Consumer Behavior (D175)

(WGU D175) MKTG 3850 Consumer Behavior

1. Introduction to Consumer Behavior

Definition and Importance:
Consumer behavior refers to the study of how individuals make decisions about what to buy, use, or dispose of products and services. It includes understanding the psychological, emotional, and social factors that influence consumers’ choices. The importance of studying consumer behavior lies in its ability to help businesses create targeted marketing strategies that align with consumer needs, leading to improved sales, customer loyalty, and brand reputation.

Evolution of Consumer Behavior:
Consumer behavior has evolved significantly with advancements in technology and shifts in societal trends. From traditional marketing methods that focused on broad audience targeting, it has shifted to a more personalized, data-driven approach. The rise of digital platforms, e-commerce, and social media has led to greater consumer empowerment, with a focus on customer experience and relationship-building.

Key Components of Consumer Behavior:

• Psychological Factors: Understanding how motivations, perceptions, learning, and attitudes affect consumer choices.

• Social Influences: Examining the role of family, friends, and social groups in shaping consumer preferences and buying decisions.

• Cultural Influences: How culture, subculture, and social class affect purchasing behavior.

• Personal Factors: Including age, income, occupation, lifestyle, and personality traits that influence consumer behavior.

• Decision-Making Process: The stages consumers go through when deciding whether to purchase a product or service.

2. Consumer Behavior Theories and Models

Motivational Theories:

Motivational theories explain the underlying needs and desires that drive consumer behavior. The most well-known model is Maslow's Hierarchy of Needs, which categorizes human needs into five levels: physiological, safety, social, esteem, and self-actualization. This theory suggests that consumers prioritize satisfying their basic needs (e.g., food and shelter) before moving to higher-level needs (e.g., personal fulfillment). Herzberg’s Motivation-Hygiene Theory also plays a significant role, distinguishing between factors that cause job satisfaction (motivators) and those that cause dissatisfaction (hygiene factors). Understanding these motivations allows marketers to target consumers based on where they are in the hierarchy of needs, improving the chances of meeting their desires.

Perception and Learning Theories:

Perception theories focus on how consumers interpret and make sense of sensory stimuli, such as advertising or product packaging. Consumers' perceptions often determine whether they recognize a product as valuable or relevant to their needs. Classical Conditioning and Operant Conditioning, core learning theories, help explain how past experiences and repetitive stimuli shape future behavior. For instance, if a consumer repeatedly sees a brand associated with positive experiences (such as a well-crafted ad), they might develop a favorable perception of that brand.

Attitude and Behavior Models:

These models focus on how consumers form attitudes toward a product or brand, and how these attitudes can predict purchasing decisions. The Fishbein Model and The Theory of Reasoned Action both provide frameworks for understanding how consumers form positive or negative evaluations of a product based on their beliefs and attitudes. Marketers can use these models to predict how consumers will behave and create strategies to influence attitudes, like highlighting product benefits or addressing perceived weaknesses.

Cultural and Social Influences:

Consumer behavior is deeply influenced by culture, subculture, and social class. People often make purchasing decisions based on the values, norms, and behaviors of the groups they belong to or admire. Reference Groups—such as family, friends, or influencers—also play a key role in shaping consumers’ preferences. For example, a person’s choice of fashion or technology can be greatly influenced by what’s popular in their peer group. Similarly, family influences—such as parents or spouses—can impact buying decisions, especially for household or personal products.

Traditional Consumer Behavior Models:

1. Psychological or Learning Model:
   Based on Maslow's hierarchy, this model suggests that consumers make purchasing decisions based on their emotional and psychological needs. Businesses can apply this model by structuring their stores or marketing campaigns to address consumers' basic needs first, such as placing essential items at the front of the store.

2. Sociological Model:
   This model states that a consumer’s social standing and group affiliations heavily influence purchasing behavior. Consumers tend to buy items that align with their group’s values or expectations. For example, a person in a hiking club may prioritize purchasing outdoor gear that reflects their identity within that group.

3. Psychoanalytical Model:
   Inspired by Sigmund Freud’s theories, this model posits that unconscious desires and motivations drive consumer behavior. For example, a luxury brand may appeal to consumers' desire for social status or recognition, influencing purchasing decisions without consumers realizing the underlying psychological triggers.

4. Economic Model:
   The economic model explains that consumers aim to get the best value for their money, considering price, substitutes, and income. Marketers using this model analyze consumers’ spending habits and adjust pricing strategies accordingly. For example, a company may compare prices with competitors to ensure their product offers the best perceived value.

Contemporary Consumer Behavior Models:

1. Engel-Kollat-Blackwell (EKB) Model:
   This model outlines five stages that consumers typically go through before making a purchase decision: Awareness, Information Processing, Evaluation, Purchasing Decision, and Outcome Analysis. Marketers can use this model to map out customer journeys and create targeted content at each stage, particularly during the Evaluation and Decision-making phases.

2. Hawkins Stern Impulse Buying Model:
   This model challenges traditional thinking by proposing that consumers don’t always make rational purchasing decisions. It categorizes impulse buying into four types: Escape purchases, Reminder purchases, Suggested purchases, and Planned purchases. Marketers can utilize this model by placing attractive products at strategic locations (like checkout counters) to trigger impulse purchases.

3. Howard Sheth Model:
   This model posits that consumer behavior follows a structured decision-making process and is influenced by various factors, including inputs (e.g., advertisements), perceptual factors (personal beliefs), and external variables (e.g., weather). Marketers can use this model to understand how external factors (such as discounts or trends) affect purchasing decisions.

4. Nicosia Model:
   Focused on the company’s role, the Nicosia model suggests that a company’s marketing messages heavily influence consumer decisions. By understanding the interplay between consumer characteristics and marketing tactics, businesses can fine-tune their advertisements to better appeal to the target market.

5. Webster and Wind Model:
   A B2B model, this model looks at four variables affecting purchase decisions in businesses: Environmental (external market factors), Organizational (internal goals and culture), Buying center (decision-makers within the organization), and Individual (demographics of the decision-makers). Companies in B2B marketing can apply this model to better understand the buying process of their corporate clients.

6. Pavlovian Model:
   Based on Pavlov’s conditioning experiment, this model suggests that consumers can develop automatic responses to certain stimuli. For example, consumers may begin associating a brand’s logo with positive feelings or experiences. Marketers can use this model to build strong, positive associations through consistent branding and messaging.

7. Black Box or Stimulus-Response Model:
   This model emphasizes the process by which consumers respond to stimuli—like ads or product displays—by internalizing and evaluating the information based on their own needs, preferences, and experiences. Understanding how consumers process these stimuli can help marketers tailor their strategies for better engagement and conversion.

3. Consumer Decision-Making Process

Problem Recognition:
The first step in the consumer decision-making process is recognizing a need or problem that requires a solution. Marketers must identify the triggers that prompt consumers to seek out products or services.

Information Search:
Once a need is recognized, consumers engage in information search to explore available solutions. This can involve internal searches (personal experiences) or external searches (reviews, recommendations, or advertising).

Evaluation of Alternatives:
Consumers evaluate different options based on attributes such as price, quality, features, and brand reputation. Marketers need to highlight the unique selling points (USPs) of their offerings to appeal to potential buyers during this stage.

Purchase Decision:
After evaluating alternatives, the consumer makes a purchase decision. Factors like promotional offers, perceived value, and brand trust play a critical role at this stage.

Post-Purchase Behavior:
After the purchase, consumers experience satisfaction or dissatisfaction, which can impact their future behavior and brand loyalty. Positive experiences may lead to repeat purchases, while dissatisfaction could lead to returns or negative reviews.

4. Consumer Behavior in the Digital Age

Impact of Technology on Consumer Behavior:
The internet, smartphones, and social media have drastically changed the way consumers make purchasing decisions. Online reviews, influencer marketing, and social proof have become integral in shaping consumer opinions.

E-Commerce and Mobile Shopping:
With the rise of e-commerce and mobile shopping, consumer behavior has shifted toward greater convenience and instant access. Mobile apps, responsive websites, and easy payment methods have redefined the online shopping experience.

Social Media and Consumer Engagement:
Social media platforms allow brands to interact with consumers in real time, providing opportunities for personalized marketing and customer service. The role of influencers and user-generated content in building brand loyalty has become essential.

Data-Driven Marketing:
Advancements in data analytics have allowed businesses to better understand consumer behavior through tracking online activity, preferences, and past purchasing decisions. This data is used to create personalized marketing campaigns and improve customer retention strategies.

5. Consumer Behavior Metrics and KPIs

Key Performance Indicators (KPIs):
KPIs for tracking consumer behavior may include customer satisfaction, net promoter scores (NPS), customer lifetime value (CLV), and customer retention rates. These metrics help businesses assess the effectiveness of their marketing strategies and customer engagement.

Conversion Rate Optimization (CRO):
CRO focuses on improving the percentage of visitors to a website who complete desired actions, such as making a purchase. Understanding consumer behavior during the decision-making process allows businesses to optimize their websites and marketing efforts.

Brand Equity:
Brand equity refers to the value that a brand adds to a product or service in the eyes of the consumer. It is influenced by factors such as brand loyalty, recognition, and consumer perceptions.

Customer Satisfaction and Loyalty:
Satisfaction and loyalty metrics help measure how well a brand meets consumer expectations. High satisfaction leads to repeat business and positive word-of-mouth, while dissatisfaction can result in churn.

6. Ethical Considerations in Consumer Behavior

Privacy Concerns:
As marketers collect more consumer data, privacy issues have become a major concern. Ethical consumer behavior focuses on how businesses collect, use, and protect consumer data.

Sustainability and Social Responsibility:
More consumers are making purchasing decisions based on ethical considerations such as environmental impact and corporate social responsibility. Marketers need to understand how these factors influence behavior and brand perception.