1-1 Analyzing Consumer Markets

1-2 Kotler on Marketing The most important thing is to forecast where customers are moving, and be in front of them.

1-3 In this chapter, we focus on the following : – Buyers’ characteristics – Consumer Psychology – Decision Making Process – Types of Decision Behaviour Chapter Objectives

1-4  Cultural Factors  Determinant of person’s wants and behaviour  Social Factors  Reference Groups (all groups that have a direct or indirect influence on person’s behaviour and attitudes  Primary Groups (friends, family neighbours, co-workers) (informal)  Secondary (religious, professional) (formal)  Aspirational Groups  Dissociative Groups  Roles And Status BUYERS’ CHARACTERISTICS

1-5  Personal Factors  Age and Stage in the life cycle  Occupation and Economic Circumstances  Personality and Self Concept  Actual self concept (how one views himself)  Ideal self concept (how one would like to view oneself)  Others’ self concept (how one thinks others see one)  Life style and values BUYERS’ CHARACTERISTICS

1-6 Motivation – Freud’s Theory People’s behaviour are largely unconscious and that a person cannot fully understand his or her own motivation. Size, shape, weight, material, color and brand name can trigger certain associations and emotions. CONSUMER PSYCHOLOGY

1-7 – Maslow’s Theory CONSUMER PSYCHOLOGY People will satisfy important needs first !!

1-8 Perception – Perception is more than reality, as it is perceptions that will affect consumers’ actual behaviour. People can emerge with different perceptions of the same object because of three perceptual processes Selective attention – People are more likely to notice stimuli than relate to a current need – People are more likely to notice stimuli than they anticipate – People are more likely to notice stimuli whose deviations are large in relation to the normal size of the stimuli Selective distortion (interpreting information in a way that will fit our preconceptions) Selective retention CONSUMER PSYCHOLOGY

1-9 Problem Recognition – May be triggered internally or externally Information Search – Heightened attention (simply becoming more receptive) – Active information search (asking people) THE BUYING DECISION PROCESS

1-10 Evaluation of Alternatives – In evaluation, the consumer sees each product as a bundle of attributes with varying abilities for delivering the benefits sought to satisfy this need Cameras: Picture sharpness, camera speed, size, price Hotel: Location, cleanliness, atmosphere, price Purchase Decision – Intervening factors Attitude of others Consumer reports Unanticipated situational factors THE BUYING DECISION PROCESS

1-11 Post Purchase Use and Disposal – Monitoring how buyers use and dispose of the product can help to increase the frequency of purchase by Tying the act of replacing the product to a certain holiday To provide better information as to either – When the product was first used or would need to be replaced – The current level of performance THE BUYING DECISION PROCESS

1-12 High Involvement Low Involvement Significant Differences between Brands Complex buying behavior Variety-seeking buying behavior Few Differences between Brands Dissonance- reducing buying behavior Habitual buying behavior TYPES OF BUYING DECISION BEHAVIOUR Buying behavior differs greatly for a tube of tooth paste, a tennis racket, financial services and a new car.

1-13 High Involvement Low Involvement Significant Differences between Brands Complex buying behavior Variety-seeking buying behavior Few Differences between Brands Dissonance- reducing buying behavior Habitual buying behavior TYPES OF BUYING DECISION BEHAVIOUR

1-14 Consumers undertake complex buying behaviour 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 category and will pass through a learning process Example : Car, Computer Implication: Should help buyers learn about product class attributes. They may motivate sales people to influence the final brand choice. COMPLEX BUYING BEHAVIOUR

1-15 High Involvement Low Involvement Significant Differences between Brands Complex buying behavior Variety-seeking buying behavior Few Differences between Brands Dissonance- reducing buying behavior Habitual buying behavior TYPES OF BUYING DECISION BEHAVIOUR

1-16 DISSONANCE – REDUCING BUYING BEHAVIOR Consumers undertake dissonance reducing behaviour when they are highly involved in a purchase and perceive few differences among brands Consumers may be highly involved when the product is expensive, risky, purchased infrequently and highly self expressive Buyers may consider most brands (in a category) in a given price range to be the same. They may respond primarily to a good price or convenience. After the purchase, consumers might experience post purchase dissonance Example : carpet, medicine Implication: Price / convenience element, and counter dissonance.

1-17 High Involvement Low Involvement Significant Differences between Brands Complex buying behavior Variety-seeking buying behavior Few Differences between Brands Dissonance- reducing buying behavior Habitual buying behavior TYPES OF BUYING DECISION BEHAVIOUR

1-18 HABITUAL BUYING BEHAVIOUR Consumers undertake habitual buying behaviour when they are not much involved in a purchase and perceive few differences among brands Consumers may be not be involved when the product is inexpensive, less risky, purchased frequently and so on. As buyers have little involvement, they simply go to the store and reach for a brand. If they keep on buying the same brand, its out of habbit rather than strong brand loyalty. Consumer do not search extensively and passively receive information. Ad repetition creates brand familiarity rather than conviction. Example : salt, candy, pulses, sugar

1-19 HABITUAL BUYING BEHAVIOUR Implication: – Because of low involvement and few differences, marketers use price and sales promotion to stimulate product trial – In advertising, ad copy should stress only few key points – Visual symbols and imagery are more important as they can be remembered easily – Television is more effective than print media because it is a low involvement medium suitable for passive learning – Can also convert LOW involvement product in to one of HIGHER (or medium) Involvement. By linking the product to some involving issue (cavity) By linking to some personal situation (vitamins, calcium) Strong advertising to trigger strong emotions related to personal values Add important feature

1-20 High Involvement Low Involvement Significant Differences between Brands Complex buying behavior Variety-seeking buying behavior Few Differences between Brands Dissonance- reducing buying behavior Habitual buying behavior TYPES OF BUYING DECISION BEHAVIOUR

1-21 VARIETY-SEEKING BUYING BEHAVIOUR Consumers undertake variety seeking buying behaviour when they are not much involved in a purchase and perceive high differences among brands Consumers may be not be involved when the product is inexpensive, less risky, purchased frequently and so on. Consumers often do a lot of brand switching. Brand switching occurs for the sake of variety rather than dissatisfaction. Example : cookies Implications: – Market leader : Will try to encourage habitual buying bahaviour by dominationg shelf space, various versions, avoiding out stock conditions, frequent reminder advertising. – Market challenger: Lower prices, deals, cupons, free samples, advertising.