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Marketing for Engineers

Dr. Karim

Chapter 5:Consumer Markets


and Buyer Behavior

Keyword - Consumer Market


Consumer market refers to all of
the personal consumption of final
consumers.

Introduction
The aim of marketing is to affect how
customers think and act. To affect the
whats,

whens,

behavior,

and

marketers

hows

of

buyer

must

first

understand the whys. In this chapter, we


look at final consumer buying influences
and processes.

C o n s u m e r B e h a v i o r - D e fi n i t i o n
Consumer behavior is defined as activities people undertake
when (1) obtaining, (2) consuming and (3) disposing of products to
satisfy needs and desire.
Consumer behavior includes the study of why, where, how often
and under what conditions consumers consume different products
or brands with the premise that it becomes easier to develop
marketing strategies to influence consumers once a marketer
knows the reasons why people buy specific products or brands.

C o n s u m e r B e h a v i o r - D e fi n i t i o n
Obtaining refers to the activities leading up to
and including the purchase or receipt of a product.
Consuming refers to how, where, when and
under

what

circumstances

consumers

use

products.
Disposing refers to how consumers get rid of
products and packaging.

Historical Approach

Why Study Consumer Behavior?


There are several reasons behind the study of consumer behavior. Below
are some important reasons:
1) Today, businesses around the world recognize that the consumer is not
the king but he is the buddy. In essence, consumer behavior analysis
helps firms to know how to please the buddy, not the king and directly
impact bottom line profits (both interconnected in the long run).
2) The marketing concept stress that a firm should create a
marketing mix that satisfies customers. Therefore, a firm need to
analyse what, where, when and why customers buy.
3)

Understanding

consumer

behavior

is

essential

to

the

development of marketing strategies, especially in pricing,


product

design,

promotion.

segmentation,

targeting,

positioning

and

The Marketing Car


Marketing
manager

Advertising
Distribution

Consumer behavior
the engine of
marketing

Market
research

Factors Affecting Consumer


Behavior
Consumer purchases are influenced strongly by
cultural, social, personal, and psychological
factors, as shown in the next slide.
For the most part, marketers cannot control
such factors, but they must take them into
account.

Factors Affecting Consumer


Behavior
Culture

is

the

learned

perceptions,

wants,

from

and

family

institutions

and

other

values,
behavior
important

Factors 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

Factors Affecting Consumer


Behavior
Social classes are societys 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

Factors Affecting Consumer


Behavior
Groups and Social Networks

Factors 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

Factors 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)

Factors Affecting Consumer Behavior

Social Factors

Family is the most important consumerbuying organization in society


Social roles and status are the groups,
family, clubs, and organizations that a
person belongs to that can define role
and social status

Factors Affecting Consumer


Behavior
Personal Factors

Age and life-cycle stage


RBC Royal Band stages
Youthyounger than 18
Getting started18-35
Builders35-50
Accumulators5060
Preserversover 60

Factors Affecting Consumer


Behavior
Personal Factors

Occupation affects the goods and


services bought by consumers
Economic situation includes trends
in:

Factors Affecting Consumer


Behavior
Personal Factors

Lifestyle is a persons pattern of living


as expressed in his or her
psychographics
Measures a consumers AIOs
(activities, interests, opinions) to
capture information about a persons
pattern of acting and interacting in
the environment

Factors 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 consumers environment

Factors Affecting Consumer


Behavior

Factors Affecting Consumer


Behavior
Psychological Factors

Factors 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

Factors Affecting Consumer


Behavior

Psychological Factors - Perception

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

Factors Affecting Consumer


Behavior
Psychological Factors - Perception

Selective attention is the tendency


for people to screen out most of the
information to which they are exposed
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

Factors Affecting Consumer


Behavior
Psychological Factors - Learning

Learning is the change in an


individuals behavior arising from
experience and occurs through
interplay of:

Factors Affecting Consumer


Behavior
Psychological Factors - Beliefs

Belief is a descriptive thought that a


person has about something based
on:
Knowledge
Opinion
Faith

Factors Affecting Consumer


Behavior
Psychological Factors - Attitudes

Attitudes describe a persons


relatively consistent evaluations,
feelings, and tendencies toward an
object or idea

Types of Buying Decision


Behavior

The Consumer Decision Process


The Consumer Decision Process (CDP) model, represents a road map
of consumer's minds that marketers and managers can use to help
guide product mix, communication, and marketing strategies.
The goal in creating the consumer decision process model was to
analyze how individuals search through facts and influences to make
decisions

that

are

logical

and

consistent

for

them.

A Simplified Version of The Consumer Decision Process

Need Recognition
Search for Information
Pre-purchase Evaluation of Alternatives
Purchase
Consumption
Post-consumption Evaluation
Divestment

St age O ne: N eed Rec ognition


The starting point of any purchase decision is customer
need (or problem) . Need recognition occurs when
an individual perceives a gap between what he
recognizes to be desired versus the existent
state of affairs.

Consumers buy things when they

believe a products ability to solve a problem is worth


more than the cost of buying it, thereby making
recognition of an unmet need the first step in the sale
of a product.
If the perceived gap is low, below a certain level, the need
will be inactive.

N e e d Re c o g n i t i o n
Current State

Desired State

Stage One: Need Recognition(con)

The next slide shows that environmental


influences

and

characteristics

individual

differences

or

(UNCONTROLLABLE

FACTORS) make up only part of a consumers


need, memory also has a large influencing
factor, especially if it is for a product that the
consumer has purchased before.

Need / Problem Recognition

M
E
M
O
R
Y

Environmental Influences
- Culture
- Social Class
- Personal Influence
- Family
- Situation

Need
Recognition
Individual Differences
- Consumer Resources
- Motivation
- Knowledge
- Attitudes
- Personality, Values,
and Lifestyle

Stage Two: Search for


Information

Once need recognition occurs, consumers begin searching


for information and solutions to satisfy their unmet needs.
* Internal retrieving knowledge from memory or
perhaps genetic tendencies.
*

External- collecting information from peers,

family, websites and the marketplace.

Search for Information


Need
Recognition

Internal
Search

M
E
M
O
R
Y

Search

External Search

Environmental
Influences

Individual
Differences

Fa
pe mil
m ers y,
ar ,
ke
tp
la
ce

Search for Information (con)


Internal Search

External Search

Stage Two: Search for Information (con)

External Search: Sources of Information


- Stimuli
1. Non Marketer Dominated
Such as friends, family, opinion leaders, etc...

2. Marketer Dominated
Refers to anything that products suppliers do for purposes
of information and persuasion, such as using advertising,
salespeople, websites, and point-of-sale materials.

External Search: Sources of Information

Information Processing
Beside the external and personal uncontrollable factors
influencing the buying behavior, exposure of customers
to the companys marketing (controllable factor) can
affect the decision-making by providing inputs for the
consumers black box where information is processed
before the final consumers decision is made. The steps
involved in processing information include:
1.

Exposure

First,

information

and

persuasive

communication must reach consumers.


2. Attention The more relevant the message and its
content, the more likely attention will be attracted.

Information Processing(con)
3. Comprehension If attention is attracted, the message is
further analyzed against categories of meaning stored in
memory. The marketer hopes that accurate comprehension
will occur.
4. Acceptance Once comprehension occurs, the message
can be either dismissed as unacceptable or accepted. The
goal of the message is to change existing beliefs and
attitudes , but the message must be accepted before this
can happen.
5. Retention Finally, the goal of any persuader is for this new
information to be accepted and STORED IN MEMORY in such
a way that it is ACCESSIBLE FOR FUTUR USE.

Information Processing
Exposure
Stimuli:
- Marketer
Dominated
- Nonmarketer
Dominated

Attention
Comprehension
Acceptance
Retention

M
E
M
O
R
Y

Examples of Marketer Dominated Stimuli: Ad That


Creates Brand Image

Stage Three: Pre-Purchase Evaluation of Alternatives


In this stage, consumers seek answers to
questions such as what are my options?, and
which is best? when they compare, contrast
and select from various products.
Different consumers employ different evaluative
criteria the standards and specifications used to
compare different products and brands (e.g., price,
reliability, and quality) as potentially the most
important.

Pre-purchase Evaluation of Alternatives based on:

Salient/ important attributes such as price and


reliability are important to the consumer.
Determinant attributes such as a cars style and
finish

usually

determine

which

brand

or

store

consumers choose.
Consumers compare what they know about different
products and brands with what they consider most
important

and

begin

to

narrow

the

field

of

alternatives before they finally resolve to buy one of


them.

Need Recognition
Internal
Search
Exposure
Stimuli

Attention

Comprehension

M
M
R
Y

Retention

Pre-purchase
Evaluation of
Alternatives

Environmental
Influences

E
O

Acceptance

Search

Individual
Differences

Stage Four: Purchase


The next stage of the consumer decision process is purchase. A
consumer might move throughthe first three stages of the decision
process according to plan and intend to purchase a particular
product or brand. But consumers sometimes buy something quite
different from what they intended or opt not to buy at all because
of what happens during the purchase stage. A consumer may
prefer one retailer but choose another because of a sale or a
promotional event at a competitors store, hours of operation,
location or credit facilities. Inside the store, the consumer may talk
with a salesperson who changes his decision, see an end-of-aisle
display that switches his or her brand preference, use a coupon or
price discount, fail to find the intended product or brand, or lack
the money or right credit card to make the purchase.

Need Recognition
Internal
Search
Exposure
Stimuli

Attention

Comprehension

M
M
R
Y

Retention

Pre-purchase
Evaluation of
Alternatives

Environmental
Influences

E
O

Acceptance

Search

Purchase

Individual
Differences

What Car Did The Customer


Buy?

Answer: Ford Focus

Stage Five: Consumption


Consumption - the point at which consumers use the product.
Consumption can either occur immediately or be delayed.
For example, if a consumer sees a sales promotion for frozen
food, he or she may stock up buying more than can be
used in the normal time frame of consumption and requiring
the consumer to warehouse the product in his or her
freezer. How the consumer uses the product can also affect
their evaluation of the product at the Post-consumption
stage (User Guide for best consumption experience). How
the product is cared for can also affect how long the product
will last until the next purchase(Maintenance Guide Increase product life).

Need Recognition
Internal
Search
Exposure
Stimuli

Attention

Comprehension

Search
Pre-purchase
Evaluation of
Alternatives

E
M

Purchase

Acceptance

R
Y

Retention

Environmental
Influences

Consumption

Individual
Differences

Stage Six: Post Consumption Evaluation


Consumers

experience

sense

of

either

satisfaction

or

dissatisfaction.
Satisfaction

occurs

when

consumers

expectations

are

matched by perceived performance.


When

experiences

and

performance

fall

short

of

expectations, dissatisfaction occurs. Did I consider all the


alternatives?, Could I have done better? These types of
questions are Post-purchase regret or cognitive dissonance
and the higher price, the higher the level of cognitive
dissonance.
Whatever is the final outcome, it is significant because the
consumer store this evaluation in his memory and refer to
it in future decisions.

Need Recognition
Internal
Search
Exposure
Stimuli

Attention

Comprehension

Search
Pre-purchase
Evaluation of
Alternatives

Purchase

Individual
Differences

Acceptance

Environmental
Influences

Consumption

Retention
External
Search

Post-consumption
Evaluation
Dissatisfaction

Satisfaction

Post Consumption
Evaluation
Dissatisfaction

Satisfaction

Stage Seven: Divestment (disposal of the product)


Consumers have several options, including complete
disposal, recycling, or remarketing (selling).
In our running example, when the consumer finishes
using the car he purchased, he has to dispose of it
somehow. He can choose to sell it to another consumer,
trade it in for another vehicle, or take it to the junkyard.

Need Recognition
Internal
Search
Exposure
Stimuli

Attention

Comprehension

Search
Pre-purchase
Evaluation of
Alternatives

Purchase

Individual
Differences

Acceptance

Environmental
Influences

Consumption

Retention
External
Search

Post-consumption
Evaluation
Dissatisfaction

Satisfaction

Divestment

ATTENTION !!!
A distinction is frequently made between high and low
involvement purchasing (e.g., having a hair cut Vs
having a medical operation), implying that in
practice the actual buying activity can be less
or more consistent with this model, depending
on the buyers perceived purchasing risks. High or
low degree of involvement is also a question of the
personal, social, and economic significance of the
purchase (e.g., one day Vs twenty days residence at
a hotel; a newspaper Vs a house).

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:

The Buyer Decision Process for


New Products
Influence of Product Characteristics
on Rate of Adoption