Consumer Market &

Understanding the
Consumer
 Consumer Market

 All individuals and households who buy or acquire goods and services
for personal consumption
– Firm needs to know
– Who buys?
– How they buy?
– When and where they buy??
– Why they buy?
– How they respond to marketing stimuli?
Why do you think marketers know these
things?

?
Because they study consumer behavior
(CB)
 What is
Consumer Behavior about?
 How, why, where and when consumers make purchase decisions?
 Considers who influences the decisions?

 How are purchases made?

 What information is needed for those decisions?


What factors affect these decisions?
 Why is it Important?

 Consumers determine the sales and profits of a firm by their purchase

decisions, thus the economic viability of the firm.
 In late 1990, US consumers were spending enough dollar bills to
stretch from the Earth to the Sun and back, with enough left over for
over 600 lines to the moon!
 Customer vs. Consumer Behavior

 Customer behavior
 Includes both individual consumers who buy goods and
services for their own use and organizational buyers who purchase
business products.
 Consumer behavior
 Is the process through which the ultimate buyer makes
purchase decisions.
 Consumer Behavior Defined
 The study of the processes involved when individuals or groups
select, purchase, use, or dispose of products, services, ideas, or
experiences to satisfy needs and desires (Solomon, 1996).

 Those actions directly involved in obtaining, consuming and

disposing of products and services, including the decision processes
that precede and follow those actions (Engel et al. 1995).

 Examines mental and emotional processes in addition to the

physical activities (Wilkie 1990).
 Consumer Behavior Deals With …

 Actions in Purchasing and Using Products

 Including Behavior and Thought Processes

The buying behavior of final consumers-individuals and
households who buy goods and services for personal
consumption.
Marketing Applications
 Positioning
 Segmentation
 Product development
 Market development
 International marketing
Consumer Spending Patterns
 Disposable income
 Discretionary income
 Family life cycle:
 Young
 Teens
 Empty nesters
 Senior citizens
 Model of Consumer Behavior
“Stimulus-Response”
Product Economic
Price Marketing
Marketing and
and Technological
Place Other Political
Promotion Other Stimuli
Stimuli Cultural

Buyer characteristics
Buyer’s decision Buyer’s
Buyer’sBlack
BlackBox
Box affecting consumer
process ”what”
”what”&& “how”
“how” behavior

Purchase timing
Product choice Buyer’s
Buyer’s Response
Response Purchase quantity
Brand choice
Dealer choice
Marketing Other Buyer’s Buyer’s decision
stimuli stimuli characteristics process
Product Economic Cultural Problem recognition
Price Technological Social Information search
Place Political Personal Evaluation
Promotion Cultural Psychological Decision
Post-purchase
behavior

Buyer’s decisions
Product choice
Brand choice
Dealer choice
Purchase timing
Purchase amount
 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.
 Model of Buyer Behavior

Marketing Buyer’s Black Box Buyer

& other Responses
stimuli
Marketing Buyer Characteristics Product Choice
Product Buyer Decision Process Brand Choice
Price Dealer Choice
Place
Promotion
Other Purchase Timing
Economic Purchase Amount
Technological
Political
Cultural
Characteristics Affecting Consumer Behavior
Cultural
Social Personal
Age and Psycho-
Culture
Culture Reference life-cycle logical
groups Occupation Motivation
Sub-
Sub-
Economic Perception Buyer
culture Family situation Learning
culture
Lifestyle Beliefs and
Roles Personality attitudes
Social
Social and and
class
class status self-concept
1. Cultural

2. Social

3. Personal

4. Psychological
1. Cultural
 Cultural
a. Culture
b. Sub-Culture
c. Social Class

Set of values norms, attitudes, and other meaningful symbols that

shape human behavior and the artifacts, or products, of that behavior as
they are transmitted from one generation to the next.
 b. Subculture

A homogeneous group
of people who share elements of the overall culture as well as unique
elements of
their own group.
 c. Social Class

A group of people in a society who are considered nearly equal in status

or community esteem, who regularly socialize among themselves both
formally and informally, and who share behavioral norms.
2. Social
 Social
a. Reference Groups
b. Family
c. Role & Status
a. Reference Group
 Reference Group

A group in society that influences an individual’s purchasing

behavior.
Implications of Reference Groups
 They serve as information sources and influence perceptions

 They affect an individual’s aspiration levels

 Their norms either constrain or stimulate consumer behavior

 Opinion Leaders

An individual who
influences the opinion of others.
 b. Family

Purchase
Purchase Roles
Roles in
in  Initiators
the
the Family
Family
 Influencers
 Decision-Makers
 Purchasers
 Consumers

Children Influence
Purchase Decisions
c. Roles and Status
 3. Personal

 a. Age and life cycle stage

 b. Occupation
 c. Economic situation
 d. Lifestyle
 e. Personality and self-concept
a. Age and life cycle stage

b. Occupation

c. Economic situation

d. Lifestyle

e. Personality
 4. Psychological

 a. Motivation
 b. Perception
 c. Learning
 d. Beliefs and attitudes
 a. Motivation
Self-
Actualization

Maslow’s
Maslow’s Hierarchy
Hierarchy Esteem
of
of Needs
Needs

Social

Safety

Physiological
Physiological Needs
 Safety Needs

Physiological Needs
 Social Needs

Safety Needs

Physiological Needs
 Personal
Needs

Social Needs

Safety Needs

Physiological Needs
b. Perception
 Perception
Process by which people select, organize, and interpret stimuli into a
meaningful and
coherent picture.
 c. Learning

A process that creates changes in behavior, immediate or expected,

through experience
and practice.
d. Beliefs and attitudes
 Value

Enduring belief that a specific mode of conduct is personally or

socially preferable to another
mode of conduct.
 An organized pattern of knowledge that an
individual holds as true about his

Belief or her world.

A learned tendency to respond consistently

toward a given object.
Attitude
 Types of Buying decision behavior

 Complex buying behavior

 Dissonance-reducing buying behavior
 Habitual buying behavior
 Variety seeking buying behavior
 High Low
Involvement Involvement

Significant
differences Complex Variety-
between Buying Seeking
brands Behavior Behavior

Few
differences Dissonance- Habitual
between Reducing Buying Buying
brands Behavior Behavior
Buyer Decision Process
 Problem
recognition

Information
search

Evaluation of
alternatives

Purchase
decision

Postpurchase
behavior
 Need
Need Recognition
Recognition

Information
Information Search
Search

Cultural,
Cultural,Social,
Social,
Individual
Individualand
and
Psychological Evaluation
Evaluation
Psychological
Factors of
of Alternatives
Alternatives
Factors
affect
affect
all
allsteps
steps

Purchase
Purchase

Postpurchase
Postpurchase
Behavior
Behavior
 Need Recognition

Result of an imbalance between actual and

desired states.
 Information Search

Internal Information Search

 Recall information in memory

External Information search

 Seek information in outside environment

 Non-marketing controlled
 Marketing controlled
 Evaluation of Alternatives

Steps Between Evaluation of Alternatives and a Purchase Decision

 Attitude
of others
Evaluation
of Purchase Purchase
alternatives intention decision
Unantici-
pated
situational
factors
 Purchase Decision
To buy
or not to buy...
Determines which
attributes
are most important
in influencing a
consumer’s choice
 Five Factors influencing Decisions

1. Level of consumer involvement

2. Length of time to make decision
3. Cost of good or service
4. Degree of information search
5. Number of alternatives considered
Post-purchase Behavior
Buyer Decision Process for New Products

 Awareness
 Interest
 Evaluation
 Trial
 Adoption