Consumer Markets and Consumer Buyer Behavior Chapter Five Consumer Markets and Consumer Buyer Behavior

Consumer Markets and Consumer Buyer Behavior Topic Outline Model of Consumer Behavior Characteristics Affecting Consumer Behavior Types of Buying Decision Behavior The Buyer Decision Process The Buyer Decision Process for New Products

Model of consumer behavior Consumers make many buying decisions everyday and buying decision is the focal point of the marketer’s effort. Marketers can study actual consumer purchases to find out what they buy, where and how much, but learning the why’s of the consumer buying behavior is not easy- the answer is locked deep within the consumer’s mind

Model of Consumer Behavior Consumer buyer behavior refers to the buying behavior of final consumers—individuals and households who buy goods and services for personal consumption Consumer market refers to all of the personal consumption of final consumers Note to Instructor Discussion Question What have you recently purchased that cost over $100? Write down all the reasons you purchased this particular item. Because students are all consumers—it is interesting to start the class with a discussion of products they have recently purchased. When you ask them why they purchased a particular item or product, you can bring them through many topics in this chapter including the characteristics that affect consumer behavior (cultural, social, personal, and psychological). You can also try to determine the process they went through including how and where they searched for information and how they evaluated their alternatives. Finally, ask them how they feel about their purchase (postpurchase behavior). This discussion will lead nicely to the next slide which is the Model of Buyer Behavior.

Model of Consumer Behavior Note to Instructor It is interesting to talk about the buyer’s black box and one of the largest challenges in marketing is to understand what happens in this black box. Students will enjoy this video by Derren Brown. It is unclear how he obtains his results and how scientific this is, but it will certainly have students realize the mystery of the consumer’s brain.

Buyer characteristics and the buyer decision process are two parts of _______. buyer’s black box buyer’s white box buyer’s red box buyer’s shopping box

Buyer characteristics and the buyer decision process are two parts of _______. buyer’s black box buyer’s white box buyer’s red box buyer’s shopping box

Characteristics Affecting Consumer Behavior Factors Influencing Consumer Behavior

Consumer purchases are influenced by cultural, _______, personal, and psychological characteristics. cost social health profit

Consumer purchases are influenced by cultural, _______, personal, and psychological characteristics. cost social health profit

Characteristics Affecting Consumer Behavior Culture is the learned values, perceptions, wants, and behavior from family and other important institutions Every group or society has a culture and cultural influences on buying behavior may vary greatly from one country to another Marketers are always trying to spot cultural shifts in order to discover new products that might be wanted

Characteristics Affecting Consumer Behavior Subculture are groups of people within a culture with shared value systems based on common life experiences and situations Hispanic African American Asian Mature consumers Note to Instructor Discussion Question What subculture do you belong to? How does this influence you as a consumer?

Characteristics Affecting Consumer Behavior Hispanic consumers: one third of the US population Hispanic consumers tend to buy more branded, higher quality products African-American consumers: they are motivated by quality and selection. Brands are important

Characteristics Affecting Consumer Behavior Asian American: they are the second fastest growing population sub segment after the Hispanics. More than 90% of the Asian American Go online regularly and are most comfortable with internet technology such as online banking

Characteristics Affecting Consumer Behavior Mature consumers: very attractive market. The entire U.S baby boom generation, the largest and the wealthiest demographic cohort in the country. Mature consumers are not stuck in their ways

Four examples of subculture groups include Hispanic, African American, Asian American, and ________. middle-class mature consumers RVers echo boomers

Four examples of subculture groups include Hispanic, African American, Asian American, and ________. middle-class mature consumers RVers echo boomers

Groups of people with shared value systems based on common life experiences are called ________. cohorts generations subcultures affiliate groups

Groups of people with shared value systems based on common life experiences are called ________. cohorts generations subcultures affiliate groups

The fastest-growing and most affluent subculture in the United States is the _____ population. Hispanic African American Asian American mature

The fastest-growing and most affluent subculture in the United States is the _____ population. Hispanic African American Asian American mature

Characteristics Affecting Consumer Behavior Social classes are society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors Measured by a combination of occupation, income, education, wealth, and other variables

Characteristics Affecting Consumer Behavior In some social systems, members of different classes are reared for certain roles and cant change their social positions. In other country, however, the lines between social classes are not fixed and rigid, people can move to a higher social class or drop into a lower one.

Characteristics Affecting Consumer Behavior Marketers are interested in social class because within a given social class tend to exhibit similar buying behavior. Social classes show distinct product and brand preferences in areas such as clothing , home furnishings, and automobiles.

Characteristics Affecting Consumer Behavior Note to Instructor The Web link brings you to Rhode Island Housing. This is an example of an organization that targets the lower income groups with housing solutions. It will be interesting to ask the student the challenges in targeting this group for this company. They might realize that high illiteracy rates, non-English speakers, and lower education levels might make it harder for them to be reached and to understand the messages.

Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors is referred to as ________. subculture families social class reference groups

Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors is referred to as ________. subculture families social class reference groups

Which of the following is not one of the major American social classes? Upper class Working class Lower-upper class Lower-working class

Which of the following is not one of the major American social classes? Upper class Working class Lower-upper class Lower-working class

Characteristics Affecting Consumer Behavior Groups and Social Networks Membership Groups Groups with direct influence and to which a person belongs Aspirational Groups Groups an individual wishes to belong to Reference Groups Groups that form a comparison or reference in forming attitudes or behavior Note to Instructor Discussion Question What groups are you a member of and what are your aspirational groups. How does this influence you as a consumers?

Characteristics Affecting Consumer Behavior Groups and Social Networks Word-of-mouth influence and buzz marketing Opinion leaders are people within a reference group who exert social influence on others Also called influentials or leading adopters Marketers identify them to use as brand ambassadors Note to Instructor It is a great idea to click through to the Tremor Web site. It is an excellent example of Buzz marketing. Ask students if they tend to have a “go to” person when they want to purchase. Would they consider themselves opinion leaders? A great group to ask about is middle school aged kids. Who are the opinion leaders here? What qualities do they possess?

A person within a reference group who, because of special skills, knowledge, or other characteristics, exerts social influence on others is called a(n) ________. opinion leader mature consumer marketer upper class citizen

A person within a reference group who, because of special skills, knowledge, or other characteristics, exerts social influence on others is called a(n) ________. opinion leader mature consumer marketer upper class citizen

Characteristics Affecting Consumer Behavior Groups and Social Networks Online Social Networks are online communities where people socialize or exchange information and opinions Include blogs, social networking sites (facebook), virtual worlds (second life) Note to Instructor: Discussion Question How can marketers use these networks? This slide should provide a lively discussion for students because they all are users of social networks. Ask students for examples they have seen or experienced. Then be sure to ask if they think the marketing efforts were effective for the marketer and why? The text gives many examples including Victoria’s Secret on Facebook and Coca Cola in Second Life.

Characteristics Affecting Consumer Behavior Social Factors ( family ) Family is the most important consumer-buying organization in society Marketers are interested in the roles and influence of the husband, wife and children on the purchase of different products and services The wife traditionally has been the main purchasing agent for the family.

Characteristics Affecting Consumer Behavior Social Factors ( family ) Children may also have a strong influence on family buying decisions Studies found that kids influence family decisions about where they take vacations , what cars or cell phones they buy. As a result , marketers of cars , full service restaurants , cell phones are now placing ads on the children oriented TV networks

Characteristics Affecting Consumer Behavior Social Factors (roles and status) Social roles and status are the groups, family, clubs, and organizations that a person belongs to that can define role and social status A role consists of the activities that people expected to perform according to the persons around them Note to Instructor Discussion Question What brands do you purchase because it is what their parents used? Why do you think this occurs?

Characteristics Affecting Consumer Behavior Social Factors (roles and status) Each role carries a status reflecting the general esteem given to it by society. People usually choose products appropriate to their roles and status. Consider the roles a working mother plays

Characteristics Affecting Consumer Behavior 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 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”

Characteristics Affecting Consumer Behavior Personal Factors Traditional family life cycle stages include young singles and married couples with children. The nontraditional stages such as unmarried couples, singles marrying later in life, single parents , extended parents ( those with young adult children returning home ) and others

Characteristics Affecting Consumer Behavior Personal Factors RBC Royal Bank stages Youth: younger than 18 Getting started: 18–35 who are going through first experiences, first credit card, first car , first child Builders: 35–50 in their peak earning years, as they build careers and family, they tend to borrow more than they invest

Characteristics Affecting Consumer Behavior Personal Factors Accumulators: 50–60 Worry about saving for retirement and invested wisely. Preservers: over 60 Want to maximize their retirement income to maintain a desired lifestyle.

Characteristics Affecting Consumer Behavior Personal Factors Occupation affects the goods and services bought by consumers Blue workers tend to buy more rugged work clothes, whereas executives buy more business suits. A company can specialize in making products needed by a given occupational group.

Characteristics Affecting Consumer Behavior Personal Factors Economic situation includes trends in: If economic indicators point to a recession, marketers can take steps to redesign , and reprice their products closely. Personal income Savings Interest rates

Characteristics Affecting Consumer Behavior Personal Factors Lifestyle is a person’s pattern of living as expressed in his or her psychographics Measures a consumer’s AIOs (activities, interests, opinions) to capture information about a person’s pattern of acting and interacting in the environment Note to Instructor Discussion Question What categories of products seem to be targeted to consumer’s lifestyles? They will realize many products in addition to cars including food, cosmetics, shampoo also appeal to a consumer’s lifestyles.

Characteristics Affecting Consumer Behavior Personal Factors Personality and self-concept Personality refers to the unique psychological characteristics that lead to consistent and lasting responses to the consumer’s environment Personality is described in terms of traits . Note to Instructor This PC ad from Fall of 2008 shows how PC’s are a a fit for many personalities even though Mac has run ads which stereotype the user.

Characteristics Affecting Consumer Behavior Personal Factors Dominance Autonomy Defensiveness Adaptability Aggressiveness Note to Instructor It is interesting to talk about brand personalities and ask students the personality of several brands: A brand personality is the specific mix of human traits that may be attributed to a particular brand. One researcher identified five brand personality traits 1. Sincerity (down-to-earth, honest, wholesome, and cheerful) 2. Excitement (daring, spirited, imaginative, and up-to-date) 3. Competence (reliable, intelligent, and successful) 4. Sophistication (upper class and charming) 5. Ruggedness (outdoorsy and tough)

Characteristics Affecting Consumer Behavior A brand personality is the specific mix of the human traits that may be attributed to a particular brand. One researcher identified five brand personality traits: Sincerity ( honest, wholesome, and cheerful) Excitement ( imaginative and up-to date)

Characteristics Affecting Consumer Behavior 3. Competence ( reliable , intelligent and successful ) 4. Sophistication ( upper class and charming) 5. Ruggedness ( tough and outdoorsy)

A person’s _____ is his/her unique set of psychological characteristics that are relatively consistent and lasting. self-esteem self-concept lifestyle personality

A person’s _____ is his/her unique set of psychological characteristics that are relatively consistent and lasting. self-esteem self-concept lifestyle personality

Which of the following is not one of the five brand personality traits? Ruggedness Sophistication Self-concept Sincerity

Which of the following is not one of the five brand personality traits? Ruggedness Sophistication Self-concept Sincerity

Characteristics Affecting Consumer Behavior Psychological Factors Motivation Perception Learning Beliefs and attitudes

Characteristics Affecting Consumer Behavior Psychological Factors Motivation A person has may needs at any given time. Some are biological, arising from the states of tension such as hunger, thirst or discomfort. Others are psychological arising from the need for recognition , esteem , or belonging . A need becomes a motive when it’s aroused to a sufficient level of intensity

Characteristics Affecting Consumer Behavior Psychological Factors Motivation A motive is a need that is sufficiently pressing to direct the person to seek satisfaction Motivation research refers to qualitative research designed to probe consumers’ hidden, subconscious motivations

Characteristics Affecting Consumer Behavior Psychologists have developed theories of human motivation, two of the most popular- the theories of psychologists Frued and Maslow. Frued’s theory suggests that a person’s buying decisions are affected by subconscious motives that even the buyer mayn’t fully understand.

Characteristics Affecting Consumer Behavior Maslow’s Hierarchy of Needs

Maslow’s hierarchy of needs are psychological, safety, ________, esteem, and self-actualization. social economic lifestyle education

Maslow’s hierarchy of needs are psychological, safety, ________, esteem, and self-actualization. social economic lifestyle education

Characteristics Affecting Consumer Behavior Psychological Factors Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world from three perceptual processes Selective attention Selective distortion Selective retention Note to Instructor Discussion Question If you watched television last night, what ads do you remember seeing? Probe to find out why they remember certain ads—was it that they broke through the clutter, that they saw them many times, or that they are in the market for that certain product?

The process by which people select, organize, and interpret information to form a meaningful picture of the world is ________. sensation learning perception motivation

The process by which people select, organize, and interpret information to form a meaningful picture of the world is ________. sensation learning perception motivation

Characteristics Affecting Consumer Behavior Psychological Factors Selective attention is the tendency for people to screen out most of the information to which they are exposed, marketers must work hard to attract the consumer’s attention Selective distortion is the tendency for people to interpret information in a way that will support what they already believe Selective retention is the tendency to remember good points made about a brand they favor and forget good points about competing brands

Characteristics Affecting Consumer Behavior Psychological Factors Learning is the change in an individual’s behavior arising from experience and occurs through interplay of: Drives Stimuli Cues Responses Reinforcement

Characteristics Affecting Consumer Behavior Psychological Factors A drive : a strong internal stimulus that calls for action. A drive becomes a motive when its directed towards a particular stimulus object. Cues are minor stimuli that determine when, where and how the person responds The consumer’s response to his or her interest in buying the product

Characteristics Affecting Consumer Behavior Psychological Factors Beliefs and Attitudes Belief is a descriptive thought that a person has about something based on: Knowledge Opinion Faith

Characteristics Affecting Consumer Behavior Marketers are interested in the beliefs that people formulate about specific products and services, because these beliefs make up product and brand images that affect buying behavior. If some of the beliefs are wrong and prevent purchase , the marketer will want to launch a campaign to correct them.

Characteristics Affecting Consumer Behavior Psychological Factors Attitudes describe a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea

Characteristics Affecting Consumer Behavior Psychological Factors Attitudes put people into a frame of mind of liking or disliking things, or moving toward or away from them Attitudes are difficult to change, a company should usually try to fit its products into existing attitudes rather than an attempt to change the attitudes.

Types of Buying Decision Behavior Complex buying behavior Dissonance-reducing buying behavior Habitual buying behavior Variety-seeking buying behavior

Complex buying behavior When consumers are highly involved in a purchase and perceive significant differences among the brands. Consumers maybe highly involved when the product is expensive, risky and purchased infrequently Marketers need to help buyers learn about product-class attributes& their relative importance. They need to differentiate their brand features, by describing them using print media with long copy

Dissonance-reducing buying behavior Occurs when consumers are highly involved with an expensive , risky purchase but see little differences among brands Consumers might experience post purchase dissonance when they notice certain disadvantages of the purchased brand or hear favorable things about brands not purchased

Habitual buying behavior Occurs under conditions of low consumer involvement and little significant brand difference Consumers appear to have low involvement with most low cost, frequently purchased products Ad repetition creates brand familiarity rather than brand conviction “ consumers don’t form strong attitudes toward a brand, they select the brand because its familiar

Types of Buying Decision Behavior Four Types of Buying Behavior

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 .

A consumer purchasing fine furniture (which is expensive and for which a brand’s name matters) would probably result in ________ buying behavior. dissonance-reducing variety-seeking complex habitual

A consumer purchasing fine furniture (which is expensive and for which a brand’s name matters) would probably result in ________ buying behavior. dissonance-reducing variety-seeking complex habitual

________ buying behavior is characterized by low consumer involvement but significant perceived brand differences. Dissonance-reducing Variety-seeking Complex Habitual

________ buying behavior is characterized by low consumer involvement but significant perceived brand differences. Dissonance-reducing Variety-seeking Complex Habitual

The Buyer Decision Process Buyer Decision Making Process

The Buyer Decision Process Need Recognition Occurs when the buyer recognizes a problem or need triggered by: Internal stimuli External stimuli

The Buyer Decision Process Information Search Sources of Information Personal sources—family and friends Commercial sources—advertising, Internet Public sources—mass media, consumer organizations Experiential sources—handling, examining, using the product

The Buyer Decision Process Evaluation of Alternatives How the consumer processes information to arrive at brand choices Note to Instructor This Web link brings you to PriceGrabber—an online comparison shopping site. What is interesting on this site is on the left hand side, you can search by features. These features help a consumer know how to evaluate a product. For instance, this example is laptop computers and one can search by processing speed, processor type, screen size, etc.

The Buyer Decision Process Purchase Decision The act by the consumer to buy the most preferred brand The purchase decision can be affected by: Attitudes of others Unexpected situational factors

The Buyer Decision Process Post-Purchase Decision The satisfaction or dissatisfaction that the consumer feels about the purchase Relationship between: Consumer’s expectations Product’s perceived performance The larger the gap between expectation and performance, the greater the consumer’s dissatisfaction Cognitive dissonance is the discomfort caused by a post-purchase conflict

The Buyer Decision Process Post-Purchase Decision Customer satisfaction is a key to building profitable relationships with consumers—to keeping and growing consumers and reaping their customer lifetime value

The Buyer Decision Process for New Products Adoption process is the mental process an individual goes through from first learning about an innovation to final regular use. Stages in the process include: Awareness Interest Evaluation Trial Adoption

What are the two largest statistical populations in the adoption process? Innovators and early majority Early adopters and early majority Early majority and late majority Innovators and laggards

What are the two largest statistical populations in the adoption process? Innovators and early majority Early adopters and early majority Early majority and late majority Innovators and laggards

The Buyer Decision Process for New Products Influence of Product Characteristics on Rate of Adoption Relative advantage Compatibility Complexity Divisibility Communicability