Integrated Marketing Communications 23C510

Consumer Behavior or how IMC ”works”

Consumer information processing and Consumer decision making

Readings • Chapters 5 & 6 from the book • Books on consumer behavior and/or consumer psychology • A LOT of articles in Journal of Consumer Research and Journal of Consumer Psychology

Are customers different from consumers? • Terms often used interchangeably • According to Doole et al (2005):

“A customer is an individual or organisation who buys a product or service; a consumer is the person who used the product or service, or may be affected by its purchase”

Macrosocial level

• Societal level • Segments, social classes..

Microsocial level

• Subcultures • Communities • Subgroups, fan groups, “tribes”

Individual level

• Individual psychology

1. HOW CONSUMERS PROCESS INFORMATION?

Three (main) psychological orientations • Psychoanalytical theory • Reinforcement theory • Cognitive theory

Psychoanalytical theory (cont.) • Developed by Sigmund Freud • Based on the way an individual develops over time within the context of a family and their interactions

Psychoanalytical theory • The unconscious as as an important influence on behavior -> Internal stimuli : instinct, urges and thoughts

• The id: immediate gratification • The superego: consciousness • The ego: mediator between the id and the superego

Reinforcement theory • People behave in the knowledge of what will happen as a result of their behavior • Ivan Pavlov one of the firsts to use the word reinforcement in with respect to behavior

Reinforcement theory • Behavior is dependent upon the expected outcomes or consequences – Consequences that lead to rewards increase behavior – Consequences that lead to punishment decrease behavior

Reinforcement theory • Reinforcement advertising = a type of advertising which is based on the objectives to be achieved

Cognitive theory • Mainstream psychology has moved from a behaviorist to cognitive orientation • Behaviorist orientation: – Stimulus-response model(s)

• Cognitive orientation: – Information-processing, problem-solving, reasoning

Cognitive theory • Assumes individuals use and process information derived from external and internal sources, to solve problems and make decisions – External, e.g. advertising – Internal, e.g. memory

Cognitive theory • Social cognitive theory considers the interaction of an individual’s environment, behavior and various personal factors such as cognitive, affective and biological events

Cognitive theory • Considers consumers to be adaptive problem solvers -> several determinants contribute to the way in which individuals process information -> these determinants are important to the understanding of cognitive orientation

The Determinants of Information Processing (Cognitive theory) 3. Learning 2. Perception

1. Personality

4. Attitudes

Internal information processing

5. Environmental factors

1. Personality • Psychoanalytic theory: – The needs that motivate human behavior are driven by two primary instincts: life and death

1. Personality • Psychoanalytic theory (cont.): – The personality of an individual is assumed to have developed in an attempt to gratify these instincts – Applications: motivation research (underlying motivations for consumer behavior)

Lots of criticism, however, the underlying needs of human beings have been the basis for many advertising messages, aimed at deeply rooted feelings, hopes, aspirations and fears

1. Personality • Trait theory Traits = habitual patterns of behavior, thought, and emotion “How one individual differs from the other”

1. Personality • Trait theory – Personality is measured and quantified – Personality tests

1. Personality • Trait theory (cont.) – Applications in marketing: identifying specific traits and developing consumer profiles -> consumer segments – E.g. 4c’s (Young & Rubicam): aspirers, succeeders, mainstreamers, reformers

Elements of Information Processing 3. Learning 2. Perception

1. Personality

4. Attitudes

Internal information processing

5. Environmental factors

2. Perception • We are exposed to a tremendous number of stimuli • Perception: How individuals see and make sense of their environmental stimuli • 1) Selection, 2) Organization and 3) Interpretation of stimuli by individuals so that they can understand the world

2. Perception • 1) Perceptual selection – The vast number of messages need to be filtered, as indivduals cannot process them all – The nature of the stimuli, or external factors such as the intensity and size, position, contrast, novelty, repetition and movement, are factors that have been developed and refined by marketing communications

2. Perception • Tools used to attract attention: Animation, unexpected camera angles, the use of music, sexual attraction..

2. Perception • 2) Perceptual organisation – For perception to be effective and meaningful, the vast array of selected stimuli needs to be organised

2. Perception • 2) Perceptual organisation – Organizing raw sensory stimuli into meaningful experiences involves cognition, a set of mental activities that includes thinking, knowing, and remembering

2. Perception • 3) Perceptual interpretation – Interpretation is the process by which individuals give meaning to the stimuli once they have been organised – By using existing categories, meanings can be given to stimuli

2. Perception • 3) Perceptual interpretation – These categories are determined from the individual’s past experiences and they shape what the individual expects to see

Marketing and Perception • For example, shoppers expect to find products in particular situations/places – E.g. shelves, display bins

• If the context in which a purchase is undertaken does not contradict a shopper’s expectations -> sales likely increase • Also, consumers try to evaluate a product’s attributes using the physical cues of taste, smell, size and shape (Javalgi et al., 1992)

Elements of Information Processing 3. Learning 2. Perception

1. Personality

4. Attitudes

Internal information processing

5. Environmental factors

3. Learning • Behavioral learning – External focus on individual – Classical conditioning • Stimulus-response (repetition of associations)

– Operant conditioning • E.g. instrumental conditioning • Positive reinforcement (reward)/negative reinforcement (punishment)

3. Learning • Cognitive learning – Accommodates the complex internal though processes that individuals utilise when presented with various stimuli – Individuals are seen as active participants in information processing – They try to resolve problems by processing information that is pertinent to each situation – Memory!

3. Learning • More recent developments: social learning theory – Applied, for example, on research on social networks and consumer communities – emphasizes the importance of observing and modeling the behaviors, attitudes, and emotional reactions of others

Elements of Information Processing 3. Learning 2. Perception

1. Personality

4. Attitudes

Internal information processing

5. Environmental factors

4. Attitudes • (According to classical psychological theory), attitudes consist of three components: 1. Cognitive component (learn): the level of knowledge/beliefs about a product/offering/etc. 2. Affective component (feel): The feelings held about a product 3. Conative component: Refers to the individual’s disposition or intention to behave in a certain way -> observable behavior?

4. Attitudes and Marketing • Influencing the attitudes held by the target audience • Current attitudes -> Desired attitudes • Changing attitudes -> changing attributes

5. Elements of Information Processing 3. Learning 2. Perception

1. Personality

4. Attitudes

Internal information processing

5. Environmental factors

5. Environmental (place cultural) influences

• Culture, subculture, social class, groups

5. Environmental influences • Situational influences – Connected neither to the purchase object, nor to the buyer – Unique to each buying act • Lights, music • Store traffic

5. Environmental influences • Usage situation – Where and when an offering will be consumed? • Is it an individual act or part of a social activity? • What time of day/week/year the offering will be consumed?

Example: consuming coffee

5. Environmental influences • Purchase situation – The act of purchase and the associated environment can influence the behavior of the target individual – Is shopping a monthly, biannual, weekly or last-minute activity? – Time to complete the physical act shopping, time to process information..

5. Environmental influences • Communications situation – The setting in which marketing communications are received will affect the degree to which the message is understood and acted upon – Compare, for example a sales person coldcalling vs. arranged appointment

HOW CONSUMERS MAKE DECISIONS?

Buying decision-making process Problem recognition Information search Alternative evaluation Purchase decision Post-purchase evaluation

Types of consumer decisionmaking • Extended problem solving – Unfamiliar products – Weak knowledge of the product – Considerable financial risk

Types of consumer decisionmaking • General problem solving – Internal memory-based search routines – Obtaining up-to-date information

Types of consumer decisionmaking • Routinised response behavior – Decision consists only of an internal search – Buyer has a great deal of experience – Usually low-value items

Involvement theory • Consumer involvement with the product = one of the key factors through which a choice is made

Involvement theory • High involvement – An expected purchase with not only high personal relevance, but high level of perceived risk – Reducing the perceived risk -> Extended Problem Solving

Involvement theory • Low involvement – An expected purchase with little threat or risk to the consumer – Low priced items, past experience of the product class and brand

Involvement theory High-involvement decision-making process Awareness Extensive information search Attitude/intention

Trial/experimentation

Long-run behavior

Low-involvement decision-making process Awareness Short internal information search Trial/experimentation Attitude/future intentions Long-run behavior

Why do people consume? • Is it rationally individual? è (”I have a need, I need to satisfy it!”) • Is it social ? è (”I belong to these peer groups, therefore I look for these products!”) • Is it cultural? è (”Ideology Y is appealing to me, therefore product X is my choice!”)

Why do people consume?

Cultural

REALLY depends on the product category!

Social

Rational/indiv idualistic

ORGANISATIONAL BUYING BEHAVIOR

• Many of the characteristics associated with consumer decision-making process can be observed in the organisational context • However, organisational buyers make decisions which ultimately contribute to the achievement of corporate objectives

Consumer-oriented markets

Business-to-business markets

Message reception

Informal

Formal

Number of decision-makers

Single of few

Many

Balance of the promotional mix

Advertising and sales promotions dominate

Personal selling dominates

Message content

Greater use of emotions an imagery

(Traditionally) greater use of rational, logic and information-based messages

Message origin

Increasing UGC

Limited use of UGC

Length of decision-time

Normally short

Longer and more involved

Target marketing and research Great use of sophisticated targeting and communication approaches

Limited but increasing use of targeting and segmentation approaches

Budget allocation

Majority of budget allocated to brand management

Majority of budget allocated to sales management

Evaluation and measurement

Great variety of techniques and approaches used

Limited number of techniques and approaches used

Cultrual POV