1

6
Analyzing
Consumer Markets
 Sources:

 Text book: Marketing Management. Kotler &

Keller. 14th edition (Global version).
 Internet
 Kotler 14th edition ppt.
 Kotler 13th edition ppt.

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 Roadmap:

 What influences consumer behavior?

Cultural, Social, Personal
 Key Psychological processes
Motivation (Freud, Maslow, Herzberg), Perception, learning,
Emotions, Memory
 The buying decision process
The five-stage model
 Behavioral decision theory and behavioral
economics

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 Chapter Questions

How do consumer characteristics influence



buying behavior?
 What major psychological processes influence
consumer responses to the marketing
program?
 How do consumers make purchasing
decisions?

In what ways do consumers stray from a
deliberate rational decision process?

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 Consumer Behavior : 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.

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 What Influences
Consumer Behavior?

Cultural Factors:
broadest and deepest

Social Factors

Personal Factors

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 What is Culture?

Culture is the fundamental determinant of

a
person’s wants and behaviors acquired
through socialization processes with family
and other key
Cultures differinstitutions.
across the world
(Arabian,
American, European, Asian,…)

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 Subcultures

Each culture consists of smaller subcultures that provide

more specific identification and socialization for their
members.
Nationalities (Arabian culture: Jordanian,


Libyan, Iraqi,…subcultures)
Religions (Muslims, Christians, Jews,…)

Racial groups (Arabs, Kurds, Turkish origin,…)

Geographic regions (North, South, Sea, Desert,

….)

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 Fast Facts About
American Culture

The average American:



 chews 300 sticks of gum a year

 goes to the movies 9 times a year

 takes 4 trips per year

 attends a sporting event 7 times each
year

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 Social Classes: appears as a result of social
stratification, homogeneous divisions, hierarchically ordered,
share same values, interests, and behaviors.

Upper uppers

Lower uppers

Upper middles

Middle

Working

Upper lowers

Lower lowers

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 Social Factors
Reference groups

Family

Social roles

Statuses

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 Reference Groups: All the groups that
have a direct (face to face) or indirect
influence on their attitudes of behavior.
 Membership groups: Direct influence.
A- Primary groups :continuous and informal
communication (family, friends, coworkers,
…)
B- Secondary groups: More formal and less
frequent communication (religious,
professional,
 trade-union
Aspirational groups).
groups: hope to join.
 Dissociative groups: individual rejection.

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 Family Distinctions affecting Buying
Decisions:
Family is the most important consumer buying
organization in the society.
Family of Orientation: parents and siblings (Insurance
example)
Family of procreation: spouse and children. (traditional
purchasing roles are changing and marketers tend now to
focus more on different targets
separately or collectively).

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 Roles and Status

hat degree of status

is
ssociated with various
ccupational roles?

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 Personal Factors

 Age  Personality
 Life cycle stage  Values
 Occupation Lifestyle 

 Wealth  Self-concept

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 Age and Stage of Lifecycle: Newly
weds spend 70 Billion $ in the 1st year after marriage. Also
they buy more in the 1st 6 months than what a family does in 5
years. (P&G, Clorox, Palmolive-Colgate : newly wed kits)

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 Occupation and Economic
Circumstances : Snap fitness showed a
success story during recession times (Fast,
convenient, affordable).

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 Personality and Self concept: Joie de
vivre chain of hotels, restaurants and resorts has an
online personality matchmaker to help the guest select
the most fitting hotel.

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 Brand Personality: consumers tend to
choose brands whose personalities match their own.

 Sincerity: Campbell
 Excitement: MTV
 Competence: CNN
 Sophistication: Rolex
 Ruggedness: Levi’s

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 Lifestyle and values :

Time-Famine: Multitasking

Money-constrained: Low
Cost products (Walmart).

Core values

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 Table 6.2 LOHAS Market Segments
(Lifestyles of
Health and Sustainability)
41 Million people, 209 Billion $ market.The
market for LOHAS products encompasses
organic foods, energy-efficient appliances,
alternative medicine, yoga tapes.
Sustainable Economy

Healthy Lifestyles

Ecological Lifestyles

Alternative Health Care

Personal Development

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 Consumer behavior

The starting point for understanding consumer
behavior is the stimulus-response model shown in
next slide.Marketing and environmental stimuli enter
the consumer’s consciousness, and a set of
psychological processes combine with certain
consumer characteristics to result in decision
processes and purchase decisions. The marketer’s
task is to understand what happens in the consumer’s
consciousness between the arrival of the outside
marketing stimuli and the ultimate purchase decisions.
Four key psychological processes—motivation,
perception, learning, and memory—fundamentally
influence consumer responses.
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 Figure 6.1 Model of
Consumer Behavior

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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 lowest, motivating
motivations unmet need and hygiene
factors

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 Three of the best-known theories of human motivation—those
of Sigmund Freud, Abraham Maslow, and Frederick Herzberg—
carry quite different implications for consumer analysis and
marketing strategy. Sigmund Freud assumed the psychological
forces shaping people’s behavior are largely unconscious, and
that a person cannot fully understand his or her own
motivations. Someone who examines specific brands will react
not only to their stated capabilities, but also to other, less
conscious cues such as shape, size, weight, material, color,
and brand name. Abraham Maslow sought to explain why
people are driven by particular needs at particular times. His
answer is that human needs are arranged in a hierarchy from
most to least pressing—physiological needs, safety needs,
social needs, esteem needs, and self-actualization. We discuss
Maslow’s theory on the next slide. Frederick Herzberg
developed a two-factor theory that distinguishes dissatisfiers
(factors that cause dissatisfaction) from satisfiers (factors that
cause satisfaction). The absence of dissatisfiers is not enough
to motivate a purchase; satisfiers must be present.

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 Maslow’s Hierarchy
Need 5: Art world

Need 3&4: Self

image and how
he’s viewed by
others

Need 2: Clean air

for breathing

Need 1: Food,
water, basics.

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 Perception : is the process by which we
select, organize, and interpret information inputs to
create a meaningful picture of the world
 Selective attention: marketers must work hard
to attract consumers’ notice.
 Selective retention: Likelihood to remember
good points about a product we like and forget
good points about competing products.
 Selective distortion: the tendency to interpret
information in a way that fits our
preconceptions.

subliminal, covert
Subliminal messages
perception: in ads oraim
marketers packaging.
to embed

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 Learning: induces changes in our behavior
arising from experience.

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 Learning

Learning theorists believe learning is produced
through the interplay of drives, stimuli, cues,
responses, and reinforcement.. A drive is a strong
internal stimulus impelling action. Cues are minor
stimuli that determine when, where, and how a person
responds. Suppose you buy an HP computer. If your
experience is rewarding, your response to computers
and HP will be positively reinforced. Later, when you
want to buy a printer, you may assume that because it
makes good computers, HP also makes good printers.
In other words, you generalize your response to
similar stimuli. A countertendency to generalization is
discrimination. Discrimination means we have learned
to recognize differences in sets of similar stimuli and
can
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Hall 6-29
 Emotions

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 Memory: Short and Long term.

Brand associations consist of all brand-related thoughts, feelings,

perceptions, images, experiences, beliefs, attitudes, and so on that become
linked to the brand node.(Associative model).

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 Figure 6.3 State Farm Mental Map

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 Figure 6.4 Consumer Buying Process

Problem Recognition

Information Search

Evaluation of alternatives

Purchase Decision

Postpurchase Behavior

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 Sources of Information

Personal Commercial
Family, Advertising
friends Salesman
Public Experiential
Mass Media Personal

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 Figure 6.5 Successive Sets in
Decision Making

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 Table 6.4 A Consumer’s Brand
Beliefs about Laptop Computers
Expectancy-value model of attitude formation in
decision making.

To find the consumer’s perceived value for each laptop according to the
expectancy-value model, we multiply his/her weights by his/her beliefs
about each computer’s attributes.

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 Figure 6.6 Steps Between
Alternative Evaluation
and Purchase

Attitudes depend on:

intensity of negative
attitude, and the
motivation to comply
with other’s wish.

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 Non-Compensatory Models of Choice

 Conjunctive: the consumer sets a minimum acceptable cutoff

level for each attribute and chooses the first alternative that meets the
minimum standard for all attributes.
Lexicographic: the consumer chooses the best brand on the


basis of its perceived most important attribute.

 Elimination-by-aspects: the consumer compares brands on
an attribute selected probabilistically—where the probability of choosing
an attribute is positively related to its importance—and eliminates brands
that do not meet minimum acceptable cutoffs.

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 Perceived Risk

 Functional:
Not up to expectations

 Physical:
Threatens health
 Financial:
Not worth the price
 Social:
Embarrassment

 Psychological: affects the mental well-being of the user

 Time: The failure of the product results in an opportunity cost of
finding another satisfactory product.
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 Figure 6.7 How Customers
Use or Dispose of Products
A key driver of sales frequency is product consumption rate

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 Low-Involvement Decision Making

Savers
takes
clothes
consumers
no longer
want and
sell them to
other
consumers
who do
want them
at the right
price.

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 The elaboration likelihood model, an influential model of
attitude formation and change, describes how consumers
make evaluations in both low- and high-involvement
circumstances. There are two means of persuasion in their
model: the central route, in which attitude formation or
change stimulates much thought and is based on the
consumer’s diligent, rational consideration of the most
important product information; and the peripheral route, in
which attitude formation or change provokes much less
thought and results from the consumer’s association of a
brand with either positive or negative peripheral cues.
Peripheral cues for consumers include a celebrity
endorsement, a credible source, or any object that
generates positive feelings. Consumers follow the central
route only if they possess sufficient motivation, ability, and
opportunity. We buy many products under conditions of low
involvement and without significant brand differences.

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 Decision Heuristics

 Availability: Consumers base their predictions on the

quickness and ease with which a particular example of
an outcome comes to mind. If an example comes to
mind too easily, consumers might overestimate the
likelihood of its happening.
 Representativeness: Consumers base their
predictions on how representative or similar the
outcome is to other examples.
 Anchoring and adjustment: Consumers arrive at
an initial judgment and then adjust it based on
additional information.
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 Framing: the manner in which choices are
presented to and seen by a decision maker.

Mental accounting used by marketers can help predict whether

consumers will or will not go to concert after having lost a ticket or
money.
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 Mental Accounting
Consumers tend to…


 Segregate gains: When a seller has a product with

more than one positive dimension, it’s desirable to have the
consumer evaluate each dimension separately. Listing
multiple benefits of a large industrial product, for example,
can make the sum of the parts seem greater than the
whole.

Integrate losses: Marketers have a distinct
advantage in selling something if its cost can be added to
another large purchase. House buyers are more inclined to
view additional expenditures favorably given the high price
of buying a house.

Integrate smaller losses with larger gains
 Segregate small gains from large losses
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 Thank You !

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