Module MM040

Consumer Behavior

 

Module authors

Joshua Ackerman

Sloan School of Management
MIT Massachussetts Institute of Technology
USA

 

Lawrence E. Williams, jr.

Leeds School of Business
University of Colorado at Boulder
USA

Learning objectives

After you have completed this module, you will be able to:

  • Describe the fundamental elements of consumer behavior and model their relevance across the consumer decision-making process;
  • Identify why an understanding of consumer behavior can convey strategic value for managers;
  • Adopt a state-of-the-art holistic view of consumers with detail at multiple levels of analysis;
  • Apply strategies targeting specific mental processes in order to influence consumers' understanding of, and desire for, products, experiences, and services;
  • Understand why, not simply how, consumers act as they do, thereby establishing a flexible orientation to novel and unforeseen issues in marketing and managerial application.
Content

Chapter 1: Why should marketers care about consumer psychology?
1.1 Definition of Consumer Behavior
1.2 Five C's Situation Analysis Model
1.3 Consumers as Decision Makers
1.4 Strategic Value

Chapter 2: The Holistic View of Consumers: A Multi-Level Approach
2.1 Evolutionary
2.2 Cultural
2.3 Social
2.4 Individual
2.5 Physiological
2.6 Model of Consumer Decision-Making

Chapter 3: Pre-Purchase Stage of Consumption Behavior
3.1 Needs & Desires
3.1.1 Types of Needs & Desires
3.1.2 Goals
3.1.2.1 Nature of Goal Pursuit
3.1.2.2 Goals Become Active & Inactive
3.1.2.3 Goals Shape Consumer Thought
3.1.2.4 Goals Increase and Decrease in Strength
3.2 Information Processing
3.2.1 Types of processing
3.2.1.1 Dual-process
3.2.1.2 Somatic vs. Abstract
3.2.1.3 Cognitive vs. Affective
3.2.2 Stages of processing
3.2.2.1 Attention
3.2.2.2 Perception
3.2.2.3 Memory
3.2.2.4 Learning
3.3 Attitudes
3.3.1 Theory of Planned Behavior
3.3.2 Elaboration Likelihood Model of Persuasion
3.3.3 Automatic and Implicit Attitudes

Chapter 4: Purchase Stage of Consumption Behavior
4.1 How do people make choices?
4.2 Cold Factors
4.2.1 Mental Accounting
4.2.2 Information Overload
4.2.3 Choice Overload
4.2.4 Prospect Theory of Risky Decision-Making
4.2.4.1 Reference Points
4.2.4.2 Loss Aversion
4.2.4.3 Endowment Effect
4.2.4.4 Status Quo Bias
4.2.5 Representativeness and Availability Heuristics
4.2.6 Anchoring and Adjustment
4.2.7 Consideration Set Effects
4.2.8 Fluency Effects on Choice
4.3 Hot Factors
4.3.1 Self-Control
4.3.1.1 Why do people fail?
4.3.1.2 When do people fail?
4.3.1.3 Should we promote or erode self-control?
4.3.2 Emotions
4.3.2.1 Content
4.3.2.2 Processing
4.3.2.3 Experiences
4.3.3 Sensorimotor Cues
4.3.3.1 Embodiment
4.3.3.2 Metaphor Effects

Chapter 5: Post-Purchase Stage of Consumption Behavior
5.1 Satisfaction & Loyalty
5.1.1 Importance
5.1.2 Satisfaction
5.1.3 Loyalty
5.2 Usage and Disposition
5.2.1 Collaborative Consumption
5.2.2 Consumption Speed, Replacement and Upgrade Decisions
5.2.3 Consumers as Sellers

Workload units 3
Read excerpt Consumer Behavior

 

Why Open School of Management believes that knowledge in consumer behavior is important

A combination of psychology, sociology, and social anthropology, consumer behavior attempts to understand the needs of individuals, groups of people, and complex constructs like businesses and corporations. Consumer behavior is used to study how individuals and groups interact with products. Interactions include how an individual selects, acquires, uses, and discards a product. Afterward, the effects of the consumer's experience with the product are studied and used when considering future marketing strategies.

 

Why study consumer behavior?

Marketing has always been a competitive field. Usually, products are developed with a specific consumer in mind. However, any given product is often in competition with a handful of similar products. Most professionals agree that examining why one product is more successful than another is an integral step in understanding the marketplace, increasing sales, and building a consumer base. Consumer behavior is one method used to examine why one product is more successful than another. In fact, it is a dominant theory in marketing.

To understand and excel as a marketer, students must understand consumer behavior. Consumer behavior provides a marketer with a handful of compelling tools that will allow the marketer to improve sales, distribution, and more. Marketers who do not understand consumer behavior must rely on outdated methods. Sadly, most outdated marketing methods have very little use in today's marketplace.

 

Module overview

This module will focus on the study of consumer behavior from the perspective of a marketer and marketing manager. By the end of the module, students should be intimately familiar with consumer behavior and its many advantages as a marketer, in modern business, and as a manager. Listed below are learning objectives that students are expected to learn throughout the module.

After you have studied this module, you should be able to:

1. Describe the fundamental elements of consumer behavior and model their relevance across the consumer decision-making process.

Consumer behavior is a process that focuses on the actions of a person or business as a user, potential consumer, and buyer. As a consumer searches, buys, and disposes of a product, marketers attempt to break down the decisions made in each phase. Using the fundamental elements of consumer behavior, students will be able to extrapolate useful information from each phase. With the information in hand, students will be able to separate useful trends from irrelevant information that should be discarded.

2. Identify why an understanding of consumer behavior can convey strategic value for managers.

Marketers are not merely attempting to convince the consumer to purchase their product. Marketing is a competition between different products. In many instances, the competition extends to internal struggle within individual businesses. For managers, understanding consumer behavior will allow them to evaluate how products will compare to their competition.

3. Adopt a state-of-the-art holistic view of consumers with detail at multiple levels of analysis.

Many people believe marketers try to engineer advertisements that will appeal to a particular consumer base. This line of reasoning is somewhat flawed, however. By studying consumer behavior, marketers can recognize broader trends. These broader trends are described as a holistic view. Essentially, a consumer can be divided into dozens of decisions, or parts, which lead to final outcomes concerning the products the consumer prefers to purchase and use. By studying each part of a consumer, which range from current events to occupation, a marketer can engineer an extremely attractive advertisement that will hook the consumer. By studying multiple consumers, marketers can form a broader message through the discovery and evaluation of visual, political, economic, and culturally-relevant trends.

4. Apply strategies targeting specific mental processes in order to influence consumers' understanding of, and desire for, products, experiences, and services.

Keeping the holistic view in mind, the state of a consumer's needs are in constant flux as situations change in their lives. There are a few constants, but for the most part the most successful marketers are those who understand the desires and needs of customers. Most desires can be extrapolated by tracking other consumer purchases and identifying patterns. Once a marketer understands why a consumer has made a choice, he or she can begin to predict future outcomes.

5. Understand why, not simply how, consumers act as they do, thereby establishing a flexible orientation to novel and unforeseen issues in marketing and managerial application.

Throughout the module, students will examine customer purchases and try to determine the ultimate reason for the transaction. As students learn to understand consumer needs, they will develop flexible methods that will allow them to build ideas and expectations. In addition, students will be be able to use methods learned in the module to develop their own problem solving capabilities. As a result, students will be able to solve unexpected issues with minimal effort.

 

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