College aantekeningen
Decision Making in Marketing Lecture Notes + Book
- Instelling
- Tilburg University (UVT)
Full summary for the exam: lectures + book chapters
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DECISION MAKING IN MARKETING SUMMARYLecture 1 – Notes: Consumer behavior
● Why do we need consumer behavior?
→ Misconception 1: Consumers are Sales Figures
A sales figure tells you whether someone bought the product or not and how many bought it (finance & accounting ppl)
If only look at sales figures in marketing = slow & flexible brand who is not able to serve consumers in the long run →
only reacting to things on the market (it’s already too late for your brand) →therefore cannot rly know from where the
problem comes from so you also cannot solve it & design a intervention → you can’t predict how ppl will react.
The benefit of consumer behavior is the good understanding of the psychology of consumers that you can predict how
they’ll react in the future and on the market.
→ Misconception 2: We should trust our Intuition
“if I like it, people will like it” ehhh no we can’t generalize from someone’s experience to everyone
Intuition is often flat bc marketers are consumers too
◊ How companies often think of consumers:
Tailor the Marketing Mix… → …to our target group… → …so we get them to do/think X
● 3 components in Consumer Behavior:
→ Stimulus (S): (Marketing Mix)
- What we, as a brand, do & expose to consumers
- What tools does marketing have & what power do they have to manipulate consumers to change things in the
market → the 4 P’s: Product, Place, Promotions, Price (what we have as instruments)
→ Organism (O): (Target Group)
- Consumer consuming & processing the information given to them, with all the biases & emotions they have
- We expect this Marketing Mix to affect the outcomes but it will do so by passing through consumers
- Bc not that many ppl have an understanding abt customers they just ignore them → OFTEN IGNORED
- Consumer Behavior Theories
→ Response (R): (So we get them to do/think X)
- The response becomes dependent on what the Organism (the target group) does with the message
- Goal that we want to achieve: having a response from consumers (buying the products) → purchase, positive
word-of-mouth, loyalty, behaviors
◊ How companies often think of consumers:
Making a product that has more features Increased product liking : not always
Extending the products in our portfolio Increase sales: not always
Making products less expensive Increase sales: not always some ppl are buying products bc of their high price
We study Consumer behavior theories (Organism O) to understand the psychology of consumers by looking at a
comprehensive perspective: we look at external & internal influences, behavioral theories and judgment &
decision-making to optimize the Response R.
● What is consumer behavior?
-> Key insights: □ Individuals react on basis of perceptions & not on the basis of objective reality
□ Objective product features ≠ consumer benefits
=> We need to understand consumers to better satisfy their needs
=> Our intuitions about what consumers perceive, think & will do are often wrong
,→ Consumer Decision process model:
1. Need of recognition → without the need, the process doesn’t even start. If your product doesn’t satisfy/identify a
customer’s need, you’ll never sell your product → a need is the discrepancy (gap) btw actual & desired state
2 states: Desired state (where wan want to be) & Actual state (where we are rn)
If there is no gap btw the two states it means NO need → A need emerges when a gap occurs btw desired & actual state
2 ways for a gap to increase:
- By the desired state going up: the gap needs to be big enough (in order to leave the “indifference zone”) to be
uncomfortable enough to actually get ppl to do something abt it
We can change a desired state/a change occurs when:
◊ when there is a change in our life stage: when we transition from one life stage to another (graduating uni: transition from a
student to young professional) you’ll have different needs & standards that makes you buy
◊ ppl can just develop new tastes through experiences, cultural changes, learning from the others (big change of values in
society to choose the most sustainable option → what used to be ok for us in the past is now falling short bc our desired state has changed)
◊ when the firm creates the need by launching new products, with new features & technologies that get ppl to compare
what they have with the new products and develop a want/need for it (electric cars)
→ The first 2 are more consumer dependent (out of the control of the firm) & 3rd one is firm dependent (firm creates a need)
- By a change in the actual state: there a malfunction with your product (phone breaks, screen breaks, battery doesn’t last
long enough anymore) so it doesn’t satisfy your actual state anymore → This gap occurs when:
◊ stock depletion: you run out of stock (you don’t have ice cream anymore in the fridge, so you go buy a new one)
◊ problem removal: when wine stain (= tâche de vin) on your carpet (=tapis) → buy a product to get it back to what it’s supposed to look like
◊ problem avoidance: engage in anticipatory actions to proven problems from happening (buy a automatic vacuum to prevent
the state of cleaning in my house if I know I won’t have time anymore to do it)
2. Search for information → 2 ways to search for an information:
- Internal: retrieval from memory
- External: □ Marketer Sources (advertising, company websites, stores, salespeople, brochures)
□ Non-Marketer Sources (Other consumers (incl. family & friends), consumer organizations, government, media)
3. Pre-purchase evaluation of alternatives → consideration of options
Once you searched for the information, you decided on a couple of brands that you might
consider → you now need to evaluate those to know which one you want to buy:
□ Universal set (all possible options on the market) □ Awareness set (options one is aware of)
□ Evoked set (options one can recall) □ Consideration set (Options one will consider after
disposing the options you don't like)
→ The chosen brand needs to penetrate 4 layers/psychological barriers
4. Purchase 5. Consumption 6. Post-consumption evaluation 7. Disposal
Continuum of High & Low effort in consumer decision making process:
- From Low to High: □ more effort & time spent on decision □ more information gathered □ more alternatives considered
□ more processing of information (time, effort) □ more attributes considered
- Low effort/heuristic: □ Ad-hoc □ Convenience-based □ Relies on rules of thumb
-> limited effort, quick & easy, time effective decision that ppl make bc they don’t want to spend too much
energy deciding → they process only limited alternatives/information & process decision quickly convenient
based, cost effective
-> LOW MOA
- High effort/systematic: □ Organized □ Comprehensive □ Effortful
, -> high effort decisions, trying your best & spending some time finding the best option comprehensive,
organized, time & resources based decision making
-> HIGH MOA
This low/high effort decision making involves 3 dimensions that influence whether we do low or high effort:
=> Motivation Ability Opportunity (MAO) = model used to understand consumer behavior
- Motivation: the more motivated we are to make a good decision, the more effort we put into it when motivated
to do a good job, it’s rly costly if we mess up (buying a toothpaste VS buying a house)
- Ability: your personal resources you have as a person → are you cognitively adept at processing complex
information? Can you understand all the attributes laptops have and compare different brands or you don’t have
a lot of expertise? Do you have pre-existing knowledge? Do you have financial resources to buy a specific
product/resource? (prime example: age differences in consumers & technological expertise: young ppl are much better at making a
high effort decision abt which smartphone to buy compared to your grandparents)
- Opportunity: situational factors decision context you are in rn
-> when we are pressed by time, distracted, when there is too much & complex information → we take the short
& easy way out and rely on low effort decision making BUT when we have plenty of time, not distracted, very
little information & easy to understand → more carefully compare & invest in the high effort decision
Understanding Consumer Behavior – Ch.1 book
● Defining Consumer Behavior
Consumer behavior = involves goods, services, activities, experiences, people & ideas
→ involves more than just buying a product (making acquisition decisions & decisions about personal finances)
→ also behavior using & disposing a product (throwing product away or sell on ebay)
→ Consumer behavior is a dynamic process:
- The sequence of acquisition, consumption & disposition can occur over time in a dynamic order (hours, days, weeks..)
- Entire markets are designed around linking 1 consumer’s disposition decision to other consumers acquisition
decisions (selling second hand, ebay)
- Marketers have to adjust to changes consumer behavior & consumers’ goals and priorities, perceptions of
brands & internal processes when planning marketing efforts
-> Environmental attitudes & actions are changing
-> Broader changes seen in consumer behavior over time (50 years ago less brands to choose from & exposed to fewer marketing messages)
→ Consumer behavior can involve many people:
Doesn’t necessarily reflect the action of a single individual, BUT of a group of friends, coworkers, or entire family
-> individuals engaging in consumer behavior can take on one or more roles (information gather abt product, purchaser & involved in disposal)
→ Consumer behavior involves many decisions:
- Whether to “acquire/use/disposal of an offering” (may have to decide whether to spend/save money when earning extra cash)
● acquisition = process by which a consumer comes to own an offering (buying, trading, renting..) & shop/online?
● usage = possess by which consumer uses an offering (what we use w the offering & how we store it)
● disposal = process by which consumer discards an offering → in 3 ways: findings a new use, get rid of it
temporarily (renting/leasing), get rid of it permanently (throwing away)
- What offering to acquire? → decision of what brand to acquire from, choices among product/service categories,
ethics & social responsibility can play a role -> avoid brands with child labor)
- Why (not)? → does offering meet someone’s needs?, related to consumer’s attitude towards money, also due to
addiction to products; consumers may delay buying technology & wait for newest version
- When? → spontaneous or planned
- Where to acquire/use/dispose of an offering? → does the product get consumed in private space or publicly?
, - How much, how often & how long to acquire/use/dispose of an offering? → sales of a product can be increased
when the consumer: (1) uses larger amounts of the product, (2) uses the product more frequently, or (3) uses it
for longer periods of time
→ Consumer behavior involves emotions & coping
Positive/negative emotions (loneliness, hope, fear, regret, guilt, embarrassment) & general moods (stress) can affect how
consumers think, the choices they make, how they feel after making a decision, what they remember & how much they
enjoy an experience
● What affects consumer behavior
4 broad domains that include factors affecting acquisition, usage & disposition decisions:
→ Psychological core: □ Motivation, Ability & Opportunity □ Exposure, Attention, Perception & Comprehension
□ Memory and Knowledge □ Attitude Formation and Change
→ Process of making decisions: □ Problem Recognition & Information Search □ Judgment & Decision-Making
□ Post-Decision Processes (Making post decision evaluations)
→ Consumer’s culture: (external processes): □ Reference groups & social Influences on Consumer Behavior
□ Consumer Diversity □ Household & Social Class Influences □ Psychographics: Values, Personality & Lifestyles
→ Consumer behavior outcomes & issues: □ Innovations: Adoption, Resistance & Diffusion (CB can diffuse through a market)
□ Symbolic Consumer Behavior (CB can symbolize who we are)
□ Marketing, Ethics & Social Responsibility in Today’s Consumer Society
● Who benefits from the Study of Consumer Behavior
- Marketing Managers: studying consumer behavior provides critical information for developing marketing
strategies & tactics, since they need to understand what consumers value → only then, they can develop,
communicate & deliver appropriate goods/service
- Ethicists & advocacy groups: marketers’ actions sometimes raise important ethical questions & concerned
consumers sometimes form advocacy groups to create public awareness of inappropriate practices
- Public policy makers & regulators: understanding consumer behavior is crucial for developing policies & rules to
protect consumers from unfair, unsafe, or inappropriate marketing practices (marketers’ decisions are affected
by these public policy actions)
- Academics: teach courses on the subject & generate new knowledge about consumer behavior through research
- Consumers & society: understanding consumer behavior provides tools for more informed decision-making
● Making business decisions based on the marketing implications of consumer behavior
1. Developing & implementing customer-oriented strategy 2. Selecting the target market 3. Developing Products
4. Positioning (competitive advantage) 5. Promotion & marketing communication decisions 6. Pricing decisions 7. Distribution
Lecture 2 – Notes: Individual Characteristics & Culture
● What is culture? = characteristics & knowledge of a particular group of people, encompassing language, religion,
cuisine, social habits, music & arts
□ culture is the petri dish you were born in/you live in now □ we adopt culture through socialization
● What does culture shape?
□ Norms: what is appropriate □ Values: what is good & bad
-> norms & values = desired states (bc if there is a change in the desired state, this could be a different 'culture')
=> Cultures shapes ‘Need of recognition’ in Consumer Decision process model - it shapes:
- Behaviors (observable part) -> words & actions which are apparent to the casual observer
- Interpretations (not observable) -> how we feel the core values should be reflected in specific situations in daily
life (such as working & socializing)
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