1Consumer Behavior

Understanding the Mystery

2Consumer Behavior Defined

The buying behavior of finalconsumers- individual and

households who buy goods and services for personal consumption

(Kotler and Armstrong, 2001)

3Model of Consumer Behavior

External Stimuli

Marketing Mix

Economic

Political

Cultural

Technological

Buyers Black Box

Buyer Characteristics

Buyer Decision Process

Buyers Responses

Product Choice Brand Choice Dealer Choice

Purchase Timing

Purchase Amount

4Characteristics Affecting Consumer Behavior

z Cultural

z Social

z Personal

z Psychological

5Cultural Factors

z Culture- Set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions

z Subculture- Group of people with shared value systems based on common life experiences and situations (i.e. nationalities, religions, geographic regions, racial groups)

z Social Class- Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors

6Social Classes

1. Upper Uppers

2. Lower Uppers

3. Upper Middles

4. Middle Classes

5. Working Class

6. Upper Lower

7. Lower Lowers

7Social Factors

z Groups- Membership or Reference/AspirationalGroups, Opinion Leader is a person with a reference group who, because of special skills, knowledge, personality or other characteristics, exerts influence on others

z Familyz Roles (expected actions) and Status (general

esteem)

8Personal Factors

z Age and Life-Cycle Stagez Occupationz Economic Situationz Lifestylez Personality and Self concept

9Lifestyle

SRI Consulting Values and Lifestyles

High Resources Low Resources

Principal-Oriented Fulfilleds Believers

Status-Oriented Achievers Strivers

Action-Oriented Experiencers Makers

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Psychological Factors

z Motivationz Perception- Selective Attention, Selective Distortion,

Selective Retention z Learning- Association Learning/Stimulus-Response,

Reinforcement, Modeling (Rodafinos, 2000).

z Beliefs and Attitudes

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Maslows Hierarchy of Needs

Self- Actualization

Esteem Needs

Social Needs

Safety Needs

Physiological Needs

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Types of Buying Behavior

Complex Buying Behavior (Real Estate)

Variety-Seeking Buying Behavior(Tooth Brass)

Dissonance-Reducing Buying Behavior(Air-Conditioning)

Habitual Buying Behavior(Grocery Products)

High Involvement

Low Involvement

Significant Differences between Brands

Few Differences between Brands

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The Buyer Decision Process

1. Need Recognition

2. Information Search

3. Evaluation of Alternatives

4. Purchase Decision

5. Postpurchase Behavior

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1. Need Recognition

The buyer senses a difference between his/her actual state and

some desired state

z Internal Stimuliz External Stimuli

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2. Information Search

z Heightened Attentionz Active Information Research

Types of SourcesPersonal (Word-of-Mouth) Commercial (Less influencing) Public Experiential

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3. Evaluation of Alternatives

All Brands

Known Brands Unknown Brands

Acceptable Brands Unacceptable Brands Overlooked Brands

Purchased Brands Rejected Brands(Bovee et al, 1995)

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4. Purchase Decision

Product Choice

Brand Choice

Dealer Choice

Purchase Timing

Purchase Amount

Attitudes of Others DecisionIntentionUnexpected Situational Factors

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5. Postpurchase Behavior

Customers further actions after the purchase, based on their satisfaction or dissatisfaction

Consumers Expectations vs Perceived Performance

Cognitive Dissonance- Buyer Discomfort caused by postpurchase conflict

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Why we need Satisfied Customers?

z Old customers cost lessz Satisfied customers is the best promotion

(word-of-mouth) z Dissatisfied customers is the worse thing that

can happen (satisfied tell 3 people, dissatisfied tell 11 people)

z Dissatisfied customers rarely give a second chance (96%)

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Stages in the Adoption Process

z Awarenessz Interestz Evaluationz Trialz Adoption

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Individual Differences in Innovativeness

z Innovators (2.5%)- Riskyz Early Adopters (13.5%)- Opinion Leadersz Early Majority (34%)- Before the Averagez Late Majority (34%)- Skepticalz Laggards (16%)- Traditional and Suspicious

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Product Characteristics and Rate of Adoption

z Relative Advantage- How superior is it?z Compatibility- Does it fit?z Complexity- How understandable is it?z Divisibility- Can we try it first?z Communicability- Are the results of using it

easy to communicate?