time and effort taken at each step depends on
the consumer’s level of involvement. High involvement decisions are usually more expensive and have a
higher perceived risk. Low involvement decisions are usually routine or habitual, and are typically for
everyday items or brands to which the consumer is brand loyal. To encourage brand loyalty and to shorten
deliberation and information search, marketers pursue customer relationship strategies. Some of these
strategies involve loyalty programs, but results from efforts like these are questionable. The Internet also
serves as a tool to enhance relationships.



LEARNING OBJECTIVES
After reading this chapter, students should be able to:
     Understand how consumers are decision makers, who buy to solve problems
     Describe the model of consumer decision-making
     Identify the influences on consumer decision-making
     Discuss the concept of high and low involvement and how this influences buyer behaviour
     Explain how customer relationship marketing aims to influence behaviour



CHAPTER TOPICS
    1.   What is a decision?
    2.   Needs
          Types of needs
    3.   Consumption trends
          Media consumption trends and marketing communication
          Case in Point 3.1—The Internet persuaders
    4.   The decision-making process
          Types of decisions
          Need recognition
          Search
          Evaluation
          Purchase and post-purchase behaviour
          Case in Point 3.2—The new mail order
          Case in Point 3.3—Click here and drive away a Toyota
    5.   Customer relationship management
          Loyalty marketing schemes—do they work?
          Case in Point 3.4—Closing in on customers
    6.   The Internet revolution and buyer behaviour



IRM t/a Consumer Behaviour by Karen Webb                                                            Page 17
LECTURE OUTLINE
Encourage discussion to introduce subject:
Ask students if they are loyal to any product or service. What steps do they take to buy that product? What
about a product they are less familiar with, perhaps something relatively expensive—like an appliance or
new stereo system. What steps would they take to buy that item?

Marketers are interested in the steps in the consumer decision-making process—both for habitual purchases
and for purchases that require more involvement and more risk for the buyer. Marketers are also interested
in the influences on decision making. Understanding the steps consumers take to make purchase decisions,
and how these decisions are shaped by different influences in the environment, can help marketers shape
their marketing programs to encourage consumers to buy from them.


1.       What is a decision?
Consumers make decisions to solve problems. A decision is the choice between alternatives that can
potentially solve problems. The decision that consumers make in purchase decisions relates to what to buy
or not to buy.

Problems are defined as ‘the difference between a consumer’s actual current state and their desired state’.
For example, if someone is hungry, they want something satisfying to eat.


2.       Needs
A need is ‘a feeling that something is missing, and may be emotional or physical in nature. In the context of
understanding consumer behaviour, needs and wants are quite similar’ (text, p. 59). Wants are probably
best considered as not having to be met—but we would be far more satisfied if the want was met! Wants
reflect emotional needs more than physical. The text gives an example of a designer-brand jumper and the
satisfaction we would have wearing the ‘real thing’.


Types of needs
Needs can be classified into two broad types: utilitarian and hedonic.
       Utilitarian needs are based on the functional utility of a product. The brand may not be as
          important as the performance of the product or service. For example an everyday bank account
          that offers some interest, and no bank fees, will more likely be referred to here than a well-
          known bank account with account-keeping fees.
       Hedonic needs appeal to the emotional benefits of a product. A product will offer some
          problem-solving function, but the functional needs are only secondary to the hedonic need to
          which the product is appealing. For example, a well-known brand name for banking might be
          preferred over ‘no bank fees’.


Consumption trends
The way people consume (or use products) can be affected by a number of variables. The 2002 Annual Eye
on Australia report noted some important trends in the consumer decision-making process:
     Consumers are seeking more information before making [key] purchases. This could be a function
        of greater access to information because of the growing use of the Internet.
     Third-party endorsement from friends, those in authority, or reference groups, is more influential
        than advertising or marketing efforts. This finding could account for the greater use of public
        relations activities in promotional programs, since this is typically referred to as third-party
        support, rather than advertising.




IRM t/a Consumer Behaviour by Karen Webb                                                             Page 18
Other trends include:
     Males under 35 are more aware of technological advancements—so many innovative products like
         plasma screens, projection TVs and home theatre systems are targeted towards them.
     Women still carry out most household chores so advertisers still target women for cleaning
         products.
     Phone and Internet banking are growing in popularity.
     Home services like dog washing, cleaning and ironing are being sought more, with the greatest
         demand from 35–54-year-olds (who have the highest disposable incomes).
     Relaxation time is important, so time- and labour-saving devices are becoming more popular.
     The future is more uncertain, so people want their needs satisfied TODAY!
     Consumers don’t trust big ‘bureaucratic’ organisations, so new ways have to be used to earn trust.


Media consumption trends and marketing communication
Often the types of shows consumers watch govern the trends in the types of products demanded. For
example, renovation shows like Backyard Blitz and Better Homes and Gardens have resulted in
phenomenal growth in home improvement products and related services. Reality TV shows like Big
Brother, Joe Millionaire and Survivor are also extremely popular, as ordinary people become extraordinary
stars. Advertisers pay extra to have their products featured in time slots these programs occupy.

Clearly the Internet is an invaluable advertising and information-providing tool, allowing customised and
interactive tools, offering new opportunities to break through the clutter.


Case in point 3.1—The Internet persuaders
This case considers the ways in which marketers can combine online communication with mainstream
media as part of a total marketing effort. It is important for students to realise that the Internet is PART of a
marketing program, not a marketing program unto itself. Support is still needed in the offline environment,
to reach all consumers. The case also considers changes in the way online advertising is conducted, with
less emphasis on banner ads, and more on pop-ups, search engines and classifieds. These trends are
expected to continue as more Australians use the Internet and spend more time online. One big benefit of
online advertising is that it is easier to measure exposure (if not effectiveness) of the actual advertisement
through online measurement tools. Examples of Australian companies’ use of the Internet are considered.


3.       The decision-making process
The consumer decision-making process is really a problem-solving process, bearing in mind that some
problems are more important than others. You may decide to build an in-ground swimming pool, because
your children like water. But it may be more urgent to actually teach your children how to swim first.
Marketers are interested in studying the consumer decision-making process because it enables them to
identify leverage points to influence consumer decisions. This means that if a company can learn what
factors influence a customer’s decision, they are better able to provide a marketing program that will satisfy
their potential customers. There are four main steps in the decision-making process, which will be
addressed in turn.


Types of decisions
There are three types, or levels, of consumer decision-making. Each level has an impact on the length or
complexity of the steps in the consumer decision-making process.
    1. Extended search decisions—are likely to be [highly] involved, requiring time and effort searching
        for information and evaluating the different alternatives. The brand name can be quite important
        for this type of decision.
    2. Limited search decisions—involve a degree of searching, but the consumer may try a different
        brand if another brand is not available or cheaper.



IRM t/a Consumer Behaviour by Karen Webb                                                                 Page 19
    3.   Habitual or routine decisions—are often made for everyday items such as groceries. Alternatively,
         a habitual decision can be for a brand to which a customer is loyal. These decisions are usually the
         hardest to influence because the consumer puts little thought into their purchase or finds no reason
         to change because the existing brand satisfies their needs.

Figure 3.2 (text p. 68) shows the how the decision process is affected by the different types or levels of
decision.


Need recognition
The first stage of the consumer decision process is need recognition. This is based on the recognition that a
need must be satisfied. Many factors can influence need recognition.

A person may be prompted by an internal need like tiredness or thirst. Alternatively they might be
motivated by an external factor like advertising, a friend’s recommendation, or peer pressure.

Often a consumer buys a product or service because they want to achieve a balance between the actual and
desired state. For example, someone might buy Bonds underwear because they would like comfortable
underwear and Sarah O’Hare or Pat Rafter says it is comfortable. But in reality they will not talk about
someone’s uncomfortable walking style from ill-fitting underwear in a dressing room, as presented in the
advertisement. The humour is there to attract attention.

We need to stress that consumers seek a balance between their actual and desired state, but the desired state
may not be attainable. We may want to look like a supermodel or a famous tennis star, but that may just be
a dream! Still, Bonds underwear which comes in all shapes and sizes helps one feel good (and comfortable
too!).

A consumer’s reaction to problem or need recognition is based on the importance of the situation and their
current situation. Consider examples here, like power napping when you’re tired at work, which may be
enticing but not appropriate. Instead a drink like V might be more acceptable. Also note that consumers are
faced with numerous problems everyday, but only those that take priority will be acted upon.

Unmet needs are those needs for which there is no clear solution. Marketers try to recognise these needs
and design their offerings around them. This not only tries to solve a consumer’s problem, but also to
differentiate a company from its competition.


Search
A need must generally be recognised before an information search begins—that is why we don’t often
notice ads unless we are interested in the offering. This is one of the reasons advertisers try to attract our
attention through humour, fear and sex appeals.

Information can come from internal and external sources. The degree of search will be based on the
involvement level.

Involvement is described as the amount of physical and mental effort and search a consumer puts into a
decision, and is based on the importance of the decision.

There is usually a higher level of involvement for higher priced items, or with items of greater risk
(financial or otherwise). Services also have a higher level of involvement and risk, because they are
intangible and reliant on the actual provider of the service. It is critical for service marketers to build and
nurture relationships to reduce the level of risk for consumers.




IRM t/a Consumer Behaviour by Karen Webb                                                               Page 20
Involvement on a purchase decision is generally somewhere along a continuum between high and low. In
addition, involvement is dependent on the consumer. What might be a highly-involved decision for one
consumer may be a relatively habitual decision with low involvement for another.

Involvement is likely to be higher when:
     the decision is meaningful and important to the consumer
     the purchase is highly visible and a reflection of self image
     it is an expensive purchase
     there is greater risk involved, because of the high cost, ease of use of the product, cost of parts,
        people could be injured, etc.

There are two main types of involvement:
     Situational, which occurs in situations only, like Valentines Day, what to wear to a wedding, or
         choice of venue for office Christmas party.
     Enduring involvement, which is more permanent and reflected across all decisions for certain
         categories. For example, someone may pursue happiness with possessions in their home. So
         decisions relating to all décor and bric-à-brac for their home are an ongoing high-involvement
         process.

Factors influencing involvement-level include:
     personal importance of the decision
     the situation you are in at the time
     social visibility
     perceived risk of negative consequences
     previous experience.

Low involvement decisions do not require extensive information search because there are many acceptable
alternatives, the decision is perceived as low-risk, or the consumer is loyal to their preferred brand.
Marketers can still have some influence here, by:
      using point-of-purchase (POP) displays and in-store promotions at the place of purchase
      creating an emotional association with the product by using baby animals and other drawcards to
          attract attention and achieve brand recall at point of purchase.

As complexity of purchase decision increases, consumers make less use of a marketer’s information, and
rely more on previous experience, advice of others, authoritative reports (like Choice magazine),
knowledge and attitudes towards the brand. Even price becomes an indicator of quality for consumers who
have limited knowledge of a product.

The Internet, libraries and government sources provide invaluable and comprehensive coverage of all types
of products and services. But at the same time, information overload is just as frustrating for consumers as
lack of information. Marketers need to be reliable, accessible and honest in their provision of information
to consumers.

Consumers are more likely to search for information if:
    they believe that the current brands in their consideration (evoked) set are inadequate
    friends or other trustworthy sources provide messages that conflict with existing beliefs
    there is a high degree of risk and consumers want to confirm their decision.

Information obtained from memory is internal search. Sometimes a consumer has enough information in
their memory to make a final decision. Internal factors like perception, learning and memory, attitudes and
motivation will be covered in Chapters 5 to 9.

External search involves gathering information from the consumer’s environment. External sources of
information include (1) the Internet, (2) printed material from the company (brochures, specifications), (3)


IRM t/a Consumer Behaviour by Karen Webb                                                            Page 21
media information, (4) advertising, (5) friends and family, (6) reference groups and opinion leaders.
External sources will be covered in Chapters 10 and 11.

People who are typically early to adopt conduct research on available choices and have an in-depth
knowledge of the market are sometimes termed market mavens. These people serve as opinion leaders in
areas that they specialise in, such as computing, audio, movies, and the like.

Once armed with all this information, consumers tend to set criteria to help them make decisions. For
example, when considering which restaurant to organise for an office function, consumers will have a set of
function venues to consider, as well as those venues not to consider.

A consideration set comprises the alternatives a consumer will consider when making a decision. In most
cases consumers aim to reduce this set to a manageable few, and use criteria that makes it easy to compare
one brand against the other. This is the third stage of the decision-making process—evaluation.

Figure 3.4 (text p. 75) provides a good summary of the internal search process to evaluate the options
available.


Evaluation
Evaluation for consumers is based on how well a brand satisfies a particular need. Marketers want
consumers to see differences between brands, and try to shape the criteria that consumers use to choose
between brands. This reinforces the importance of marketers understanding consumer behaviour.

To find out what is important for consumers, marketers need to conduct research.

Critical attributes are those features that consumers seek from various products and perceive as being the
most important. Let’s refer back to choosing a venue for a business function. Criteria such as location,
banquet catering for large groups, price, cuisine and separate function rooms might be considered. But
catering for big groups, and location, might be the most critical attributes.

Consumers are always looking for short cuts and in Chapter 5 we’ll be considering the importance of
brands and customer relationships—which reduce the time taken in consumer decision-making.

Consumers decide between brands by evaluating their important criteria for each. Two popular methods of
evaluation include compensatory and non-compensatory models. Consumers who haven’t studied buyer
behaviour are not aware of the fancy names, but operate by the principles in these models, particularly for
high involvement decisions.

Compensatory evaluation occurs when a product’s benefits are assessed against each other. This means that
it is not always possible to compare apples with apples, so benefits are compared. One 4WD car may come
with airconditioning and power steering, but not a bull-bar. Another car may come with a bull-bar and roof
racks, but not the other two attributes. A consumer needs to weigh up what they can do without, and what
they must have.

Non-compensatory evaluation involves comparisons of alternatives against specific criteria or benefits
sought. Using the last example again, a consumer would compare the 4WDs available with all important
criteria, weighing up each brand’s ability to meet the criteria.

The factors that determine which model will be used will depend on the information available on each
brand. The level of involvement and the importance of the decision will also play a role.




IRM t/a Consumer Behaviour by Karen Webb                                                           Page 22
Purchase and post-purchase behaviour
A purchase decision is not only to buy or not to buy, but also which brand to buy. In addition, decisions on
where to buy, when to buy and how to buy must be considered.

        Where to buy includes decisions on choice of retailer, online or offline (at a store), or direct
         through a wholesaler/producer.

        When to buy addresses buying now, for a certain season (Christmas) or post-season sales.

        How to buy relates to mode of transaction, such as cash, EFTPOS, credit, lay-by, interest-free
         terms. The terms of purchase may be the way retailers differentiate themselves from competitors.

Clearly, less thought and effort go into the purchase stage for low-involvement products like grocery items
and low-risk purchases.

Consumer decision-making does not end with the purchase. Consumers evaluate how satisfied they are
with their decision, which will shape future purchases for that product category and brand. If a customer
faces some regret with their purchase, they will experience post-cognitive dissonance. This means that the
consumer is not satisfied that the purchase has met their needs. The level of dissonance is likely to be
higher if the purchase was expensive or if the product performs poorly compared to others in the
consumer’s reference groups.

Marketers can alleviate post-purchase dissonance by providing warranties, money-back guarantees, follow-
up letters, call centre service advice, and answers to FAQs.


Case in point 3.2—The new mail order
This case study discussed the growth in catalogue and direct shopping and provides some interesting
statistics for students to explore. Direct shopping includes mail catalogues but also direct-response media
like television, radio, newspapers and magazines. The Internet is another important growth option to
consider here.


Case in point 3.3—Click here and drive away a Toyota
This case study discusses the issues involved in making high-involvement purchases online. However, an
Internet site does not just fill the role of e-commerce. It can facilitate the purchase, answer many of the
customer’s inquiries, and build relationships with prospects and existing customers as they explore their
purchase options. In this case Toyota provides examples of how their website facilitates the purchase
decision.


4.       Customer relationship management
Relationship marketing is an extension of the marketing concept, and involves nurturing partnerships with
parties in the marketing channel, including customers, retailers, suppliers etc. The focus of relationship
marketing is to add value beyond competitors and gain customer loyalty. It is five times more expensive to
acquire new customers than to retain existing ones. In addition, a 5 per cent increase in loyal customers can
double the profits of a business over the lifetime of that business.

Relationships with customers enhance profitability, allow the opportunity to cross-sell products and
services, or up-sell to more expensive product lines, reduce the impact of competitor activity (thus reducing
brand switching) and reduce the steps involved in the consumer decision process (because search and
evaluation are no longer important steps due to reduced risk).



IRM t/a Consumer Behaviour by Karen Webb                                                             Page 23
Relationships with other stakeholders in the marketing channel can produce higher reliability, more secure
supply, and cost efficiencies in manufacturing and marketing activities.



5.      Loyalty marketing schemes—do they work?
Loyalty marketing schemes are designed to encourage repeat business—but they don’t necessarily result in
loyalty to a particular brand. They are often based on rewards or benefits accrued over the long term. Some
classic examples of loyalty programs include FlyBuys and the Qantas Frequent Flyer program.

Research indicates that success in these schemes shouldn’t necessarily be measured by loyalty to a brand,
since customers repeat purchasing may be a result of the promise of a reward. Purchasing for a reward is
based on a type of learning behaviour that will be considered in Chapter 6.


Case in point 3.4—Closing in on customers
This case discusses Sony’s efforts to develop meaningful relationships with its customers, although so
many of its products are not sold direct, but through selected distributors and agents.

Efforts Sony has undertaken to build relationships with end consumers include opening their own retail
store in Sydney, building effective databases and having direct communications with consumers, through
an interactive web presence.

Effective relationships through regular communication can provide Sony with access to valuable market
intelligence, allowing them to be at the forefront in innovation for their products. Through information
technology, Sony is also able to use information from global networks such as the United States.


6.      The Internet revolution and buyer behaviour
The Internet has probably been the most influential innovation for consumers and businesses of all time.

Although the Internet has its shortcomings, such as security concerns and an overwhelming amount of
information, two of the key benefits associated with the Internet, which are not necessarily available
through other promotional activities, include interaction and customisation.

Interaction allows consumers to have a two-way discussion with the company and get involved in forums
or discussion groups of key interest. Customisation refers to the Internet’s ability to allow consumers to
tailor the website to their own needs, making it easy to seek the information they require.

Again, improving relationships through better service and information availability can shape the influences
acting on the decision-making process. Websites can also reinforce the consumer’s decision, and reduce the
perceived risk of purchase by offering access to information, online assistance and the e-mail addresses of
company representatives.



INTERACTIVE CLASS EXERCISES

What is a decision?
Refer to opening examples for easy purchase decisions and complex decisions. Ask students what problems
they are trying to solve when they purchase a particular item. To promote discussion, refer to Exhibits 3.1
and 3.2 (text, p. 58) for examples from Tontine on problem solving.



IRM t/a Consumer Behaviour by Karen Webb                                                            Page 24
Problems
Encourage examples on problems and how they can be solved. For example:
     desire for adventure—weekend getaways, adventure holidays
     kids climbing the walls at home—cheap, family entertainment to encourage activity outside
     desire to improve promotional opportunities—undertake a course at college.


Needs
Discuss the difference between physical and emotional needs. Think of almost any product on the market,
and whether it meets physical or emotional needs. For example, expensive perfume or deodorant, Harry
Potter novel or educational textbooks. Bi-polar examples are good for demonstrating the point at hand. The
problem recognition process should be introduced here (see Figure 3.1, text p. 59). Problems often come
about because we strive for a certain lifestyle but our current situation causes a state that doesn’t
necessarily equate to where we want to be. If we are satisfied with our situation we will do nothing (not
buy). If not satisfied, we will begin searching for information on alternatives to satisfy our need or want.


Consumption trends
Discussion on ways marketers tackle the following trends should promote interest. Consider the following
trends and examples relevant for ‘today’:
                                                        Examples of marketing activities
    Trend                                               to respond to trend
    Consumers are seeking more information              Provide website with link to FAQs
    before making [key] purchases                       Operate call centre
                                                        Train sales staff in stores
    Third-party endorsement from friends, those in      Target opinion leaders
    authority or reference groups, is more              Use opinion leaders
    influential than advertising or marketing efforts
    Males under 35 are more aware of                    Target this group with innovative products like plasma
    technological advancements                          screens, projection TVs, home theatre systems in
                                                        innovative ways—e.g. SMS, e-mail, special promotion
                                                        offers
    Women still carry out most household chores         Advertisers still target women for cleaning products,
                                                        e.g. Enjo, ironing and washing aids
    Phone and Internet banking are growing in           Allow accounts to be paid over the phone and through
    popularity                                          BPAY systems
                                                        Offer incentives for using these methods that are
                                                        cheaper for organisations
    Home services like dog washing, cleaning and        All promotional efforts should be targeted towards this
    ironing are being sought more, with the             demographic, but further research needs to be
    greatest demand from 35–54-year-olds (who           undertaken to better describe this market
    have the highest disposable incomes).               Seek examples of ‘home services’
    Relaxation time is important, so time- and          Opportunities for growth in markets that make
    labour-saving devices are becoming more             household chores easier
    popular                                             Seek examples of products in this category
    The future is more uncertain, so people want        Credit terms are important here, like interest-free, lay-
    their needs satisfied TODAY!                        by but take home, credit card and other flexible
                                                        payment options
                                                        Encourage examples of retailers offering these terms
    Consumers don’t trust big ‘bureaucratic’            Use of trusted celebrities in promotions
    organisations, so new ways have to be used          Target opinion leaders to ‘spread’ the word
    to earn trust                                       Use public relations activities and sponsorship to
                                                        show community concern and care




IRM t/a Consumer Behaviour by Karen Webb                                                                 Page 25
Types of decisions
Encourage examples on each type of decision. A table with three columns would work here, with all
students contributing at least one idea.
Extended search decisions            Limited search decisions              Habitual or routine decisions
Real estate                          Change of product if preferred        Milk
                                     brand is out of stock


Need recognition
When discussing a the fact that a consumer’s reaction to problem or need recognition is based on the
importance of the situation and their current situation, encourage some examples with possible solutions.
Consider recognition of problems like:
     hungry and on a diet
     best friend is going to Africa but you have to study
     your dream home is up for sale but you’re heavily mortgaged.


High and low involvement
Group work could be encouraged here. Consider some examples of products that can be both high- and
low-involvement decisions, depending on the consumer. Ask students to prepare a two-minute debate
within their team, stating the reasons behind the low- or high-involvement purchase decision.

For example, a headache tablet may be low-involvement if the consumer buys it all the time (low risk of
perceived negative consequences) and they are loyal to a particular brand (past experience). However, this
decision could be more highly involved if a consumer has found out they are pregnant or have some health
condition which their current headache relief may hinder or hurt (perceived risk of negative consequences),
their preferred brand is out of stock (situational), or bad publicity has occurred on that brand (situation at
the time).

Some examples for the groups include:
   a) pair of jeans
   b) restaurant
   c) weekend getaway
   d) gift for wedding
   e) dentist.


Internal and external sources
What sources of information will be sought for the following products?
   a) favourite brand of chocolate biscuits
   b) prescribed medicine
   c) outback holiday
   d) kitchen renovation
   e) kitchen appliances


Evaluation of information
A roleplay is possible to demonstrate evaluation of information.

Have one student act as the consumer (with some ‘family’ members influencing their decision). Have
another student as the travel agent.
The role of the travel agent is to find out what benefits or features are important for the consumer as they
consider an overseas skiing holiday. Meanwhile the consumer has to determine the best way to weigh up




IRM t/a Consumer Behaviour by Karen Webb                                                              Page 26
the alternatives. Other students watching need to decide which model of evaluation is being used—
compensatory or non-compensatory.

Try to have both models addressed at some point in the exercise (using the same example if possible).

Ask students when they would be more likely to use one model over the other.


Customer relationship management
Encourage examples of where relationships exist between a company and its customers. What is the end
result of these relationships? Prompt with examples such as car dealers, real estate agents, dry cleaners,
banks. Note that there are benefits for both marketers and customers in developing relationships and
encouraging brand loyalty.


Loyalty programs
Ask students which loyalty programs they belong to.
Have they ever bought anything from a particular retailer or used a particular credit card to gain points for
rewards?
Have they ever received the reward?
How much had to be spent to get this reward?


DISCUSSION EXERCISES
1.   Look through magazines and choose three very different ads. Discuss:
     a) the problem the advertiser seeks to solve for the consumer
     b) whether the needs that the product or service will satisfy are utilitarian or hedonic.

     The problem solving will be dependent on the ads that are chosen. It is important that students are
     able to differentiate between utilitarian and hedonic needs. With utilitarian needs, performance or
     function of the product is more important. Hedonic needs appeal to the emotional benefits of a
     product. Many brands appeal to both needs, with greater emphasis on either hedonic or utilitarian
     needs. The choice of ad will govern which needs are being appealed to, rather than the nature of the
     product or service being advertised.

2.   What type of search would you expect consumers to follow in an initial purchase of a new product or
     brand in the following product categories?
     a) Men’s moisturising cream
     b) Prepared fruit snack for children
     c) DVD player
     d) Harley Davidson motor bike
     e) Full-cream milk
     Give reasons for your answer.

     The three options available include:
              Extended search decisions—are likely to be (highly) involved, requiring time and effort
                  searching for information and evaluating the different alternatives. The brand name can
                  be quite important for this type of decision. These purchases are likely to be more
                  expensive as well.
              Limited search decisions—involve a degree of searching, but the consumer may try a
                  different brand if another brand is not available or cheaper. For example, if a consumer
                  is loyal to a brand (of dishwashing powder) but their regular powder is out of stock, they
                  may look at the alternatives available. If consumers want to buy a new product and have
                  no brand preference, they may chose any brand that has their required features.



IRM t/a Consumer Behaviour by Karen Webb                                                             Page 27
                 Habitual or routine decisions—are often made for everyday items such as groceries.
                  Alternatively, a habitual decision can be for a brand a customer is always loyal to. These
                  decisions are usually the hardest to influence, because the consumer puts little thought
                  into their purchase or finds no reason to change because the existing brand satisfies their
                  needs.

     The approach you would expect consumers to take depends on the influences working on their
     decisions, plus their level of involvement with the purchase. But as a guide:
     a) Men’s moisturising cream—limited search
     b) Prepared fruit snack for children—limited search (especially if parent is seeking nutrition and low
         sugar)
     c) DVD player—extensive search
     d) Harley Davidson motor bike—extensive search
     e) Full cream milk—habitual or routinised decision

3.   Identify two products or services that require an extensive search of information prior to making a
     purchase decision.
     a) Discuss the different internal and external sources of information that the consumer could use.
     b) Explain different techniques a marketer could use to inform the consumer and shape attitudes
         towards their brand.

     High involvement decisions are the focus of this question. Your sources will depend on the types of
     products chosen.
     a) The sources of internal information will include past attitudes towards brand, memory of past
         experience, learning (of attributes, benefits, incentives of brand), and perception of brand’s
         image. External sources include opinions of others, like market mavens, friends, family or other
         reference groups, government reports, availability of information on the Internet, advertising and
         other promotional information of marketers, other marketing mix variables such as type of
         distribution (exclusive etc.), pricing levels, and product range.
     b) The different techniques marketers can use to shape access to this information and attitudes
         toward their product are by providing sound comparable information on the website; if pricing is
         important as indicator of quality using a relatively high (skimming) pricing level; public relations
         with third-party endorsement though media releases; and features on relevant television shows
         and magazine commentary, sponsorship of events that attract target audience, samples and trials
         for market mavens, participation in government-sponsored reports (like Choice) etc.

4.   You are thinking of knocking down your existing house and building a brand new home.
     a) List some attributes you could consider as criteria to use to evaluate the different (brand) options
        available. For example, rental allowance, nine-month turnaround, quick local council approval.
     b) Discuss how your evaluation would differ when you used a compensatory decision model as
        opposed to a non-compensatory model.

     The criteria used for the example will be individual to each student.

     When using a compensatory model, students would trade-off overall benefits of the various brands,
     and most likely choose the brand with the most important criteria. They would also consider benefits of
     each brand they could live without. When using non-compensatory evaluation, students would weigh
     each knockdown option in terms of EACH criterion and choose the brand that performs the best.

5.   You are the marketing manager for Miele Australia, responsible for the effective marketing of all
     kitchen appliances sold in Australia. What measures would you use to reduce potential cognitive
     dissonance with expensive purchases?




IRM t/a Consumer Behaviour by Karen Webb                                                             Page 28
     There are various measures you could use to reduce ‘buyer regret’, such as congratulation letters to
     customers, customer details from warranty cards collected with updates and hints on new appliances,
     free cooking lessons on relevant appliances, free installation, and a money-back guarantee. And this
     list is not exhaustive. Students should be encouraged to look at ways companies can nurture
     relationships with customers and reduce their regret over expensive purchases.

6.   How can a marketer of a longer-lasting alkaline battery that gives warning of depleting energy use
     knowledge of the consumer decision process in designing a marketing strategy?

     The focus of this question is more on the steps involved in the process, rather than the influences.
     Students are expected to address each step of the decision process.

     Need recognition—a marketer will need to let consumers learn they have a problem with existing
     brands, and that batteries that die without warning can affect performance of some products.
     Advertising, third-party endorsements, and use of market mavens to influence opinions could be
     considered.

      Information search—as consumers use both internal and external sources, the company needs to
     utilise both areas. External search can be targeted through advertisements, editorials, websites, and
     demonstration at trade shows. Internal search can be targeted through raising questions in promotions
     that address the benefits of your product, providing widely available stock (especially at toy stores and
     other relevant distribution outlets), acquiring positive attitudes and endorsements from product by
     using knowledgeable celebrities, etc.

     Evaluation—benefits of the product need to be highlighted so consumers using compensatory models
     will use each relevant criterion that the marketer wants. Since it is not a particularly high-risk
     purchase, formal weighing up of each alternative may not be undertaken.

     Purchase—make sure the product is widely available where products that require batteries are sold.
     Point-of-purchase displays near registers might be beneficial to stand out from competitors, with
     separate information leaflets or a competition.

      Post-purchase evaluation—this is really dependent on the product doing what it says it will. For a
     low-involvement decision, performance and quality of the product are critical.




IRM t/a Consumer Behaviour by Karen Webb                                                              Page 29

								
To top