Analyzing

Consumer Markets

Tutored by : Prof. Sunil D’ Anto

 Learning Agenda
• How do consumer characteristics influence
buying behavior?
• What major psychological processes influence
consumer responses to the marketing program?
• How do consumers make purchasing decisions?
• How do marketers analyze consumer decision
making?
 Tata Steel used
steeljunction® to
encourage consumers
to go steel shopping
and to develop deeper
understanding of
individual and
household customers.
 Consumer Behavior

Consumer behavior is the study of how individuals,

groups, and organizations select, buy, use, and
dispose of goods, services, ideas, or experiences to
satisfy their needs and wants.
Influences on Consumer Behavior

Cultural Factors

Social Factors

Personal Factors
 1. Culture
Culture
(a set of beliefs, perceptions,
preferences & behaviour)

is the fundamental
determinant of a
person’s wants and
behaviors acquired
through socialization
processes with family,
and other key
institutions.
 Subcultures

Nationalities

Religions

Racial groups

Geographic regions
2. Social Classes

Upper uppers
Lower uppers
Upper middles
Middle class
Working class
Upper lowers
Lower lowers
 Social Classes
A1

A2
B1

B2
C
D
E1

E2
 Characteristics of Social Classes

• Within a class, people tend to behave alike

• Social class conveys perceptions of inferior
or superior position
• Class may be indicated by a cluster of
variables (occupation, income, wealth)
• Class designation is mobile over time
 Social Factors

Reference
Family*
Groups*

Social roles
&
Statuses*
 * Reference Groups

Membership groups

Primary groups
(family, friends, neighbours, coworkers)

Secondary groups
(social, professional groups)

Aspirational groups

Dissociative groups
Provogue uses teenage icons as brand ambassadors and a youth
targeted website to connect to its customers
Radio Shack Targets Women with Female
Store Managers
 Family
 Family of orientation: parents and siblings
 Family of procreation: spouse and children
Roles and Status

What degree of status is

associated with various
occupational roles?
 3. Personal Factors

Age*
Self- Life cycle
Concept* Stage*

Lifestyle* Occupation

Values Wealth
(the belief systems)
Personality*
Age & The Family Life Cycle
Age and Stage of Lifecycle
 Personality

Personality refers to a set of distinguishing human

psychological traits that lead to relatively consistent and
enduring responses to environmental stimuli.

Personality can be a useful variable in analyzing

consumer brand choices.
Self Concept & Brand Personality

Sincerity

Excitement

Competence

Sophistication

Ruggedness
 Lifestyle Influences

Multi-tasking

Time-starved

Money-constrained
 Bank of Baroda,
India & Faysal Bank
of Pakistan has
extended banking
hours for time-
pressed executives.
 LOHAS (Lifestyles of Health and Sustainability)
Market Segments

• Sustainable Economy
• Healthy Lifestyles
• Ecological Lifestyles
• Alternative Health Care
• Personal Development
Model of Consumer Behavior
Key Psychological Processes

Motivation Perception

Learning Memory
 Motivation

Maslow’s Herzberg’s
Freud’s Hierarchy Two-Factor
Theory of Needs Theory

Behavior Behavior Behavior is

is guided by is driven by guided by
subconscious the lowest, motivating
motivations unmet need and hygiene
factors
Maslow’s Hierarchy of Needs
Herzberg’s Two-Factor Theory
Perception

Selective Attention

Selective Retention

Selective Distortion
*(game!)

Subliminal Perception
(ref. Freud's Theory)
 Learning
 learning induces change in behavior, based on experience
 Most human behavior is “learned”! (although incidental)

 Learning is produced trough the interplay of drives,

stimuli, cues, responses & reinforcement :

 Drive: A strong internal stimulus impelling action

 Cues: Minor stimuli that determine when, where,
and how a person responds
 Generalization/Discrimination: Learning to recognize
differences in sets of similar stimuli and adjusting our
responses accordingly
Hedonic Bias : attributing success to self & failure to
other causes!
 Emotions
(customer response is not always cognitive & rational)
 Memory

• Short term memory (STM)

• Long term memory (LTM)

• Memory encoding
• Memory retrieval

 Brand Associations
State Farm Mental Map (*hypothetical)
Consumer Buying Process

Problem/Need Recognition

Information Search

Evaluation

Purchase Decision

Postpurchase
Behavior
1. Problem /need Recognition
2.a. Sources of Information

Personal Commercial

Public Experiential
 2.b. Successive Sets Involved in Consumer
Decision Making

Market partitioning: the process of identifying the hierarchy of attributes that

guide the consumer decision making sets
3. Evaluation of Alternatives:
(a) Beliefs and Attitudes
3. Evaluation of Alternatives:
(b) Expectancy-Value Model
Stages between Evaluation of Alternatives and
Purchase
 Non-Compensatory Models of Choice

• Conjunctive (chooses first alternative that meets the

minimum acceptable cutoff level for a particular attribute)

• Lexicographic (chooses the best brand on the basis of its

perceived most important attribute)

• Elimination-by-aspects (the consumer compares brands

on a attribute selected and brands not meeting this attribute are
eliminated.

Consumers do not adopt only one type of choice rule and

may combine two or more decision rules.
 Perceived Risk
Functional

Physical

Financial

Social

Psychological

Time
How Customers Use and Dispose of Products
 Rural Consumer Behaviour

• Rural consumers are more brand loyal

• Restrictions on consumption
• Collective consumption behaviour: for family
rather than individual
• Seasonality of consumption based on
seasonality of agricultural production/income
• Specific patterns in the five-stage buying
decision process
 FYI: Other Theories of
Consumer Decision Making
* Heuristics :experience-based techniques for problem
solving, learning, and discovery

Involvement
Decision Heuristics
• Elaboration
• Availability
Likelihood Model
• Representativeness
• Low-involvement
marketing • Anchoring and
strategies adjustment
• Variety-seeking
buying behavior
 Framing

• Choice architecture
• Nudge
 Mental Accounting
(the way consumers code, categorize & evaluate financial outcomes)

• Consumers tend to…

• Segregate gains (categorize benefits to “make sum
greater than the whole”)
• Integrate losses (additional exp over house cost)
• Integrate smaller losses with larger gains
(equated tax payment vs. lumpsum)
• Segregate small gains from large losses
(rebates on big ticket purchases)
 Wake up! for Review…

• How do consumer characteristics influence buying

behavior?
• What major psychological processes influence
consumer responses to the marketing program?
• How do consumers make purchasing decisions?
• In what ways do consumers stray from a deliberate
rational decision process?