Consumer Markets and Consumer Buyer Behaviour Lecture 3 January 27, 2012

Class Objectives for Today

Identify the Major Models of Consumer Behaviour Outline the Major Characteristics Affecting Consumer Behaviour Distinguish the Major Consumer Buying Roles Explain the Buyer Decision Process

CONSUMER BUYING BEHAVIOUR

Marketers are forced to understand and be cognizant of the buying behavior of the consumer, especially with todays technologically savvy and well informed consumers. Consumer buyer behaviour refers to the buying behaviour of final consumers individuals and households who buy goods and services for personal consumption. All of these final consumers combine to make up the consumer market.

CONSUMER BUYING BEHAVIOUR

Consumer market refers .. to all the individuals and households who buy or acquire goods and services for personal consumption. Consumers may make many buying decisions every day and hence consumer buyer behaviour and the consumer market are very dynamic. Marketers can study actual consumer purchases to find out what they buy, where and how much.

CONSUMER BUYING BEHAVIOUR

Consumers buying behavior is impacted by: 1. Consumer characteristics Consumer Psychology Consumer purchases are influenced strongly by: cultural, social, personal and Psychology characteristics

2.

CONSUMER BUYING BEHAVIOUR impacted by:

1. Consumer Characteristics I.) Cultural II). Learning II). Social III). Perception III). Personal IV). Memory

2. Consumer Psychology
I). Motivation

1. Consumer Characteristics
Cultural Factors
These refer to beliefs, perceptions, values, wants and normative patterns of behavior that is transmitted to the individual by society from family and other important institutions. Culture is the most basic cause of a persons wants and behaviour. Human behaviour is largely learned.

Culture is transmitted from generation to generation via:

i) ii) iii) iv) v) vi)

Family Church School Groups Media Peers

Consumer Characteristics Culture

Impact on marketing:
Both culture and subculture will impact the buying behaviour of consumers. Consumer products/services choice, use and buying patterns are overwhelming impacted by the cultural exposure of the consumer. Companies that are able to absorb multicultural activities and strategies in their overall marketing programs are at an

advantage in capitalizing on the great potential of this factor

Sub Culture
Many brands target specific Asian Americans most subcultures: affluent 15 mil- $500 bil in spending money expected to Hispanics 50 mill- $950 increase to $750 bill in 2013 mill buying po3wer expected to increase $1.4 tr-2013 Mature markets(baby boomers - By 2015 50 75 African American annual 40% of adult consumers buying $913 bil increase to $1.2 trill- 2013

Consumer Characteristics Social

 Social factors
Social forces represent: all the forces that will allow for the social development and maturity of the individual. They are closely intertwined in the cultural background of the individual.

These include: Reference groups Social roles Status Family

1. Consumer Characteristics
Social
Reference groups All the groups that have direct or indirect impact on an individuals attitudes and behavior
Groups with direct influence are membership groups and are two types:

i) Primary
-family, friends, neighbours, co-workers, etc.

ii) Secondary
- religious, professional groups, etc.

1. Consumer Characteristics Social

Impact on marketing:
Reference groups will influence consumers in three (3) ways: i) Exposing individuals to new lifestyles, behaviors and experiences that will impact attitude towards brands, products, etc. Creating pressure for conformity which may impact product choice, brand and usage rate. Exposing individuals to groups that they are hoping to belong or whose values they reject.

ii) ii)

1. Consumer Characteristics Social

Social roles and status
An individual membership in a group will assign him roles (activities) and each role carries a status.

Impact on Marketing:
Consumers will select products that symbolizes and will communicate their roles And ultimately their status in society. Marketers can maximize on this in branding and positioning of products services to the consumer.

1. Consumer Characteristics
Social
 Family This can be categorized as the most powerful institution of consumer buying in any society. Family structure and organization are implications of socio cultural orientations.
The consumer behaviour is determined by the family that they were exposed to (family orientation) and this behavior is transferred to the family they create (family procreation) Impact on marketing: Changes in family size and structure will result in changes in the buying behavior of the consumer.

1. Consumer Characteristics
Personal Factors
These include: 1. Age, stage, and life cycle (Sony 7 groups) Occupation and economic circumstances Personality and self concept Impact on marketing: A. Peoples purchasing pattern and choice as it relates to products/services will reflect changes as they move from age to age and as they move through life events situations like marriage, childbirth, retirement, etc. B. Economic situations can impact product choice and ultimately demand. Ones occupation may be a strong indicator of product consumption pattern.

2.

3.

4. Lifestyles and value.

1. Consumer Characteristics
Personal
Impact on Marketing:

C. Each person possesses personality characteristics and self concept that will impact his/her buying behavior. Brands are chosen based on how well the product or service fits the personality. brand personality - is in sync with the consumers brand personalitythis refers to the mix of human traits that can be attributed to a particular brand.

1. Consumer Characteristics
Personal
Consumers will more than often select brands that will have brand personality that are consistent with their own: - Actual self - Ideal self concept - Others self concept

1. Consumer Characteristics
Personal
Impact on marketing:

D. Lifestyles and values also help to shape consumers taste and buying patterns. Lifestyle relates to an individuals pattern of living in the world as expressed in activities, interests and opinions. Marketers can aim the brand more closely to reflect the consumers lifestyle or changes within the lifestyle.

2. Consumer Psychology
A persons buying choices are further influenced by four psychological factors:
Motivation Perception Learning Beliefs and Attitudes

a. b. c. d.

2. Consumer Psychology Motivation Motivation A motive is: a need that is sufficiently pressing to direct
the person to seek satisfaction of the need. An aging baby-boomer who buys a sporty convertible might explain that he likes to feel the wind thru his thinning or bald hair or he wants to feel young again
Kotler & Armstrong, (2012) see pg 147

Numerous theories have been tabled to explain this concept which can generally be applied to consumer behaviour.

2. Consumer Psychology Motivation

Maslows Theory of needs Products/services ultimately fit into the overall plan, goals and lives of the consumer base on their situation in the hierarchy of needs.

Hertzbergs Two-factor Theory In selling products, marketers should increase satisfiers and decrease dissatisfiers in order to attract customers.

2.Consumer Psychology Motivation

Freuds Theory Product can meet deeper innate needs of consumer based on motives. Products/services also represent different things to consumer based on the projected needs by the marketer.
Freud-persons do not fully understand their motivation
An aging baby-boomer who buys a sporty convertible might explain that he likes to feel the wind thru his thinning or bald hair or he wants to feel young again

2.Consumer Psychology Perception

Perception
Process by which people select, organize and interpret information to form a meaningful picture of the world
Kotler & Armstrong, (2012)

It is perception and not reality, that consumers respond to which will impact their behavior in the marketplace or marketspace.

2.Consumer Psychology Perception

As it relates to perception, people can form different perceptions of the same stimulus due to perceptual processes :

- Selective attention - Selective distortion - Selective retention - Subliminal (subconscious) perception

2.

Consumer Psychology Perception

Some persons are affected by advertising but does not know it
Subliminal (subconscious)

Research has shown that people are exposed to 3000-5000 messages every day One cant respond to every stimuli, use Selective Attentionscreens out most of the information

perception

2.Consumer Psychology
Learning and Memory
Learning
Learning relates to permanent change in behavior arising from experience.
Learning is reinforced through drives (strong internal stimuli, cues, responses and reinforcement .

Memory
Information and experiences that individuals encounter throughout their lives

Model of Consumer Behaviour

Marketing Stimuli Products & services Price, Distributi on Communic ations
Other Stimuli Economic Technologic al Political Cultural Consumer Psychology Motivation Perception Learning Memory Buying Decision Process Problem recognition Information search Evaluation of Alternatives Decision Post-purchase behavior Purchase Decision Product choice Brand Choice Dealer Choice Purchase Amount Purchase timing Payment Method.

Consumer Characteristics Cultural Social Personal

Summary
Consumer buying are affected by large societal factors. Consumer buyer behaviour is influenced by four key sets of buyer characteristics: cultural, social, personal and psychological. Buying behaviour may vary greatly across different types of products and buying decisions. Consumers undertake complex buying behaviour when they are highly involved in a purchase and perceived significant differences among brands.

Types of Buying Decisions

Buying behaviour different greatly for different products Some purchases are simple, habitual therefore very routine; Others are Complex involving extensive research eg buying a computer or a motor vehicle

Types of Buying Decisions

Complex buying behaviour Buying Behaviour characterised by:
High consumer involvement in a purchase Significant perceived differences among brands

Dissonance reducing buying behaviour Buying Behaviour characterised by:

High consumer involvement in a purchase Few perceived differences among brands

Usually involved if the product is expensive, risky, purchased infrequently & highly self expressive.

Usually involved if the product is expensive, risky, purchased infrequently &

highly self expressive.

Types of Buying Decisions

Habitual buying behaviour Buying Behaviour characterised by:
Low consumer involvement in a purchase Few significantly perceived brand differences

Variety-seeking buying Varietybehaviour Buying Behaviour characterised by:

Low consumer involvement in a purchase Significant perceived brand differences

Purchases are usually low cost, frequently purchased, passive

Consumers can easily switch brands

The Buying Decision process

This process begins long before the actual purchase and continues long after. Sometimes results in the non-purchase of goods and services Marketers therefore must concentrate on the entire process.

The Buying Decision Process

Need Recognition
Post purchase behaviour

Information Search Purchase Decision

Evaluation of alternatives

The Buyer Decision Process

How can marketers learn about the stages in the buying process: Personal purchase experience Interview persons Ask consumers to describe the ideal way to buy product Most consumers go thru the five (5) stage Buying Process

The Buyer Decision Process

1. Need recognition a need occurs when a customer is faced with a problem or a need. A need may occur from two states:  actual state (when a product fails to perform satisfactorily hence a need emerges)  or  desired state (desire for something new) (might be triggered by an advt)

The Buyer Decision Process

2. Information search and evaluation (Consumers actively seeking) Information search in this context relates to: the mental or physical way information is gathered. The search can be: - Internal - External social network sites

The Buying Decision Process

a.

Information evaluation:
The more urgent the need the less evaluation will take place The more significant the product the more evaluation The more complex the alternatives the greater the evaluation

b. c.

The Buying Decision Process

Information is obtained from 4 sources: Advertisement- sales person Commercial advts. Non consumer advt. eg Hospitality rating Apple AA
Personal family friends
Experiential (using the product-risk taking)

The Buying Decision Process

The intensity of the search heightens awareness, knowledge of available brands & features 3. EVALUATION OF ALTERNATIVES Short listing personal criteria Can be subjective (impulsive objective(consumer guides) Careful calculation & logical thinking: i. Trying to satisfy a need ii. Derive benefits from the product iii. Product attributes satisfy needs Eg shoes durability style price

The Buying Decision Process

4. Purchase Decision
The buyers decision about which brand to purchase This is impacted by: Attitude of others (friends) Unanticipated situational factors reduced income Purchase intention Perceived risks (self esteem Evaluation of alternatives

Purchase decision may not always result in actual purchase!!!!!

The Buying Decision Process

4. Post purchase decision These include: a. Post purchase action b. Post purchase satisfaction c. Post purchase use and disposal
Consumer takes further action after the purchase based on satisfaction or dissatisfaction

A gap between expectation and reality results in

Cognitive dissonance (state of mind that customers go thru after a purchase)

Level of dissonance increases with the value of the product.

The Buying Decision Process

Customer satisfaction will result in lasting relationships It is also important that customer satisfaction levels be measured periodically As buyers go thru the buying process some may pass more quickly than others. It depends on the buyer themselves, the products, and the actual buyer situation

The marketers job is to understand : the buyers behaviour at each stage. The attitudes of others, perceived risk, situational factors as well as, the consumers level of post purchase satisfaction & actions

The Buyer Decision Process for New Products

New Product
A good or service or idea that is perceived by some potential customer as new (Kotler/Armstrong) The product may have been on the market before (how do consumers learn about he Adoption process The mental process an individual passes from first hearing about an innovation to final adoption. This is the decision for the user to become a regular user.

Stages in the Adoption Process

Awareness the consumer becomes aware of the innovation but lacks information about it. Interest The consumer is stimulated to seek information about the innovation. Evaluation The consumer decided whether it would make sense to try the new product.
tries the product on a small scale to improve his or her estimate of its value. consumer decides to make full and regular use of the innovation. This progression suggests that the new-product marketer should think about how to facilitate consumer movement through these stages.

Trial The consumer

Adoption The

Stages in the Adoption Process

HYUNDAI ASSURANCE
We got your back for one full year
(customers were protected against lost jobs and incomes

Questions for Review