Consumer Behavior lectures notes and practice exam questions
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Course
Consumer Behavior
Institution
Erasmus Universiteit Rotterdam (EUR)
A comprehensive overview of all the lecture notes of RSM's Marketing Management master core course Consumer Behavior. With these lecture notes I scored a 8.5 on the exam! At the end of the document there are also some practice exam questions.
Lecture 1 Consumer Behavior: Introduc6on and Framework
General Theoretical Frameworks
Certain effects are a part of a certain theory and that again is a part of a bigger
(e.g. Associative Networks)
framework.
Objec:ve is to understand the individual effects and where they come from and
Specific Theoretical Frameworks
how they are related/connected.
(e.g. Branding Theories)
What is consumer behavior
Lots of different defini:on of consumer behavior: Effects
- Kardes: Human reac:ons to products, services, and marke:ng ac:vi:es. (e.g. Mere-Exposure Effect)
- Blackwell et al.: Human ac:vi:es related to the obtaining, consuming
and disposing of products and services.
- Solomon: Processes involved in selec:ng, buying, using or disposing of products, services, ideas
and experiences to sa:sfy needs and wants.
- Avery et al.: Set of mental and physical ac:vi:es undertaken by consumers to acquire and
consume products as to fulfill their needs and wants.
But according to the lecturer the best defini:on is that of Peter & Olson:
“Dynamic interac:ons of affect, cogni:on, and behavior, with events in the environment, that
are associated with the “exchange aspects” of human life”.
Ques%ons consumer behavior can answer:
- Are low-calorie foods perceived as healthy?
- What is the best way to frame an adver:sing message?
- Do aRrac:ve product endorsers improve product image?
- Etc.
Consumer behavior research
This course is designed to introduce you to the field of consumer behavior from the perspec:ve of
understanding the behavior of consumers, drawing from theories from psychology, sociology,
antropology and economics. Possible topics: mo:va:on, adver:sing effects, decision processes,
consump:on rituals, etc. In this course, 1) provide you with theories, models, and other tools to beRer
understand the “why” behind consumer behavior. 2) Provide you with general ideas about how to
influence consumers, and about how you as a consumer are influenced by others (including marketers).
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,Consumer decision process Need Recognition
In this lecture an overview of the consumer decision process steps will be given, Search for Information
in the next lectures these steps will be discussed in more detail. Pre-purchase Evaluation of Alternatives
Purchase
This framework showcases the steps consumers pass through before making a
purchase. Consumption
Post-consumption Evaluation
What is a need?
Disposal
A need = discrepancy between actual and desired state
Problem recogni:on occurs when there is a considerable difference between the actual state (the way
the needs are actually met by the consumer) and desired state (the way consumer desires to sa:sfy his
needs).
It occurs either due to change in desired states, actual state or in both states.
Change in the desired state can be caused due to reference groups and novelty
seeking behavior of the consumer: life stage changes, new taste, new
technologies.
Change in the actual state can occur due to stock out of situa:ons/stock
deple:on, problem removal, problem avoidance, arousal of needs.
Thus, the focus of marketers at this stage should be to create a category need
so that the consumer perceives a problem. The objec:ve of communica:on campaigns is also to make
the customer relate the problem with the company’s products.
Search for informa%on
A consumer will search for informa:on regarding solu:ons for the problem recognized in the previous
step. There are two types of searches that are performed by the consumer:
1. Internal: Retrieval from memory, e.g. consumer will recall the brand that he/she knows,
2. External: External search involves gathering informa:on about solu:ons from various external
sources.
o Marketer sources: adver:sing, company websites, stores, salespeople, brochure
o Non-marketer sources: other consumers (incl. family & friends), consumer organiza:ons,
government, media
Informa(on processing
There is a generalized framework for processing informa:on --------------->
Percep:on is an important element that influences the consumer
informa:on search process/the way consumer receive informa:on.
Heuris:c search Systema:c search
- Ad hoc - Organized
- Convenience-based - Comprehensive
- Relies on rules of thumb - Efforbul
Tends to happen in case when there is less risk, Tends to happen in case of more risk, high level
low level of involvement, more knowledge and of involvement, less knowledge and more :me
less :me (e.g. buying toothpaste) (e.g. buying a house)
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,When searching for informa:on or products to our need, people don’t have :me to ponder endlessly
over each possible product. Here’s where heuris:c searches come into play. Heuris:cs is the process by
which humans use mental shortcuts to arrive at a decision/it simplifies the decision-making process.
When you prac:ce systema:c search ocen it becomes heuris:c over :me.
- For example, when you were younger and needed to calculate 4+4, you would use your fingers
to do that but later on you can do this automa:cally.
Considera(on of op(ons
When we search, how do we search?
The considera:on set is a model used to represent all of the brands and products a
consumer evaluates before making a final purchase decision.
- In the awareness set are all the brands and products a consumer ini:ally
thinks of when faced with a purchasing decision.
- The op:ons from the awareness set is filtered through the consumer’s individual thoughts,
preferences and feelings, such as price and heuris:cs and this forms the considera:on set. The
“considera:on set” is the set of brands ac:vely considered at the :me of choice
To be in the considera:on set you need to be in the awareness set.
Choice outcomes are far more influenced by content of considera:on set than by processing of
considered alterna:ves
Two most important laws of marke:ng
1. In order for a customer to choose ac:on A (e.g., brand A), Brand A must be considered
2. In order for a customer to choose ac:on A (e.g., brand A), the customer must fail to consider a
brand he/she likes beRer than brand A
Mental categories & co-occurrence in considera:on set:
Evalua%on of alterna%ves
Acer informa:on is searched, alterna:ve products are iden:fied as possible op:ons. In this step
consumer evaluate on those alterna:ves on which the informa:on is gathered. For evalua:on, a
consumer will not consider all brands available in the market. A consumer will shortlist a set of choices
on which evalua:on is done, this is known as the evoked set. Evoked set can be defined as a set of
brands that a consumer will remember while making the purchase decision.
In this process of evalua:ng alterna:ves, consumers use different strategies to filter on alterna:ves:
- Compensatory models
o Decision making strategy that weighs the posi:ve and nega:ve aRributes of the
considered alterna:ves and allows for posi:ve aRributes to compensate for the nega:ve
ones.
- Non-compensatory models (is like heuris:c search; it’s more intui:ve, automa:c)
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, o Decision making strategy eliminates alterna:ves that do not meet a par:cular criterion.
So, even though a product may have a very high value on one aRribute, if it fails another
aRributed it is eliminated from considera:on.
Consumer decision process – con(nuum
LPS and ESP are types of buying behavior. When making a decision, i.e.
selec:on of an alterna:ve to solve a problem, the :me and effort required to complete the process
varies across buying situa:ons. You can define two kinds of problem solving spread over a con:nuum:
LPS & EPS.
LPS: consumer is familiar with the product and familiar with the product category but unfamiliar with the
various brands. Consumer is aware of some brands but has no established brand preference and is
unaware of the new brands that have been introduced. The result: it involves only a moderate effort on
part of the consumer. Consumer has to gather knowledge to add/modify the exis:ng knowledge that he
has in his memory and then make a decision/gather addi:onal informa:on about the brands to arrive at
his brand decision.
- Types of products and situa:ons where we generally have LPS: goods that are of low
involvement; they are generally moderately priced, frequently bought and lesser amount of risk
involved. Generally recurring purchases.
ESP: the consumer is in an unfamiliar product class and is not clear about criteria to consider for buying.
Thus, consumer needs informa:on on both the product category as well as the various brands available
in it. For instance, you’re interested in purchasing a Color Television set to replace the exis:ng black and
white one. You have heard of the various brand names, but don’t know what product aRributes or
features to consider while choosing a good television. So, yours is an extensive problem solving; this
situa:on requires extensive informa:on search and evalua:on.
- Consumer has to gather knowledge about the decision criteria, brands available and make a
choice amongst the brands
- Types of products/situa:ons where we have EPS: goods that are of high involvement; they are
expensive, infrequently bought and involve a considerable amount of risk. Generally, first :me
purchases.
From LPS to EPS: more effort & :me spent on When do we engage in LPS
decision - Limited importance of product (low-
- More informa:on gathered risk)
- More processing of informa:on (:me, - Limited availability of :me/resources
effort) - Similarity of alterna:ves à indifference
- More alterna:ves considered
- More aRributes considered
An important element that influences the evalua:on process is the ajtude of the consumer towards the
product; posi:ve ajtude towards a par:cular brand will make a consumer consider that brand and a
nega:ve ajtude towards it will result in rejec:on of the brand. Thus, adver:sers try to create a
favorable ajtude among consumers towards their brand
Purchase
At this stage, consumer will make a final decision regarding the brand to be purchased. A consumer will
also make decisions on:
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