easy learning notes understanding market areas work environment learning notes

1. 5. Analyzing Consumer Markets

2. Consumer Behavior
C.B is the study of how individuals,
groups and organizations select, buy, use
and dispose of goods, services, ideas or
experiences to satisfy their needs and
wants.

3. What Influences Consumer Behavior?/Factors
affecting consumer buying behavior
Cultural Factors
Social Factors
Personal Factors

4. Cultural Factors: 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.
• Each Culture consists of smaller
subcultures like nationalities, religions,
geographic regions.

5. Cultural Factors
• Virtually all human societies exhibit social stratification
relatively homogeneous and enduring divisions in a
society.
• Social classes are hierarchically ordered and with
members who share similar values, interests and behavior.
• Indian marketers use SEC, combination of education
and occupation in Urban Areas (A1, A2, B1, B2, C, D, E1 and E2)
• For rural areas, the system uses the occupation of the
chief wage earner of the household and type of house to
classify into four categories R1 to R4.

6. 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, education).
• Individuals can move up or down the
social-class ladder during their lifetimes.

7. 2. Social Factors
Reference
groups
Social
roles
Statuses
Family

8. Reference Groups
Membership groups
a. Primary groups
(continuous and informal interaction)
b. Secondary groups
(formal and less continuous)
Aspirational groups
Dissociative groups

9. Cont’d
• If the reference group influence is strong,
marketers must determine to reach and
influence the group’s opinion leaders.
• Offers informal advice/information about
product.
• Opinion leaders are confident, socially active
and involved with the category.

10. Family
Two families:
1. Family of orientation consists of parents and
siblings.
2. Family of procreation – spouse and children
• Wife can act main purchasing agent for food,
clothing, home improvements products etc.
• For expensive products joint decision making.
• Shift in buying pattern due to children.

11. Roles and Status
What degree of
status is
associated with
various
occupational
roles?
Status symbol products

12. 3. Personal Factors
Age
and
Stage in Life
Cycle
Occupation
And
Economic
Circumstances
Personality
And
Self concept
Lifestyle
and
Values

13. Age and Stage in Life Cycle
• Taste in food, clothes, furniture and recreation is
often related to age.
• Consumption is shaped by family life cycle and
number, age and gender of people in household.
• Marketers should consider critical life events or
transitions for giving rise to new
needs.(marriage, illness, first job, retirement etc)

14. Occupation and Economic Circumstances
• Marketers identify the occupational groups and
tailor the products.
• Product & Brand choice is also affected by income,
debts, borrowing power, savings, assets etc.
• Marketers should take steps to redesign, re-price the
product during economic downturn.

15. Personality & Self Concept
• Personality – set of distinguishing human
psychological traits.
• Eg. Self-confidence, dominance, sociability,
adaptability etc.
• Consumers purchase the brands whose
personalities match with their own.
• Consumers often choose and use brands with a
brand personality consistent with their actual
self-concept or others’ self concept.

16. Brand Personality (Stanford’s Jennifer Aaker)
1.Sincerity (down-to-earth, honest, wholesome, cheerful)
2. Excitement (daring, imaginative, up-to-date)
3. Competence (reliable, intelligent, successful)
4. Sophistication (upper class & charming)
5. Ruggedness (outdoorsy & tough)

18. Lifestyle & Values
Time-constrained
- multitasking
Money-constrained
Lifestyles are shaped by:
Core Values – The belief systems that underlie
attitudes and behaviors.

19. Consumer Buying/Decision Making Process/
The Buying Decision Process: The Five Stage Model
1. Problem Recognition:
• Buyer recognizes a problem or
need triggered by internal or
external stimuli.
2. Information Search:
Two levels of involvement with
search:
1. Heightened attention (mild search)
2. Active information search

20. Cont’d: Sources of Information
Personal – Family, friends, neighbors, acquaintances
Experiential – handling, examining, using the product
Public – mass media, consumer rating organizations
Commercial – Advertising, web sites, dealers, displays
Packaging, salespersons.

21. Search Dynamics: Successive Sets Involved in Consumer
Decision Making
Market partitioning: This process of identifying the hierarchy of
attributes that guide consumer decision making.
• Brand dominant hierarchy and Nation dominant hierarchy

22. 3. Evaluation of Alternatives
• No single process is used by all consumers or by one
consumer in all buying situations.
Evaluation Process:
1. The consumer is trying to satisfy need.
2. The consumer is looking for certain benefits from the product.
3. The consumer sees each product as a bundle of attributes with
varying abilities to satisfy need.
Examples:
Hotels – Location, cleanliness, price, atmosphere
Mouthwash – taste/flavor, price, germ killing capacity, effectiveness
etc.

23. A Consumer’s Evaluation of Brand Beliefs About Laptops
Expectancy-Value Model
The expectancy value model of attitude formation shows that
consumers evaluate products and services by combining their brand
beliefs – the positives and negatives – according to importance.
40% 30%
10%
20%

24. 4. Purchase Decision
• Brand, dealer, quantity, timing and payment method.
Non-compensatory model of consumer choice:
Heuristics (Thumb rule/mental shortcut)
1. Conjunctive heuristics (Minimum cutoff for each attribute)
2. Lexicographic heuristics (Chooses best brand on the basis of
most imp. attribute)
3. Elimination by aspects heuristic (Eliminates brand that do
not meet min. cutoff)

25. INTERVENING FACTORS: Stages between
Purchase intention and Purchase decision

26. Perceived Risk
Functional – Product does not perform up to expectations.
Physical - Threat to physical well-being/health of user
Financial – Product is not worth the price paid
Social – Product results embarrassment in front of others.
Psychological – Affects mental well-being of user.
Time – The failure of the product results in finding another
satisfactory product.
A Consumer’s decision to modify, postpone or avoid a purchase
decision is influenced by perceived risk.

27. 5. Post purchase Behavior
• Post Purchase Satisfaction
Satisfaction reflects a person’s judgments of a product’s
perceived performance in relationship to expectations.
Performance < Expectations : Disappointed
Performance = Expectations : Satisfied
Performance > Expectations : Delighted
• Post Purchase Actions
• Post Purchase Use and Disposal

28. Fig 6.7 How Customers Use and Dispose of Products

29. Key Psychological Processes
Fig 6.1 - Model of Consumer Behavior (Stimuli-Response model)

30. Key Psychological Processes
Motivation
(Freud, Maslow,
Herzberg)
Memory
Learning
Perception

31. Motivation: Freud’s theory
• Sigmund Freud assumed that psychological forces
shaping people’s behavior are largely unconscious.
• A person cannot fully understand his or her own
Motivations.
• For examining specific brands, one may react not only
to their stated capabilities but also less conscious cues
like shape, size, weight, color, material, brand name.
• Use of laddering technique, in-depth interviews can be
used to trace motivation.

32. Maslow’s Hierarchy of Needs
• Human needs are arranged in a hierarchy
of importance.
• People will try to satisfy their most
important need first and then try to satisfy
the next most important.
• E.g. A starving man will not take an
interest in the latest happening, nor in
how he is viewed by others, nor even in
whether he is breathing clean air.
• Enough food and water is first important
and the next most important need will
become important.

33. Herzberg’s Two-Factor Theory: Frederick Herzberg
• Fredrick Herzberg differentiates dissatisfiers from satisfiers.
• Dissatisfiers (Factors that cause dissatisfaction)
• Satisfiers (Factors that cause satisfaction)
• The absence of dissatisfiers is not enough to motivate a purchase;
satisfiers is must for purchase.
• Sellers should try to avoid dissatisfiers.
• Sellers should identify the major satisfiers or motivators of
purchase and then supply them.
• E.g A computer that does not come with warranty would be a
dissatisfier and its presence does not act as a satisfier or motivator
of purchase. Ease of use should be a satisfier.

34. Perception
Selective Attention
Subliminal Perception
Selective Retention
Selective Distortion
• Perceptions affect consumers’ actual behavior.
• Perception is the process by which we select, organize
and interpret information to create a meaningful picture
of the world.
• Selective Perception and Subliminal Perception

35. Cont’d
Selective Attention
• People are more likely to notice stimuli that relate to a current need
• People are more likely to notice stimuli they anticipate (expect)
• People are more likely to notice stimuli whose deviations are large in
relationship to the normal size of the stimuli
Selective Distortion
• Tendency to interpret information in a way that fits our preconceptions.
• Information is distorted with prior brand and product beliefs and
expectations.
Selective Retention
• People are likely to remember good points about a product they like
and forget the good points about competing products.

36. Cont’d
Subliminal Perception
• Consumers are not consciously aware of subliminal messages, yet
they affect the behavior.

37. Learning
• Learning induces changes in our behavior arising
from experience.
• Learning is produced through drives, stimuli, cues,
responses and reinforcement.
• Drive is strong internal stimulus impelling action.
• Cues are minor stimuli that determine when, where
and how person responds.
• Generalization and Discrimination
• Hedonic bias – People attribute success to
themselves and failure to others.

38. Memory
• STM and LTM
• Brand association consists of all brand related thoughts, feelings,
perceptions, images, beliefs, attitudes etc. linked to brand node.
• Memory encoding – how and where
information gets into memory.
• Memory retrieval is the way information gets
out of memory.
Three factors:
1. The presence of other product information in
memory.
2. The time between exposure to information and
encoding matters – the longer the time delay,
the weaker the association.
3. Information may be available in memory but
not accessible without proper reminders.

39. THANK YOU