Analyzing

Consumer Markets

P.Subburaj
Research Scholar
DoMS,University of Madras
 Chapter Questions

• 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?
 Analysing Customer/Industrial
Markets
 Introduction
 Consumer/Buyer Behaviour
- Models of Consumer Behaviour
- Factors Influencing Behaviour
- Types of Buyer Behaviour
- The Adoption Process
 Organisational/Industrial Buyer Behaviour
- Characteristics of Business Markets
- Models of Organisational Buyer Behaviour
- What buying decisions do Organisational Buyers make?
- Who participates in the Buying Process?
- What are the main influences on Organisational Buyers?
 Consumer Buying Behavior
• Consumer Buying Behavior refers to
the buying behavior of final
consumers (individuals &
households) who buy goods and
services for personal consumption.
• Study consumer behavior to answer:
“How do consumers respond to
marketing efforts the company might
use?”
Crest Used Mobile Phones to Engage
Consumers in Its Irresistibility
Campaign
MODELS OF CONSUMER BEHAVIOUR
The 4 O’s model

In earlier times, marketers could understand consumers well through daily

experience of selling to them. But as organisations and markets have grown in
size, many marketing decision makers have lost contact with these customers and
have to turn to consumer research. The question they need answers are
demonstrated through the concept of the 4 O’s

 What do they buy? - Objects of purchase

 Why do they buy? - Objectives of purchase
 Who buys? - Operation of purchase
 How do they buy? - Organisation of purchase
 When do they buy? - Occasions of purchase

4 O’s frameworks to understanding buyer behaviour

MODELS OF CONSUMER BEHAVIOUR

 Objectives of purchase - Convenience, shopping, speciality goods/services

 Objectives of purchase - Economic, sociological, personal, psychological

 Organisations of purchase - Family, reference group, roles and status

 Operation of purchase - Buyer decision processes

The central question to the above is understanding how consumers respond to various
marketing stimuli that the company may use. The company that really understands how
consumers will respond to different product features, prices and advertising appeals
has a great advantage over its competitors.
 Model of Consumer Behavior
Product Marketing and Economic
Other Stimuli
Price Technological
Place Political
Promotion Cultural

Buyer’s Characteristics
Decision Buyer’s Black Box Affecting
Process Consumer
Behavior

Product Choice Purchase

Buyer’s Response Timing
Brand Choice
Purchase
Dealer Choice Amount
Characteristics Affecting
Consumer Behavior
Culture
Social
Personal
Psychological
Buyer
 What is Culture?

Culture is the fundamental determinant

of a person’s wants and behaviors
acquired through socialization
processes with family and other key
institutions.
Factors Affecting Consumer Behavior:
Culture
• Most basic cause of a person's wants and
behavior.
• Values
• Perceptions
Subculture Social Class
• Groups of people with shared • People within a social class
value systems based on common tend to exhibit similar buying
life experiences. behavior.
• Hispanic Consumers • Occupation
• African American Consumers • Income
• Asian American Consumers • Education
• Mature Consumers • Wealth
 Subcultures

Nationalities

Religions

Racial groups

Geographic regions
Social Classes

Upper uppers
Lower uppers
Upper middles
Middle class
Working class
Upper lowers
Lower lowers
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
 Factors Affecting Consumer Behavior:
Social
Groups
•Membership
•Reference

Family
•Husband, wife, kids
•Influencer, buyer, user Social Factors

Roles and Status

Factors Affecting Consumer Behavior:
Personal
Personal Influences

Age and Family Life Cycle

Occupation
Stage

Economic Situation Personality & Self-Concept

Lifestyle Identification

Activities Opinions

Interests
Factors Affecting Consumer Behavior:
Psychological

Motivation

Beliefs and Psychological

Factors Perception
Attitudes

Learning
 Family Distinctions
Affecting Buying Decisions

• Family of Orientation
• Family of Procreation
Radio Shack Targets Women with
Female Store Managers
Roles and Status

What degree of status is

associated with various
occupational roles?
 Personal Factors

Age
Self- Life cycle
concept stage

Lifestyle Occupation

Values Wealth
Personality
The Family Life Cycle
 Lifestyle Influences

Multi-tasking

Time-starved

Money-constrained
Table 6.2 LOHAS (Lifestyles of Health
and Sustainability) Market Segments
• Sustainable Economy
• Healthy Lifestyles
• Ecological Lifestyles
• Alternative Health Care
• Personal Development
 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
 Types of Buying Decisions

High Low
Involvement Involvement
Significant Complex Variety-
differences Buying Seeking
between Behavior Behavior
brands
Few Dissonance- Habitual
differences Reducing Buying Buying
between Behavior Behavior
brands
The Buyer Decision Process

Need Recognition

Information Search

Evaluation of Alternatives

Purchase Decision

Postpurchase Behavior
The Buyer Decision Process
Step 1. Need Recognition

Need Recognition
Difference between an actual state and a desired state

Internal Stimuli External Stimuli

• Hunger • TV advertising

• Thirst • Magazine ad
• A person’s normal
• Radio slogan
needs
•Stimuli in the
environment
The Buyer Decision Process
Step 2. Information Search

Personal Sources •Family, friends, neighbors

•Most influential source of
information

Commercial Sources •Advertising, salespeople

•Receives most information
from these sources

Public Sources •Mass Media

•Consumer-rating groups

•Handling the product

Experiential Sources •Examining the product
•Using the product
The Buyer Decision Process
Step 3. Evaluation of Alternatives
Product Attributes
Evaluation of Quality, Price, & Features

Degree of Importance
Which attributes matter most to me?

Brand Beliefs
What do I believe about each available brand?

Total Product Satisfaction

Based on what I’m looking for, how satisfied
would I be with each product?

Evaluation Procedures
Choosing a product (and brand) based on one
or more attributes.
The Buyer Decision Process
Step 4. Purchase Decision

Purchase Intention
Desire to buy the most preferred brand

Attitudes Unexpected
of others situational
factors

Purchase Decision
The Buyer Decision Process
Step 5. Post purchase Behavior

Consumer’s Expectations of
Product’s Performance

Product’s Perceived
Performance

Satisfied Dissatisfied
Customer! Customer

Cognitive Dissonance
Stages in the Adoption Process

Awareness

Interest

Evaluation

Trial

Adoption
Adoption of Innovations in New Products
Percentage of Adopters

Early Majority Late Majority

Innovators

Early
34% 34% Laggards
Adopters

13.5% 16%
2.5% Time of Adoption
Early Late
 Influences on the Rate of Adoption
of New Products
Communicability Relative Advantage
Can results be easily Is the innovation
observed or described superior to existing
to others? products?

Product
Divisibility Characteristics Compatibility
Can the innovation Does the innovation
be used on a fit the values and
trial basis? experience of the
target market?
Complexity
Is the innovation
difficult to
understand or use?
Perception

Selective Attention

Selective Retention

Selective Distortion

Subliminal Perception
Figure 6.3 State Farm Mental Map
Bahlsen Uses Crunchy Sounds to
Encode Brand Associations
Figure 6.4 Consumer Buying Process

Problem Recognition

Information Search

Evaluation

Purchase Decision

Postpurchase
Behavior
Problem Recognition
Sources of Information

Personal Commercial

Public Experiential
Figure 6.5 Successive Sets Involved in
Consumer Decision Making
Table 6.4 A Consumer’s Evaluation of
Brand Beliefs About Laptops
Figure 6.6 Stages between Evaluation
of Alternatives and Purchase
Non-Compensatory Models of Choice

• Conjunctive
• Lexicographic
• Elimination-by-aspects
Perceived Risk
Functional

Physical

Financial

Social

Psychological

Time
Figure 6.7 How Customers Use and
Dispose of Products
 Other Theories of
Consumer Decision Making

Involvement Decision Heuristics

• Elaboration • Availability
Likelihood Model • Representativeness
• Low-involvement • Anchoring and
marketing adjustment
strategies
• Variety-seeking
buying behavior
 Mental Accounting

• Consumers tend to…

• Segregate gains
• Integrate losses
• Integrate smaller losses with larger gains
• Segregate small gains from large losses
 Marketing Debate

 Is target marketing ever bad?

Take a position:
1. Targeting minorities is exploitive.
or
2. Targeting minorities is a sound
business practice.
Thank You