CONSUMER BEHAVIOR

Why does Staples sell Starbucks coffee?

RESEARCH Out of 11000 products launched by 77

companies, only 56% are present five years later – Kuczmaski & Associates

Only 8% of new product concepts offered by 112 leading companies reached the market. Out of this 83% failed to reach marketing objectives

BASED ON CONCEPTS FROM Psychology Sociology Anthropology Marketing Economics

APPLICATION OF CONSUMER BEHAVIOUR

Analyzing market opportunities

Selecting target market

Marketing mix decisions

Use in social and Non profit marketing

IMPORTANCE

Significance in daily life

Application to Decision making

CONSUMER

PERCEPTION/SENSATION

COGNITION

AFFECT

BELIEFS

SOCIAL ANDOTHER INFLUENCE

INFOSEARCH

CHOICES

PREFERENCES

COMMUNICATION

MARKETRESEARCH

STRATEGY

INFLUENCES ON AND OF CONSUMER BEHAVIOR

Factors affecting Consumer Behavior

A: Social Factors

• Reference Group

• Family• Role &

status

B: Cultural Factor

• Culture• Sub-culture• Social

Culture

C: Economic Factor

• Disposable Income

• Size of Family• Consumption &

saving• Credit Available• Additional

income

D: Personal Factors

• Age & life cycle

• Occupation & lifestyle

• Personality & self Concept

E: Psychological

Factors• Motivation • Perception• Learning• Attitude

CHARACTERISTICS AFFECTING CONSUMER BEHAVIOR

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Social FactorsGroups

Membership groups have a direct influence and to which a person belongs.

These are usually related to its social origin, age, place of residence, work, hobbies, leisure, etc..

Aspirational groups are groups to which an individual wishes to belong. This group will have a direct influence on the consumer who, wishing to

belong to this group and look like its members, will try to buy the same products.

Reference groups are groups that form a comparison or reference in forming attitudes or behavior

They influence the image that the individual has of himself as well as his behavior

These provide to the individual some points of comparison more or less direct about his behavior, lifestyle, desires or consumer habits.

• Eg: cigarettes, beer and cars

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Social FactorsGroups

Opinion leaders are people within a reference group with special skills, knowledge,

personality, or other characteristics that can exert social influence on others

• Buzz marketing enlists opinion leaders to spread the word

• Social networking is a new form of buzz marketing• MySpace.com• Facebook.com

Social roles and status are the groups, family, clubs, and organizations to which a person belongs that can define role and social status

The position of an individual within his family, his work, his country club, his group of friends, etc.. – All this can be defined in terms of role and social status.

A social role is a set of attitudes and activities that an individual is supposed to have and do according to his profession and his position at work, his position in the family, his gender, etc.. – and expectations of the people around him.

Social status meanwhile reflects the rank and the importance of this role in society or in social groups. Some are more valued than others.

FAMILY:

Forms an environment of socialization in which an individual will evolve, shape his personality, acquire values.

Develops attitudes and opinions on various subjects such as politics, society, social relations or himself and his desires.

also on his consumer habits, his perception of brands and the products he buys.

We all kept, for many of us and for some products and brands, the same buying habits and consumption patterns that the ones we had known in our family.

CHARACTERISTICS AFFECTING CONSUMER BEHAVIOR

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Culture is the learned values, perceptions, wants, and behavior from family and other important institutions

I. CULTURAL FACTORS Culture and societal environment: Throughout his existence, an individual

will be influenced by his family, his friends, his cultural environment or society that will “teach” him values, preferences as well as common behaviors to their own culture.

For a brand, it is important to understand and take into account the cultural factors inherent to each market or to each situation in order to adapt its product and its marketing strategy.

Nationalities, religions, ethnic groups, age groups, gender of the individual, etc..

Eg: Age- chayawanprash, kesri jeevan for those who are near to retirement

Gender: Pulsar- Definitely Male

Subculture are groups of people who share the same values based on a common experience or a similar lifestyle in general.

The subcultures are often considered by the brands for the segmentation of a market in order to adapt a product or a communication strategy to the values or the specific needs of this segment.

Eg: Hindu bride in Red dress Sikh religion doesn’t permit hair

shaving South Indians prefer coffee North Indians prefer Tea

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CHARACTERISTICS AFFECTING CONSUMER BEHAVIOR

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Social classes are society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors

Social classes are defined as groups more or less homogenous and ranked against each other according to a form of social hierarchy.

Social class is measured by a combination of occupation, income, education, wealth, and other variables

We often assume three general categories among social classes : lower class, middle class and upper class.

People from different social classes tend to have different desires and consumption patterns Disparities resulting from the difference in their purchasing power

D: Personal Factors• Age & life cycle• Occupation & lifestyle• Personality & self Concept

AGE AND WAY OF LIFE:

A consumer does not buy the same products or services at 20 or 70 years. His lifestyle, values , environment, activities, hobbies and consumer habits evolve throughout his life.

For example, during his life, a consumer could change his diet from unhealthy products (fast food, ready meals, etc..) to a healthier diet, during mid-life with family before needing to follow a little later a low cholesterol diet to avoid health problems.

The factors influencing the buying decision process may also change. For example, the “social value” of a brand generally play a more important role in the decision for a consumer at 25 than at 65 years.

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Personal FactorsLifestyle is a person’s pattern of living as

expressed in his or her psychographics• Measures a consumer’s AIOs (activities, interests, and

opinions) to capture information about a person’s pattern of acting and interacting in the environment

• The lifestyle of a consumer will influence on his behavior and purchasing decisions.

• For example, a consumer with a healthy and balanced lifestyle will prefer to eat organic products and go to specific grocery stores, will do some jogging regularly (and therefore will buy shoes, clothes and specific products), etc..

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Personal FactorsPersonality : It materializes into some traits such as

confidence, sociability, autonomy, charisma, ambition, openness to others, shyness, curiosity, adaptability, etc..

Personality refers to the unique psychological characteristics that lead to consistent and lasting

responses to the consumer’s environmentBrand personality refers to the specific mix of

human traits that may be attributed to a particular brand

• Sincerity• Excitement• Competence• Sophistication• Ruggedness

Self-Concept :Self-concept refers to people’s possessions that contribute to and reflect their identities

While the self-concept is the image that the individual has – or would like to have – of him and he conveys to his entourage.

These two concepts greatly influence the individual in his choices and his way of being in everyday life. And therefore also his shopping behavior and purchasing habits as consumer.

In order to attract more customers, many brands are trying to develop an image and a personality that conveys the traits and values - real or desired – of consumers they are targeting.

Eg: cosmetics, designerware, Shopper’s stop, Raymond with well known celebrity,

E: Psychological Factors• Motivation • Perception• Learning• Attitude

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Psychological FactorsMotivation

A motive is a need that is sufficiently pressing to direct the person to seek satisfaction

To increase sales and encourage consumers to purchase, brands should try to create, make conscious or reinforce a need in the consumer’s mind so that he develops a purchase motivation. He will be much more interested in considering and buy their products.

They must also, according to research, the type of product they sell and the consumers they target, pick out the motivation and the need to which their product respond in order to make them appear as the solution to the consumers’ need.

Eg: credit cards give individuals the power to influence others and give them higher social status

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Psychological FactorsAbraham Maslow’s Hierarchy of Needs

• People are driven by particular needs at particular times

• Human needs are arranged in a hierarchy from most pressing to least pressing• Psychological• Safety• Social• Esteem• Self-actualization

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Psychological FactorsPerception is the process by which people

select, organize, and interpret information to form a meaningful picture of the world from three perceptual processes

Depending to his experiences, beliefs and personal characteristics, an individual will have a different perception from another.

Each person faces every day tens of thousands of sensory stimuli (visual, auditory, kinesthetic). It would be impossible for the brain to process all consciously. That is why it focuses only on some of them.

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Psychological Factors

Selective attention is the tendency for people to screen out most of the information to which they are exposed

Eg: fast forwarding a video or audio Expectation Rewarding

Selective distortion is the tendency for people to interpret information in a way that will support what they already believe

Selective retention is the tendency to remember good points made about a brand they favor and to forget good points about competing brands

Eg: full page ads, contrasting and colorful, repetitions of brand names in jingles

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Psychological FactorsBeliefs and Attitudes

Belief is a descriptive thought that a person has about something based on:

• Knowledge• Opinion• Faith• Experience he acquires, • Learning and• his external influences (family, friends, etc..), • He will develop beliefs that will influence his

buying behavior.

CHARACTERISTICS AFFECTING CONSUMER BEHAVIOR

Attitudes describe a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea

While an attitude can be defined as a feeling, an assessment of an object or idea and the predisposition to act in a certain way toward that object. Attitudes allow the individual to develop a coherent behavior against a class of similar objects or ideas.

Beliefs as well as attitudes are generally well-anchored in the individual’s mind and are difficult to change.

For many people, their beliefs and attitudes are part of their personality and of who they are.

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Psychological FactorsBeliefs and Attitudes

LEARNING:

Learning is through action. When we act, we learn. It implies a change in the behavior resulting from the experience. The learning changes the behavior of an individual as he acquires information and experience.

For example, if you are sick after drinking milk, you had a negative experience, you associate the milk with this state of discomfort and you “learn” that you should not drink milk. Therefore, you don’t buy milk anymore.

Rather, if you had a good experience with the product, you will have much more desire to buy it again next time.

CASE: Mr Mathur’s Trip to Goa

C: Economic Factor• Disposable Income• Size of Family• Consumption & saving• Credit Available• Additional income

CONSUMER PROBLEMS AND RECOGNITION

Consumer problem: Discrepancy between ideal and actual state--e.g., consumer: Has insufficient hair Is hungry Has run out of ink in his

or her inkjet cartridge

CONSUMER DECISIONS:THEORY AND REALITY IN CONSUMER BUYING

INFORMATIONSEARCH

PROBLEMRECOGNITIO

N

EVALUATION OF

ALTERNATIVES PURCHASE

POSTPURCHASE

EVALUATION/BEHAVIORS

Theory

Complications

APPROACHES TO SEARCH FOR PROBLEM SOLUTIONS

INTERNAL

EXTERNAL

MemoryThinking

Word of mouth, media,store visits, trial CATALOG

OPTIONS IDENTIFIED AND CONSIDERED

UNIVERSAL SET

RETRIEVED SET

EVOKED SET

All possible options

Options that readily come to mind

Options that will be considered by the consumer

Note: Retrieved and evoked sets will vary among different consumers

REMINDER For low involvement

products, efforts aimed at affecting internal search tend to be more effective—the consumer is usually not willing to expend energy on external search.

External search is more likely for higher involvement products.

ELEMENTS OF INFORMATION SEARCH

Sources of information Marketers source: like ads, brochures store

displays, website etc Non marketers sources: Personal: like

friends, relatives, past experiences etc Independent sources: • Public Information: consumer reports, Govt

publications• Product or service experts: home appraiser,

pharmacies etc

ELEMENTS OF INFORMATION SEARCH (CONTD)

Search strategies

Is the pattern of information acquisition customers utilize to solve their problems

Customers weigh the cost in terms of physical and mental efforts against gains

from information

ELEMENTS OF INFORMATION SEARCH (CONTD)

Amount of search

Efforts put into processing the information

DECISION MAKING ISSUES IN THE AMOUNT OF SEARCH Involvement level

Temporary Enduring(ongoing

interest) Consumer locus of control

Internal External

Product category complexity

Consumer knowledge and Expertise

Time pressure

ALTERNATIVE EVALUATIONHow does he/she use the information to arrive at a choice?

EVALUATION TYPE

Compensatory model: Decision based on overall value of alternatives (good attribute can outweigh bad ones)

Non-compensatory: Absolutely must meet at least one important criterion (e.g., car must have automatic transmission)

Hybrid: Combination of the two (e.g., one non-compensatory measure, then compensatory tradeoffs on other attributes

Abandoned strategy: Consumer finds initial criteria unrealistic and proceeds to less desirable solution

IMPORTANT

LESSIMPORTANT

COMPENSATORY MODEL Customer arrives at choice by considering

all the attributes and benefits of a product or service.

simple additive rule:

Weighted additive rule: based on relative importance of each attribute like quality, customer support, Price etc

NON-COMPENSATORY MODELConjunctive model:

Setting the minimum cutoff for each attribute.

Each alternative is examined against the minimum cutoff of all attributes

Ex. I want a saree whose price is below 5000, should be pink in color and should be of specific material

Disjunctive model: Entails tradeoff between aspects of choice

alternatives It considers sheer presence or absence of

attributes rather than the degree/amount in which these attributes are present

Should serve the same purpose

Ex: trade off between copy speed and dual copying capability

PURCHASE Choice identification: (identifies most

preferred choice)

Purchase intent: (determination that one will buy the product)

Implementation : (paying seeking and obtaining transfer of ownership)

POST PURCHASE EXPERIENCE Decision confirmation: Experience evaluation: Satisfaction/dissatisfaction: Exit Voice loyalty

ATTITUDE CHANGE VIA COGNITIONS (INFLUENCING BELIEFS)

- Changing consumer’s beliefs about the attributes of a brand Providing information about the brand

Change existing beliefs Difficult Advertiser’s motives are suspect

Change importance of attributes Add beliefsDid you know that….? Change ideal (fashion)

LANGUAGE PROBLEMS “Please leave your values at the desk” - Paris

hotel “Drop your trousers here for best results” -

Bangkok laundry “The manager has personally passed all water

served here” - Acapulco restaurant “Because of the impropriety of entertaining

guests of the opposite sex in the bedroom, it is suggested that the lobby be used for the purpose.” - Zurich hotel

Ladies are requested not to have children in the bar.”- Norway bar

“COME ALIVE WITH PEPSI”

“Come alive out of the grave” - Germany

“Pepsi brings your ancestors back from the grave” - China

BUYER BEHAVIOUR

MARKETING STIMULI

OTHER STIMULI

BUYER CHARACTERISTICS Cultural Social Personal Psychological

BUYER’S DECISION PROCESS

Problem Recognition Information Search Evaluation of Alternatives Purchase Decision Consumption Postpurchase behaviour

BUYER’S DECISION Product Choice Brand Choice Dealer Choice Purchase Timing Purchase Amount

PERSONAL FACTORS Family Life Cycle Occupation and Economic

circumstances Lifestyle Personality and self - concept

PSYCHOLOGICAL FACTORS Motivation Perception Learning Beliefs and Attitudes

BUYING ROLES

Initiator: sows the seed in customers’ mind to buy a product.

May be a part of the customer’s family A friend A colleague Or a salesperson

Influencer: Influences the decision process Can be a expert

Decider: the person who actually takes the decision

The decision can b joint also

Buyer: actually buys the product This can be the decider himself or

herself or the initiator

User: who actually consumes the product

Can be the entire family or just one person

BUYING BEHAVIOUR

Complex Dissonance - Reducing Habitual Variety seeking

BUYING PROCESS Problem Recognition Information Search Evaluation Alternatives Purchase Decision

POST - PURCHASE BEHAVIOUR Satisfaction Actions Use and Disposal