Download consumer ANALYSIS

25-2-2012
Consumer Behavior– you are
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what you buy…
Learning objectives
• Factors that influence consumer behavior.
• Structure of the consumer buying decision process.
• Nature of organizational buying.
• How an understanding of buying processes can be used
in the development of marketing strategy.
• Why relationship marketing is becoming an increasingly
important
strategic
marketing
tool
and
how
a
relationship marketing program can be developed.
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80 per cent of all
new products launched
fail
WHY?
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WHAT WE NEED TO KNOW
• Who is in the market and
what is the extent of their
power with regard to the
organization?
• What do they buy?
• How do they buy?
• When do they buy?
•
Where do they buy?
• What are the customers’
‘hot’ and ‘cold’ spots?
• Why do they buy?
• Who is involved in the
buying?
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Stimulus – response model of
buyer behavior
This model shows that the
marketing and other stimuli
enter the consumer’s “black
box” and produce certain
responses
Marketers must figure
out what is in the
buyer’s black box
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NEW CONSUMER
• Far more demanding
• Far more discriminating
• Much less brand loyal
• Much more willing to complain
than customers in the past.
YOUTH MARKET
➡ Far more media literate
➡ Infinitely more
advertising literate
➡ Much more brand
literate, brand
sophisticated and brand
discriminating
➡ Far more
technologically literate.
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Who buys and uses product / service
• Initiator (identifies need for product /
service)
• Influencer (provides info or preference)
• Decider (decides on spending the money)
• Purchaser (makes the purchase)
• User
Example: hospital food service
•
•
•
•
•
Initiator: dietitian wants better nutrition
Influencer: doctors want happy patients
Decider: administrator wants low cost
Purchaser: agent wants good contract
User: patients want edible food
Example: summer vacation
•
•
•
•
•
Initiator: child wants fun
Influencer: cousin wants place he has found
Decider: father wants low cost
Purchaser: mother wants happy family
User: whole family wants to enjoy
themselves
FACTORS INFLUENCING
CONSUMER BEHAVIOR
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Culture & Subculture
• Culture is the most basic cause of a person's
wants and behavior.
– Culture is learned from family and other important
institutions.
– Culture reflects basic values, perceptions, wants,
and behaviors.
– Cultural shifts create opportunities for new
products or may otherwise influence consumer
behavior.
– Subcultures are of interest to marketers.
Social Class
• People within a particular social class are
more similar than those from different
social classes
• Social class is determined by a series of
variables, such as occupation, income,
education and values, rather than by a single
variable
• Individuals can move from one social class
to another.
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Reference Groups
Family (most important)
Husband, wife, kids
Influencer, buyer, user
Social Factors
Roles and Status
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Reference Group
• Primary membership
groups, which are
generally informal and to
which individuals belong
and within which they
interact. These include
family, neighbors,
colleagues and friends.
• Secondary membership
groups, which tend to be
more formal than primary
groups and within which
less interaction typically
takes place. Included
within these are trade
unions, religious groups
and professional societies.
• Aspirational groups, to
which an individual would
like to belong.
• Dissociative groups,
whose values and
behavior the individual
rejects.
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• Influence of reference group varies with
PLC
• Opinion leaders in reference groups
• It was believed that opinion leadership was
limited primarily to prominent figures
within society, this is no longer seen to be
the case
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Family
• Family of orientation ( parents, sister,
brother)
• Family of procreation (spouse and children)
Husband-dominant
Wife-dominant
Equal
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Wife
Dominant
Relative influence of husbands & wives
Child clothing
Information
search
Final
decision
groceries
Women’s
clothing
Pots & pans
NonRx
lamps
Toys/games
furniture
luggage
carpet
refrigerator
Paint wallpaper
vacations
Men’s leisure clothing
Joint
Men’s business clothing
TV sets
stereo
camera
Financial planning
Family car
Sport equipment
hardware
Lawn mower
Husband
Dominant
Extent of role specialization
100
75
50
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017
Personal Factors
• Age and Life-Cycle Stage
– People change the goods they buy over their
lifetimes.
• Occupation
– Occupation influences the purchase of
clothing and other goods.
• Economic Situation
– Some goods and services are especially
income-sensitive.
Personal Factors
• Lifestyle:
– Pattern of living as
expressed via a person’s
activities, interests, and
opinions.
• VALS:
– Widely used system
– Classifies consumers with
respect to how they spend
their time and money.
Personality and Self-Concept
• Personality refers to the unique psychological characteristics
that lead to relatively consistent and lasting responses to one’s
own environment. Generally defined in terms of traits.
• Brand Personality refers to specific mix of human traits that
may be attributed to a particular brand. For example: Sincerity,
Excitement, Competence, Sophistication, Ruggedness
• Self-concept suggests that people’s possessions contribute to
and reflect their identities. We are what we have.
Psychological factors
– Motivation: needs and motives
– Perception: selective attention, distortion, and
retention
– Learning: drives, stimuli, cues, responses, and
reinforcement
– Beliefs and attitudes
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MOTIVATION
• Biogenic needs and Psychogenic needs
• Marshallian Model : Person’s behavior is
inherently rational and motivated by
economic factors
• Freud’s Theory: psychological factors that
influence behavior are for the most part
unconscious
• Many purchases are made not by need but
by desire for prestige and social standing
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MOTIVATION….. Cont..
Self-Actualization
Esteem needs
Social needs
Safety needs
Physiological
needs
Herzberg Two
Factor theory :
satisfier and
dissatisfier
Maslow’s Hierarchy of Needs
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PERCEPTION
Perception
• The process by which an individual uses
information to create a meaningful picture of
the world by
– selecting,
– organizing
– interpreting
• Perception is important because people
selectively perceive what they want and it
affects how people see risks in a purchase.
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THE BUYING DECISION
PROCESS
•The buying roles within the decision making unit
•Type of buying behavior
•Decision process
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Buying Roles
Other people often influence a consumers purchase
decision. The marketer needs to know which people
are involved in the buying decision and what role
each person plays, so that marketing strategies can
also be aimed at these people. (Kotler et al, 1994).
• Initiator: the person who first suggests or thinks of the idea of buying a
particular product or service.
• Influencer: a person whose views or advice carry weight in making the
final buying decision
• Decider: the person who ultimately makes the final buying decision or
any part of it
• Buyer: the person who physically makes the actual purchase
• User: the person who consumes the product or service
Note: teens are increasingly assuming more of these roles
Think about your past purchase– who was in which role?
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Types of Buying Decision
Behaviors
• Based on:
– Degree of involvement
– Degree of perceived differences between brands
– Influences promotional strategies
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Consumer Decision-Making
Process
Need Recognition
Information Search
Cultural, Social,
Individual and
Psychological
Factors
affect
all steps
Evaluation
of Alternatives
Purchase
Postpurchase
Behavior
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• How do you know when to shop? What are the
triggers that initiate an awareness & search?
• What are the internal & external sources of these
triggers?
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Need Recognition
Marketing helps
consumers recognize
(or create) an imbalance
between present status
and preferred state
• When a current product isn’t
performing properly
• When the consumer is running
out of an product
• When another product
seems State
Preferred
superior to the one currently used
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The information search stage
An internal search involves the
scanning of one's memory to recall previous
experiences or knowledge concerning
solutions to the problem-- often sufficient for
frequently purchased products.
An external search may be necessary
when past experience or knowledge is
insufficient, the risk of making a wrong
purchase decision is high, and/or the cost of
gathering information is low.
Personal sources
(friends and family)
Public sources (rating
services like Consumer
Reports)
Commercial sources
(advertising or sales
people)
The evoked set or choice set
:
a group of brands from which the 36
buyer can choose
CAR /Generator/ University
• Go back to your past purchase– what were the
specific internal and external sources of
information that influenced your decision?
• How do you determine (and rate) the credibility of
these sources?
• What specific information influenced you?
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Evaluative or Choice Criteria
• Criteria are standards and specifications consumer uses in
evaluating products and brands
• E.g. For a car buyer, evaluative criteria are mileage, engine,
social image projection.
• Evaluative criteria may vary from consumer to consumer.
Several evaluative criteria are salient (important) to the
consumer, some are determinant ( they are most important).
This is dynamic.
• The number and type of evaluative criteria may vary by product
. Consumers use more evaluative criteria for high involvement
products as compare to low involvement products.
• Evaluative criteria also change over time.
Factors influencing consumer consideration of
certain brand
• Product’s attributes
• Relative importance to the consumer
• Consumer’s perception of each brand’s
image
• Consumer’s utility function for each of the
attribute
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Marketing Strategy Implication
• Changing the physical product
• Changing belief about the product
(psychological repositioning)
• Changing belief about the competitor’s
product ( competitive repositioning)
• Changing the relative importance of
particular attribute
• Emphasizing ignored product feature
• Changing buyers’ expectations
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Comprehensive Models of
Consumer Behavior
• Nicosia Model
• Engel, Kollat, and Blackwell Model
• The Howard and Sheth Model
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Criticism on Consumer Models?
•
•
•
•
Unrealistic
Too simple
Many purchases are impulsive
Difference between low involvement and
high involvement products purchse
• Consumer often limit their information
processing………
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ORGANIZTIONAL BUYING
BEHAVIOR
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• Who makes up the market?
• What buying decisions do they make?
• Who are the key participants in the buying process?
• What are the principal influences upon the buyer, and
what organizational rules and policies are important?
• What procedures are followed in selecting and
evaluating competitive offerings, and how do buyers
arrive at their decisions?
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Characteristics
• Small but large buyers
• Geographically concentrated
• Close relationship between suppliers and
customers
• Inelastic demand
• Derived demand
• Professional buying
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Types of buying decisions
• Straight rebuy
• Modified rebuy
• New task
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Participants in Business Buyer Behavior
•
Buying center: Decision-making unit of a buying
•
•
organization is called its buying center.
Not a fixed and formally identified unit.
Membership will vary for different products and buying
situations.
•
Buying roles:
– Users: who will actually use the product
– Influencers: who affect the buying decision;they
help define specifications and also provide
information for evaluating alternatives
– Buyers: Who make actual purchase
– Deciders: who have formal or informal power to
select or approve the final suppliers
– Gatekeepers: who control the flow of information
to others
Copyright 2007,
Prentice-Hall Inc.
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Salesperson’s
challenge:
– To understand
who participates,
– What role they
play, and
– How much
influence they
have in the
decision
Types of Buyers
• Loyal buyers, who remain loyal to a source for
considerable periods
• Opportunistic buyers, who choose between sellers on the
basis of who will best further their long-term interests
• Best deal buyers, who concentrate on the best deal
available at the time
• Creative buyers, who tell the seller precisely what they
want in terms of the product, service and price
• Advertising buyers, who demand advertising support as
part of the deal
• Chisellers, who constantly demand extra discounts
• Nuts and bolts buyers, who select products on the basis of
the quality of their construction.
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GROUP ACTIVITY
• Arrange yourself in a group of FIVE.
• You can sit in a circle to interact easily with
your group members.
• Share your group efforts with the class.
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Activity 1
(15 mints)
FACTORS INFLUENCING
CONSUMER BEHAVIOR
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• How might the model shown on previous slide be
used to increase our understanding of consumer
buying patterns for
1.
2.
3.
4.
Food stuffs? [Group 1], [Group 5]
Mobile Phones? [Group 2]
Fashion Clothing? [Group 3]
Cars ? [Group 4]
•
Which are the seemingly most important influences
upon consumer choice in each case? What are the
implications for the marketing planner?
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Activity 2
• Identify examples of the four types of buying
behavior and consider the implications for
marketing planning
1. Complex buying behavior [Gp. 1] [Gp. 5]
2. Variety seeking buying behavior [Gp. 2]
3. Dissonance reducing buying behavior [Gp. 3]
4. Habitual buying behavior [Gp. 4]
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Activity 3
• Case Study – The Consumer is a Rearview
Mirror
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The principal influences on
industrial buyers
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Product Influence on Marketing
Strategy
•
•
•
•
•
Replacement rate
Gross margin
Amount of adjustment
Time of consumption
Amount of searching time
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• Red goods: High replacement rate, Low
on other dimensions
• Orange goods: Medium score on all five
dimensions
• Yellow goods: Low rate of
replacement, high on other
dimensions.
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