Consumer response to a message is the agenda of the chapter The Consumer Audience Consumer response to a message is the agenda of the chapter

Consumer Behavior What motivates customers as they make purchase decisions? How these factors help them in finding group of people who might profitably target with an advertisement message? Major questions related to buying/purchase How did the purchase process happen? Was it something g u need or just bought that? Were you planning for the product? Did you ask anyone before buying the product? Did you ask someone after you bought that product?

Consumer behavior describes how individuals or groups select, purchase, use or dispose of products Also CB describes the needs that motivate these behaviors Consumers are the people who buy or use products to satisfy their needs and wants Customers are specific types of consumers, they are people who are devoted fans who buy a particular brand or shop at specific store. How to categorize consumers: Divide them by the type of market like B2C & B2B Customers/purchasers or consumers Purchasers and consumers have different needs and wants

Cultural and Social Influence on Consumer Decisions Many factors affect the way we make purchase decisions Culture and society affect your values and opinions Our brought up in a particular family make certain habits and biases. So does your friends and acquaintances. Major forces/factors of culture which affect our decision making process: Culture Social Class Reference Groups Family and Demographics

Culture is made up of: Tangible items like art, literature, building, clothing, furniture, music, functions/gatherings Intangible concepts like history, knowledge, morals, customs, laws etc Culture define way of life of group of people Culture is learned and passed on from one generation to other. Norms is boundary of culture, the source of norms is our values, values depicts our belief system We value honesty, integrity, joint family system etc

Core values of the brand should match core values of the consumer Core values govern attitude and attitude (positive or negative) drives behavior Core values of the brand should match core values of the consumer A sense of belonging Excitement Fun and Enjoyment Warm relationship self-fulfillment respect from others a sense of accomplishment security self- respect Sub cultures divide by age, values, ethnic, etc Corporate culture How company operates…some are formal and some are informal.

The position you and your family occupy within your society Social Class The position you and your family occupy within your society The factors are: Income Wealth Education Family prestige Value of home Neighborhood Different buying patterns of every class

Political parties, religious groups, co-workers, peers etc. Reference Groups A reference group is a group of people we use as a guide for behaviors in specific conditions Political parties, religious groups, co-workers, peers etc. Individuals can be described in terms of their relationship with others: Inner-directed (Individualistic) Outer-directed (group and society) For consumers, reference group have 3 functions: they provide information they serve as means of comparison they offer guidance celebrity endorsement come in that parameter

Family The family is the most important ref group because of its longevity and the intensity of its relationships Lifestyle … the way you spend your time and money and the kind of activities you value Demographics are the statistical, personal, social and economic characteristics used to describe a population including age, gender, education, income, occupation, race, and family size.

Psychological influences that motivate consumers Perception and state of mind State of mind affects the way you perceive information as well as determines your particular pattern of consumer behavior Past experience, opinions, word-of-mouth etc Mental states like anger, fatigue, hunger, excitement, lethargy Needs and Wants Innate needs … biological … primary needs.. Necessary needs to maintain life…food. Water, shelter, sex Acquired needs …are those we learn in response to our culture and environment

Selective perceptions Selective exposure Selective distortion Selective retention Satisfaction If products meets expectations… satisfaction results otherwise dissatisfaction Cognitive dissonance… try to compensate bad experience by not listening to bad words about the products and try to find +ve things Motivation A motiv is an internal force that stimulates you to behave in a particular manner. This force comes from tension when needs remained unfulfilled

Attitude and values Attitude impact on motivation Attitude are learned, can be established, changes, modified, or replaced. Attitude vary in direction and strength… positive/negative or neutral Personality It refers to consistency in behavior in terms of how we react to events and situations and behave in various roles Psychographic influences It refers to lifestyle and psychological characteristics like attitude, interest and opinions AOI (Attitude, opinion and Interest) Lifestyle How people allocate time, money and energy

Behavioral influences on consumer decisions Usage behavior Usage refers to how much of a product category or brand a customer buys Consumers can be described in terms of their relationship with a product category and as well as brand Heavy users mostly buy most of the product Pareto Rule says 80% of the product is bought by 20% users Innovation and adoption The consumer decision process Need recognition Information search Evaluation of alternatives Purchase decision Post purchase evaluation

Steps to Segmentation Identify market type Examples: Homogenous Heterogeneous Examples: Telecom companies launch campaigns Petrol company ads

Steps to Segmentation Identify market type Dividing the market into groups of people with similar characteristics in certain key product-related areas (Segment)

Steps to Segmentation Identify market type Segment Identify the group that will be the most profitable audience / is most likely to respond to the message (Target)

Why Use Segmentation Approach? Precisely match needs & wants of customers with high buying potential Advertising messages Product variations Save on wastage in media plans Generate more sales

Segmentation Approaches Demographics Age & Life Stage Gender Ethnicity Religion Income Education Household Size Psychographics Society/Culture Lifestyle Personality Geographics International National State City Climate Urban/Rural Customer-Oriented Benefits Sought Specific Problems solved by product Specific Benefits offered Behavior Traits Usage Rates User Status Brand Loyalty Product-Oriented

Demographics Are statistical, personal, social & economic characteristics used to describe a population Age Gender Education Income Occupation Race / Ethnicity Family Size

Geographic The area in which the target market lives Urban / Suburban City Province National International Climate

Psychographic Refers to lifestyles & psychological characteristics such as values, attitudes, beliefs, personality, motivations, interests & opinions Activities (Hobbies, shopping, entertainment, social events…) Opinions (Self, social issues, morality, culture, business, religion, environment, society…) Interests (family, job, community, fashion, food, health…) Trends & Fads

Important Components Culture & Values Freedom, independence, individualism, collectivism, achievement, respect, excitement, openness, conservativeness, need for self-fulfillment, long-term orientation, superiority, etc… Reference Groups – guides for behavior Social Class

Usage Behavior How much of a product category or brand a customer buys or may buy or how willing people are to innovate Consumer Categories Based on Product Usage Usage Rates Light Medium Heavy Brand Relationship Non-Users Ex-Users Regulars First-Timers Loyal Users Switchers Innovation Innovators Early Adopters Early Majority Late Majority Laggards

Benefit Segmentation Based on consumers’ needs or problems (or wants) or specific benefits consumers hope to derive

Maslow’s Hierarchy of Needs Primary (Innate) vs. Secondary Needs (acquired) Relevant Products Examples

Other Segmentations Lifestyles Analysis How people allocate time, energy & money VALS – Values & Lifestyle Analysis Sociodemographic Segmentation Baby Boomers, Gen X, Gen Y, Millenium Kids…

Target Profiling Also called Consumer Narrative Descriptions of the target audience that read like a description of someone you know Example (for Fishing Boat Charter): Married men within 35 – 50 year age bracket with kids up to 3 in number aged 6 – 16, upper middle class socio-economic background with income around $90K or more per year. Well settled in their career with white-collar professional jobs. Reside in a coastal area of Florida. Busy schedule and usually pre-plan vacations & value comfort & relaxation over adventure. Vacations are a way to spend quality family time. Want to be role models for their sons and have strong progressive family values… Many have had prior fishing experience…