A. Perception
i. In marketing, perceptions are more important than reality because they
affect consumers’ actual behavior.
ii. Perception is the process by which we select, organize, and interpret
information inputs to create a meaningful picture of the world.
iii. Sensory Marketing: marketing that engages the consumers’ senses and
affects their perception, judgment and behavior
1. Sensory marketing can be used subconsciously to shape consumer
perceptions of more abstract qualities of a product or service (say,
different aspects of its brand personality such as its sophistication,
ruggedness, warmth, quality, and modernity).
2. Sensory marketing can also be used to affect the perceptions of
specific product or service attributes such as its color, taste, smell,
or shape.
3. Touch is the first sense to develop and the last sense we lose with
age.
a. High need-for-touch (NFT) individuals were more
confident and less frustrated about their product
evaluations when they could actually touch a product than
when they could only see it.
b. For low NFT individuals, touching did not matter one way
or another.
4. Smell: Scent-encoded information has been shown to be more
durable and last longer in memory than information encoded with
other sensory cues.
5. Sound (audition): Sounds that make up a word can carry meanings
and ambient music in a store has also been shown to influence
consumer mood, time spent in a location, perception of time spent
in a location, and spending.
6. Taste. Humans can distinguish only five pure tastes: sweet, salty,
sour, bitter, and umami.
a. Taste perceptions themselves depend on all the other
senses—the way a food looks, feels, smells, and sounds to
eat.
b. Physical attributes, brand name, product information
(ingredients, nutritional information), product packaging,
and advertising affect taste.
7. Vision: many visual perception biases or illusions exist in
day-to-day consumer behavior.
iv. People emerge with different perceptions of the same object because of
three perceptual processes:
1. Selective attention: because we cannot possibly attend to all these,
we screen most stimuli out
a. People are more likely to notice stimuli that relate to a
current need
b. People are more likely to notice stimuli they anticipate
c. People are more likely to notice stimuli whose deviations
are large in relationship to the normal size of the stimuli
d. People are influenced by unexpected stimuli
2. Selective distortion: the tendency to interpret information in a way
that fits our preconceptions/prior beliefs and expectations
3. Selective retention: consumers are likely to remember good points
about a product we like and forget good points about competing
products.
v. Subliminal Perception: no evidence supports the notion that marketers can
systematically control consumers at a subliminal level
B. Learning
i. Learning induces changes in our behavior arising from experience.
ii. Learning theorists believe learning is produced through the interplay of
drives, stimuli, cues, responses, and reinforcement.
1. A drive is a strong internal stimulus impelling action.
2. Cues are minor stimuli that determine when, where, and how a
person responds.
3. Generalization transfers beliefs to other products
4. Discrimination means we have learned to recognize differences in
sets of similar stimuli and can adjust our responses accordingly.
iii. Learning theory teaches marketers that they can build demand for a
product by associating it with strong drives, using motivating cues, and
providing positive reinforcement.
iv. The hedonic bias occurs when people have a general tendency to attribute
success to themselves and failure to external causes.
C. Emotions
i. Consumer response may be emotional and invoke different kinds of
feelings.
ii. Marketers are increasingly recognizing the power of emotional appeals—
especially if these are rooted in some functional or rational aspects of the
brand.
iii. An emotion-filled brand story has been shown to trigger’s people desire to
pass along things they hear about brands, through either word of mouth or
online sharing.
D. Memory
i. Cognitive psychologists distinguish between short-term memory (STM)—
a temporary and limited repository of information—and ong-term memory
(LTM)—a more permanent, essentially unlimited repository.
ii. Most widely accepted views of long-term memory structure assume we
form some kind of associative model.
1. The associative network memory model views LTM as a set of
nodes and links.
2. Nodes are stored information connected by links that vary in
strength.
3. Any type of information can be stored in the memory network,
including verbal, visual, abstract, and contextual.
4. A spreading activation process from node to node determines how
much we retrieve and what information we can actually recall in
any given situation.
5. Consumer brand knowledge is a node in memory with a variety of
linked associations.
a. The strength and organization of these associations will be
important determinants of the information we can recall
about the brand.
b. Brand associations consist of all brand-related thoughts,
feelings, perceptions, images, experiences, beliefs,
attitudes, and so on, that become linked to the brand node.
iii. Memory Processes
1. Memory encoding describes how and where information gets into
memory.
2. The more attention we pay to the meaning of information during
encoding, the stronger the resulting associations in memory will
be.
3. Memory retrieval is the way information gets out of memory.
Three facts are important about memory retrieval
4. The presence of other product information in memory can produce
interference effects and cause us to either overlook or confuse new
data.
5. The time between exposure to information and encoding has been
shown generally to produce only gradual decay.
6. Information may be available in memory but not be accessible for
recall without the proper retrieval cues or reminders.
II. The Buying Decision Process: The Five-Stage Model
A. Consumer behavior questions marketers should ask:
i. Who buys our product or service?
ii. Who makes the decision to buy the product or service?
iii. Who influences the decision to buy the product or service?
iv. How is the purchase decision made? Who assumes what role?
v. What does the customer buy? What needs must be satisfied? What wants
are fulfilled?
vi. Why do customers buy a particular brand? What benefits do they seek?
vii. Where do they go or look to buy the product or service? Online and/or
offline?
viii. When do they buy? Any seasonality factors? Any time of
day/week/month?
ix. How is our product or service perceived by customers?
x. What are customers’ attitudes toward our product or service?
xi. What social factors might influence the purchase decision?
xii. Do customers’ lifestyles influence their decisions?
xiii. How do personal, demographic, or economic factors influence the
purchase decision?
B. The buying decision process includes all the experiences in learning, choosing,
using, and even disposing of a product.
C. The consumer typically passes through five stages: problem recognition,
information search, evaluation of alternatives, purchase decision, and postpurchase
behavior.
D. Consumers don’t always pass through all five stages—they may skip or reverse
some.
E. Problem Recognition
i. With an internal stimulus, one of the person’s normal needs—hunger,
thirst, sex—rises to a threshold level and becomes a drive.
ii. A need can also be aroused by an external stimulus.
iii. Marketers need to identify the circumstances that trigger a particular need
by gathering information from a number of consumers so they can then
develop marketing strategies that spark consumer interest.
F. Information Search
i. A mild search state is called heightened attention (the consumer becomes
more receptive to information about a product).
ii. Active information search includes: looking for reading material, phoning
friends, going online, and visiting stores to learn about the product.
iii. Major information sources to which consumers will turn fall into four
groups:
1. Personal: Family, friends, neighbors, acquaintances
2. Commercial: Advertising, Web sites, e-mails, salespersons,
dealers, packaging, displays
3. Public: Mass media, social media, consumer-rating organizations
4. Experiential: Handling, examining, using the product
iv. The greatest quantity of information is received from commercial sources
v. The most effective information often comes from personal or experiential
sources or public sources that are independent authorities
vi. Only the consideration set will meet initial buying criteria.
vii. As the consumer gathers more information, just a few, the choice set, will
remain strong contenders.
1. This process of identifying where consumers fall in the
decision-making hierarchy is called market partitioning.
2. Attributes can also be used to segment customers.
G. Evaluation of Alternatives
i. The consumer is trying to satisfy a need.
ii. The consumer is looking for certain benefits from the product solution.
iii. The consumer sees each product as a bundle of attributes with varying
abilities to deliver the benefits. The attributes of interest to buyers vary by
product
iv. Consumers will pay the most attention to attributes that deliver the
sought-after benefits.
v. Through experience and learning, people acquire beliefs and attitudes that
influence buying behavior.
1. A belief is a descriptive thought that a person holds about
something.
2. Attitude is a person’s enduring favorable or unfavorable
evaluations, emotional feelings, and action tendencies toward
some object or idea
3. Attitudes economize on energy and thought so they can be very
difficult to change.
vi. Expectancy-Value Model: consumers evaluate products and services by
combining their brand beliefs—the positives and negatives—according to
importance.
vii. Strategies to improve attitudes under the Expectancy-Value Model:
1. Redesign/real repositioning
2. Alter beliefs about the brand/psychological repositioning
3. Alter beliefs about competitors’ brands/competitive depositioning
4. Alter the importance weights
5. Call attention to neglected attributes
6. Shift the buyer’s ideals
H. Purchase Decision
i. A consumer may make as many as five subdecisions: brand (brand A),
dealer (dealer 2), quantity (one computer), timing (weekend), and payment
method (credit card)
ii. Noncompensatory Models of Consumer Choice
1. The expectancy-value model is a compensatory model, in that
perceived good things about a product can help to overcome
perceived bad things.
2. Consumers often take “mental shortcuts” called heuristics or rules
of thumb in the decision process.
3. With noncompensatory models of consumer choice, positive and
negative attribute considerations don’t necessarily net out.
a. Conjunctive heuristic: the consumer sets a minimum
acceptable cutoff level for each attribute and chooses the
first alternative that meets the minimum standard for all
attributes.
b. Lexicographic heuristic: the consumer chooses the best
brand on the basis of its perceived most important
attribute.
c. Elimination-by-aspects heuristic: the consumer compares
brands on an attribute selected probabilistically—where
the probability of choosing an attribute is positively related
to its importance—and eliminates brands that do not meet
minimum acceptable cutoffs
4. Consumers don’t necessarily use only one type of choice rule.
iii. Intervening Factors: Attitudes of others can intervene in the purchase
process if the other person’s negative attitude toward our preferred
alternative is intense and our motivation to comply with the other person’s
wishes is high
iv. A consumer’s decision to modify, postpone, or avoid a purchase decision
is heavily influenced by one or more types of perceived risk
1. Functional risk—The product does not perform to expectations
2. Physical risk—The product poses a threat to the physical
well-being or health of the user or others
3. Financial risk—The product is not worth the price paid
4. Social risk—The product results in embarrassment in front of
others
5. Psychological risk—The product affects the mental well-being of
the user
6. Time risk—The failure of the product results in an opportunity
cost of finding another satisfactory product
I. Postpurchase Behavior
i. Postpurchase Satisfaction is a function of the closeness between
expectations and the product’s perceived performance
1. Some consumers magnify the gap when the product isn’t perfect
and are highly dissatisfied; others minimize it and are less
dissatisfied.
2. A satisfied consumer is more likely to purchase the product again
and will also tend to say good things about the brand to others.
3. Dissatisfied consumers may abandon or return the product. They
may seek information that confirms its high value.
4. They may take public action by complaining to the company,
going to a lawyer, or complaining directly to other groups (such as
business, private, or government agencies) or to many others
online.
5. Private actions include deciding to stop buying the product (exit
option) or warning friends (voice option)
ii. Postpurchase communications to buyers have been shown to result in
fewer product returns and order cancellations.
iii. Marketers should also monitor how buyers use and dispose of the product
J. Moderating Effects on Consumer Decision Making
i. Inolvement: the elaboration likelihood model
1. The central route: attitude formation or change stimulates much
thought and is based on the consumer’s diligent, rational
consideration of the most important product information
2. The peripheral route: attitude formation or change provokes much
less thought and results from the consumer’s association of a brand
with either positive or negative peripheral cues
3. Consumers follow the central route only if they possess sufficient
motivation, ability, and opportunity
4. We buy many products under conditions of low involvement and
without significant brand differences
5. Evidence suggests we have low involvement with most low-cost,
frequently purchased products
ii. Four techniques to try to convert a low-involvement product into one of
higher involvement.
1. They can link the product to an engaging issue
2. They can link the product to a personal situation
3. They might design advertising to trigger strong emotions related to
personal values or ego defense
4. They might add an important feature
iii. Variety-Seeking Buying Behavior: bbuying situations that are
characterized by low involvement but significant brand differences may
trigger a lot of brand switching.
1. The market leader will try to encourage habitual buying behavior
by dominating the shelf space with a variety of related product
versions, avoiding out-of-stock conditions, and sponsoring
frequent reminder advertising.
2. Challenger firms will encourage variety seeking by offering lower
prices, deals, coupons, free samples, and advertising that tries to
break the consumer’s purchase and consumption cycle and
presents reasons for trying something new.
III. Behavioral Decision Theory and Behavioral Economics
A. Behavioral decision theorists have identified many situations in which consumers
make seemingly irrational choices
i. Consumers are more likely to choose an alternative (a home bread maker)
after a relatively inferior option (a slightly better but significantly more
expensive home bread maker) is added to the available choice set
ii. Consumers are more likely to choose an alternative that appears to be a
compromise in the particular choice set under consideration, even if it is
not the best alternative on any one dimension
iii. The choices consumers make influence their assessment of their own
tastes and preferences
iv. Getting people to focus their attention more on one of two considered
alternatives tends to enhance the perceived attractiveness and choice
probability of that alternative
v. The way consumers compare products that vary in price and perceived
quality (by features or brand name) and the way those products are
displayed in the store (by brand or by model type) both affect their
willingness to pay more for additional features or a better-known brand
vi. Consumers who think about the possibility that their purchase decisions
will turn out to be wrong are more likely to choose better-known brands
vii. Consumers for whom possible feelings of regret about missing an
opportunity have been made more relevant are more likely to choose a
product currently on sale than wait for a better sale or buy a higher-priced
item
viii. Consumers’ choices are often influenced by subtle (and theoretically
inconsequential) changes in the way alternatives are described
ix. Consumers who make purchases for later consumption appear to make
x. Consumer’s predictions of their future tastes are not accurate—they do not
really know how they will feel after consuming the same flavor of yogurt
or ice cream several times
xi. Consumers often overestimate the duration of their overall emotional
reactions to future events (moves, financial windfalls, outcomes of
sporting events)
xii. Consumers often overestimate their future consumption, especially if there
is limited availability
xiii. In anticipating future consumption opportunities, consumers often assume
they will want or need more variety than they actually do
xiv. Consumers are less likely to choose alternatives with product features or
promotional premiums that have little or no value, even when these
features and premiums are optional (like the opportunity to purchase a
collector’s plate) and do not reduce the actual value of the product in any
way
xv. Consumers are less likely to choose products selected by others for
reasons they find irrelevant, even when these other reasons do not suggest
anything positive or negative about the product’s values
xvi. Consumers’ interpretations and evaluations of past experiences are greatly
influenced by the ending and trend of events. A positive event at the end of
a service experience can color later reflections and evaluations of the
experience as a whole.
xvii. When faced with a simple but important decision, consumers can actually
make things more complicated than they should.
B. Decision Heuristics
i. The availability heuristic—Consumers base their predictions on the
quickness and ease with which a particular example of an outcome comes
to mind.
ii. The representativeness heuristic—Consumers base their predictions on
how representative or similar the outcome is to other examples.
iii. The anchoring and adjustment heuristic—Consumers arrive at an initial
judgment and then adjust it—sometimes only reluctantly—based on
additional information.
C. Framing is the manner in which choices are presented to and seen by a decision
maker.
D. Mental Accounting describes the way consumers code, categorize, and evaluate
financial outcomes of choices
i. Consumers tend to segregate gains.
ii. Consumers tend to integrate losses.
iii. Consumers tend to integrate smaller losses with larger gains.
iv. Consumers tend to segregate small gains from large losses.
E. The principles of mental accounting are derived in part from prospect theory,
which maintains that consumers frame their decision alternatives in terms of gains
and losses according to a value function.