Download “Understanding Consumers”

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:
 What makes or forces or influences customers to buy?
 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 – 2nd 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
Target Marketing
• Simpler (1) strategy
• More difficult strategy
(multiple markets)
• Reaches more people
• Better focus of company’s
• Reaches a lot who
won’t buy product.
– Time
• Hopes that the right
– Effort
consumers get message
– 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
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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?
 Market
Potential –total revenue that can be gotten
from a market segment.
 Market Share – % of the total market that each
company or product controls.
 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
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