The Consumer Decision Making, Segmentation and Target Market selection

Why Consumer Behavior? Consumer behavior consumers make purchase decisions consumers use and dispose of product = HOW

Purchase Example You have decided you need to buy the following: – New laptop – Tablet – A taco – New pair of jeans – Bottle of shampoo – Gnocchi

Consumer Decision Process

A Simple “Value” Example

Social Media Application

Need Recognition Difference between current state and desired state – Physical/Functional – Psychological – Product Issues (running out, try new, need new) Stimuli – External  Marketing  Saw a Wendy’s ad – Internal  YOU  Stomach growling

Information Search Internal – What you know – Previous experience – Information you’ve been made aware of previously External – Research  collect information Other People  Friends, Family, etc. Marketing  Advertising, company websites, etc. Non Marketing  Reviews, specialty sites, etc. Involvement – High – Low Risk – Performance – Social – Financial

Information Search: Involvement High-involvement purchases require: Extensive and informative promotion to target market Low-involvement purchases require: In-store promotion, eye-catching package design, and good displays. Coupons, cents-off, 2-for-1 offers

Evaluation of Alternatives

Attributes Cutoff Criteria Ranking What attributes must it have? Which are more important? Which can you live without?

Evaluation of Alternatives Mentally Taxing  Use of Heuristics (shortcuts) – Price – Brand – Packaging/Presentation

Purchase and Consumption Whether to buy When to buy What to buy (product type and brand) Where to buy (type of retailer, specific retailer, online or in store) How to pay

Post Purchase Did product deliver promise? Was it worth the price? Cognitive Dissonance/Buyers remorse

Influences on CDM Social Factors Individual Factors Psycho- logical Factors Cultural Factors CONSUMER DECISION- MAKING PROCESS BUY / DON’T BUY

Social Factors Reference Groups Direct Face-to-Face membership Primary: small, informal group Secondary: large, formal group Indirect Nonmembership Aspirational Group that someone would like to join Nonaspirational Group with which someone wants to avoid being identified

Social Factors Opinion Leaders Family Members

Psychological Factors Motives Attitudes Perceptions Learning

Motives

Perception Select Organize Interpret Selective Exposure Selective Distortion Selective Retention Consumer notices certain stimuli and ignores others Consumer changes or distorts information that conflicts with feelings or beliefs Consumer changes or distorts information that conflicts with feelings or beliefs Consumer remembers only that information that supports personal beliefs

Why should we care about these? Important attributes Price Brand names Quality and reliability Threshold level of perception Product or repositioning changes Foreign consumer perception Subliminal perception

Attitudes Affect Cognitive Conative Emotions Thoughts Behavior/Action

Individual Factors Age Lifestyle/Personality Lifecycle – Single – Married – Married w/kids – Empty nesters – Retired Age of kids Babies Toddlers Teenagers College

Additionally…. Purchase Situation – What occasion am I buying for? – Who am I buying for? Shopping Situation – Store atmosphere – Salespeople – Crowding – In-Store Demos – Promotions – Packaging Temporal State – mood

SWOT & Industry Analysis SWOT in Table form – Short concise statements Discussion section – Implications of above statements Industry Analysis – Sales – Market share – Trends