Consumer Markets and Consumer

Buyer Behavior
 The Marketing Mix
⚫ The tools available to a business to gain the reaction it
is seeking from its target market in relation to its
marketing objectives
⚫ 4Ps – Price, Product, Promotion, Place.
⚫ Traditional 4Ps extended to encompass growth of
service industry to 7Ps
⚫ Price, Product, Promotion, Place, People, Process,
Physical Environment
The Marketing Mix
PRODUCT
 Product Value
⚫ The Value Bundle
Set of tangible and intangible benefits customers
receive from the products and services.
⚫ Value
Customer has perceived benefits and perceived costs of
the purchase
Price
 Price
⚫ Price impacts profit thru the
revenue equation
Profit=Revenue-Cost
Revenue=Price*Quantity
⚫ Price level influences quantity
demanded and supplied of a
product or service
 Pricing Strategies
⚫ Skimming the Market
Introducing a product at a high price for higher initial
profits.

⚫ Penetration Pricing
A product is offered at low price to gain market
acceptance quickly.
 Pricing Strategies
⚫ Psychological Pricing
Establishing prices that are emotionally satisfying
⚫ Cost pricing
Cost-based pricing or cost-plus pricing adds a constant
margin to the base cost of the individual product or
service
⚫ Loss-Leader Pricing
Offering one or more products in a product mix at a
specially reduced price for a limited time.
Promotion
Promotion
⚫ Strategies
to make the consumer
aware of the existence of a
product
or service
⚫ NOT just advertising
 Promotional Decisions
⚫ Communicate the value of the firm’s products and
services.

Promotion Strategy process

Place
 Place
⚫ The means by which products and services get from
producer to consumer and where they can be accessed by
the consumer
⚫ The more places to buy the product and the easier it is made
to buy it, the better for the business (and the consumer?)
 Place Decisions
⚫ Physical Distribution
⚫ Channel Management -Who owns and controls the
product on its journey to the customer?
⚫ Manufacturer-direct channel
⚫ Dealer channel
⚫ Distributor channel
People
 People
⚫ People represent the business
⚫ The image they present can be important
⚫ First contact often human – what is the lasting image they
provide to the customer?
⚫ Extent of training and knowledge
of the product/service concerned
⚫ Mission statement – how relevant?
⚫ Do staff represent the desired culture
of the business?
Process
 Process
⚫ How do people consume services?
⚫ What processes do they have to go through to acquire
the services?
⚫ Where do they find the availability
of the service?
⚫ Contact
⚫ Reminders
⚫ Registration
⚫ Subscription
⚫ Form filling
⚫ Degree of technology
Physical Environment
 Physical Environment
⚫ The ambience, mood or physical presentation of the
environment
⚫ Smart/shabby?
⚫ Trendy/retro/modern/old fashioned?
⚫ Light/dark/bright/subdued?
⚫ Romantic/chic/loud?
⚫ Clean/dirty/unkempt/neat?
⚫ Music?
⚫ Smell?
Consumer Buyer Behavior
Definitions
⚫ Consumer Buying Behavior
⚫ Buying behavior of individuals and households
that buy products for personal consumption.
⚫ Consumer Market
⚫ All individuals/households who buy products
for personal consumption.

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Model of Buyer Behavior
Model of Consumer Behavior
⚫ Stimulus Response Model
⚫ Marketing and other stimuli enter the buyer’s “black
box” and produce certain choice / purchase
responses.
⚫ Marketers must figure out
what is inside of the buyer’s
“black box” and how stimuli
are changed to responses. ?
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Factors Influencing
Consumer Behavior
Characteristics Affecting Consumer
Behavior

Key Factors ⚫ Culture

⚫ Subculture
⚫ Social Class
• Cultural
• Social
• Personal
• Psychological
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Characteristics Affecting Consumer
Behavior

Key Factors ⚫ Groups

⚫ Membership
⚫ Reference
• Cultural ⚫ Aspirational
groups
• Social ⚫ Opinion leaders
⚫ Buzz marketing
• Personal ⚫ Family
• Psychological ⚫ Kids can influence
⚫ Roles and Status
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Characteristics Affecting Consumer
Behavior

Key Factors ⚫ Age and life-cycle

⚫ Occupation
⚫ Economic situation
• Cultural ⚫ Lifestyle
⚫ Activities, interests, and
• Social opinions
⚫ Lifestyle segmentation
• Personal
⚫ Personality and
• Psychological self-concept
⚫ Brand personality

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Characteristics Affecting Consumer
Behavior
Brand Personality Dimensions

• Sincerity • Excitement
• Ruggedness • Competence
• Sophistication

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Think about Tide
detergent.
What brand
personality
seems to
describe Tide
best?
Can you think of
examples of
brands that fit
each personality
type?
Characteristics Affecting Consumer
Behavior
⚫ Motivation
Key Factors ⚫ Needs provide motives
⚫ Motivation research
⚫ Maslow’s hierarchy of needs

• Cultural ⚫ Perception
⚫ Selective attention, selective
distortion, selective retention
• Social ⚫ Learning
⚫ Drives, stimuli, cues, responses
• Personal and reinforcement
⚫ Beliefs and attitudes
• Psychological
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Types of Buying Behavior
The Buyer Decision Process
The Buyer Decision Process
Stages ⚫ Needs can be triggered
by:
⚫ Need recognition ⚫ Internal stimuli
⚫ Information search ⚫ Normal needs become
⚫ Evaluation of strong enough to drive
behavior
alternatives
⚫ External stimuli
⚫ Purchase decision
⚫ Advertisements
⚫ Postpurchase behavior ⚫ Friends of friends

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The Buyer Decision Process
Stages ⚫ Consumers exhibit heightened
attention or actively search for
⚫ Need recognition information.
⚫ Sources of information:
⚫ Information search
⚫ Personal
⚫ Evaluation of ⚫ Commercial
alternatives ⚫ Public

⚫ Purchase decision ⚫ Experiential

⚫ Postpurchase behavior ⚫ Word-of-mouth

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The Buyer Decision Process
Stages ⚫ Evaluation procedure depends
on the consumer and the
buying situation.
⚫ Need recognition
⚫ Most buyers evaluate multiple
⚫ Information search attributes, each of which is
⚫ Evaluation of weighted differently.
alternatives ⚫ At the end of the evaluation
stage, purchase intentions are
⚫ Purchase decision formed.
⚫ Postpurchase behavior

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The Buyer Decision Process
Stages ⚫ Two factors intercede
between purchase
⚫ Need recognition
intentions and the
⚫ Information search
actual decision:
⚫ Evaluation of
alternatives ⚫ Attitudes of others
⚫ Purchase decision ⚫ Unexpected situational
⚫ Postpurchase behavior factors

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The Buyer Decision Process
Stages ⚫ Satisfaction is key:
⚫ Delighted consumers
⚫ Need recognition engage in positive
word-of-mouth.
⚫ Information search ⚫ Unhappy customers tell on
⚫ Evaluation of average 11 other people.
alternatives ⚫ It costs more to attract a
new customer than it does
⚫ Purchase decision
to retain an existing
⚫ Postpurchase behavior customer.
⚫ Cognitive dissonance

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Buyer Decision Process for New
Products

⚫ New Products
⚫ Good, service or idea that
is perceived by customers
as new.

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Buyer Decision Process for New
Products

⚫ Stages in the Adoption

Process
⚫ Marketers should help
consumers move from
awareness to adoption.

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Buyer Decision Process for New
Products
Stages in the Adoption Process

• Awareness • Evaluation
• Interest • Trial
• Adoption

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 Buyer Decision Process for New
Products
⚫ Individual Differences
in Innovativeness
⚫ Consumers can be classified into five adopter categories,
each of which behaves differently toward new products.

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 Figure 6-7:
Adopter Categories Based
on Relative Time of Adoption
Buyer Decision Process for New
Products

⚫ Product
Characteristics and
Adoption
⚫ Five product
characteristics
influence the
adoption rate.
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 Buyer Decision Process
for New Products

Product Characteristics
• Relative Advantage
• Compatibility
• Complexity
• Divisibility
• Communicability
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Buyer Decision Process for New
Products

⚫ International Consumer Behavior

⚫ Values, attitudes and behaviors differ greatly in other
countries.
⚫ Physical differences exist that require changes in the
marketing mix.
⚫ Customs vary from country to country.
⚫ Marketers must decide the degree to which they will
adapt their marketing efforts.

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