Analyzing Consumer Markets

Consumer behavior is the study of how individuals, groups and organizations select, but, use and dispose goods services, ideas or experiences to satisfy their needs and wants. A marketer must fully understand both theory and reality of consumer behavior. Consumers make many buying decisions every day. Most large companies research consumer buying decisions in great detail to answer questions about what consumers buy, where they buy, how and how much they buy, when they buy and why they buy. A consumer buyers behavior is influenced by cultural, social and personal factors. Cultural factors exert the broadest and deepest influence. The general question for marketer is, how do consumers respond to various marketing efforts the company might use?

Characteristics affecting consumer behavior

Cultural Factors
Cultural factors exert a broad and deep influence on consumer behavior. The marketers need to understand the role played by the buyers culture, sub culture and social class. Culture A set of basic valves, Perception, wants and behaviors learned by a number of society from family and other important institutions. E.g. In U.S.A. a child is normally learns or is exposed to the following values achievement and success, activity and involvement, efficiency and practicality, progress, maternal comfort, individuals etc. Every group/society has a culture and cultural influences on buyer behavior may vary greatly from country to country. Failure to adjust to these differences can result in ineffective Marketing or mistakes.

E.g. The cultural shift towards greater concern about health and fitness has created a huge industry for health and fitness services. (exercise equipments and clothing , natural food Marketers are always trying to spot cultural shifts in order to discover new products that might be wanted. E.g. The cultural shift towards greater concern about health and fitness has created a huge industry for health and fitness services. (exercise equipments and clothing , natural food)

Sub culture A group of people with shared value systems based on common life experiences and situations. Sub culture includes nationalities, religions, geographic region etc. Many sub cultures make up important market segments and marketers often design products and marketing programs tailored to their needs. E.g. Hispanic consumer African/American Asian American Nature consumer

Social Class Relatively permanent and ordered divisions in a society whose members share similar values, interests and behaviors.

Social Classing not determined by a single factor, such as income, but is measured as a combination of occupation, income, education, wealth and other variables.

Social factors
A consumer behavior also influenced by social factors such as the consumers small groups, family and social roles and status.
Groups

A persons behavior is influenced by many small groups; E.g. Reference group

Family The

family is the most important consumer buying organization in society and it has been researched extensively. Marketers are interested in the roles and influence of the husband, wife and children on the purchase of different products and services. E.g. According to Lowes research women initiate 80% of all homeimprovement purchase.

Role

and status A person belongs to many groups such as family, clubs, organizations. The persons positions in each group can be defined in terms of both role and status. People usually chose products appropriate to their role and status.

Eg - The major American social classes Lower Class Working class Middle class Upper Class Upper lowers 9% 38% Upper Middle 12% Upper Upper 1% Lower Lowers 7% Middle class 32% Lower Uppers 2%

Personal factors
A buyers decisions also are influenced by personal characteristics such as the buyers age and life cycle stage, occupation, economic situation, life style and personality. Age and life cycle stage Consumer buying is shaped by the stage of the family life cycle. Traditional family life cycle stages include young, singles and married couple with children . But today marketers are increasingly catering to new stages such as
Unmarried couples Singles marrying later in life Childless couples Single parents Extended parents (those with

young and adult children)

Occupation A persons occupation affects the goods and services bought. Marketers try to identify the occupational groups that have an above average interest in their products and services. Economic Situation A personal economic situation will affect product choice. Marketers of income sensitive goods watch trends in personal income, savings and interest rates. If economic indicators point to a recession, marketers can take steps to redesign, reposition and re-price the products closely. E.g. Rolex watches High price Timex More affordable watches Lifestyle A persons pattern of living as expressed in his/her activities, interest and opinions (Add the Valls framework) Personality and self concept Each persons personality influences his/her buying behavior. Personality usually describes items of trails such as self-confidence, dominance, sociability, adaptability and

aggressiveness. E.g. Coffee makers have discovered that heavy coffee drinkers tend to be high sociability. Thus to attract custom ers Starbucks, create environment in which people relax and socialize over a cup of coffee.

Psychological Factors
A persons buying choices are further influenced by four major psychological factors such as motivation, perception, learning and beliefs and attitude. Motivation A motive is a need that is sufficiently pressing to direct the person to seek satisfaction. Psychologists have developed theories of human motivation. a) b) Sigmund Freud Abraham Maslow Abraham Maslow Hierarchy of needs Perception A motivated person is ready to act. How the person acts is influenced by his/her own perception of the situation. Perception is the process by which people select, organize and interpret information to form a meaningful picture of the world. There are three perceptual processes: 1.Selective attention 2.Selective distortion 3.Selective retention Selective attention The tendency for people to screen out most of the information to which they are exposed to. E.g. If people expose to 5000 ads per day it is impossible for a person to pay attention to all these. So marketers should work hard to attract consumers attention.
Selection distortion The tendency of people to interpret information in a way that will support what they already believe. E.g. If a consumer distrust a company he might perceive even honest ads from the company as

questionable. Selective retention Consumers are likely to remember good points to make about a brand they favor and to forgot good points made about competing brands. Learning When people act, they learn. Learning describes charges in an individuals behavior arising from experience. E.g. If a consumer buys a digital camera, if the experience is rewarding, the consumer will probably use the cam era more and more. Beliefs and attitudes A belief is a descriptive thought that a person has about something. Belief may be based on real knowledge, opinion or faith and may or may not carry on emotional charge. Attitude A persons consistently favorable or unfavorable evaluations, feelings and tendencies toward an object or idea.

The buyer decision process

Need recognition This is the first stage of the buyer decision process in which the consumers recognize a problem or need. The need can be triggered by internal stimuli when one of the persons norm al needs rises to a level of high enough to become drive. E.g. An advertisement/discussion with friend might get you thin king about buying a new car. Information search The stage of the buyer decision process in which the consumer is search for more information, the consumer may simply have attention or may go into active information search. E.g. If a customer decides to buy a new car, at the least he will probably pay more attention on car ads, cars owned by friends etc. (or read/talk). They can get info from several sources. Personal source (family, friend, neighbor etc.) Commercial sources (advertising, sales people and dealers) Public sources (mass media) Experimental sources (handling, examining) Evaluation or alternatives The stage of the buyer decision process in which the consumer uses information to evaluate alternative brands in the choice set. E.g. It can be price, quality, reputation etc. Marketers should study buyers to find out how they actually evaluate brand alternatives. If they have what evaluative processes go on, marketers can take steps to influence the

buyers decision.

Purchase decision The buyers decision about which brand to purchase. In the evaluation stage consumer ranks brand and forms purchase intentions. In the evaluation stage, the consumer forms preferences among the brands in the choice set. The consumer may also form an intention to buy the most preferred brand. In executing a purchase intention, the consumer may make up to five subdivisions: brand (brand A), dealer (dealer 2), quantity (one computer) timing (weekend), and payment method (Credit card). Intervening Factors Even if consumers form brand evaluations, two general factors can intervene between the purchase intention and the purchase decision. The first is the attitudes of others. The extent to which another persons attitude reduced our preference for an alternative depends on two things: (1) the intensity of the other persons negative attitude toward our preferred alternative and (2) out motivation to comply with the other persons wishes. The second factor is unanticipated situational factors that may erupt to change the purchase by perceived risk. 1. 2. 3. 4. 5. 6. Functional risk The product does not perform up to expectations. Physical risk - The product poses a threat to the physical well-being or health of the use of others. Financial risk The product is not worth the price paid. Social risk: The product results in embarrassment from others. Psychological risk The product affects the mental well-being of the user. Time risk - The failure of the product results in an opportunity cost of finding another satisfactory products.

Postpurchase Behavior The marketers job therefore doesnt end with the purchase. Marketers must monitor postpuchase satisfaction, post purchase actions and post purchase product uses. Postpurchase satisfaction - Satisfaction is a function of the closeness between expectations and the products perceived performance. If performance falls short of expectations, the cosumer is disappointed; if it meets expectations, the consumer is satisfied; if it exceeds expectations, the consumer is delighted. These feelings make a difference in whether the customer buys the product again and talks favorably or unfavorably about it to others. Postpurchase Actions

If the consumer is satisfied, she is more likely to purchase the product again. The satisfied customer will also tend to say good things about the brand to others. On the other hand, dissatisfied consumers may abandon or return the product. The may seek information that confirms its high value. They may take public action by complaining to the company, going to a lawyer, or complaining to other groups (such as business, private, or government agencies). Private actions include deciding to stop buying the product (exit option) or warning friends (voice option).