Chapter

Analyzing
Consumer
Markets

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Two Diff Categories of Consumers
 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…
Models of Buyer / (Consumer)
behavior
Figure 3.1 Model of Consumer Behavior
Factors Influencing
Consumer Behavior
 What Influences Consumer
Behavior?
• Cultural factors

– Culture

– Subcultures

– Social classes

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 1. 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.
i.e. Value, Preferences, Perception and
Behavior is formed depending on the
culture
 1.A Subcultures :
More Specific Identification & Socialization of members

Nationalities

Religions

Racial groups

Geographic regions
 1.B Social Classes:
are Homogenous social stratifications in society whose
members share similar values, Interests and Behaviour.

Determined : Education  Occupation Income

Upper uppers
Lower uppers
Upper middles
Middle class
Working class
Upper lowers
Lower lowers
Characteristics of Social Classes

• Within a class, people tend to behave

alike
• Social class conveys perceptions of
inferior or superior position
• Class may be indicated by a cluster of
variables (occupation, income, wealth)
• Class designation is mobile over time
Factors Influencing
Consumer Behavior
 What Influences Consumer
Behavior?
2) Social factors

Reference groups

Cliques

Family

Roles and status

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2.A Reference Groups: Influences
 Exposes an Individual to New behaviour and life style
Attitude and self concept
They creat pressure for conformity that affects product and brand choices

OPINION
LEADERS
2.B Family
2.C Roles : Activities a person is expected to perform
2.D Status
What degree of status is
associated with various
occupational roles?
Factors Influencing
Consumer Behavior
 What Influences Consumer
Behavior?
• 3) Personal factors
– Age/stage in life cycle
– Occupation and
economic
circumstances
– Personality and self-
concept
– Lifestyle and values

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 3. Personal Factors

Age
Self- Life cycle
concept stage

Lifestyle Occupation

Values Wealth
Personality
The Family Life Cycle
Brand Personality

Sincerity

Excitement

Competence

Sophistication

Ruggedness
 Lifestyle Influences :
Activity, Interest & Openion (AIO)

Multi-tasking

Time-starved

Money-constrained
 Faysal Bank of
Pakistan has
extended
banking hours
for time-pressed
executives.
Factors Influencing
Consumer Behavior
Figure 3.1 Model of Consumer Behavior
Key Psychological Processes

Motivation

Memory Perception

Emotions Learning

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 Motivation

Maslow’s Herzberg’s
Freud’s Hierarchy Two-Factor
Theory of Needs Theory

Behavior Behavior Behavior is

is guided by is driven by guided by
subconscious the lowest, motivating
motivations unmet need and hygiene
factors
Maslow’s Hierarchy of Needs
Herzberg’s Two-Factor Theory
 Key Psychological Processes
• Perception
– The process by
which we select,
organize, and
interpret information
inputs to create a
meaningful picture
of the world

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Perception

Selective Attention

Selective Distortion

Selective Retention

Subliminal Perception
Neuromarketing
 Key Psychological Processes
• Emotions

– Many different
kinds of emotions
can be linked to
brands

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 Learning

• We Act …We learn

• Learning induces changes in our behavior arising from
experience
• Learning is produced through the interplay of Drives,
Stimuli, cues, responses and reinforcement
• Drives :- is a strong internal stimulus impelling action
• Stimuli :- is an input to the sensory Organ
• Cues: are minor stimuli that determine when, where and
how a person responds
Generalization v/s/ Discrimination

More emphasis on Cognitive approach : - Hedonic Bias

 Memory

Data Input

Forgotten Forgotten Forgotten

/Lost /Lost /Lost
 Associative Network Memory /
(ANM) model
• Nodes : - are stored information ..
connected by
• Links are the connecting strings that
vary in strength
• Brand Association consists of all brand
related thoughts, feelings, perception,
images, experience, belief, attitude and so
on that become linked to the brand node
Associative Network Memory /
(ANM) model contd…
Buying Decision Making Process

Marketer have to undergo the various

influences on buyers and develop an
understanding of how consumers actually
make their decision…
Marketer must identify:
1.Who makes the decision
2.Involvement level in the buying decision
3.Steps in the Buying Process
1. Buying Roles
Figure 3.1 Model of Consumer Behavior
 The Buying
Decision Process
• The consumer typically passes
through five stages
– Problem recognition
– Information search
– Evaluation of alternatives
– Purchase decision
– Postpurchase behavior

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 3 “Stage Model” of
Consumer Buying Decision Process

1.Problem Recognition

2.Information Search

3.Evaluation

4.Purchase Decision

5.Postpurchase Behavior
 3.1 Problem Recognition

• Buying process starts when the buyer

recognizes a problem or need.
External Stimuli:-
Internal Stimuli
3.2 INFORMATION SEARCH

i.Heightened Attention (Milder Search)

ii.Active Information Search

Sources of Information

Personal Commercial

Public Experiential
Successive Sets Involved in
Consumer Decision Making
 Evaluation of Alternatives

Basic concept of Consumer Evaluation Process :

1.Consumer is trying to satisfy the need
2.Consumer is looking for certain benefits from
product solution
3.Consumer see the product as a bundle of
attributes with varying abilities for delivering
the benefits sought to satisfy the need
 Evaluation contd..

• Belief:- is a descriptive thought that a

person holds about something
• Attitude:- are person’s enduring
favorable or unfavorable evaluations,
emotional feeling and action tendencies
toward some object or idea
 EVM: Expectancy Value Model
Attitude towards brands are formed
through attribute evaluation procedure
Computer ATTRIBUTES
Memory Graphics Size & Price (10%)
(40%) (30%) Weight
(20%)
A 8 9 6 9
B 7 7 7 7
C 10 4 3 2
D 5 3 8 5

Computer A : 0.4x8 + 0.3x9 + 0.2x6 + 0.1x9 = 8

Computer B :------------------------------------------ =7
Computer C :------------------------------------------ =6
Computer D :------------------------------------------ =5
 Compensatory v/s Noncompensatory
Models of Choice
• Compensatory model :- Perceived good things for a
product can help to over come perceived bad things

• Non-Compensatory Models of Choice

Heuristics :- Are Mental Short cuts / Thumb Rule
Conjunctive : Customer Sets Min Acceptable cut off level for each
attribute and choose the first alternative that meets the min standard

Lexicographic :Choose the best brand on the basis of its

perceived most important attribute
Stages between Evaluation of
Alternatives and Purchase
Perceived Risk
Functional

Physical

Financial

Social

Psychological

Time
 The Buying
Decision Process
• Postpurchase behavior
– Postpurchase
satisfaction

– Postpurchase actions

– Postpurchase uses
and disposal

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 THE BUYER DECISION PROCESS
Postpurchase
Behavior
Cognitive dissonance is buyer
discomfort caused by
postpurchase conflict.

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Figure 6.7 How Customers Use and
Dispose of Products
 Moderating Effects on Consumer
Decision Making
• Elaboration Likelihood Model-ELM
– Involvement & Consumer Decision
Making
• Central Route of persuasion -HI
• Peripheral route of Persuasion-LI
• Variety-Seeking Buying Behavior

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 Behavioral Economics
• Decision Heuristics
– Availability heuristic
– Representativeness heuristic
– Anchoring and adjustment heuristic
• Framing
– Mental accounting

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