Consumer Markets and Consumer Buyer Behavior Chapter 5 Consumer Markets and Consumer Buyer Behavior

Schedule – Before Midterm 4 Oct.8/9 Consumer Markets and Consumer Buyer Behavior Ch.5 Case 3 5 Oct.15/16 Business Markets and Business Buyer Behavior Ch.6 Case 4 6 Oct.22/23 Marketing Information System Ch.4 Case 5

Learning Goals Define the consumer market and construct a model of consumer buyer behavior Name the four factors that influence buyer behavior List and understand the types of buying decision behavior and stages in the process Describe the adoption and diffusion process for new products

Case Study Harley Davidson Measuring Success Currently 22% of all U.S. bike sales Demand above supply Sales doubled in the past 5 years with earnings tripled Building Success Understanding the customers’ emotions and motivation Determining the factors of loyalty Translating this information to effective advertising 5 - 4

Learning Goals Define the consumer market and construct a model of consumer buyer behavior Name the four factors that influence buyer behavior List and understand the types of buying decision behavior and stages in the process Describe the adoption and diffusion process for new products

Definitions Consumer buyer behavior refers to the buying behavior of final consumers – individuals and households who buy goods and services for personal consumption All of these final consumers combine to make up the consumer market

Learning Goals Define the consumer market and construct a model of consumer buyer behavior Name the four factors that influence buyer behavior List and understand the types of buying decision behavior and stages in the process Describe the adoption and diffusion process for new products

Model of Buyer Behavior

Characteristics Affecting Consumer Behavior Culture Forms a person’s wants and behavior Subculture Groups with shared value systems Social Class Society’s divisions who share values, interests and behaviors Key Factors Cultural Social Personal Psychological

Characteristics Affecting Consumer Behavior Groups Membership Reference Aspirational Opinion leaders Buzz marketing Family Many influencers Roles and status Key Factors Cultural Social Personal Psychological

This advertiser knows teens are strongly influenced by groups when purchasing fashion items

Characteristics Affecting Consumer Behavior Age and life cycle Occupation Economic situation Lifestyle Activities, interests and opinions Lifestyle segmentation Personality and self-concept Key Factors Cultural Social Personal Psychological

Personal Factors Family Life Cycle stages throughout which families pass as they mature over time Stages in family life cycle: 1.bachelor stage 2.newly married couples, no children 3.full nest 1; youngest child under 6 4.full nest 2; youngest child 6 or over 5. full nest 3; older married couples with dependent children 6.empty nest 1; older married couples no children with them 7. empty nest 1; older married couples no children at home;retired 8.solitary survivor, working 9.solitary survivor, retired

Personal Factors Personality ğ a person’s unique characteristics that lead to relatively consistent and lasting responses to his environment Self-concept ğ the self image or general picture that people have of themselves

Personal Factors Lifestyle a person’s pattern of living as expressed in his activities, interests and opinions Psychographics ğ technique of measuring lifestyles and developing lifestyle classifications Major dimensions measured are: Activities (work, hobbies, social events, entertainment, shopping, sports,vacation) Interests (family, home, job, recreation, fashion, food, media, achievements) Opinions (themselves, social issues, politics, business, economics, products, future)

Values and Lifestyles (VALS) Actualizers High Resources High Innovation Fulfilleds Achievers Experiencers Makers Believers Strivers Strugglers Low Resources Low Innovation

Brand Personality Dimensions Sincerity Ruggedness Excitement Competence Sophistication

Characteristics Affecting Consumer Behavior Key Factors Motivation Perception Learning Beliefs and attitudes Cultural Social Personal Psychological

Psychological Factors Motivation A motive is a need that is sufficiently pressing to direct the person to seek satisfaction Motivation research is based on Freud. Looks for hidden and subconscious motivation Maslow ordered needs based on how pressing they are to the consumer

Maslow’s Hierarchy of Needs

This ad demonstrates a product meeting physiological and social needs

Discussion What consumer products might fulfill multiple levels of the Hierarchy of Needs? There are many products that fit several levels. Hotels, for instance, will satisfy basic physiological needs, but the best room at the Ritz Carlton may meet many higher levels.

Psychological Factors Perception Perception is the process by which people select, organize, and interpret information. Perception Includes: Selective attention Consumers screen out information Selective distortion People interpret to support beliefs Selective retention People retain points to support attitudes

Discussion Question Perception How many ads were you exposed to today? Which ones do you remember? Why? Did students include Internet ads, logos on clothing, ads in the subway, billboards, logos on drinks, in the classroom, TV or radio ads? This should prompt discussion of selective attention, distortion and retention. Was it that they are loyal to these brands? Did they break through the clutter? Were they bombarded by a particular brand message?

Psychological Factors Learning Learning describes changes in an individual’s behavior arising from experience Learning occurs through Drives Internal stimulus that calls for action Stimuli Objects that move drive to motive Cues Minor stimuli that affect response Reinforcement Feedback on action

Psychological Factors Beliefs and Attitudes a descriptive thought about a brand or service may be based on real knowledge, opinion, or faith Attitude describes a person’s evaluations, feelings and tendencies toward an object or idea They are difficult to change

Learning Goals Define the consumer market and construct a model of consumer buyer behavior Name the four factors that influence buyer behavior List and understand the types of buying decision behavior and stages in the process Describe the adoption and diffusion process for new products

Types of Buying Decision Behavior

The Buying Roles 5 roles people might play in a buying decision Initiator ğ who first gives the idea of buying the product or service Influencer ğwhose view or advice influences the decision Decider ğwho decide on any component of buying decision Buyer ğwho makes the actual purchase User ğwho uses the product or sevice purchased

The Buyer Decision Process

The Buyer Decision Process Needs can be triggered by: Internal stimuli Normal needs become strong enough to drive behavior External stimuli Advertisements Friends of friends Process Stages Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior

The Buyer Decision Process Consumers exhibit heightened attention or actively search for information Sources of information: Personal Commercial Public Experiential Word-of-mouth Process Stages Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior

Information Search Personal Sources Commercial Sources Public Sources Family, friends, neighbors Most effective source of information Advertising, salespeople Receives most information from these sources Experiential Sources Mass Media Consumer-rating groups Handling the product Examining the product Using the product

The Buyer Decision Process Evaluation procedure depends on the consumer and the buying situation. Most buyers evaluate multiple attributes, each of which is weighted differently. At the end of the evaluation stage, purchase intentions are formed. Process Stages Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior

Evaluation of Alternatives Consumer May Use Careful Calculations & Logical Thinking Consumers May Buy on Impulse and Rely on Intuition Consumers May Make Buying Decisions on Their Own. Consumers May Make Buying Decisions Only After Consulting Others. Marketers Must Study Buyers to Find Out How They Evaluate Brand Alternatives

Decision Making Sets Total Set Aware- ness Consid- Set eration Set Choice Set Decision

The Buyer Decision Process Process Stages Two factors intercede between purchase intentions and the actual decision: Attitudes of others Unexpected situational factors Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior

Buyer Decision Process for New Products Good, service or idea that is perceived by customers as new. Stages in the Adoption Process Marketers should help consumers move through these stages.

Stages in the Adoption Process Awareness: Consumer is aware of product, but lacks information. Stages in the Adoption Process Interest: Consumer seeks Information about new product. Evaluation: Consumer considers trying new product. Trial: Consumer tries new product on a small scale. Adoption: Consumer decides to make regular use of product.

Buyer Decision Process for New Products Individual Differences in Innovativeness: Consumers can be classified into five adopter categories, each of which behaves differently toward new products

Adopter Categories Early Majority Late Majority Innovators Early Adopters Percentage of Adopters Laggards 34% 34% 13.5% 16% 2.5% Early Time of Adoption Late

Buyer Decision Process for New Products Product Characteristics influencing the adoption rate: Relative Advantage ğ Is the innovation superior to existing products? Compatibility ğ Does the innovation fit the values and experience of the target market? Complexity ğ Is the innovation difficult to understand or use? Divisibility ğ Can the innovation be used on a trial basis? Communicability ğ Can results be easily observed or described to others?

Buyer Decision Process for New Products International Consumer Behavior Values, attitudes and behaviors differ greatly in other countries. Physical differences exist which require changes in the marketing mix. Customs vary from country to country. Marketers must decide the degree to which they will adapt their marketing efforts.

Discussion Question How is a site like Consumer Reports used in the decision- making process? Go to the site and ask students which type of decision this is best for. They should agree that the site is helpful for highly involved products. It is used in the information search to determine what attributes are important. It then helps them evaluate the alternatives as they can see how the brands compare.

Discussion Question Why might the adoption process be slow for a home robot? Computers are doing more for us at home. We already have TiVo-type products which scan databases and decide what to record. Other products include the Roomba and other home vacuum systems. New robots can conduct an orchestra (Sony) and assist the blind. Source: Business Week Source: Business Week

The Buyer Decision Process Process Stages Satisfaction is important: Delighted consumers engage in positive word-of-mouth. Unhappy customers tell on average 11 other people. Cognitive dissonance is common Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior

Learning Goals Define the consumer market and construct a model of consumer buyer behavior Name the four factors that influence buyer behavior List and understand the types of buying decision behavior and stages in the process Describe the adoption and diffusion process for new products

Ramazan Bayraminiz Kutlu & Mutlu olsun!!! For Next Week Read Chapter 6 Be prepared for case 4 – Kodak discussion