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Chapter 5. Consumer Markets & Consumer Buyer Behavior. Consumer Buyer Behavior. Consumer Behavior What Where How How much When Why The consumers buy. Understanding the rest is easy but the “why” is difficult. Consumer Behavior. Consumer Behavior Model

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Chapter 5

Chapter 5

Consumer Markets & Consumer Buyer Behavior


Consumer buyer behavior

Consumer Buyer Behavior

  • Consumer Behavior

    • What

    • Where

    • How

    • How much

    • When

    • Why

      The consumers buy.

      Understanding the rest is easy but the “why” is difficult.


Consumer behavior

Consumer Behavior

  • Consumer Behavior Model

    • “How the STIMULI are changed into a RESPONSE” can be understood by analyzing two things:

    • The BUYER’S CHARACTERISTICS influence how he PERCEIVES and how he REACTS to the STIMULI.

    • The BUYER’S DECISION PROCESS affects buyer’s behavior.


Consumer behavior1

Consumer Behavior

  • Buyer’s Characteristics

    • Cultural Factors

    • Social Factors

    • Personal Factors

    • Psychological Factors

Psychological

Motivation

Perception

Learning

Beliefs & Attitudes

Buyer


Buyer s characteristics

Buyer’s Characteristics

Psychological

Motivation

Perception

Learning

Beliefs & Attitudes

Buyer


Buyer s characteristics1

Buyer’s Characteristics

  • Cultural Factors

    • Culture

      • A set of basic values, perceptions, wants and behaviors learned by a member of society from family and other important institutions.

      • Cultural shift – the change in secondary values affecting people’s choices of products and lifestyle.

      • e.g. a shift toward greater concern for health and fitness has created a huge (diet) industry. The shift toward informality has resulted in more demand for casual clothing and simple home furnishings.

    • Subculture

      • A group of people with shared value system based on common life experiences & situations.

      • e.g. nationalities, religions, racial groups, ethnic groups & geographic groups.


Buyer s characteristics2

Buyer’s Characteristics

  • Culture Factors (example)(the US children are exposed to the following values)

    • Achievement and success

    • Activity and involvement

    • Efficiency and practicality

    • Progress

    • Material comfort

    • Individualism

    • Freedom

    • Humanitarianism

    • Youthfulness

    • Fitness and health

  • What comparative value are you exposed to?


Buyer s characteristics3

Buyer’s Characteristics

  • Cultural Factors (continued)

    • Social class

      • Relatively permanent and ordered divisions in a society, based on income, occupation, education and wealth, whose members share similar values, interests and behaviors.

      • In some social class systems, members of different classes are REARED for certain roles and cannot change their social positions. Hence, affecting their life-longpreferences for certain products.

      • Upward and downward shifts are also possible and are of great importance to a marketer to know.


Buyer s characteristics4

Buyer’s Characteristics

  • Cultural Factors (continued)

    • Social class


Buyer s characteristics5

Buyer’s Characteristics

Psychological

Motivation

Perception

Learning

Beliefs & Attitudes

Buyer

Buyer


Buyer s characteristics6

Buyer’s Characteristics

  • Social Factors

    • Group

      • Membership group – a group to which a person belongs

      • Reference group – a group serving as direct or indirect points of comparison in forming a person’s attitudes or behavior.

        • Opinion Leader – a person within a reference group who, because of special skills, knowledge, personality or other characteristics, exerts social influence on others.

        • Marketers need to identify these Opinion Leaders in order to use them to do buzz marketing for their brands.

        • First, Opinion Leaders are targeted through direct marketing.

        • High-Tech Buzz or e-buzz (social networking websites).

        • e-buzz can easily backfire because users control the content.


Buyer s characteristics7

Buyer’s Characteristics

Assignment

Real Marketing

Tremor and Vocalpoint:

What’s the Latest Buzz?

(Principles of Marketing, 12th Edition, pages 128-129)


Buyer s characteristics8

Buyer’s Characteristics

  • Social Factors (continued)

    • Family

      • The biggest influence on buyer-behavior.

      • The biggest consumer buying organization.

      • Patriarchic vs. Matriarchic families.

      • Joint vs. nuclear families.

      • Husband-wife involvement varies widely.

      • 48:52 population ratio

      • Nike (Ref: What Women Want (Mel Gibson, Helen Hunt)

      • Children – affect the decisions regarding food, clothing, entertainment, vacations, TVs & personal care items.

      • Restaurants, Auto makers and travel destinations are now putting ads in Cartoon Network & Toon Disney.


Buyer s characteristics9

Buyer’s Characteristics

  • Social Factors (continued)

    • Roles and Status

      • The group (family, organization, club etc.) you belong to gives you a Role i.e. activities you are expected to perform according to the persons around you.

      • Each Role h as status reflecting the general esteem given to that role.

      • People choose products that reflect their roles in that group.

      • Imagine a man being a son and husband at home, manager at office, trainee at Gym, and a fan at a sporting event.


Buyer s characteristics10

Buyer’s Characteristics

Psychological

Motivation

Perception

Learning

Beliefs & Attitudes

Buyer

Buyer


Buyer s characteristics11

Buyer’s Characteristics

  • Personal Factors

    • Age & Life-Cycle Stage

    • Occupation

    • Economic Situation

    • Life-Style

    • Personality and Self-Concept


Buyer s characteristics12

Buyer’s Characteristics

  • Personal Factors

    • Age and Life-Cycle Stage

      • People change good and services over their lifetime.

      • Food, clothes, furniture and recreation are often age related.

      • Both TASTES & BUYING are shaped by the stage of family life-stage.

      • RBC Royal Bank has identified FIVE life-stage segments.

        • Youth – younger than 18.

        • Getting Started – aged between 18 & 35, going through first experiences of almost everything.

        • Builders – between 335 & 50, at the peak earning years, focused on Career and Family, usually borrowing more than they invest.

        • Accumulators – between 50 & 60, worry about saving for retirement and investing wisely.

        • Preservers - over 60, want to maximize their retirement income to maintain a desired life-style.

      • RBC Bank offers different services to them.

      • What would be the life-stage segments for Car or a House?


Buyer s characteristics13

Buyer’s Characteristics

  • Personal Factors

    • Age and Life-Cycle Stage

      • Life-Cycle

        • Singles, divorced and married

        • Singles with kids and no kids

        • Divorced with kids and no kids

        • Married with kids and kids


Buyer s characteristics14

Buyer’s Characteristics

  • Personal Factors (continued)

    • Occupation

      • A person’s occupation affects the goods and services bought.

      • Blue-collar workers prefer more rugged clothes.

      • White-collar workers prefer more suits and formal dresses.

      • A company can specialize in making products for a specific occupational group.

      • e.g. Carhartt makes rugged, durable work clothes.

      • An Animal trainer says;

        • “My Carhartt jeans not only keep me warm but they stood up to one playful lion and her very sharp claws”.


Buyer s characteristics15

Buyer’s Characteristics

  • Personal Factors (continued)

    • Economic Situation

      • Marketers watch trends in income, savings & interest rate.

      • If recession is indicated, marketers may redesign, reposition and reprice their products.

      • Some target the rich e.g. Rolex:

        • “a tribute to elegance, an object of passion, a symbol for all time”.

      • Some target consumers with more modest means e.g. Timex:

        • “take a licking and keep on ticking.”


Buyer s characteristics16

Buyer’s Characteristics

  • Personal Factors (continued)

    • Lifestyle

      • People from them same culture, subculture, social class and occupation may have quite different lifestyle.

      • Lifestyle is a person’s pattern of living as expressed in his/her psychographics (i.e. AIO)

      • A – Activities (work, hobbies, shopping, sports, social events)

      • I – Interests (food, fashion, family, recreation)

      • O – Opinions (about themselves, social issues, business products)

      • Lifestyleprofiles a person’s whole pattern of acting and interacting.

      • VALS (Value and Life Style) classification


Buyer s characteristics17

Buyer’s Characteristics

  • Example of Life-Style for Technography

    • Fast-forwards(biggest spenders, career driven, time strapped)

    • New age nurturers(tech for edutainment)

    • Mouse potatoes(technotainment)

    • Techno-strivers(up-&-coming believers in tech)

    • Traditionalists(folks suspicious of tech beyond basics)


Buyer s characteristics18

Buyer’s Characteristics


Buyer s characteristics19

Buyer’s Characteristics

  • Personal Factors (continued)

    • Lifestyle

      • VALS

        • VALS classifies people by Psychologicaland Four Demographics that correlate with buying behavior.

        • Primary Motivations (psychological):

          • Ideals oriented – guided by knowledge and principles

          • Achievement oriented – products and service that demonstrate success to their peers

          • Self-Expression oriented – look for social or physical activity, variety and risk.

          • Innovators and Survivors are exceptions to the above styles.

          • Innovators have so much that they can demonstrate any motivation.

          • Survivors have so little that they can not demonstrate anything but needs.

        • Resources (demographics)

          • Income

          • Education

          • Health& energy

          • Self-confidence etc.


Buyer s characteristics20

Buyer’s Characteristics

  • Personal Factors (continued)

    • Personality and Self-Concept

      • Personality – the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment.

      • i.e. self-confidence, dominance, sociability, autonomy, defensiveness, adaptability and aggressiveness.

      • Heavy Coffee Drinkers tend to be high on sociability. Thus, Starbucks offers an environment where they can relax and socialize.

      • Brand personality – the specific mix of human traits that my be attributed to a particular brand.

      • Consumers are likely to choose brands with personalities that match their own.


Buyer s characteristics21

Buyer’s Characteristics

  • Personal Factors (continued)

    • Personality and Self-Concept

      • Five common brand personalities

        • Sincerity (honest, down-to-earth, cheerful)

        • Excitement (daring, spirited, imaginative & up-to-date)

        • Competence (reliable, intelligent and successful)

        • Sophistication (upper class and charming) e.g. Mercedes

        • Ruggedness (outdoorsy and tough) e.g. Levi’s

      • Self-Concept

        • “Who or What am I?”

        • Usually, what we have reflects what or who we are.

        • Identify possible self-images/concepts and associate your brand with it.


Buyer s characteristics22

Buyer’s Characteristics

Psychological

Motivation

Perception

Learning

Beliefs & Attitudes

Buyer

Buyer


Buyer s characteristics23

Buyer’s Characteristics

  • Psychological Factors

    • Motivation

    • Perception

    • Learning

    • Beliefs and Attitudes


Buyer s characteristics24

Buyer’s Characteristics

  • Psychological Factors

    • Motivation

      • Biological or Psychological needs turn into motives which seek satisfaction.

      • Motive – a need that is sufficiently pressing to direct the person to seek satisfaction of the need.

      • What motivates different people for different choices?

      • Sigmund Freud – we never know, its all subconscious.

      • A 60 year old using a convertible sports car or listening to his “good-old-days” melodies, might be at a deeper level motivated by the need to feel younger which he consciously may deny.

      • Many companies employ psychologists, anthropologists and other social scientists to explore through research the motivation levels and reasons for human choice.


Buyer s characteristics25

Buyer’s Characteristics

  • Psychological Factors

    • Motivation

      • Example summary of Motivation Research

        • “Good morning, ladies and gentlemen. We have called you here today for a little consumer research. Now, lie down on the couch, toss your inhibitions out the window and let’s try a little free association.

        • First, think about brands as if they were your friends. Imagine you could talk to your TV. What would you say and what would he say?

        • Now, think of your shampoo as an animal. A panda, a lion, a snake, anything?”


Buyer s characteristics26

Buyer’s Characteristics

  • Psychological Factors

    • Motivation

      • However, Abraham Maslow offers the following:


Buyer s characteristics27

Buyer’s Characteristics

  • Psychological Factors

    • Perception

      • A motivated person is ready to act but how he/she should act is affected by the way he/she perceives the situation.

      • The process by which people select, organize and interpretinformation to form a meaningful picture of the world.

      • People are exposed to 3000 to 5000 messages every day.

      • People can form different perceptions of the same stimulus because of THREEperceptual processes;

        • Selective Attention

        • Selective Distortion

        • Selective Retention


Buyer s characteristics28

Buyer’s Characteristics

  • Psychological Factors

    • Perception

      • Selective Attention – the tendency to screen out information

      • Selective Distortion – the tendency to interpret information in a way that supports what a person already believes:

        • if you distrust a company, you will perceive even an honest ad from that company as questionable.

      • Selective Retention – the tendency to retain information that supports our attitudes and beliefs and forget what is against.

        • Without distorting, you may forget the good points about a competing brand and remember the good points about your own brand.


Buyer s characteristics29

Buyer’s Characteristics

  • Psychological Factors

    • Learning

      • When people act, they learn.

      • So, changes in an individual’s behavior arising from experience.

      • Learning is an interplay of

        • Drives/motives

        • Stimuli

        • Cues

        • Responses

        • Reinforcement

      • A drive(self-actualization) becomes a motive when directed toward a stimulus object(digital camera).

      • This response is conditioned by cuesi.e. the minor stimuli that determine when, where and how the person responds.

      • Cues could be discussion with a friend, windows shopping etc.

      • Say, Nikon was bought. If the experience with Canon is rewarding, his behavior/response is reinforced.

      • He/she may prefer Nikon Brands for anything related in future.


Buyer s characteristics30

Buyer’s Characteristics

  • Psychological Factors

    • Attitudes & Beliefs

      • Through doing and acting, we learn.

      • Our learning designs our attitudes and beliefs.

      • Belief – a descriptive thought that a person has about something.

      • Attitude – a person’s relatively consistent evaluation, feelings, and tendencies toward an object or idea.

      • Beliefs are based on either real knowledge, opinion or feelings.

      • Marketers should know the beliefs of people about their brands.

      • Attitudes put people into a frame of mind of liking or disliking things or moving toward or away from them.

      • Our camera buyer may have the attitude:

        • “buy the best” which leads to “Japanese camera”, which leads to Nikon.

      • Attitudes are difficult to change. Better to FIT our products into the existing attitudes.


The buying decision behavior

The Buying Decision Behavior

  • The Buying Decision Behavior

    • Complex Buying Behavior

    • Dissonance-Reducing Buying Behavior

    • Habitual Buying Behavior

    • Variety-Seeking Buying Behavior


The buying decision behavior1

The Buying Decision Behavior

HIGH Involvement

LOW Involvement

SIGNIFICANT Differences among Brands

FEW Differences between Brands


Types of buying behavior

Types of Buying Behavior

  • Complex Buying Behavior

    • Expensive, risky, purchased infrequently & highly self-expressive products.

    • Favorable communication is PRINT MEDIA with LONG COPY and PUSH STRATEGY.

    • e.g. a Laptop buyer knows little about GHz & RAMs. He/she goes through learning process, developing beliefs, then attitudeand finally a thoughtful purchase decision.

  • Dissonance-Reducing Buying Behavior

    • Expensive, risky, infrequent purchase but sees little difference among brands.

    • Due to post-purchase dissonance, after-sale communications to provide evidence and support to help them feel good about purchase.

    • e.g. Carpeting. Price & convenience may attract primarily.


Types of buying behavior1

Types of Buying Behavior

  • Habitual Buying Behavior

    • Low-cost, frequently purchased products e.g. salt.

    • They buy a brand repeatedly due to habit, not brand loyalty.

    • Ads repetition creates brand familiarityrather than brand conviction, price and sales promotion. Ad should have few key points.

    • In such cases, consumer behavior does not pass through the usual “learn-belief-attitude-behavior” process but through passive learning.

    • Price and sales-promotion are good tools to stimulate trial.

    • Visual symbols are important because they are easy to remember and be associated with the brand.

    • A campaign should include high repetition (TV is better than others as its suitable for passive learning).


Types of buying behavior2

Types of Buying Behavior

  • Variety-Seeking Buying Behavior

    • Cookies, for example, about which the buyer may hold some belief will be evaluated during consumption.

    • The next purchase might be a different brand, not because of dissatisfaction, but because of boredom or simply to try something new.

    • The market leader should keep shelf space, dominate shelf space, frequent ads.

    • The challengers should lower prices, special deals, free samples and ads convincing people to seek variety.


Types of buying behavior3

Types of Buying Behavior

  • In more routine purchases, consumers often skip some of these stages e.g. while buying your favorite & familiar brand of toothpaste.

  • But in a more complex situation, it is all followed.


Buying decision making process

Buying Decision Making Process

  • Need Recognition

    • Internal Stimulus

    • External Stimulus

  • Information Search

    • Personal sources (family, friends, neighbors, colleagues, acquaintances)

    • Commercial sources (ads, websites, dealers, packaging, displays)

    • Public sources (mass-media, internet searches, editorials)

    • Experiential sources (handling, examining, using the product)

  • Personal sources are more preferred. As they legitimize and evaluate the product for the buyer while commercial sources only inform.


Buying decision making process1

Buying Decision Making Process

  • Information evaluation

    • After gathering information, sometimes, buyers calculate and evaluate a lot. At other times, they just act on impulses and intuition.

      • Size

      • Price

      • Color

      • Style

      • Features

      • Benefits etc.

  • Purchase Decision

    • After making the decision, STILL TWO factors matter a lot:

      • Attitude of others (nears & dears)

      • Unexpected situational factors (economy, competitors, feed back of a friend)


Buying decision making process2

Buying Decision Making Process

  • Post purchase behavior

    • Expected performance vs. actual performance

    • Thinking about opportunity cost

    • Cognitive dissonance

    • Dissatisfied customers usually do not tell the seller.

    • A company should create systems that encourage customers to complain.

    • In this way, the company can learn how well it is doing and how it can improve.


Buying decision making process3

Buying Decision Making Process

Assignment

Real Marketing

Lexus:

Delighting Customers to Keep them Coming Back

(Principles of Marketing, 12th Edition, pages 142-143)


Buying decision process for new products

Buying decision process for New Products

  • New product

    • A good, service, idea or place that is perceived to be new by consumers.

  • Adoption process

    • The mental process through which an individual passes from first learning to final adoption.

    • Adoption – the decision of a consumer to become a regular user of a product.

    • Adoption Process involves Five Stages:

      • Awareness – the consumer becomes aware of it, but lack information.

      • Interest – the consumer seeks information due to interest.

      • Evaluation – the consumer considers whether trying is worth it.

      • Trial – a small scale try to improve initial estimates & guesses

      • Adoption – the consumer decides to make full & regular use.

    • Marketer should help consumer go through these stages through free trials or weekend trials (for cars).


Buying decision process for new products1

Buying decision process for New Products

  • Individual differences in innovativeness

    • People differ greatly in their readiness to try a new product.

    • They can be classified in FIVE groups;

      • Innovators – venturesome, try new ideas at some risk

      • Early adopters – adopt early but carefully, guided by respect, they are opinion leaders

      • Early majority – deliberate, adopt new products before the average person, rarely are opinion leaders

      • Late majority – skeptical, they adopt ONLY after a majority tries it

      • Laggards – tradition bound, suspicious of changes and adopt the innovation ONLY when it has become something of a tradition itself

    • A marketer should direct his marketing efforts toward innovators and early adopters. They are relatively younger, better educated and higher on income than the rest.

    • They are less brand loyal. Prefer to take advantage of special promotions e.g. discounts, samples etc.


Buying decision process for new products2

Buying decision process for New Products

  • Influence of product characteristics on rate of adoption

    • Some products catch on almost overnight (iPod) while some take a bit longer.

    • Five Characteristics are important in influencing an innovation’s rate of adoption;

      • Relative advantage – the degree to which innovation appears superior to existing products

      • Compatibility – the degree to which it FITS the values & experiences of consumers

      • Complexity – the degree to which it is difficult to understand or use

      • Divisibility – the degree to which it may be tried on limited basis

      • Communicability – the degree to which the results of using the innovation can be observed and described to others


Buying decision process for new products3

Buying decision process for New Products

  • Consumer Behavior across borders

    • Some differences are obvious e.g.:

    • Kellogg’s (cereals) strategy

      • In the US, people do have cereals in breakfast. Kellogg convinces them to choose Kellogg over others.

      • In France, where people either do not have breakfast or have it with coffee, Kellogg convinces them JUST to add cereal to their table.

      • In India, where people prefer heavy, fried breakfast, Kellogg convinces people to try something lighter.

    • Some differences are subtle (physical differences or environmental) e.g.:

    • Remington:

      • Offers a smaller electric shaver in Japan because of OBVIOUS difference in hand size (obvious difference) BUT pushy and hard-hitting advertisements can be viewed as aggressive BECAUSE Humility and Respect are great values in their culture.


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