Recap Characteristics Affecting Consumer Behavior Key Factors n

Recap

Characteristics Affecting Consumer Behavior Key Factors n n Cultural Social Personal Psychological – – Motivation Perception Learning Beliefs and attitudes 2

Psychological Factors Motivation • A motive is a need that is sufficiently pressing to direct the person to seek satisfaction • Motivation research is based on Freud. Looks for hidden and subconscious motivation • Maslow ordered needs based on how pressing they are to the consumer 3

Maslow’s Hierarchy of Needs

Psychological Factors Perception • Perception is the process by which people select, organize, and interpret information. • Perception Includes: – Selective attention • Consumers screen out information – Selective distortion • People interpret to support beliefs – Selective retention • People retain points to support attitudes 5

Psychological Factors Learning • Learning describes changes in an individual’s behavior arising from experience • Learning occurs through – Drives • Internal stimulus that calls for action – Stimuli • Objects that move drive to motive – Cues • Minor stimuli that affect response – Reinforcement • Feedback on action 6

Psychological Factors Beliefs and Attitudes • Belief – a descriptive thought about a brand or service – may be based on real knowledge, opinion, or faith • Attitude – describes a person’s evaluations, feelings and tendencies toward an object or idea – They are difficult to change 7

Types of Buying Decision Behavior

The Buying Roles • 5 roles people might play in a buying decision – Initiator ğ who first gives the idea of buying the product or service – Influencer ğwhose view or advice influences the decision – Decider ğwho decide on any component of buying decision – Buyer ğwho makes the actual purchase – User ğwho uses the product or sevice purchased 9

The Buyer Decision Process

Decision Making Sets Total Set Awareness Set Consideration Set Choice Set Decision 11

Stages in the Adoption Process Awareness: Consumer is aware of product, but lacks information. Interest: Consumer seeks Information about new product. Evaluation: Consumer considers trying new product. Trial: Consumer tries new product on a small scale. Adoption: Consumer decides to make regular use of product. 12

Buyer Decision Process for New Products • Individual Differences in Innovativeness: – Consumers can be classified into five adopter categories, each of which behaves differently toward new products 13

Early Majority Innovators Percentage of Adopters Adopter Categories Early Adopters 34% Late Majority Laggards 34% 16% 13. 5% 2. 5% Early Time of Adoption Late 14

Buyer Decision Process for New Products • Product Characteristics influencing the adoption rate: – Relative Advantage ğ Is the innovation superior to existing products? – Compatibility ğ Does the innovation fit the values and experience of the target market? – Complexity ğ Is the innovation difficult to understand or use? – Divisibility ğ Can the innovation be used on a trial basis? – Communicability ğ Can results be easily observed or described to others? 15

Customer-Driven Marketing Strategy: Creating Value for Target Customers Lecture 11

Topics to be discussed 1. Market Segmentation 2. Market Targeting 3. Differentiation and Positioning

Market Segmentation • Dividing a market into smaller groups with distinct needs, characteristics, or behavior that might require separate marketing strategies or mixes

Market Targeting • The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.

Differentiation • Actually differentiating the market offering to create superior customer value.

Positioning • Arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

Designing a Customer-Driven Marketing Strategy Select customers to serve Decide on a value proposition Segmentation Divide the total market into smaller segments. Differentiation Differentiate the market offering to create superior customer value. Targeting Select the segment or segments to enter. Create value for targeted customers Positioning Position the market offering in minds of target customers.

MARKET SEGMENTATION

Market Segmentation • Geographic segmentation v Dividing a market into different geographical units such as nations, provinces, regions, parishes, cities, or neighborhoods. • Examples Ø World region or country: Western Europe, Middle East, Pacific Rim, China, India, Canada, Mexico, North America Ø Country region: East Asia, South Asia, North Asia Ø Density: Urban, suburban, exurban, rural

Market Segmentation • Demographic segmentation v. Dividing the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. • Examples Ø Age: Under 6, 6 -11, 12 -19, 20 -34, 35 -49, 50 -64, 65+ Ø Gender: Male, female Ø Family life cycle: Young, single; married, no children; married with children; single parents, Ø Income: Under $20, 000; $20, 000 -$30, 000; $30, 000$50, 000; $50, 000 -$100, 000; $100, 000 -$250, 000; $250, 000 and over

Market Segmentation • Psychographic segmentation v. Dividing a market into different groups based on social class, lifestyle, or personality characteristics. • Examples Ø Social class: Lower lowers, upper lowers, working class, middle class, upper middles, lower uppers, uppers Ø Lifestyle: Achievers, strivers, survivors Ø Personality: Compulsive, gregarious, authoritarian, ambitious

Market Segmentation • Behavioral segmentation v. Dividing a market into groups based on consumer knowledge, attitudes, uses, or responses to a product. • Examples Ø Occasions: Regular occasion; special occasion; holidays; seasonal Ø Benefits: Quality, service, economy, convenience, speed Ø User status: Nonuser, ex-user, potential user, first-time user, regular user Ø User rates: Light user, medium user, heavy user

Can we use multiple segmentation bases? • Yes. • It can help companies to identify and better understand key customer segments, target them more efficiently, and tailor market offerings and messages to their specific needs.

Requirements for Effective Segmentation • Measurable: not too hard to identify and measure • Accessible: effectively reached and served • Substantial: large or profitable enough to serve • Differentiable: worthy to separate segments • Actionable: possible to develop separate marketing programs