MARTIN de TOURS SCHOOL OF MANAGEMENT DEPARTMENT OF MARKETING LESSON PLAN MKT3530 CONSUMER BEHAVIOR

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1 MARTIN de TOURS SCHOOL OF MANAGEMENT DEPARTMENT OF MARKETING LESSON PLAN MKT3530 CONSUMER BEHAVIOR

2 MKT3530 CONSUMER BEHAVIOR LESSON PLAN COURSE DESCRIPTION A study of the nature and determinants of consumer behavior. Attention will be focused on the influence of socio psychological factors such as personality, various social groups, demographic variables, social class, and culture on the information of consumers attitudes; consumption and purchasing behavior; including steps in decision-making process starting from problem identification, information and fact finding, evaluation of alternatives, buying decision, and afterpurchase evaluation. COURSE OBJECTIVES Appreciate the fascinating field of consumer behavior with the consumer at its center. Get a full grasp of quantitative and qualitative consumer research. Understand the reasons for mass marketing and segmentation of markets. Get a feel of the internal processes like consumer perception, learning and memory attitudes, motivation and emotion, personality, self-concept and lifestyle. Acquire insights into the social and cultural influences on behavior. Understand how communication combines the individual s inner influences to the social and cultural influences for an adequate decision-making and adoption of products, ideas or services. EXAMINATION STRUCTURE Quiz 10% Discussion Activity 10% Term Project 10% Midterm Examination 30% Comprehensive Final Examination 40% Total 100%

3 LESSON PLAN Part 1: Introduction to Consumer Behavior

4 Lesson 1: Introduction: The Impact of the Digital Revolution on Consumer Behavior Time Allocation: 1.5 hrs Learning objectives CHAPTER 1 To enable students to: Understand the impact of the digital revolution on general consumer behavior. Understand consumer behavior. Identify the two major approaches to the study of consumer behavior. Understand the developme nt of the marketing concept. Understand the role of consumer research in the study of consumer behavior. Understand how segmentati on, targeting, and positioning are used in Brief contents THE IMPACT OF THE DIGITAL REVOLUTION The digital revolution has introduced several drastic changes into the business environment. a) Consumers have more power than ever before. b) Consumers have access to more information then ever before. c) Marketers can offer more services and products than ever before. d) The exchange between marketers and customers is increasingly interactive and instantaneous. e) Marketers can gather more information about consumers more quickly and easily. f) Impact reaches beyond the PC-based connection to the Web. DEFINITION AND SCOPE OF CONSUMER BEHAVIOR Consumer behavior is defined as the behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs. The term consumer behavior is often used to describe two different kinds of consuming entities: the personal consumer and the organizational consumer. a) The personal consumer buys goods and services for his or her own use, for the use of the household, or as a gift for a friend. b) The organizational consumer includes profit Teaching/ Learning Strategies Lecture Teaching Aids/ Materials PowerPoint presentation Evaluation Questioning and Answering in Class Quiz and Exams

5 the study of consumer behavior. Understand customer value, satisfaction, and retention. Learn the role of ethics in marketing. Learn the societal marketing concept. Understand the three interlocking stages of consumer decisionmaking. and not-for-profit businesses, government agencies, and institutions, all of which must buy products, equipment, and services in order to run their organizations. DEVELOPMENT OF THE MARKETING CONCEPT AND THE DISCIPLINE OF CONSUMER BEHAVIOR The production concept assumes that consumers are mostly interested in product availability at low prices. The product concept assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features. The selling concept is a natural extension of the production and product concepts. In this concept, marketing s primary focus is selling the product(s) that it has unilaterally decided to produce. Instead of trying to persuade customers to buy what the firm had already produced, marketing-oriented firms found that it was a lot easier to produce only products they had first confirmed, through research, that consumers wanted. a) This consumer-oriented concept came to be known as the marketing concept. b) Consumer needs and wants became the firm s primary focus. THE ROLE OF CONSUMER RESEARCH 1. Consumer research describes the process and tools used to study consumer behavior. 2. Two theoretical perspectives that guide the development of consumer research methodology: a) The positivist approach

6 tends to be objective and empirical, to seek causes for behavior, and to conduct research studies that are generalized to larger populations. b) The interpretivist approach tends to be qualitative and based on small samples. SEGMENTATION, TARGETING, AND POSITIONING Three elements form a strategic framework for bringing marketing efforts to consumers: a) Market segmentation the process of dividing a market into subsets of consumers with common needs or characteristics. b) Market targeting selecting one or more of the segments identified for the company to pursue. c) Positioning developing a distinct image for the product or service in the mind of the consumer. CUSTOMER VALUE, SATISFACTION, AND RETENTION Customer value is defined as the ratio between the customer s perceived benefits (economic, functional, and psychological) and the resources (monetary, time, effort, psychological) used to obtain those benefits. Customer satisfaction is the individual s perception of the performance of the product or service in relation to his or her expectations. Customer retention makes it in the best interest of customers to stay with the company rather than switch to another firm. MARKETING ETHICS AND SOCIAL RESPONSIBILITY The societal marketing concept requires that all marketers fulfill the needs of the target audience in ways that improve society as a whole, while fulfilling the

7 objectives of the organization. Marketing ethics and social responsibility are important components of organizational effectiveness. CONSUMER BEHAVIOR AND DECISION MAKING ARE INTERDISCIPLINARY Marketing theorists borrowed heavily from concepts developed in other scientific disciplines: a) Psychology the study of the individual. b) Sociology the study of groups. c) Social psychology the study of how an individual operates in groups. d) Anthropology the influence of society on the individual. e) Economics to form the basis of this new marketing discipline. CONSUMER DECISION-MAKING The process of consumer decision-making can be viewed as three distinct but interlocking stages: a) The input stage influences the consumer s recognition of a product need b) The process stage focuses on how consumers make decisions c) The output stage consists of purchase behavior and postpurchase evaluation

8 Lesson 2: Consumer Research Time Allocation: 3 hrs Learning objectives Brief contents Teaching/ Learning Strategies Teaching Aids/ Materials Evaluation To enable students to: Compare the differences between customer research and marketing research. Understand the differences between quantitative research and qualitative research. Understand the use of positivist and interpretivist research. Learn the steps in the consumer research process. Understand the difference between primary and secondary research. Understand the differences between qualitative and quantitative research designs Discuss the differences between CONSUMER RESEARCH PARADIGMS Consumer researchers today use two different types of research methodology to study consumer behavior 1. Quantitative research is descriptive in nature, and is used by researchers to understand the effects of various promotional inputs on the consumer, thus enabling marketers to predict consumer behavior. 2. Qualitative research methods are administered by a highly trained interviewer/analyst who also analyzes the findings thus, they tend to be somewhat subjective, and findings cannot be generalized to larger populations. Marketers use qualitative research findings to discover new ideas and to develop promotional strategy, and quantitative research findings to predict consumer reactions to various promotional inputs. THE CONSUMER RESEARCH PROCESS 1. Defining the objectives of the research A carefully thought-out statement of objectives helps to define the type and level of information needed. 2. Collecting and evaluating secondary data Secondary information is any data originally generated for some purpose other than the present research objectives. Locating secondary data is called secondary research. Original Lecture PowerPoint presentation Questioning and Answering in Class Quiz and Exams

9 qualitative and quantitative data collection instruments Identify the various probability and nonprobabilit y sampling methods. research performed by individual researchers or organizations to meet specific objectives is called primary research. Syndicated Data - Because it is often very costly to collect primary data, many companies routinely purchase syndicated data on consumption patterns. 3. Designing a primary research study. - Quantitative Research Designs 3.1 Observational Research - consumers are watched during the process of buying and using products. Mechanical observation is using a mechanical or electronic device to record customer behavior or response to a particular marketing stimulus. 3.2 Experimentation - test the relative sales appeal of many types of variables such as package designs, prices, promotional offers In such experiments (called causal research), only one variable is manipulated at a time (the independent variable), although all other elements are kept constant. A major application of causal research is test marketing in which, prior to launching a new product, elements such as package, price, and promotion are manipulated in a controlled setting in order to predict sales or gauge the possible responses to the product. 3.3 Surveys - ask consumers about their purchase preferences in person, by mail, or by telephone. Personal interview surveys most often take place in the home or in retail shopping areas. One of the common forms today is the mall intercept. Telephone surveys are also used to collect consumer

10 data; however, evenings and weekends are often the only times to reach the working homemaker. Mail surveys are conducted by sending questionnaires directly to individuals at their homes. Online surveys are sometimes conducted on the Internet - Quantitative Research Data Collection Instruments Data collection instruments include questionnaires, personal inventories, attitude scales, and, for qualitative data, discussion guides. Data collection instruments are usually pretested and debugged to assure validity and reliability of the research study. - A study is said to have validity if it does, in fact, collect the appropriate data needed to answer the questions or objectives. - A study is said to have reliability if the same questions, asked of a similar sample, produce the same findings. Questionnaires - can be sent through the mail to selected respondents for selfadministration or can be administered by field representatives in person or by telephone. a) The questionnaire itself can be disguised or undisguised as to its true purpose. b) Open-ended questions require answers to be in the respondent s own words. c) Closed-ended questions require that the respondent merely check the appropriate answer from a list of options. Attitude scales researchers often present respondents

11 with a list of products or product attributes for which they are asked to indicate their relative feelings or evaluations. a) Likert scales ask the respondent to check or write the number corresponding to their level of agreement or disagreement to statements. b) Semantic differential scales ask the respondent to evaluate a concept, etc., on the basis of each attribute by checking the point on the continuum that best reflects their feelings. c) Behavior intention scales measure the likelihood that consumers will act in a certain way in the future d) Rank-order scales ask the respondent to rank items in order of preference in terms of some criterion. - Qualitative Research Designs and Data Collection Methods 1. Depth Interviews a lengthy, nonstructured interview between a respondent and a highly trained interviewer. 2. Focus Groups consist of eight to ten respondents who meet with a moderator/analyst for a group discussion. 3. Projective Techniques are designed to tap the underlying motives of individuals despite their unconscious rationalizations or efforts at conscious concealment.. 4. Metaphor Analysis a new stream of consumer research suggests that most communication is nonverbal, and that people do not think in words, but in images. 4. Sampling and Data Collection The sampling plan addresses three questions. a) Whom to survey (the sampling unit). b) How many to survey (the sample size). c) How to select (the sampling procedure). The size of the sample is

12 dependent both on the size of the budget and on the degree of confidence that the marketer wants to place in the findings. If the researcher wants the findings to be projectable to the total population, then a probability sample should be chosen; if it is sufficient to have the findings representative of the population, then a nonprobability sample can be selected. 5. Data Analysis and Reporting Research Findings In qualitative research, the moderator or test administrator usually analyzes the responses received. In quantitative research, the researcher supervises the analysis. The body of the report includes a full description of the methodology used and, for quantitative research, also includes tables and graphics to support the findings. - A sample of the questionnaire is usually included in the appendix to enable management to evaluate the objectivity of the findings.

13 Lesson 3: Market Segmentation Time allocation: 1.5 hrs Learning Objectives To enable the students to: Define market segmentation. Explain how and why market segmentation is used. Identify the nine major bases for segmentation Enumerate the variables within the nine segment bases. Categorize the criteria for targeting a market segment. Explain the use of concentrated, differentiated, and countersegmen tation when implementing a segmentations strategy. Brief Contents WHAT IS MARKET SEGMENTATION? Market segmentation is the process of dividing a potential market into distinct subsets of consumers with common needs or characteristics and selecting one or more segments to target with a distinct marketing mix. Prior to the development of market segmentation, mass marketing was the prevailing method. The same product and marketing mix were offered to all consumers. WHO USES MARKET SEGMENTATION? Both sides of the market place benefit from market segmentation. a) Consumers receive products targeted to their specific needs. b) Marketers are able to offer more differentiated products, increasing profits, market share, etc. c) Retailers, industrial manufacturers, hotels, and the media have all benefited from market segmentation. BASES FOR SEGMENTATION There are nine major categories of consumer characteristics on which to base market segmentation: 1. Geographic segmentation, the market is divided by location. 2. Demographic segmentation is the process of segmenting the market based on age, sex, marital status, income, occupation, and education 3. Psychological segmentation (characteristics) - consumers can be segmented in terms of their needs and motivation, personality, perceptions, learning, level of involvement, and attitudes. 4. Psychographic segmentation - segmenting based on personality and attitude measures Teaching/ Learning Strategies Lecture Teaching Aids/ Materials PowerPoint presentation Evaluation Questioning and Answering Questions in Class Quiz and Exams

14 5. Sociocultural segmentation - segments on the basis of stages in the family life cycle, social class, core cultural values, subcultural memberships, and cross-cultural affiliation. 6. Use-related segmentation categorizes consumers in terms of usage rate, awareness status, and degree of brand loyalty. 7. Usage situation segmentation - The occasion or usage situation often determines what consumers will purchase or consume. 8. Benefits Segmentation - Marketers and advertisers seek to isolate one particular benefit that they should communicate to the consumer. 9. Hybrid Segmentation Approaches - Marketers commonly segment markets by combining many segmentation bases, rather than relying on a single base. CRITERIA FOR EFFECTIVE TARGETING OF MARKET SEGMENTS To be an effective target, a market segment should be: a) Identifiable. b) Sufficient (in terms of size). c) Stable or growing. d) Accessible (reachable) in terms of both media and cost IMPLEMENTING SEGMENTATION STRATEGIES Differentiated marketing is when the marketer targets several segments using individual marketing mixes. Concentrated marketing is when the marketer targets only one segment with a unique marketing mix. Countersegmentation strategy Sometimes companies find that it is beneficial to recombine some segments into a new single segment that could be targeted with an individually tailored product or promotional campaign.

15 LESSON PLAN Part 2: Consumers as an Individual

16 Lesson 4: Consumer Motivation Time Allocation: 1.5 hours Learning Brief Contents Objectives To enable students to Explain motivation Define the terms needs and goals Understand positive and negative motivation. Discuss the difference between rational and emotional motives. Understand the dynamic nature of motivation. Explain the various defense mechanisms Identify the four types of arousal stimulus. Explain need systems MOTIVATION AS A PSYCHOLOGICAL FORCE Motivation can be described as the driving force within individuals that impels them to action. This driving force is produced by a state of tension, which exists as the result of an unfilled need. Needs 1. Innate needs are physiological or biogenic, and include food, water, air, clothing, shelter, and sex. 2. Acquired needs are needs that we learn in response to our culture or environment and include the need for self-esteem, prestige, affection, power, and learning. Goals 1. Generic goals are the general classes or categories of goals that consumers select to fulfill their needs. 2. Product-specific goals are the products they select to fulfill their needs. Positive and Negative Motivation - Motivation can be positive or negative in direction - we may feel a driving force toward some object or condition, or a driving force away from some object or condition. Positive and Negative Goal 1. A positive goal is one toward which behavior is directed, and thus is often referred to as an approach object. 2. A negative goal is one from which behavior is directed away, and thus is sometimes referred to as an avoidance object. Rational versus Emotional Motives 1. Rational motives - consumers carefully consider all alternatives and choose those that give them the greatest utility. 2. Emotional motives - the selection of goals according to personal or subjective criteria (e.g., pride, fear, affection, status). Teaching/ Learning Strategies Lecture Teaching Aids/ Materials Powerpoint presentation Evaluation Questioning and answering questions in class. Quiz and Exams THE DYNAMIC NATURE OF MOTIVATION 1. Needs and goals are constantly growing and changing. a) They don t cease because existing needs are never completely satisfied.

17 b) Newer, higher-level needs replace fulfilled needs. 2. Success and Failure Influence Goals Individuals who successfully achieve their goals usually set new and higher goals for themselves. The nature and persistence of an individual s behavior often is influenced by expectations of success or failure in reaching certain goals. 3. Substitute Goals When an individual cannot attain a specific goal or type of goal that he or she anticipates will satisfy certain needs, behavior may be directed to a substitute goal. 4. Frustration Failure to achieve a goal often results in feelings of frustration. Individuals react differently to frustrating situations. 5. Defense Mechanisms People who cannot cope with frustration often mentally redefine the frustrating situation in order to protect their self-image and defend their self-esteem. Reaction to the frustration of not being able to reach goal attainment can take many forms, such as aggression, rationalization, regression, withdrawal, projection, autism, identification, and repression. 6. Arousal of Motives Physiological Arousal - Bodily needs, at any one specific moment in time, are rooted in an individual s physiological condition at that moment. Emotional Arousal - Thinking or daydreaming results in the arousal or stimulation of latent needs Cognitive Arousal - Random thoughts or personal achievement can lead to a cognitive awareness of needs. Environmental Arousal - The set of needs activated at a particular time is often determined by specific cues in the environment. TYPES AND SYSTEMS OF NEEDS 1. Hierarchy of Needs Maslow's theory postulates five basis levels of human needs, which rank in order of importance from low-level (biogenic) needs to higher-level (psychogenic) needs. Maslow s hierarchy of needs theory suggests that individuals seek to satisfy lower-level needs before higher-level needs emerge.

18 2. A Trio of Needs Theory Some psychologists believe in the existence of a trio of basic needs: the needs for power, for affiliation, and for achievement. MOTIVATIONAL RESEARCH Motivational research is a term generally used to refer to qualitative research designed to uncover the consumer s subconscious or hidden motivation.

19 Lesson 5: Personality and Consumer Behavior Time Allocation: 1.5 hours Learning Brief Contents Objectives To enable students to Describe the nature and development of personality. Discuss personality theory. Trace the shift from consumer materialism to compulsive consumption. Explain consumer ethnocentrism. Describe the elements of brand personality. Discuss the concepts of self and selfimage. WHAT IS PERSONALITY? Personality is defined as those inner psychological characteristics that both determine and reflect how a person responds to his or her environment. THE NATURE OF PERSONALITY In the study of personality, three distinct properties are of central importance: a) Personality reflects individual differences. b) Personality is consistent and enduring. c) Personality can change. THEORIES OF PERSONALITY 1. Freudian Theory The Id is the warehouse of primitive and impulsive drives, for which the individual seeks immediate satisfaction without concern for the specific means of that satisfaction. Superego is the individual s internal expression of society s moral and ethical codes of conduct. Ego is the individual s conscious control which functions as an internal monitor that attempts to balance the impulsive demands of the id and the sociocultural constraints of the superego. 2. Neo-Freudian Personality Theory Several of Freud s colleagues disagreed with his contention that personality is primarily instinctual and sexual in nature. They argued that social relations are fundamental to personality development. Karen Horney proposed three personality groups: compliant, aggressive, and detached. 3. Trait Theory It is primarily quantitative or empirical, focusing on the measurement of personality in terms Teaching/ Learning Strategies Lecture Teaching Aids/ Materials Powerpoint presentation Evaluation Questioning and answering questions in class. Quiz and Exams

20 of specific psychological characteristics called traits. Types of traits measured include: a) Consumer innovativeness how receptive a person is to new experiences. b) Consumer materialism the degree of the consumer s attachment to worldly possessions. c) Consumer ethnocentrism the consumer s likelihood to accept or reject foreignmade products. PERSONALITY AND UNDERSTANDING CONSUMER DIVERSITY 1. Consumer Innovativeness and Related Personality Traits Personality traits to be discussed include: a) Consumer innovativeness. b) Dogmatism. c) Social character. d) Need for uniqueness. e) Optimum stimulation level. f) Variety-novelty seeking. 2. Cognitive Personality Factors Two cognitive personality traits have been useful in understanding selected aspects of consumer behavior. They are: a) Need for cognition. b) Visualizers versus verbalizers. 3. Consumer Materialism to Compulsive Consumption Consumer Materialism is a trait of people who feel their possessions are essential to their identity. Fixated consumption behavior: Fixated consumers characteristics are: a) A deep (possibly: passionate ) interest in a particular object or product category. b) A willingness to go to considerable lengths to secure additional examples of the object or product category of interest.

21 c) The dedication of a considerable amount of discretionary time and money to searching out the object or product. Compulsive consumption - Consumers have an addiction; in some respects, they are out of control, and their actions may have damaging consequences to them and those around them. Consumer Ethnocentrism: Responses to Foreign-Made Products BRAND PERSONALITY A brand personification recasts consumers perception of the attributes of a product or service into the form of a human-like character. It seems that consumers can express their inner feelings about products or brands in terms of association with a known personality. SELF AND SELF-IMAGE 1. One or Multiple Selves - The idea that an individual embodies a number of different multiple selves suggest that marketers should target their products and services to consumers within the context of a particular self. 2. The Makeup of the Self-Image - Four aspects of self-image are: a) Actual self-image how consumers see themselves. b) Ideal self-image how consumers would like to see themselves. c) Social self-image how consumers feel others see them. d) Ideal social self-image how consumers would like others to see them. e) Expected self-image how consumers expect to see themselves at some specified future time. f) Ought-to self traits or characteristics that an individual believes it is his or her duty or obligation to possess. 3. The Extended Self

22 - Consumers possessions can be seen to confirm or extend their self-images. 4. Altering the Self - Consumers often wish to change themselves to become a different or improved self.

23 Lesson 6: Consumer Perception Time Allocation: 3 hours Learning Brief Contents Objectives To enable students to Define perception and its key elements. Differentiate between absolute threshold and differential threshold. Explain the marketing applications of just noticeable difference (j.n.d.). Review the concept of subliminal perception Discuss the dynamics of perception. Explain the concept of Gestalt psychology. Understand the implications of consumer imagery. Describe consumers perception of risk and key risk reduction strategies. ELEMENTS OF PERCEPTION Perception is the process by which an individual selects, organizes, and interprets stimuli into a meaningful and coherent picture of the world. Sensation Sensation is the immediate and direct response of the sensory organs to stimuli (an advertisement, a package, and a brand name). Sensory receptors are the human organs (i.e., the eyes, ears, nose, mouth, and skin) that receive sensory inputs, sight, sound, smell, taste, or touch. The Absolute Threshold The lowest level at which an individual can experience a sensation is called the absolute threshold. Adaptation refers specifically to getting used to certain sensations, becoming accustomed to a certain level of stimulation. Sensory adaptation is a problem that causes many advertisers to change their advertising campaigns regularly. The Differential Threshold The minimal difference that can be detected between two stimuli is called the difference threshold or the j.n.d. (just noticeable difference). Weber s law states that the stronger the initial stimulus, the greater the additional intensity needed for the second stimulus to be perceived as different. Manufacturers and marketers endeavor to determine the relevant j.n.d. for their products so that: a) Negative changes reductions or increases in Teaching/ Learning Strategies Lecture Teaching Aids/ Materials Powerpoint presentation Evaluation Questioning and answering questions in class. Quiz and Exams

24 product size, or reduced quality are not readily discernible to the public. b) So that product improvements are readily discernible to the consumer without being wastefully extravagant. Subliminal Perception People are also stimulated below their level of conscious awareness they can perceive stimuli without being consciously aware of it. DYNAMICS OF PERCEPTION There are three aspects to perception selection, organization, and interpretation of stimuli. a) Individuals are very selective as to which stimuli they recognize. b) They subconsciously organize the stimuli they do recognize according to widely held psychological principles. c) And they interpret such stimuli (i.e., they give meaning to them) subjectively in accordance with their needs, expectations, and experiences. Perceptual Selection Consumers subconsciously exercise selectivity as to the stimuli they perceive. Which stimuli get selected depends on two major factors in addition to the nature of the stimulus itself: a) Consumers previous experience as it affects their expectations. b) Their motives at the time (their needs, desires, interests, and so on). Selective Perception The consumer s selection of stimuli (selective perception) from the environment is based on the interaction of expectations and motives with the stimulus itself.

25 1. Selective exposure consumers actively seek out messages they find pleasant or with which they are sympathetic. 2. Selective attention consumers have a heightened awareness of the stimuli that meet their needs or interests. 3. Perceptual defense individuals unconsciously may distort information that is not consistent with their needs, values, and beliefs. 4. Perceptual blocking consumers screen out enormous amounts of advertising by simply tuning out. Perceptual Organization Gestalt psychology - People do not experience the numerous stimuli they select from the environment as separate and discrete sensations. a) People tend to organize stimuli into groups and perceive them as unified wholes. Three of the most basic principles of perceptual organization are figure and ground, grouping, and closure. 1. Figure and Ground - Stimuli that contrast with their environment are more likely to be noticed. 2. Grouping can be used advantageously by marketers to imply certain desired meanings in connection with their products. 3. Closure - If the pattern of stimuli to which they are exposed is incomplete, they tend to perceive it as complete they fill in the missing pieces. Perceptual Interpretation The interpretation of stimuli is uniquely individual because it is based on what individuals expect to see in light of their previous experience. How close a person s interpretations are to reality depends on the clarity of the stimulus, the past experiences of the perceiver, and his or her motives and interests at the time of perception.

26 Perceptual Distortion With respect to perceptual distortion, individuals are subject to a number of influences that tend to distort their perceptions: Physical Appearances; Stereotypes; First Impressions; Jumping to Conclusions; Halo Effect CONSUMER IMAGERY Consumers attempt to preserve or enhance their self-images by buying products they believe agree with that self-image and avoiding products that do not agree. Perceived Risk Perceived risk is the uncertainty that consumers face when they cannot foresee the consequences of their purchase decision. The degree of risk that consumers perceive and their own tolerance for risk taking are factors that influence their purchase strategies. Types of risk include: functional risk, physical risk, financial risk, social risk, psychological risk, and time risk. How Consumers Handle Risk Consumers seek information Consumers are brand loyal. Consumers select by brand image. Consumers rely on store image. Consumers buy the most expensive model. Consumers seek reassurance.

27 Lesson 7: Consumer Learning Time Allocation: 3 hours Learning Brief Contents Objectives To enable students to Explain consumer learning theory and identify the necessary elements Discuss the elements of Classical Conditioning theory. Review the elements of Instrumental Conditioning Describe modeling (observation al learning). Explain and apply cognitive learning theory in a marketing situation. Relate involvement theory to consumer behavior. Describe the Elaboration Likelihood Model. Outline measures of involvement. Understand how consumer learning can CONSUMER LEARNING Consumer learning can be thought of as the process by which individuals acquire the purchase and consumption knowledge and experience that they apply to future related behavior. Motivation is based on needs and goals. If motives serve to stimulate learning, cues are the stimuli that give direction to the motives Response is how individuals react to a cue how they behave constitutes their response. Reinforcement increases the likelihood that a specific response will occur in the future as the result of particular cues or stimuli. BEHAVIORAL LEARNING THEORIES Behavioral learning theories are sometimes called stimulus-response theories. a) When a person responds in a predictable way to a known stimulus, he or she is said to have learned. Classical Conditioning Conditioned learning results when a stimulus that is paired with another stimulus elicits a known response and serves to produce the same response when used alone. a) An unconditioned stimulus might consist of a well-known brand symbol that implies technological superiority and trouble-free operation (the unconditioned response). b) Conditioned stimuli might consist of new products bearing well-known symbols. Teaching/ Learning Strategies Lecture Teaching Aids/ Materials Powerpoint presentation Evaluation Questioning and answering questions in class. Quiz and Exams

28 be measured. Strategic Applications of Classical Conditioning Repetition works by increasing the strength of the association and by slowing the process of forgetting. a) After a certain number of repetitions retention declines. b) This effect is known as advertising wearout and can be decreased by varying the advertising messages. Stimulus generalization explains why imitative me too products succeed in the marketplace: consumers confuse them with the original product they have seen advertised. a) The principle of stimulus generalization is applied by marketers to product line, form, category extensions, family branding and licensing. Stimulus discrimination is the opposite of stimulus generalization and results in the selection of specific stimulus from among similar stimuli. a) The consumer s ability to discriminate among similar stimuli is the basis of positioning strategy, which seeks to establish a unique image for a brand in the consumer s mind. Instrumental Conditioning Instrumental conditioning - the stimulus that results in the most satisfactory response is the one that is learned. a) In consumer behavior terms, instrumental conditioning suggests that consumers learn by means of a trial-and-error process in which some purchase behaviors result in more favorable outcomes (i.e., rewards) than other purchase behaviors. b) A favorable experience is instrumental in teaching the individual to repeat a specific behavior. c) Two types of reinforcement (or reward) influence, which provided that the likelihood for a response would be

29 repeated. - The first type, positive reinforcement, consists of events that strengthen the likelihood of a specific response. - Negative reinforcement is an unpleasant or negative outcome that also serves to encourage a specific behavior. d) Forgetting and extinction when a learned response is no longer reinforced, it diminishes to the point of extinction; that is, to the point at which the link between the stimulus and the expected reward is eliminated. Strategic Applications of Instrumental Conditioning Aside from the experience of using the product itself, consumers can receive reinforcement from other elements in the purchase situation, such as the environment in which the transaction or service takes place, the attention and service provided by employees, and the amenities provided. Reinforcement schedules marketers have found that product quality must be consistently high and provide customer satisfaction with each use for desired consumer behavior to continue. Shaping the reinforcement of behaviors that must be performed by consumers before the desired behavior can be performed Massed versus distributed learning timing has an important influence on consumer learning. a) Question should a learning schedule be spread out over a period of time (distributed learning), or should it be bunched up all at once (massed learning)? Modeling or Observational Learning Modeling or observational learning (also called vicarious learning) - Consumers observe how others behave in response to certain situations (stimuli), the ensuing results (reinforcement) that occur, and they imitate (model) the positively-reinforced

30 behavior when faced with similar situations. a) Modeling is the process through which individuals learn behavior by observing the behavior of others and the consequences of such behavior. b) Their role models are usually people they admire because of such traits as appearance, accomplishment, skill, and even social class. COGNITIVE LEARING THEORY Cognitive learning theory holds that the kind of learning most characteristic of human beings is problem solving, and it gives some control over their environment. Information Processing Information processing is related to both the consumer s cognitive ability and the complexity of the information to be processed. Individuals differ in terms of their ability to form mental images and in their ability to recall information. Involvement Theory and Consumer Relevance A consumer s level of involvement depends on the degree of personal relevance that the product holds for the consumer. a) High-involvement purchases are those that are very important to the consumer in terms of perceived risk. b) Low-involvement purchases are purchases that are not very important to the consumer, hold little relevance, and little perceived risk. Central and Peripheral Routes to Persuasion 1. Central and peripheral routes to persuasion the central premise is that consumers are more likely to weigh information carefully about a product and to devote considerable cognitive effort to evaluating it when they are

31 highly involved with the product category and vice versa. a) Use of the central route to persuasion is more effective in marketing for highinvolvement purchases. b) The peripheral route to persuasion is more effective for low-involvement purchases. 2. The elaboration likelihood model (ELM) suggests that a person s level of involvement during message processing is the critical factor in determining the most effective route of persuasion. c) For high-involvement purchases, marketers should use arguments stressing the strong, solid, high-quality attributes of their products thus using the central route. d) For low-involvement purchases, marketers should use the peripheral route to persuasion, focusing on the method of presentation rather than on the content of the message MEASURES OF CONSUMER LEARNING Recognition and Recall Measures Recognition and recall tests are conducted to determine whether consumers remember seeing an ad, the extent to which they have read it or seen it and can recall its content, their resulting attitudes toward the product and the brand, and their purchase intentions. Cognitive Responses to Advertising 1. Comprehension is a function of the message characteristics, the consumer s opportunity and ability to process the information, and the consumer s motivation (or level of involvement). 2. To ensure a high level of comprehension, many marketers conduct copy testing either before the advertising is actually run in media (called pre-testing) or after it appears (post-testing).

32 Attitudinal and Behavioral Measures of Brand Loyalty 1. Brand loyalty is the ultimate desired outcome of consumer learning. 2. Attitudinal measures are concerned with consumers overall feelings about the product and the brand, and their purchase intentions. 3. Behavioral measures are based on observable responses to promotional stimuli purchase behavior, rather than attitude toward the product or brand.

33 Lesson 8: Consumer Attitude Formation and Change Time Allocation: 3 hrs Learning Brief Contents Objectives To enable the students to: Describe attitude in terms of its four elements. Discuss the structural models of attitude Describe how attitudes are formed. Describe how attitudes are learned. Identify the sources of influence on attitude formation. Outline and explain the five strategies for changing consumer attitudes. WHAT ARE ATTITUDES? An attitude is a learned predisposition to behave in a consistently favorable or unfavorable way with respect to a given object. The Attitude Object Object refers to such things as: product, product category, brand, service, possessions, product use, advertisement price, or retailer. Attitudes Are a Learned Predisposition 1. Attitudes are learned a) They are formed as a result of direct experience with the product, information acquired from others, and exposure to mass media. 2. Attitudes Have Consistency a) Attitudes are relatively consistent with the behavior they reflect. Attitudes Occur Within a Situation a) By situation we mean events or circumstances that, at a particular time, influence the relationship between an attitude and a behavior. Teaching/ Learning Strategies Lecture Teaching Aids/ Materials PowerPoint presentation Evaluation Questioning and Answering Questions in Class Quiz and Exams STRUCTURAL MODELS OF ATTITUDES 1. Tricomponent Attitude Model According to the tricomponent attitude model, attitudes consist of three major components: cognition, affect, and conation. Cognitions are previous knowledge or experiences with or about the object. The affective component of an attitude consists of the consumer s emotions or feelings. Conation is concerned with the likelihood or tendency that an individual

34 will undertake a specific action or behave in a particular way with regard to the attitude object. 2. Multi-Attribute Attitude Models Multi-attribute attitude models examine attitudes in terms of selected product attributes or beliefs. 2.1 The Attitude-Toward-Object Model The consumer s attitude toward a product or specific brands of a product is a function of the presence (or absence) and evaluation of certain product-specific beliefs and/or attributes. 2.2 The Attitude-Toward-Behavior Model The individual s attitude toward behaving or acting with respect to an object 2.3 Theory-of-Reasoned-Action Model To understand intention we also need to measure the subjective norms that influence an individual s intention to act. a) A subjective norm can be measured directly by assessing a consumer s feelings as to what relevant others (family, friends, roommates, co-workers) would think of the action being contemplated. b) They accomplish this by assessing the normative beliefs that the individual attributes to relevant others, as well as the individual s motivation to comply with each of the relevant others. 2.4 Theory of Trying-to-Consume The theory of trying-to-consume is designed to account for the cases where the action or outcome is not certain but reflects the consumer s efforts to consume. a) Sometimes personal impediments or environmental impediments prevent the desired outcome.

35 2.5 Attitude-Toward-the-Ad Models The consumer forms various feelings (affects) and judgments (cognitions) as the result of exposure to an ad. These feelings and judgments in turn affect the consumer s attitude toward the ad and beliefs about the brand acquired from exposure to the ad. Finally, the consumer s attitude toward the ad and beliefs about the brand influence his or her attitude toward the brand. ATTITUDE FORMATION How Attitudes Are Learned When we speak of the formation of an attitude, we refer to the shift from having no attitude toward a given object to having some attitude toward it. In general, the more information consumers have about a product or service, the more likely they are to form attitudes about it, either positive or negative. Sources of Influence on Attitude Formation The formation of consumer attitudes is strongly influenced by personal experience, the influence of family and friends, direct marketing, and mass media. The primary means by which attitudes toward goods and services are formed is through the consumer s direct experience in trying and evaluating them. Sometimes attitudes follow the purchase and consumption of a product. Personality Factors 1. Individuals with a high need for cognition (information) are likely to form positive attitudes in response to ads that are rich in productrelated information. 2. Consumers who are relatively low in need for cognition (information) are more likely to form positive attitudes to ads that feature attractive models or well-known celebrities.

36 STRATEGIES OF ATTITUDE CHANGE 1. Attitude changes are learned; they are influenced by personal experience and other sources of information, and personality affects both the receptivity and the speed with which attitudes are likely to be altered. 2. Marketers have several attitudechange strategies from which to choose: a) Changing the consumer s basic motivational function. b) Associating the product with an admired group or event. c) Resolving two conflicting attitudes. d) Altering components of the multi-attribute model. e) Changing consumer beliefs about competitors brands. Basic Motivational Function 1. Utilitarian function changing attitudes by showing that the product serves a useful purpose that the consumers did not previously consider. 2. Ego-defensive function offers reassurance to the consumer s selfconcept. 3. Value-expressive function anticipate and appeal to the consumer s values, lifestyle, and outlook. 4. Knowledge function individuals generally have a strong need to know and understand the people and things with whom they come in contact. BEHAVIOR CAN PRECEDE OR FOLLOW ATTITUDE FORMATION Cognitive Dissonance Theory 1. Cognitive dissonance theory - discomfort or dissonance occurs when a consumer holds confusing thoughts about a belief or an attitude object (either before or after the purchase). 2. Postpurchase dissonance occurs after the purchase. a) The consumer is not happy

37 with the purchase so they adjust their attitudes to conform to their behavior. 3. Tactics that consumers can use to reduce dissonance include reduction: a) By rationalizing the decision as being wise. b) By seeking out advertisements that support the original reason for choosing the product. c) By trying to sell friends on the positive features of the brand. d) By looking to known satisfied owners for reassurance. Attribution Theory Attribution theory attempts to explain how people assign causality to events on the basis of either their own behavior or the behavior of others. Self-perception theory addresses individuals inferences or judgments as to the cause of their own behavior. Internal and external attributions attitudes develop as consumers look at and make judgments about their own behavior. Defensive attribution consumers are likely to accept credit personally for success, and to credit failure to others or to outside events. Foot-in-the-door technique- based on the premise that individuals look at their prior behavior and conclude that they are the kind of person who says Yes to such requests. a) Such self-attribution serves to increase the likelihood that they will agree to a similar, more substantial request. Attributions Toward Others Every time a person asks Why? about a statement or action of another or others attribution toward others theory is relevant. Attributions Toward Things It is in the area of judging product performance that consumers are most likely to form product attributions

38 toward things. Specifically, they want to find out why a product meets or do not meet their expectations.

39 Lesson 9: Communication and Consumer Behavior Time Allocation: 1.5 hrs Learning Brief Contents Objectives To enable the students to: Define communication by enumerating the five elements Elaborate the bases of credibility for a communication source. Outline the factors affecting the target audience s reception of a communication Describe the feedback process in communication Explain the elements of a persuasive communication s strategy. Define and discuss the elements of a message strategy. Discuss involvement theory. Discuss the central elements of message presentation and their implications for marketers. COMPONENTS OF COMMUNICATION The Sender 1. The sender is the initiator of the communication and can be a formal or informal source. 2. A formal communications source might be the organization communicating the message. 3. An informal communications source might be a parent or a friend who gives product information or advice. The Receiver 1. The receiver is the targeted prospect or a customer. 2. There are also intermediary audiences for a message and unintended audiences The Medium 1. The medium is the channel or way the message is communicated. 2. It can be an impersonal communications channel, such as a mass medium like a newspaper or television program. 3. It can be an interpersonal communications channel an informal conversation between two friends or a formal conversation between a salesperson and a customer. The Message 1. The message can be a verbal message, spoken or written, and usually can contain more specific product information than a nonverbal message. 2. Or, it can be a nonverbal message in the form of symbolic communication. Teaching Learning Strategies Lecture Teaching Aids/ Materials PowerPoint presentation Evaluation Questioning and Answering Questions in Class Quiz and Exams