Unit 2 Understanding Consumers Consumer Behavior Buying Motives

Unit 2 “Understanding Consumers” Consumer Behavior Buying Motives Influences on the Consumer Decision Making Segmentation

Why Do People Buy Products? • To satisfy their individual wants and needs. • To enjoy the benefits that products offer. Consumer Behavior: The study of consumers and how they make buying decisions. • People make product decisions every day. • Marketers spend millions of dollars to uncover the reasons behind these decisions. Successful marketers consider: l What makes or forces or influences customers to buy? l How, Where, When & Why they make those choices.

5 Reasons You Buy (Buying Motives) 1. Physical – food, sleep, water, shelter, air 2. Psychological (mental): • Security (physical safety & economic security) • Social ( friends, love, belonging) • Esteem (respect and recognition) 3. Emotional – feelings (pleasure, excitement) 4. Rational – facts (convenience, performance) 5. Patronage – loyalty to a product or business

What Influences YOU in Decision-Making? External Internal Marketing Product Price Place Promotion Decision-Making Process: 1) problem recognition; 2) information search; 3) alternative evaluation; 4) purchase; and 5) post-purchase evaluation. Buyer’s Remorse – 2 nd thoughts about expensive purchase.

3 Types of Decision-Making 1. ________ – purchased frequently with little thought; over time becomes a habit; little to no time to communicate to customers. 2. ________ – requires more time and is usually more expensive; some time to give information. 3. ___________ - requires going through all five stages; very expensive or life changing; plenty of time/opportunity to communicate to customers.

Market Segmentation • Market – all potential customers a company would like to serve. • Mass Marketing – try to appeal to the entire market; “one size fits all”. • Segmentation– ID smaller group(s) whose members share 1+ characteristics (variables). • Target Marketing – focus time, money, and effort on segment that wants to & is able to buy. • “Mass” vs “Target” Pros and Cons?

Pros and Cons Mass Marketing Vs Target Marketing • Simpler (1) strategy • • Reaches more people • Reaches a lot who won’t • buy product. • Hopes that the right consumers get message More difficult strategy (multiple markets) Better focus of company’s – Time – Effort – Money Concentrates on just those people likely to buy.

5 Segmentation Variables 1. Geographic – dividing consumers into markets based on where they live. 2. Demographic – age, gender, race, income, and educational level; measurable statistics. 3. Psychographics – peoples’ social class, lifestyles & personalities (Baby Boomer, active, etc). 4. Product Usage – how consumers use the product and how often. 5. Benefits Derived – value or satisfaction consumers receive from a product.

How do these variables help a business?

Questions for a Good Market Segment l l Are there enough customers to be worthwhile? Would they buy the product? Can they afford to buy the product? Can they be reached by promotion/distribution? l Market Potential –total revenue that can be gotten from a market segment. l Market Share – % of the total market that each company or product controls. l Marketing Intelligence – process of gathering competitive marketing information.

Competition – rivalry between 2+ businesses for the consumers’ spending money. Types of Competition • Direct – sells product within same category • Indirect – sells product outside of category (Delta vs United; Delta Airlines vs Amtrak Trains) • Price Competition – sales & discounts, etc. • Non-Price Competition – focus is on quality, brand, location, or service.

Consumers Benefit From Competition • • •