Chapter Three Consumer Markets and Consumer Buyer Behavior

Consumer Markets and Consumer Buyer Behavior Topic Outline • Model of Consumer Behavior • Characteristics Affecting Consumer Behavior • Types of Buying Decision Behavior • The Buyer Decision Process for New Products Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 2

Consumer behavior • Processes a consumer uses to make purchase decisions, as well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and the product use. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 3

Model of Consumer Behavior • Consumer buyer behavior refers to the buying behavior of final consumers— individuals and households who buy goods and services for personal consumption • Consumer market refers to all of the personal consumption of final consumers Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 4

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide

Characteristics Affecting Consumer Behavior Consumers purchases are influenced strongly by cultural, social, personal, and psychological characteristics. Marketers cannot control such factors, but they must take them into account. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 6

Characteristics Affecting Consumer Behavior Culture Subculture Social Referenc e groups Family Personal Age and life cycle stage Occupation Economic situation Lifestyle Social class Roles and Status Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Personality and self conceft Psychologic al Motivation Perception Buyer Learning Beliefs and attitudes Chapter 5 - slide 7

Characteristics Affecting Consumer Behavior 1. Cultural factors – Culture – Sub culture – Social class 2. Social factors 4. Psychological factors – – Motivation Perception Learning Beliefs and attitudes – Groups – Family – Roles and status 3. Personal factors – – – Age and life cycle stage Occupation Economic situation Life style Personality and self concept Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 8

Characteristics Affecting Consumer Behavior 1. Cultural factors: Cultural factors exert (apply) a broad and deep influence on consumer behavior. The marketer needs to understand the role played by the buyer’s culture, subculture and social class. a) culture b) subculture c) social class Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 9

a) Culture is the learned values, perceptions, wants, and behavior from family and other important institutions In other words, Culture is sum of VBBN. values, beliefs, behaviors, norms (VBBN) Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 10

Discussion Exercise • What does this behavior indicate about the person? n Values of loyalty to country and respect for the flag. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 11

Discussion Exercise • What does this behavior indicate about the person? n Belief in

Discussion Exercise • What does the picture indicate the person is doing? n Challenging norms of society, challenging authority, expressing free speech. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 13

b) 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 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 14

c) 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 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 15

• 2. Social factors: a consumer’s also is influenced by social factors, such as the consumer’s small groups, family and social roles and status. a) Groups b) Family c) Roles and status Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 16

Groups and Social Networks a) Groups: a person’s behavior is influenced by many small groups. Membership Groups • Groups with direct influence and to which a person belongs Aspirational Groups • Groups an individual wishes to belong to Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Reference Groups • Groups that form a comparison or reference in forming attitudes or behavior Chapter 5 - slide 17

Characteristics Affecting Consumer 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 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 18

Characteristics Affecting Consumer Behavior Groups and Social Networks • Online social networks are online communities where people socialize or exchange information and opinions • Include blogs, social networking sites (facebook), virtual worlds (second life) Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 19

Characteristics Affecting Consumer Behavior Social Factors b) Family is the most important consumerbuying organization in society c) Roles and Status: Social roles and status are the groups, family, clubs, and organizations that a person belongs to that can define role and social status. Example: A women Priya plays the role of brand manager in a company, she plays role daougher with her parents etc. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 20

Characteristics Affecting Consumer Behavior 3. Personal Factors a) Age and life-cycle stage: People change the goods and services they buy over their lifetimes. Tastes of food, clothes, furniture and recreation are often age related. • Sony company’s target customers segmentation – – – Youth—younger than 18 Getting started— 18 -35 Builders— 35 -50 Accumulators— 50– 60 Preservers—over 60 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 21

Characteristics Affecting Consumer Behavior Personal Factors b) Occupation affects the goods and services bought by consumers. c)Economic situation includes trends in: Personal income Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Savings Interest rates Chapter 5 - slide 22

Characteristics Affecting Consumer Behavior Personal Factors d) 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 • It based on religious influences Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 23

Characteristics Affecting Consumer Behavior Personal Factors e) Personality and Self-Concept – Personality refers to the unique psychological characteristics that lead to consistent and lasting responses to the consumer’s environment. Ex: Self confidence, dominance, sociability, autonomy, defensiveness, adaptability and greessiveness. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 24

Characteristics Affecting Consumer Behavior Personal Factors Dominance Autonomy Defensiveness Adaptability Aggressiveness Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 25

Characteristics Affecting Consumer Behavior 4. Psychological Factors: A persons buying choices are further influenced by four major psychological factors: a) Motivation b) Perception c) Learning d) Beliefs and attitudes Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 26

Characteristics Affecting Consumer Behavior Psychological Factors a) Motivation 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 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 27

Characteristics Affecting Consumer Behavior Psychological Factors b) 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 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 28

Characteristics Affecting Consumer Behavior Psychological Factors Selective attention is the tendency for people to screen out most of the information to which they are exposed (bare) 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 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 29

Characteristics Affecting Consumer Behavior Psychological Factors c) Learning is the change in an individual’s behavior arising from experience and occurs through interplay of: Drives (make) Responses Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Stimulus (incentive) Cues Reinforcement Chapter 5 - slide 30

Characteristics Affecting Consumer Behavior Psychological Factors d) Beliefs and Attitudes Belief is a descriptive thought that a person has about something based on: – Knowledge – Opinion – Faith Attitudes describe a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 31

Types of Buying Decision Behavior High involvement Low involvement Significant differences between brands Complex buying behavior Variety-seeking buying behavior Few differences between brands Dissonancereducing buying behavior Habitual buying behavior Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 32

Complex buying behavior: -Consumer buying behavior in situations characterized by high consumer involvement in a purchases and significant perceived differences among brands. -Ex: expensive new computer purchase decision. Dissonance reducing buying behavior: - consumers buying behavior in situations characterized by high involvement but few perceived differences among brands. -Ex: consumers buying carpeting Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 33

Habitual buying behavior: - Consumer buying behavior in situations characterized by low consumer involvement and few significant perceived brand differences. -Ex: like sugar, salt purchase behavior Variety seeking buying behavior: - Consumer buying behavior in situations characterized by low consumer involvement but significant perceived brand differences. -ex: cookies Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 34

The Buyer Decision Process -Need recognition -Information search -evaluation of alternatives -purchase decision -post purchase behavior Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 35

The Buyer Decision Process Need Recognition • Occurs when the buyer recognizes a problem or need triggered by: – Internal stimuli (motivation) – External stimuli (motivation) Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 36

The Buyer Decision Process Information Search Sources of Information • Personal sources—family and friends • Commercial sources— advertising, Internet • Public sources—mass media, consumer organizations • Experiential sources— handling, examining, using the product Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 37

The Buyer Decision Process Evaluation of Alternatives • How the consumer processes information to arrive at brand choices Lots of storage Performance Safety Variety of colors Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 38

The Buyer Decision Process Purchase Decision • The act by the consumer to buy the most preferred brand • The purchase decision can be affected by: – Attitudes of others – Unexpected situational factors Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 39

The Buyer Decision Process Postpurchase Decision • The satisfaction or dissatisfaction that the consumer feels about the purchase • Relationship between: – Consumer’s expectations – Product’s perceived performance • The larger the gap between expectation and performance, the greater the consumer’s dissatisfaction • Cognitive dissonance is the discomfort caused by a post purchase conflict Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 40

The Buyer Decision Process Postpurchase Decision • Lack of confidence (doubts) about the correctness of a prior purchase decision and efforts to reconcile doubts Did I Do the Right Thing? Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 41

The Buyer Decision Process Post-Purchase Decision Customer satisfaction is a key to building profitable relationships with consumers— to keeping and growing consumers and reaping (gathering) their customer lifetime value Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 42

The Buyer Decision Process for New Products A good, service or idea that is perceived by some potential customers as new. 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 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Evaluation Trial Adoption Chapter 5 - slide 43

• Consumers go through five stages in the process of adopting a new product: – Awareness: the consumer becomes aware of the new product but lacks information about it. – Interest: the consumer seeks information about the new product – Evaluation: the consumer considers whether trying the new product makes sense. – Trial: the consumer tries the new product on a scale to improve his or her estimate of its value. – Adoption: the consumer decides to make full and regular use of the new product. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 44

The Buyer Decision Process for New Products Influence of Product Characteristics on Rate of Adoption Five characteristics are especially important in influencing an innovation’s rate of adoption. For example consider the characteristics of HDTV. Relative advantage Compatibility Complexity Divisibility Communicability Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 45

Relative advantage: the degere to which the innovation appears superior to existing products. Compatibility: HDTv is highly compatible with the lifestyles found in upper middle class homes. Complexity: HDTv are not very complex and therefore, once programming is avilabe and prices come down. Divisibility: HDTv are sill very expensive. Communicability: the degree to which the results of using the innovation can be observed or described to others. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter 5 - slide 46