Principles of Marketing Ch 5

Chapter 5:Consumer Markets and Buyer Behavior

Consumer market refers to all of the

personal consumption of final consumers.

Keyword - Consumer Market

The aim of marketing is to affect how customers think

and act. To affect the whats, whens, and hows of

buyer behavior, marketers must first understand the

whys. In this chapter, we look at final consumer

buying influences and processes.

Introduction

C o n s u m e r B e h a v i o r - D e fi n i ti o n

Consumer behavior is defined as activities people undertake when (1)

obtaining, (2) consuming and (3) disposing of products to satisfy needs

and desire.

Consumer behavior includes the study of why, where, how often and under

what conditions consumers consume different products or brands with

the premise that it becomes easier to develop marketing strategies to

influence consumers once a marketer knows the reasons why people buy

specific products or brands.

C o n s u m e r B e h a v i o r - D e fi n i ti o n

Obtaining refers to the activities leading up to and

including the purchase or receipt of a product.

Consuming refers to how, where, when and under

what circumstances consumers use products.

Disposing refers to how consumers get rid of

products and packaging.

Historical Approach

Why Study Consumer Behavior?

There are several reasons behind the study of consumer behavior. Below are some

important reasons:

1) Today, businesses around the world recognize that “the consumer is not the king

but he is the buddy”. In essence, consumer behavior analysis helps firms to know

how to “please the buddy, not the king” and directly impact bottom line profits

(both interconnected in the long run).

2) The marketing concept stress that a firm should create a marketing mix that

satisfies customers. Therefore, a firm need to analyse what, where, when and

why customers buy.

3) Understanding consumer behavior is essential to the development of marketing

strategies, especially in pricing, product design, segmentation, targeting,

positioning and promotion.

Market research

Marketing manager Consumer behavior‘the engine of marketing’

Advertising

Distribution

The Marketing Car

Factors Affecting Consumer Behavior

Consumer purchases are influenced strongly by

cultural, social, personal, and psychological factors,

as shown in the next slide.

For the most part, marketers cannot control such

factors, but they must take them into account.

Culture is the learned values, perceptions,

wants, and behavior from family and other

important institutions


• Subculture are groups of people within a culture with shared value systems based on common life experiences and situations– Hispanic– African American– Asian– Mature consumers


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

• Measured by a combination of occupation, income, education, wealth, and other variables



Membership Groups

•Groups with direct influence and to which a person belongs

Aspirational Groups

•Groups an individual wishes to belong to

Reference Groups

•Groups that form a comparison or reference in forming attitudes or behavior

Groups and Social Networks


• Word-of-mouth influence and buzz marketing– Opinion leaders are people within a reference

group who exert social influence on others– Also called influentials or leading adopters– Marketers identify them to use as brand

ambassadors



• Online social networks are online communities where people socialize or exchange information and opinions

• Include blogs, social networking sites (Facebook), virtual worlds (second life)



• Family is the most important consumer-buying organization in society

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

Social Factors


• Age and life-cycle stage• RBC Royal Band stages– Youth—younger than 18– Getting started—18-35– Builders—35-50– Accumulators—50–60– Preservers—over 60

Personal Factors


Occupation affects the goods and services bought by consumers

Economic situation includes trends in:

Personal Factors

Personal income Savings

Interest rates


Lifestyle is a person’s pattern of living as expressed in his or her psychographics

• Measures a consumer’s AIOs (activities, interests, opinions) to capture information about a person’s pattern of acting and interacting in the environment

Personal Factors


• Personality and Self-Concept– Personality refers to the unique psychological

characteristics that lead to consistent and lasting responses to the consumer’s environment

Personal Factors


Personal Factors

Dominance

Autonomy

Defensiveness

Adaptability

Aggressiveness


Psychological Factors

Motivation

Perception

Learning

Beliefs and attitudes


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

Motivation research refers to qualitative research designed to probe consumers’ hidden, subconscious motivations

Psychological Factors - Motivation


Perception is the process by which people select,

organize, and interpret information to form a

meaningful picture of the world from three

perceptual processes

– Selective attention

– Selective distortion

– Selective retention

Psychological Factors - Perception


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

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 forget good points about competing brands

Psychological Factors - Perception


• Learning is the change in an individual’s behavior arising from experience and occurs through interplay of:

Psychological Factors - Learning

Drives Stimuli

Cues Responses


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

• Knowledge• Opinion• Faith

Psychological Factors - Beliefs


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

Psychological Factors - Attitudes

Types of Buying Decision Behavior

Complex buying behavior

Dissonance-reducing buying behavior

Habitual buying behavior

Variety-seeking buying behavior

The Consumer Decision Process

The Consumer Decision Process (CDP) model, represents a road map of

consumer's minds that marketers and managers can use to help guide

product mix, communication, and marketing strategies.

The goal in creating the consumer decision process model was to analyze how

individuals search through facts and influences to make decisions that are

logical and consistent for them.

A Simplified Version of The Consumer Decision Process

Purchase

Need Recognition

Search for Information

Consumption

Post-consumption Evaluation

Divestment

Pre-purchase Evaluation of Alternatives

S t a g e O n e : N e e d R e c o g n i ti o nThe starting point of any purchase decision is customer need (or

problem) . Need recognition occurs when an individual perceives a

gap between what he recognizes to be desired versus the existent

state of affairs. Consumers buy things when they believe a product’s

ability to solve a problem is worth more than the cost of buying it,

thereby making recognition of an unmet need the first step in the

sale of a product.

• If the perceived gap is low, below a certain level, the need

will be inactive.

N e e d R e c o g n i ti o n

Current State Desired State

S t a g e O n e : N e e d R e c o g n i ti o n ( c o n )

The next slide shows that environmental influences

and individual differences or characteristics

(UNCONTROLLABLE FACTORS) make up only part of

a consumer’s need, memory also has a large

influencing factor, especially if it is for a product

that the consumer has purchased before.

Need / Problem Recognition

Individual Differences- Consumer Resources- Motivation- Knowledge- Attitudes- Personality, Values, and Lifestyle

Environmental Influences- Culture- Social Class- Personal Influence- Family - SituationM

EMORY

Need Recognition

Stage Two: Search for Information

Once need recognition occurs, consumers begin searching for

information and solutions to satisfy their unmet needs.

* Internal – retrieving knowledge from memory or perhaps genetic

tendencies.

* External- collecting information from peers, family, websites and

the marketplace.

Search for Information

Need Recognition

Search

External Search

Internal Search

MEMORY

Individual Differences

Environmental Influences

Family, peers,

marketplace

Search for Information (con)

Internal Search External Search

Stage Two: Search for Information (con)

External Search: Sources of Information - Stimuli

1. Non Marketer Dominated

Such as friends, family, opinion leaders, etc...

2. Marketer Dominated

Refers to anything that products’ suppliers do for purposes of

information and persuasion, such as using advertising, salespeople,

websites, and point-of-sale materials.

External Search: Sources of Information

I n f o r m a ti o n P r o c e s s i n g

Beside the external and personal uncontrollable factors influencing the

buying behavior, exposure of customers to the company’s marketing

(controllable factor) can affect the decision-making by providing

inputs for the consumer’s black box where information is processed

before the final consumer’s decision is made. The steps involved in

processing information include:

1. Exposure – First, information and persuasive communication must

reach consumers.

2. Attention – The more relevant the message and its content, the more

likely attention will be attracted.

I n f o r m a ti o n P r o c e s s i n g ( c o n )

3. Comprehension – If attention is attracted, the message is further

analyzed against categories of meaning stored in memory. The

marketer hopes that accurate comprehension will occur.

4. Acceptance – Once comprehension occurs, the message can be either

dismissed as unacceptable or accepted. The goal of the message is to

change existing beliefs and attitudes , but the message must be

accepted before this can happen.

5. Retention – Finally, the goal of any persuader is for this new

information to be accepted and STORED IN MEMORY in such a way

that it is ACCESSIBLE FOR FUTUR USE.

Information Processing

M EMORY

Attention

Comprehension

Acceptance

Retention

Exposure

Stimuli:- Marketer Dominated- Nonmarketer Dominated

Examples of Marketer Dominated Stimuli: Ad That Creates Brand Image

Stage Three: Pre-Purchase Evaluation of Alternatives

In this stage, consumers seek answers to questions such

as “what are my options?”, and “which is best?” when

they compare, contrast and select from various

products.

Different consumers employ different evaluative criteria –

the standards and specifications used to compare

different products and brands (e.g., price, reliability, and

quality…) as potentially the most important.

Pre-purchase Evaluation of Alternatives based on:

• Salient/ important attributes such as price and reliability

are important to the consumer.

• Determinant attributes such as a car’s style and finish

usually determine which brand or store consumers

choose.

• Consumers compare what they know about different

products and brands with what they consider most

important and begin to narrow the field of alternatives

before they finally resolve to buy one of them.


SearchInternal Search

M

E

M

O

R

Y


Environ- mental

Influences

Need Recognition

Attention

Comprehension

Acceptance

Retention

Exposure

Stimuli

S t a g e F o u r : P u r c h a s e

The next stage of the consumer decision process is purchase. A consumer

might move through the first three stages of the decision process

according to plan and intend to purchase a particular product or brand.

But consumers sometimes buy something quite different from what they

intended or opt not to buy at all because of what happens during the

purchase stage. A consumer may prefer one retailer but choose another

because of a sale or a promotional event at a competitor’s store, hours

of operation, location or credit facilities. Inside the store, the consumer

may talk with a salesperson who changes his decision, see an end-of-

aisle display that switches his or her brand preference, use a coupon or

price discount, fail to find the intended product or brand, or lack the

money or right credit card to make the purchase.



M

E

M

O

R

Y


Environ- mental

Influences

Need Recognition

Attention

Comprehension

Acceptance

Retention

Exposure

Stimuli

Purchase

What Car Did The Customer Buy?

Answer: Ford Focus

Stage Five: Consumption

Consumption - the point at which consumers use the product.

Consumption can either occur immediately or be delayed. For

example, if a consumer sees a sales promotion for frozen food, he or

she may ‘stock up’ buying more than can be used in the normal time

frame of consumption and requiring the consumer to ‘warehouse’

the product in his or her freezer. How the consumer uses the product

can also affect their evaluation of the product at the Post-

consumption stage (User Guide for best consumption experience).

How the product is cared for can also affect how long the product will

last until the next purchase(Maintenance Guide - Increase product

life).



M

E

M

O

R

Y


Environ- mental

Influences

Need Recognition

Attention

Comprehension

Acceptance

Retention

Exposure

Stimuli

Purchase

Consumption

Stage Six: Post Consumption Evaluation

Consumers experience a sense of either satisfaction or dissatisfaction.

• Satisfaction occurs when consumers’ expectations are matched by

perceived performance.

• When experiences and performance fall short of expectations,

dissatisfaction occurs. “Did I consider all the alternatives?”, “Could I

have done better?” These types of questions are Post-purchase

regret or cognitive dissonance – and the higher price, the higher the

level of cognitive dissonance.

• Whatever is the final outcome, it is significant because the

consumer store this evaluation in his memory and refer to it in

future decisions.



M

E

M

O

R

Y


Environ- mental

Influences

Need Recognition

Attention

Comprehension

Acceptance

Retention

Exposure

Stimuli

Purchase

Consumption


External Search

SatisfactionDissatisfaction

Post Consumption Evaluation

Dissatisfaction Satisfaction

Stage Seven: Divestment (disposal of the product)

Consumers have several options, including complete disposal, recycling,

or remarketing (selling).

In our running example, when the consumer finishes using the car he

purchased, he has to dispose of it somehow. He can choose to sell it

to another consumer, trade it in for another vehicle, or take it to the

junkyard.



M

E

M

O

R

Y


Environ- mental

Influences

Need Recognition

Attention

Comprehension

Acceptance

Retention

Exposure

Stimuli

Purchase

Consumption


External Search

SatisfactionDissatisfaction

Divestment

ATTENTION !!!

A distinction is frequently made between high and low

involvement purchasing (e.g., having a hair cut Vs having a

medical operation), implying that in practice the actual

buying activity can be less or more consistent with this

model, depending on the buyer’s perceived purchasing

risks. High or low degree of involvement is also a question

of the personal, social, and economic significance of the

purchase (e.g., one day Vs twenty days residence at a hotel;

a newspaper Vs a house).

The Buyer Decision Process for New Products

Adoption process is the mental process an individual goes through from first learning about an innovation to final regular use.

• Stages in the process include:

Awareness

Interest

Evaluation Trial Adopt

ion

The Buyer Decision Process for New Products

Influence of Product Characteristics on Rate of Adoption

Relative advantage Compatibility

Complexity Divisibility

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Principles of Marketing Ch 5

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