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Analyzing Consumer Behavior
Chapter Four
Key Learning Points
Concept and activity of market segmentation
Segmentation implementation issues
Understanding consumer motives for buying
behavior
Understanding how consumers make purchase
decisions
Importance of understanding where and when
consumers purchase
Implications for global and technology-based
markets
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Customer Analysis
Customer analysis addresses five
questions:
Who are the current and potential
customers for the product or service?
Why do they buy?
How do they make purchasing decisions?
Where do they buy the product or service
(what channels of distribution are used)?
When do they buy?
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Customer Analysis
Customer analysis should ALSO
study:
Competitors’ customers.
Former customers.
Nonusers.
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Who Are the Customers?
Market segmentation is the key.
Segmentation breaks mass markets
into groups with different buying
habits.
Segmentation schemes are critical in
certain situations.
The segmentation process makes use
of both primary and secondary data.
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Who Are the Customers?
Benefits of market segmentation:
More efficient than mass marketing
Cost
More effective than mass marketing
Customization
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Who Are the Customers?
Single-customer segments make
sense in certain circumstances:
Small number of customers
One-to-one marketing and mass
customization
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Discussion Question
Using one-to-one marketing effectively
requires that marketers have access to
extensive databases.
1. What particular database fields might
Club Med’s marketers use in developing
one-to-one marketing appeals for their
new line of luxury hotels?
2. Can you think of an example of a product
or service that offers consumers mass
customization opportunities? Explain.
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Table 4.1
Geographic & Psychographic
Segmentation Variables
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Table 4.1
Demographic Segmentation Variables
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Table 4.2
Behavioral Variables
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Table 4.3
Consumption Index: Dental Accessories
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Table 4.4
Product Preferences by Stage in the
Family Life Cycle
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Figure 4.1
Generational Cohorts
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Table 4.5
Ethnic Differences in Consumption
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Who Are the Customers?
Psychographics:
VALS is the most popular system.
VALS segments individuals into eight
groups based on:
Primary motivation, and
Resources.
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Who Are the Customers?
VALS Psychographic Groups
Innovators
Thinkers
Experiencers
Achievers
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Believers
Strivers
Makers
Survivors
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Figure 4.2
Sample VALS Questions
See all the items . . .Take the VALS Survey!
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Figure 4.3
How Tech Customers Stack Up
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Discussion Question
Media Junkies are
entertainment oriented,
have high resources, but
are pessimistic toward
new technology.
If you worked for a TV
network website or for
Hulu.com or a TV
network website, would
you target this group?
Why or why not?
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Who Are the Customers?
More on segmentation:
Occasion segmentation can be
profitable.
Geographic, demographic, and usage
are typically used.
More businesses are adding
psychographics.
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Who Are the Customers?
Segmenting in Technology-Based
Markets:
Not all consumers are equally likely to
adopt new innovations.
The diffusion of innovations model
describes how innovations are adopted
throughout the marketplace.
Positive word-of-mouth is often a key
characteristic in new product adoption.
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Figure 4.4
Diffusion of Innovations
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Who Are the Customers?
Marketing Research Implications:
Data Collection
Primary data collected via a survey is
often used to understand customers.
Secondary data should also be explored:
Government: http://www.census.gov/
Trade / professional publications
Syndicated data
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Table 4.6
MRI Travel Data
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Who Are the Customers?
Marketing Research Implications:
Developing Target Markets
Parsimony must be considered.
Selected segmentation scheme must
statistically explain differences in
purchasing behavior or other key
variables.
Behavior = f (segmentation
variables).
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Who Are the Customers?
Marketing Research Implications:
Developing Target Markets
Other considerations when selecting
one or more segments to target:
Segment size
Segment growth rate
Environmental factors associated
with the segment
Potential competitive position
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Illustration Table 4.7
Harley-Davidson Segmentation
Study/Lifestyle Factors
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Illustration Tables 4.8 and 4.9
Harley-Davidson Segmentation Scheme
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Figure 4.6
Simplified Customer Behavior Model
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Why Do Consumers Buy?
The purchase decision process begins
with need recognition.
Maslow’s Hierarchy of Needs:
Five ordered levels of needs
Most relevant for understanding
consumer needs
BENEFITS not attributes are key factor
in motivating consumers to purchase.
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How Do Consumers Make
Purchase Decisions?
Search For Alternatives follows Need
Recognition.
Sources of information may be:
Internal, or
External.
The amount of information search
undertaken is difficult to predict.
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How Do Consumers Make
Purchase Decisions?
Search For Alternatives
Results in the creation of three sets of
options:
Evoked or consideration set
Inert set
Purchase set
Primary research can determine in
which set consumers place the brand.
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How Do Consumers Make
Purchase Decisions?
Evaluating Options in the
Consideration Set:
Product is decomposed into attributes.
Multi-attribute model is used to make
choice.
Four key questions are raised by the
multi-attribute model.
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Key Questions Raised by
the Multi-Attribute Model
Which attributes do customers use to
define a product?
How do we determine how much of
each attribute a brand possesses?
How are the importance weights
determined?
How do customers combine prior
information to make choices?
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Table 4.10
Simplified Customer Behavior Model
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How Do Consumers Make
Purchase Decisions?
Post purchase Behavior:
Consumers form expectations about
the product prior to usage.
Consumers evaluate product during
and after consumption.
Future purchases are highly
dependent on post purchase
evaluation.
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How Do Consumers Make
Purchase Decisions?
External influences help to shape
the way consumers make purchase
decisions.
Key external influences include:
Group influences.
Product class influences.
Situational influences.
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How Do Consumers Make
Purchase Decisions?
Family and Friends:
Example: Family life cycle
Social class:
Upper, middle, working, and lower classes
Culture:
Extremely important in global marketing
See Figure 4.8.
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Figure 4.8
Analysis for Marketing Decisions
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How Do Consumers Make
Purchase Decisions?
Main Elements of Culture
Language
Religion
Values and
attitudes
Education
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Social
organization
Technology
and material
culture
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“Cultural differences are
particularly important in a global
marketing context. The biggest
issue facing companies wanting to
market products in other countries
is the fact that significant
differences in culture can affect the
way customers respond to the
product and the market strategy.”
- Russell S. Winer
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How Do Consumers Make
Purchase Decisions?
Product class influences affecting
technology:
Rogers’ study – five factors identified
Potential for network externalities
Perceived risk
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How Do Consumers Make
Purchase Decisions?
Several situational influences exist:
Physical surroundings
Social surroundings
Temporal factors
Task definitional factors
Antecedent states
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How Do Consumers Make
Purchase Decisions?
Buying Roles in
Group Buying Decisions
Initiator
Influencer
Decider
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Purchaser
User
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Where and When Do
Customers Buy?
Where do customers buy?
When do customers buy?
Understand purchase timing.
Timing issues influence both
marketing and operations.
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Executive Summary
Understanding consumers is critical.
Descriptive information is needed.
Learn the benefits consumers seek.
The buying process is complex.
Understand where consumers buy.
Know when consumers buy.
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