1. Analyzing Consumer Market

2. Analyzing Consumer Markets What influences consumer behavior? Social Personal Cultural The Buying Decision Process: The Five Stage Model Problem Recognition Information Search Evaluation of Alternatives Purchase Decision Post Purchase Behavior

3. Consumer Behavior Consumer behavior is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants.

4. What Influences Consumer Behavior?

5. What Is Culture? Culture is the fundamental determinant of a person’s wants and behaviors acquired through socialization processes with family and other key institutions.

6. Subcultures Nationalities Religions Racial groups Geographic regions Each culture consists of smaller subcultures that provide more specific identification and socialization for their members.

7. Social Factors Reference groups Family Social roles Statuses

8. Reference Groups A person’s reference groups are all the groups that have a direct (face-to-face) or indirect influence on their attitudes or behavior. Membership groups – direct influence Primary groups – interact continuously, family friends, neighbors, coworkers Secondary groups – trade unions, religious groups Aspirational groups – we hope to join Dis-associative groups – we don’t want to get associated with “Marketers need to reach and influence opinion leaders of the reference groups”

9. Family – most influential primary reference group  Family of orientation: parents and siblings  Family of procreation: spouse and children  Teen and Young Adults spend 120 billion dollars a year  2/3 of 13-21 age group influence in purchase of of audio/video equipment, software and vacations

11. Age and Stage of Lifecycle

12. Occupation and Economic Circumstances Marketers try to identify the occupational groups that have above-average interest in their products and services. Product and brand choice are also affected by economic circumstances—spendable income, savings and assets, debts, borrowing power, and attitudes toward spending and saving—to a great extent.

13. Personality Personality refers to a set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli. Personality can be a useful variable in analyzing consumer brand choices.

14. Brand Personality Sincerity – Campbell’s Excitement - MTV Competence - CNN Sophistication - Blackberry Ruggedness – Levis These brands will, in theory, attract users high on the same traits.

15. Model of Consumer Behavior

16. The Buying Decision Process: Five Stage Model

17. Figure 5.4 Consumer Buying Process Problem Recognition Information Search Evaluation of alternatives Purchase Decision Postpurchase Behavior

18. Problem Recognition By Internal Stimuli – thirst, hunger By External Stimuli – advertisement Marketers need to identify what triggers a particular need by gathering information from customers.

19. Information Search: Sources of Information CommercialPersonal PublicExperiential The personal sources include family, friends, neighbors, acquaintances. Commercial sources include advertising, Web sites, salespersons, dealers, packaging, and displays. Public sources refer to mass media and consumer-rating organizations. Experiential sources refer to the consumers’ experiences handling, examining, and using the product.

20. Successive Sets in Decision Making

21. Evaluation of Alternatives Based on the values that are important to the customers they evaluate Belief and Attitudes Expectancy Value Model – consumer’s evaluation of products and services by combining brand beliefs and their importance

22. A Consumer’s Brand Beliefs about Laptop Computers

23. Steps Between Alternative Evaluation and Purchase

24. Perceived Risk A consumer’s decision to modify, postpone, or avoid a purchase decision is heavily influenced by one or more types of perceived risk: 1. Functional risk—The product does not perform to expectations. 2. Physical risk—The product poses a threat to the physical well- being or health of the user or others. 3. Financial risk—The product is not worth the price paid. 4. Social risk—The product results in embarrassment in front of others. 5. Psychological risk—The product affects the mental well-being of the user. 6. Time risk—The failure of the product results in an opportunity cost of finding another satisfactory product

25. Post Purchase Behavior Post Purchase Satisfaction – disappoint or delight – expectation vs. performance Post Purchase Actions – a satisfied customer buys product, dissatisfied Voice option Exit option Post Purchase Uses and Disposals

26. Analyzing Business Markets

27. Organization What is Organizational Buying? Business Buying Vs. Consumer Market Buying Situations System Buying and Selling Participants in the Business Buying Process The Buying Center Buying Center Influences The Purchasing /Procurement Process Stages in Buying Process Managing Business to Business Customer Relationship

28. Many principles of basic marketing also applies to business marketers like building strong relationship with customers etc. but they also face some unique considerations in selling to other business, that is what we will try to assess and be prepared for!

29. What Is Organizational Buying? Organizational buying refers to the decision- making process by which formal organizations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers.

30. Participants in the Business Buying Process

31. The Buying Center Initiators are users or others in the organization who request that something be purchased. Users are those who will use the product or service. In many cases, the users initiate the buying proposal and help define the product requirements. Influencers are people who influence the buying decision, often by helping define specifications and providing information for evaluating alternatives. Deciders are people who decide on product requirements or on suppliers.

32. The Buying Center Approvers are people who authorize the proposed actions of deciders or buyers. Buyers are people who have formal authority to select the supplier and arrange the purchase terms. Buyers may help shape product specifications, but they play their major role in selecting vendors and negotiating. Gatekeepers are people who have the power to prevent sellers or information from reaching members of the buying center.

33. Stages in the Buying Process: Buyphases Problem recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order-routine specification Performance review

34. Problem Recognition Internal (new product development ideas, unsatisfactory purchase) or External Stimuli (trade shows, sales representative)

35. General Need Description and Product Specification Buyers need to determine product’s general characteristics and required quantity Product Value Analysis – an approach to cost reduction that studies, whether components can be re-designed or standardized or made by cheaper method of production without adversely impacting product performance – can me competitive advantage for sellers – HP won ISRI’s first Design for Recycling Award

36. Supplier Search: Forms of Electronic Marketplaces Catalog sites Vertical markets Pure play auction sites Spot markets Private exchanges Barter markets Buying alliances

37. Proposal Solicitation Invite qualified Suppliers to submit proposal After analyzing, invite the best one to make presentation

38. Order Routine Specification Orders can be made routine at times. Final negotiation on technical specification, the quantity needed, the expected time of delivery, return policies, warranties so on.

39. Performance Review Buyers periodically review performance of chosen suppliers

40. Next Class Consumer Behavior Exercise Marketing Plan – Phase 1

41. Thank you!