MBA 722: MARKETING MANAGEMENT

 Module 3: B:
ANALYZING CONSUMER
MARKETS

Prepared by:
Anjuli Catolin
Consumer Buyer Behavior
– refers to the buying behavior of final consumers –
individuals and households that buy goods and services
for personal consumption.

Consumer Market
– all individuals or households that buy or acquire
goods and services for personal consumption
I. What motivates the consumers to buy?
MODEL OF BUYER BEHAVIOR
I. What influences Consumer Behavior?
 CULTURAL

Culture

Subculture

Social Class
CULTURAL
Culture

Culture is the most basic cause of a person’s wants and

behavior. Human behavior is largely learned. Growing up in
a society, a child learns basic values, perceptions, wants,
and behaviors from his or her family and other important
institutions. Every group or society has a culture, and
cultural influences on buying behavior may vary greatly
from country to country. A failure to adjust to these
differences can result in ineffective marketing or
embarrassing mistakes.
Subculture
 Each culture contains smaller subcultures, or groups of
people with shared value systems based on common life
experiences and situations. Subcultures include
nationalities, religions, racial groups, and geographic
regions.

Many subcultures make up important market segments,

and marketers often design products and marketing
programs tailored to their needs. Examples of four such
important subculture groups include Hispanic American,
African American, Asian American, and mature
consumers.
Social Class
Almost every society has some form of social class
structure. Social classes are society’s relatively permanent
and ordered divisions whose members share similar
values, interests, and behaviors. Social class is not
determined by a single factor, such as income, but is
measured as a combination of occupation, income,
education, wealth, and other variables.
In some social systems, members of different classes are
reared for certain roles and cannot change their social
positions. Marketers are interested in social class because
people within a given social class tend to exhibit similar
buying behavior.
 SOCIAL
Groups and Social Networks

Family

Social Roles and Status

 Groups and Social Networks

Many small groups influence a person’s behavior. Groups that

have a direct influence and to which a person belongs are
called membership groups.
In contrast, reference groups serve as direct (face-to-face) or
indirect points of comparison or reference in forming a
person’s attitudes or behavior.
People often are influenced by reference groups to which
they do not belong. Marketers try to identify the reference
groups of their target markets. Reference groups expose a
person to new behaviors and lifestyles, influence the person’s
attitudes and self concept, and create pressures to conform
that may affect the person’s product and brand choices.
Word-of-Mouth Influence and Buzz Marketing

Word-of-mouth influence can have a powerful impact on

consumer buying behavior. The personal words and
recommendations of trusted friends, associates, and other
consumers tend to be more credible than those coming
from commercial sources, such as advertisements or
salespeople.

Buzz marketing involves enlisting or even creating opinion

leaders to serve as “brand ambassadors” who spread the
word about a company’s products
Online Social Networks

Online social networks are online communities where

people socialize or exchange information and opinions.
Social networking media range from blogs (Gizmodo) and
message boards (Craigslist) to social networking Web sites
(Facebook and Twitter) and virtual worlds (Second Life).
This new form of consumer-to-consumer and business-to-
consumer dialog has big implications for marketers.
Family

Family members can strongly influence buyer behavior. The

family is the most important consumer buying organization
in society, and it has been researched extensively.
Marketers are interested in the roles and influence of the
husband, wife, and children on the purchase of different
products and services. Husband-wife involvement varies
widely by product category and by stage in the buying
process.
Roles and Status

A person belongs to many groups—family, clubs,

organizations, online communities. The person’s position in
each group can be defined in terms of both role and status.

A role consists of the activities people are expected to

perform according to the people around them. Each role
carries a status reflecting the general esteem given to it by
society. People usually choose products appropriate to their
roles and status.
 PERSONAL

Age and Life-Cycle Stage

Occupation

Economic Situation

Lifestyle

Personality and Self-Concept

II. Personal Factors

Age and Life-Cycle Stage

People change the goods and services they buy over their
lifetimes. Tastes in food, clothes, furniture, and recreation are
often age related. Buying is also shaped by the stage of the
family life cycle—the stages through which families might
pass as they mature over time. Life stage changes usually
result from demographics and life-changing events—
marriage, having children, purchasing a home, divorce,
children going to college, changes in personal income, moving
out of the house, and retirement. Marketers often define
their target markets in terms of life-cycle stage and develop
appropriate products and marketing plans for each stage.
Occupation
A person’s occupation affects the goods and services
bought. Blue-collar workers tend to buy more rugged work
clothes, whereas executives buy more business suits.
Marketers try to identify the occupational groups that have
an above-average interest in their products and services.

Economic Situation
A person’s economic situation will affect his or her store
and product choices. Marketers watch trends in personal
income, savings, and interest rates. Following the recent
recession, most companies have taken steps to redesign,
reposition, and re-price their products.
Lifestyle

People coming from the same subculture, social class,

and occupation may have quite different lifestyles.
Lifestyle is a person’s pattern of living as expressed in
his or her psychographics. It involves measuring
consumers’ major AIO dimensions—activities (work,
hobbies, shopping, sports, social events), interests
(food, fashion, family, recreation), and opinions (about
themselves, social issues, business, products).
Personality and Self-Concept

Each person’s distinct personality influences his or her

buying behavior. Personality refers to the unique
psychological characteristics that distinguish a person
or group. Personality is usually described in terms of
traits such as self-confidence, dominance, sociability,
autonomy, defensiveness, adaptability, and
aggressiveness. The idea is that brands also have
personalities, and consumers are likely to choose
brands with personalities that match their own.
 PSYCHOLOGICAL

Motivation
Perception
Learning
Beliefs and Attitudes
Motivation

Freudian Motivational Theory

According to Sigmund Freud, people are largely
unconscious about the real psychological forces shaping
their behavior. He saw the person as growing up and
repressing many urges. These urges are never eliminated or
under perfect control; they emerge in dreams, in slips of
the tongue, in neurotic and obsessive behavior, or,
ultimately, in psychoses.
Freud’s theory suggests that a person’s buying decisions are
affected by subconscious motives that even the buyer may
not fully understand.
Maslow’s Hierarchy of Needs
Abraham Maslow sought to explain why people are driven by
particular needs at particular times.
Two Factor Theory
Herzberg developed a theory that stated that there were
certain factors that a business could introduce that would
directly motivate employees to work harder (motivators).
However there were also factors that would de-motivate an
employee if not present but would not in themselves actually
motivate employees to work harder (hygiene factors)
In Marketing Management, this theory distinguishes
dissatisfiers (factors that cause dissatisfaction) from satisfiers
(factors that cause satisfaction).The absence of dissatisfiers is
not enough to motivate a purchase; satisfiers must be present.
Herzberg’s theory has two implications. First, sellers should do
their best to avoid dissatisfiers. Second, the seller should
identify the major satisfiers or motivators of purchase in the
market and then supply them.
Perception

A motivated person is ready to act. How the person acts is

influenced by his or her own perception of the situation. All
of us learn by the flow of information through our five
senses: sight, hearing, smell, touch, and taste. However,
each of us receives, organizes, and interprets this sensory
information in an individual way. Perception is the process
by which people select, organize, and interpret information
to form a meaningful picture of the world.
 Selective attention
Selective distortion
 Selective retention
Learning

When people act, they learn. Learning describes changes in

an individual’s behavior arising from experience. Learning
theorists say that most human behavior is learned.
Learning occurs through the interplay of drives, stimuli,
cues, responses, and reinforcement.
Beliefs and Attitudes

Through doing and learning, people acquire beliefs and

attitudes. These, in turn, influence their buying behavior. A
belief is a descriptive thought that a person has about
something.
 Beliefs may be based on real knowledge, opinion, or faith
and may or may not carry an emotional charge.
Attitude describes a person’s relatively consistent
evaluations, feelings, and tendencies toward an object or
idea. Attitudes put people into a frame of mind of liking or
disliking things, of moving toward or away from them. A
person’s attitudes fit into a pattern; changing one attitude
may require difficult adjustments in many others.
II. TYPES OF BUYING DECISION BEHAVIOR
Complex Buying Behavior

Consumers undertake complex buying behavior when they

are highly involved in a purchase and perceive significant
differences among brands. Consumers may be highly
involved when the product is expensive, risky, purchased
infrequently, and highly self-expressive. Typically, the
consumer has much to learn about the product category.
Dissonance-Reducing Buying Behavior

Dissonance-reducing buying behavior occurs when

consumers are highly involved with an expensive,
infrequent, or risky purchase but see little difference among
brands. For example, consumers buying carpeting may face
a high-involvement decision because carpeting is expensive
and self-expressive. Yet buyers may consider most carpet
brands in a given price range to be the same. In this case,
because perceived brand differences are not large, buyers
may shop around to learn what is available but buy
relatively quickly. They may respond primarily to a good
price or purchase convenience.
 Habitual Buying Behavior

Habitual buying behavior occurs under conditions of low-

consumer involvement and little significant brand
difference. For example, take table salt. Consumers have
little involvement in this product category—they simply go
to the store and reach for a brand. If they keep reaching for
the same brand, it is out of habit rather than strong brand
loyalty. Consumers appear to have low involvement with
most low-cost, frequently purchased products.
Variety-Seeking Buying Behavior

Consumers undertake variety-seeking buying behavior in

situations characterized by low consumer involvement but
significant perceived brand differences. In such cases,
consumers often do a lot of brand switching. Brand
switching occurs for the sake of variety rather than because
of dissatisfaction.
III. THE BUYER DECISION PROCESS

Need Recognition
The buying process starts with need recognition—the buyer
recognizes a problem or need. The need can be triggered by
internal stimuli when one of the person’s normal needs—for
example, hunger or thirst—rises to a level high enough to
become a drive. A need can also be triggered by external
stimuli.
Information Search

An interested consumer may or may not search for

more information. If the consumer’s drive is strong and
a satisfying product is near at hand, he or she is likely to
buy it then. If not, the consumer may store the need in
memory or undertake an information search related to
the need.
Evaluation of Alternatives

How does the consumer choose among alternative

brands? Marketers need to know about alternative
evaluation, that is, how the consumer processes
information to arrive at brand choices. Unfortunately,
consumers do not use a simple and single evaluation
process in all buying situations. Instead, several
evaluation processes are at work. The consumer arrives
at attitudes toward different brands through some
evaluation procedure.
Purchase Decision

In the evaluation stage, the consumer ranks brands and forms

purchase intentions. Generally, the consumer’s purchase
decision will be to buy the most preferred brand, but two
factors can come between the purchase intention and the
purchase decision:

1. The attitudes of others. If someone important to you thinks

that you should buy the lowest priced car, then the chances of
you buying a more expensive car are reduced.
2. Unexpected situational factors. The consumer may form a
purchase intention based on factors such as expected income,
expected price, and expected product benefits.
 Post purchase Behavior

The marketer’s job does not end when the product is bought. After
purchasing the product, the consumer will either be satisfied or
dissatisfied and will engage in postpurchase behavior of interest to
the marketer. What determines whether the buyer is satisfied or
dissatisfied with a purchase? The answer lies in the relationship
between the consumer’s expectations and the product’s perceived
performance.
If the product falls short of expectations, the consumer is
disappointed; if it meets expectations, the consumer is satisfied; if it
exceeds expectations, the consumer is delighted. The larger the gap
between expectations and performance, the greater the consumer’s
dissatisfaction. This suggests that sellers should promise only what
their brands can deliver so that buyers are satisfied.
IV. THE BUYER DECISION PROCESS FOR NEW
PRODUCTS
Consumers go through five stages in the process of adopting a
new product:
Awareness: The consumer becomes aware of the new product
but lacks information about it.
Interest: The consumer seeks information about the new
product.
Evaluation: The consumer considers whether trying the new
product makes sense.
Trial: The consumer tries the new product on a small scale to
improve his or her estimate of its value.
Adoption: The consumer decides to make full and regular use
of the new product.
V. BEHAVIORAL ECONOMICS

Behavioral Economics is the study of psychology as it relates

to the economic decision-making processes of individuals
and institutions. The two most important questions in this
field are:

1. Are economists' assumptions of utility or profit

maximization good approximations of real people's
behavior?

2. Do individuals maximize subjective expected utility?