The factors that affect the demands of the consumers

Trends in the consumer behavior in 2011- 2012

HON. EDUARDO G. ONG

BSC, MBA, LLB, PhD, DPA, DBA

Diplomate in Business Education

Fellow in Personnel Management
Fellow in Real Estate Management
Management & Academic Consultant
Professor of Business & Public Administration
Chairman Professional Board of Real Estate Service-PRC
President Phil. Association of Professional Regulatory Boards
Involves the psychological processes
that consumers go through in
recognizing needs, finding ways to
solve these needs, making purchase
decisions (e.g., whether or not to
purchase a product and, if so, which
brand and where). Interpret
information, make plans, and
implement these plans (e.g., by
engaging in comparison shopping or
actually purchasing a product).
Consumer Buying Behavior
Refers to the buying behavior
of final consumers individuals
& households who buy goods
and services for personal
consumption.
 PERCEPTION/ MARKET
SENSATION RESEARCH INFO
SEARCH

COGNITION

STRATEGY CHOICES

AFFECT

PREFERENCES

BELIEFS
CONSUMER
COMMUNICATION
SOCIAL AND
OTHER INFLUENCE
 If you have bad breath, you cannot smell it
yourself.
 If you eat a balanced diet, you do not need
vitamin supplements.
 Using a razor with five blades will reduce the
likelihood of cutting yourself and will result in
less skin irritation.
 Dell Computers tend to be of higher quality
than those made by HP and Sony.
 Rust stains on clothes can be removed with the
use of lemon juice. Bleach actually makes
these stains worse.
 Are veggie burgers actually healthy?
 What makeup should you use to get an “even”
skin tone?
 Do I get any useful benefits from spending
more than Php 5,000.00 on a digital camera?
 Should I get a “make-over?” What am I
looking for? What should I do?
 Is my mechanic honest?
 Which tie should I wear for a job interview?
 Should I give my wife roses, chocolate, or
software?
 Consumer problem:
Discrepancy between ideal and actual
state--e.g., consumer:
 Has insufficient hair
 Is hungry
 Has run out of ink in his or her
inkjet cartridge
 Problems can be solved in
several ways--e.g., stress
reduction <----- vacation, movie, hot
bath, medication
 PROBLEM
RECOGNITION
INFORMATION
SEARCH

EVALUATION OF
ALTERNATIVES

PURCHASE
POSTPURCHASE
EVALUATION/
Theory
BEHAVIORS
Complications
INTERNAL
Memory
Thinking

EXTERNAL
Word of mouth, media,
store visits, trial
CATALOG
 UNIVERSAL SET
All possible options

RETRIEVED SET
Options that readily
come to mind

EVOKED SET
Options that will be
considered by the
consumer

Note: Retrieved and

evoked sets will vary
among different
consumers
 For low involvement products,
efforts aimed at affecting internal
search tend to be more effective
—the consumer is usually not
willing to expend energy on
external search.

 External search is more likely for

higher involvement products.
 Involvement level
 Temporary

 Enduring

 Consumer locus of control

 Internal

 External

 Product category complexity

 Consumer knowledge
IMPORTANT
 Compensatory: Decision based on overall value
of alternatives (good attribute can outweigh bad
ones)
 Non-compensatory: Absolutely must meet at
least one important criterion (e.g., car must have
automatic transmission)
 Hybrid: Combination of the two (e.g., one non-
compensatory measure, then compensatory
tradeoffs on other attributes
 Abandoned strategy: Consumer finds initial
criteria unrealistic and proceeds to less desirable
solution
LESS
IMPORTANT
 If either Coke or Pepsi is on
sale, buy that brand;
otherwise, buy Coke
 The larger the navels, the
better the orange
 The larger package is likely to
offer a lower unit price (not
true in reality)
 AFFECT
BELIEFS
(FEELING)

BEHAVIORAL
INTENTIONS
 Beliefs  Behavioral
 Can be positive, negative, Intentions
or neutral  An individual’s plan or
 May or may not be accurate expectations of what he or
 May contradict other she will do
beliefs held by the other  May appear inconsistent
person with beliefs
 Affect  May not predict well what
the individual will do in
 May be positive or negative
reality
 May take on specific
dimension (e.g., pleasure,
disgust)
 Statements must be
 Perceived
 Comprehended

 Remembered

 Believed (at least in part)

 Model of Buyer Behavior
Marketing and
Product Other Stimuli Economic
Price Technological
Place Political
Promotion Cultural

Buying Decision Buyer’s Black Box Buyer

Process Characteristics

Product Choice Purchase

Brand Choice Buyer’s Response Timing
Dealer Choice Purchase
Amount
 Factors Influencing Consumer Behavior

Cultural
Social
Individual/Personal
Culture Reference Age and Psychological
groups life-cycle
Motivation Buyer
Occupation Perception
Subculture
Family Economic Learning
situation
Beliefs and
Social Lifestyle attitudes
class Roles
and Personality
status and
self-concept
 Culture
 Most basic cause of a person's wants and behavior.

Subculture Social Class

• Groups of people with shared • Society’s relatively
value systems based on permanent & ordered
common life experiences. divisions whose members
share similar values,
• Hispanic Consumers interests, and behaviors.
• African American Consumers • Measured by: Occupation,
• Asian American Consumers Income, Education, Wealth
and Other Variables.
• Mature Consumers
 CELL PHONE CRAZE

“ In Filipino Culture everything new and shiny

is attractive”
Factors Affecting Consumer Behavior:
Social
Groups
• Membership
• Reference

Family
• Husband, wife, kids Social Factors
• Influencer, buyer, user

Roles and Status

 Reference Group
are groups that have direct (face to
face)or indirect influence on the
person’s attitudes or behavior

“ People are often influenced by

reference groups to which
they do not belong”
 Family members can
strongly influence
Buyer behavior

Role – consists of the activities people are

expected to perform according
to the persons around them

Each role carries a status reflecting the

general esteem given to it by
society

People often choose products that show their status in society

Factors Affecting Consumer Behavior:
Individual/ Personal
Personal Influences

Age and Life Cycle

Occupation
Stage

Economic Situation Personality & Self-Concept

Lifestyle Identification

Activities Opinions

Interests
Factors Affecting Consumer Behavior:
Psychological
Motivation

Psychological
Beliefs and
Attitudes
Factors Perception

Learning
BELIEFS & ATTITUDE
A persons beliefs and attitude are acquired through
acting and learning.
A belief is a descriptive thought that a person has
about something
An attitude is a person’s consistency favorable or
Unfavorable evaluations , feelings and tendencies
Toward an object or idea.
PERCEPTION
Is the process by which people select,
organize, and interpret information to form a
meaningful picture of the world.

The marketer must remember that two

people with the same motivation and in the
same situation may act differently because
they perceive the situation differently.
LEARNING
Is described as changes in an individual
behavior arising from experience.
MOTIVATION
The process of motivation is
initiated by the Tensions an
unsatisfied want creates
motive (drive) – is a need that
is sufficiently pressing to
direct the person to seek
satisfaction of the need.
Sigmund Freud's Theory –

Assumes that people are largely unconscious

about the
real psychological forces shaping their
behavior. Accordingly, a person does not
fully understand his or her motivation.
id - is an important part of our personality
because as newborns it allows us to get basic
needs
Sigmund Freud's Theory –

Ego- based on reality principle the ego

understands that other people have
needs and desires and that something
being impulsive or selfish can hurt
us in a long run
Superego moral parts of us are
develops due to moral and ethical
restraints placed on us by our
caregivers
The role of the unconscious is only
one part of the model.  Freud also
believed that everything we are
aware of is stored in our conscious. 
Our conscious makes up a very small
part of who we are.  In other words,
at any given time, we are only aware
of a very small part of what makes up
our personality; most of what we are
is buried and inaccessible.
 
The final part is the preconscious or
subconscious.  This is the part of us
that we can access if prompted, but is
not in our active conscious.  Its right
below the surface, but still buried
somewhat unless we search for it. 
Information such as our telephone
number, some childhood memories,
or the name of your best childhood
friend is stored in the preconscious.
 
HENRY MURRAY’s THEORY
Henry Alexander Murray (May 13, 1893 – June 23, 1988)
was an American psychologist who taught for over 30 years at
Harvard University. He was founder of the
Boston Psychoanalytic Society and developed a theory of
personality based on "need" and "press". He also is developer
of the Thematic Apperception Test (TAT) which is widely
used by psychologists.
Murray classified needs as being either:
Primary needs (which are biologically based): food,
water, air, sex, avoidance of pain
Secondary needs (which either derive from our
biological needs or are inherent in our psychological
nature): achievement, recognition, acquisition
dominance, aggression, autonomy affiliation, play,
cognizance (asking questions of others)
Murray believed that stronger needs are expressed
more often over time and lead to more intense
behaviour.
WILLIAM MCGUIRE
William McGuire has described the steps an individual must
be persuaded to pass through to assimilate a desired
behavior.
These steps are:
Exposure to the message
Attention to the message
Interest in or personal relevance of the message
Understanding of the message
Personalizing the behavior to fit one’s life
Accepting the change
Remembering the message and continuing to agree with it
Being able to think of it
Making decisions based on bringing the message to mind
Behaving as decided
Receiving positive reinforcement for behavior
Accepting the behavior into one’s life
Maslow’s Hierarchy of Needs

Self
Actualization
(Self-development)

Esteem Needs
(self-esteem, status)
Social Needs
(sense of belonging, love)

Safety Needs
(security, protection)

Physiological Needs
(hunger, thirst)
Consumer Decision-Making Process

Need Recognition

Information Search

Cultural, Social,
Individual and
Psychological Evaluation
Factors of Alternatives
affect
all steps
Purchase

Postpurchase
Behavior
 Complete model of consumer behavior

Start
Need
recognition
Internal
search Influences
Search
• culture
Exposure
• social class
• family
Stimuli Attention Alternative
• situation
(marketer evaluation
dominated, Memory
Comprehension
other) Individual
differences
Acceptance Purchase
• resources
• motivation &

Retention involvement
Outcomes • knowledge
• attitudes
• personality,
values, lifestyle
External
search
Dissatisfaction Satisfaction
• How do you know when to shop? What are the
triggers that initiate an awareness & search?

• What are the internal & external sources of

these triggers?
 Need Recognition
• When a current product isn’t
Marketing helps
consumers recognize (or performing properly
create) an imbalance
between present status • When the consumer is running
and preferred state out of an product

• When another product seems

superior to the one currently used
The information search stage
An internal search involves the
scanning of one's memory to recall
previous experiences or knowledge Personal sources
concerning solutions to the problem-- (friends and family)
often sufficient for frequently
purchased products. Public sources (rating
services like
An external search may be necessary Consumer Reports)
when past experience or knowledge is
insufficient, the risk of making a wrong Marketer-dominated
purchase decision is high, and/or the sources (advertising
cost of gathering information is low. or sales people)

The evoked set: a group of

brands from which the buyer can
choose
• go back to your past purchase– what were the
specific internal and external sources of information
that influenced your decision?

• how do you determine (and rate) the credibility of

these sources?

• what specific information influenced you?

Determinants of External Search
 Buyer Behavior
Other people often influence a consumers purchase
decision. The marketer needs to know which people are
involved in the buying decision and what role each
person plays, so that marketing strategies can also be
aimed at these people. (Kotler et al, 1994).

• Initiator: the person who first suggests or thinks of the idea of buying a particular
product or service.
• Influencer: a person whose views or advice carry weight in making the final buying
decision
• Decider: the person who ultimately makes the final buying decision or any part of it
• Buyer: the person who makes the actual purchase
• User: the person who consumes the product or service

Note: teens are increasingly assuming more of these roles

Think about your past purchase– who was in which role?

Relative influence of husbands & wives Wife
Dominant
Child clothing Women’s
clothing
Final Information groceries
Pots & pans
decision search
NonRx
lamps
Toys/games
furniture
luggage
carpet
Paint wallpaper
refrigerator
vacations
Men’s leisure clothing
Joint Men’s business clothing
stereo
TV sets
camera
Financial planning

Family car Sport equipment

hardware

Lawn mower

Husband
Extent of role specialization Dominant

100 75 50 25 0
 Consumer decision making varies
with the level of involvement in the
purchasing decision

• Extensive: problem solving occurs when

buyers purchase more expensive, less
frequently purchased products in an
unfamiliar product category requiring
information search & evaluation; may
experience cognitive dissonance.

• Limited: problem solving occurs when buyers are

confronted with an unfamiliar brand in a familiar product
category Increase in
Consumer
• Routine: response behavior occurs when buyers evaluation
purchase low cost, low risk, brand loyal, frequently processes
purchased, low personal identification or relevance,
items with which they are familiar.
 Factors affecting
Consumer involvement

• Previous experience: low level involvement

• Interest: high involvement
• Perceived risk of negative consequences: high involvement
• Situation: low to high due to risk
• Social visibility: involvement increases with product visibility

So…
• Offer extensive information on high involvement products
• In-store promotion & placement is important for low involvement products
• Linking low-involvement product to high-involvement issue can increase sales
 Types of consumer involvement
and decision making

Routine Limited Extensive

Involvement Short Low to High

moderate
Time Low Short to Long
moderate
Cost Short Low to High
moderate
Information Internal only Mostly Internal &
Search internal external
Number of one few many
alternatives
Compensatory Decision: Using product characteristics to guide decision
• Select the best overall brand-- evaluates brand options in terms of each relevant
attribute and computes a weighted or summated score for each brand. The consumer
chooses the brand with the highest score.
• Compensatory model because a positive score on one attribute can outweigh a
negative score on another attribute.

• Conjunctive Decision Rule (cutoff criteria)-- Consumer sets a minimum standard

for each attribute and if a brand fails to pass any standard, it is dropped from consideration .
• Reduces a large consideration set to a manageable size.
• Often used in conjunction with another decision rule.

• Disjunctive Decision Rule (rank by importance)-- sets a minimum acceptable

standard as the cutoff point for each attribute--any brand that exceeds the cutoff point is
accepted.

• Reduces large consideration set to a more manageable number of alternatives.

• Consumer may settle for the first satisfactory brand as final choice or may use
another decision rule.

• Synthesized decision rule-- Consumers maintain overall evaluations of brands in

their long term memories. Brands on not evaluated on individual attributes but on the highest
perceived overall rating.
• think of an important purchasing decision you have made

• what are some of the thoughts you have had following your
purchase? Any regrets?

• what has influenced those thoughts?

• how have you dealt with the discomfort?

• how has the company anticipated or dealt with your discomfort?

 Post purchase Behavior

?
Cognitive Dissonance

Can minimize through:

Effective Communication
Did I make a good decision? Follow-up
Guarantees
Did I buy the right product? Warranties
Under promise & over deliver
Did I get a good value?
Sour Grapes–
a story of
cognitive dissonance

…after being unable to reach the grapes the fox said, “these
grapes are probably sour, and if I had them I would not eat them.”
--Aesop
 Cognitive Dissonance
• psychological discomfort caused by inconsistencies
among a person’s beliefs, attitudes, and actions
• varies in intensity based on importance of issue and
degree of inconsistency
• induces a “drive state” to avoid or reduce dissonance by
changing beliefs, attitudes, or behaviors and thereby
restore consistency

Applications:

Tendency to avoid information can be countered by eliciting interest,

norm of fairness, or perceive usefulness of information

Post-decision “buyer’s remorse” may be increased by importance or difficulty or

irreversibility of decision

Counter-attitudinal action, freely chosen with little incentive or justification, leads

to attitude change (e.g., new product at special low price)
• think of an innovation in your field

• describe different groups of employees in your organization who

would respond early and favorably, as well as later and
unfavorably

• what are the differences between these groups?

• how could you use this information to market the innovation to

them more effectively?
• Identify an innovation in your organization or an organization
you are familiar with

• Identify the subgroups who responded to the innovation using

the Rogers & Shoemaker stakeholder model

• What could have been done to facilitate acceptance by each of

these groups?
Decision Processing
 THANK YOU
for listening!
HON. EDUARDO G. ONG
BSC,MBA,LLB,PHD,DPA,DBA

Professor of
Business Management &
Public Administration