Analyzing Consumer Markets - PowerPoint Presentation

Slide1

Analyzing Consumer MarketsSlide2

Kotler on Marketing

The

most

important thing is to forecast where customers are moving, and be in front of them.Slide3

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?How do marketers analyze consumer decision making?Slide4

Model of consumer behavior

Consumers make many buying decisions everyday and buying decision is the focal point of the marketer’s effort.

Marketers can study actual consumer purchases to find out what they buy, where and how much, but learning the

why’s of the consumer buying behavior is not easy- the answer is locked deep within the consumer’s mind.Slide5

Model of Consumer Behavior

Buyer’s Black BoxSlide6

Model of consumer behavior

Many

different factors affect consumer buying behavior. Buying behavior is never simple

.Understanding it, however, is the essential task of marketing management. Slide7

Model of consumer behavior

Consumer buyer behavior

refers to the buying behavior of final consumers(individuals and households who buy goods and services for personal consumption).

Consumer market refers to all of the personal consumption of final consumersSlide8

1)The American consumer market consists of about 287 million people.

2)These

people consume trillions of dollars of goods and services each year.

3)The world consumer market consists of more than 6.2 billion people.4)Consumers vary tremendously in age, income, education level, and tastes.Model of consumer behaviorSlide9

Cultural Factors

Social Factors

Psychological

Factors

Personal Factors

Factors Influencing Consumer BehaviorSlide10

Factors Influencing Consumer BehaviorSlide11

Cultural Factors

Cultural

factors exert the broadest and deepest influence on consumer behavior.The marketer needs to understand the role played by the buyer’s culture, sub- culture, and social class.Slide12

Cultural Factors (Culture)

Culture

is the set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions.Culture is the most basic cause of a person’s wants and behavior. Slide13

Cultural Factors (Culture)

Every group or society has a culture and cultural influences on buying behavior may vary greatly from one country to another.

Marketers are always trying to spot cultural shifts in order to imagine new products that might be wanted.Slide14

Fast Facts About American Culture:

The

average American:

chews 300 sticks of gum a yeargoes to the movies 9 times a yeartakes 4 trips per year attends a sporting event 7 times each year

Cultural

Factors (Culture)Slide15

Each culture contains smaller subcultures.

Subculture

are groups of people within a culture with shared value systems based on common life experiences and situations.

Cultural

Factors (Subculture)Slide16

Nationalities

Religions

Racial Groups

4.Geographic Regions

Cultural

Factors (Subculture) Slide17

Many

of these subcultures make up important market segments and many times products are designed for them

.

Examples of important subculture groups include:HispanicAfrican AmericanAsian AmericanMature consumers

Cultural

Factors (Subculture)Slide18

1)

Hispanic

consumers:

one third of the US population.Hispanic consumers tend to buy more branded, higher quality products. There are 35 million consumers in this group, they spend $425 billion on goods and services.

Cultural

Factors (Subculture)Slide19

2)

African American

consumers:

This group has a tremendous purchasing power. This group has a buying power of $527 billion and, if they were a separate nation, would rank among the top 15 in the world. They appear to be very price conscious, are motivated by quality and selection, and emphasize brand name and loyalty.

Cultural

Factors (Subculture)Slide20

3)

Asian American

consumers:

This group is the fastest-growing and most affluent U.S. demographic segment and now number more than 10 million with disposable income of $229 billion annually. Language and cultural tradition appear to be the largest barrier to effectively marketing to this group.

Cultural

Factors (Subculture)Slide21

Because of its rapid growth, however, this group will receive increased attention from marketers .

More than 90% of the Asian American Go online regularly and are most comfortable with internet technology such as online banking

Cultural

Factors (Subculture)Slide22

4) Mature consumers:

very attractive market.

The entire U.S baby boom generation, the largest and the wealthiest demographic cohort in the country.

Mature consumers are not stuck in their ways

Cultural

Factors (Subculture)Slide23

Social class :Is the relatively permanent and ordered division in a society whose members share similar values, interests, and behaviors.

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

Cultural Factors (Social class)Slide24

In some social systems, members of different classes are reared for certain roles and can’t change their social positions.

In other country, however, the lines between social classes are not fixed and rigid, people can move to a higher social class or drop into a lower one.

Cultural Factors(Social class)Slide25

Marketers are interested in social class because within a given social class tend to exhibit similar buying behavior.

Social classes show distinct product and brand preferences in areas such as clothing , home furnishings, and automobiles.

Cultural

Factors(Social class)Slide26

Social scientists have identified

seven American social classes

:

a)Upper Uppers (less than 1 percent). b)Lower Uppers (about 2 percent). c)Upper Middles (about 12 percent). d)Middle Class (about 32 percent).

e)Working

Class (about 38 percent).

f)Upper

Lowers (about 9 percent).

g)Lower

Lowers (about 7 percent).

Cultural

Factors(Social class)Slide27

Cultural

Factors(Social class)Slide28

Consumer

Family

Status

Reference

Groups

Social Roles

Social FactorsSlide29

A consumer’s behavior is influenced by social factors.

These

include small

groups, family, and social roles and status Social FactorsSlide30

Social Factors (Groups)

A person’s behavior is influenced by many small

groups

. There are several specialized group formations within the larger configuration.Reference groups:Membership groupsPrimary groups

Secondary

groups

Aspirational

groups

Dissociative groups

Opinion leadersSlide31

Reference groups:

Groups

that

have a direct (face-to-face) or indirect influence on the person’s attitudes or behavior. People are often influenced by reference groups to which they do not belong. Social Factors (Groups)Slide32

Membership groups:

Groups that have a direct influence on a person’s behavior; they are groups to which a person belongs.

Primary groups:

Person interacts informally such as family ,friends , neighbors.Secondary groups:Person tend to be formal and require less interaction such as religious , professional and trade union groups.Social Factors (Groups)Slide33

Reference groups influence members in at least

three

ways: Reference groups expose a person to new behaviors and lifestyles. Influence the person’s attitudes and self-concept. They also create pressures to conform that may affect the person’s product and brand choices.Social Factors (Groups)Slide34

People are influenced by groups to which they don’t belong:

Aspirational

group:

A group to which an individual wishes to belong.Dissociative group:A group to which an individual reject to join because their values and behaviors. Social Factors (Groups)Slide35

Word-of-mouth influence and buzz marketing.

Opinion leaders:

people within a reference group who have their special skills ,knowledge , personality , to exert social influence on others.

Also called influentials or leading adoptersMarketers identify them to use as brand ambassadors.

Social

Factors (Groups)Slide36

Online Social Networks are online communities where people socialize or exchange information and opinions.

Include blogs, social networking sites (

facebook

), virtual worlds (second life).Social Factors (Groups)Slide37

A consumer’s purchases are also influenced by family members.

The

influence can be very strong because the

family is the most important consumer-buying organization in society. It has been extensively researched.Social Factors (Family)Slide38

There are two kinds of families in the buyer’s life:

Family of orientation:

Consists of Parents & relatives.

In America 40% of families have auto insurance with the same company as the husband’s parents.Family of procreation:Consists of husband & wife & children.Social Factors (Family)Slide39

Social Factors (Family)

Marketers are interested in the roles and influence of the husband, wife and children on the purchase of different products and services.

The wife traditionally has been the main purchasing agent for the family.Slide40

Social Factors (Family)

Children may also have a strong influence on family buying decisions.

Studies found that kids influence family decisions about where they take vacations , what cars or cell phones they buy.

As a result , marketers of cars , full service restaurants , cell phones are now placing ads on the children oriented TV networks.Slide41

Social Factors (roles and status)

Social roles and status are the groups, family, clubs, and organizations that a person belongs to that can define role and social status.

A role consists of the activities that people expected to perform according to the persons around them.Slide42

Social Factors (roles and status)

Each role carries a status reflecting the general esteem given to it by society.

People usually choose products appropriate to their roles and status.Slide43

Personal Factors

A buyer’s decisions are also influenced by personal characteristics such the buyer’s

age and life-cycle stage, occupation, economic situation, lifestyle, personality and self-concept.Slide44

Personal Factors

Age

Values

Life cycle

stage

Occupation

Personality

Self-

concept

Wealth

LifestyleSlide45

21 y.

Age

What are their current psychological

life stages that matter?

Life Cycle

What are their critical life events at their age?

Personal

Factors (Age and life-cycle stage)Slide46

Personal Factors (Age and life-cycle stage)

Age and life-cycle stage

People change the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture and recreation are

age related.Buying is also shaped by the stage of the family life cycle that is the stages through which families might pass as they mature over time.Slide47

Personal Factors (Age and life-cycle stage)

Traditional

family life cycle stages include young singles and married couples with children.

The nontraditional stages such as unmarried couples, singles marrying later in life, single parents , extended parents ( those with young adult children returning home ) and othersSlide48

Personal Factors (Age and life-cycle stage)

RBC Royal Bank stages

Youth:

younger than 18Getting started: 18–35 who are going through first experiences, first credit card, first car , first child.Builders: 35–50 in their peak earning years, as they build careers and family, they tend to borrow more than they invest.Slide49

Personal Factors (Age and life-cycle stage)

Accumulators:

50–60

Worry about saving for retirement and invested wisely.Preservers: over 60Want to maximize their retirement income to maintain a desired lifestyle.Slide50

What are their consumption

Patterns due to their current

Occupations?

Occupation

Personal Factors (

Occupation)Slide51

Personal Factors (Occupation)

Occupation:

A person’s occupation affects the goods and services bought (software bought by accountants, lawyers, and doctors).

Blue workers tend to buy more rugged work clothes, whereas executives buy more business suits.A company can specialize in making products needed by a given occupational group.Slide52

How much are they willing

To spend?

Wealth

Personal Factors (

Wealth)Slide53

Economic situation includes trends in:

If economic indicators point to a recession, marketers can take steps to redesign , and

reprice

their products closely.

Personal Factors (

Wealth)Slide54

The

economic situation of the buyer is very important in purchase consideration

.

If a person fears losing their job, their purchasing habits generally change. If the person perceives that their economic situation is going to improve, they might consider making a major purchase.

Personal Factors (

Wealth)Slide55

Lifestyle

What would benefit them for their way

of living?

Personal Factors (

Lifestyle & Values)

Values

What are the things that they believe

in and are important to them?Slide56

People from the same social strata can have very different lifestyles

.

A

lifestyle :is a person’s pattern of living as expressed in his or her psychographics (such as activities, interests, and opinions). Lifestyle profiles a person’s whole pattern of acting and interacting in the world. It is more than the person’s social class or personality.

Personal Factors

(

Lifestyle & Values)Slide57

Examples include: Activities

(work, hobbies, shopping, etc.).

Interests

(food, fashion, recreation, etc.).Opinions (about themselves, social issues, business, etc.).Personal Factors

(

Lifestyle & Values)Slide58

The most widely used lifestyle classification is the SRI Values and Lifestyles (VALS) typology

.

VALS classifies people according to their consumption tendencies by how they spend their time and money. A person could change positions over time. It is felt that a person’s lifestyle does affect their purchase behavior. Groups are further subdivided based on self-orientation and resources.

Personal

Factors (

Lifestyle & Values)Slide59

Self-orientation groups include:

Principle-oriented

consumers

who buy based on their views of the world.Status-oriented consumers who base their purchases on the actions and opinions of others.

Action-oriented

buyers

who are driven by their desire for

activity , variety

, and risk taking.

Personal Factors

(

Lifestyle & Values)Slide60

Resources:

can be either abundant or minimal depending on whether the buyer has high or low levels of income, education, health, self-confidence, energy, and other factors.

Personal Factors

(

Lifestyle & Values)Slide61

What are their traits and

characteristics?

Personality

Personal Factors

(

Personality

and self-concept

)Slide62

Personality

:

refers to the unique psychological characteristics that lead to consistent and lasting responses to the consumer’s environment.

Personality is described in terms of traits (such as self-confidence, dominance sociability, etc.).

Personal Factors

(

Personality

and self-concept

)Slide63

The self-concept:

describes the self-image

. The basic idea is that people’s possessions contribute to and reflect their identities. (how one views oneself)

Personal Factors

(

Personality

and self-concept

)Slide64

Each person’s personality and self-concept will influence their buying behavior

.

Personality can be useful for analyzing consumer behavior for certain brand or product choices.

Personal Factors

(

Personality

and self-concept

)Slide65

Characteristics Affecting Consumer Behavior

Personal Factors (

Personality

and self-concept

)Slide66

A brand personality:is the specific mix of the human traits that may be attributed to a particular brand.

One researcher identified five brand personality traits:

Personal Factors

(Personality

and self-concept

)Slide67

Sincerity

Excitement

Competence

Sophistication

Ruggedness

Brand Personality

Personal Factors

(

Personality

and self-concept

)Slide68

Sincerity

( honest, wholesome, and cheerful)

Excitement

( imaginative and up-to date)Competence ( reliable , intelligent and successful )Sophistication ( upper class and charming)Ruggedness ( tough and outdoorsy)

Personal Factors

(

Personality

and self-concept

)Slide69

Key Psychological FactorsSlide70

Influencing Buyer Behavior

Ernest

Dichter’s

research found:Consumers resist prunes because prunes are wrinkled looking and remind people of old age.Men smoke cigars as an adult version of thumb sucking.Women prefer vegetable shortening to animal fats because the latter arouse a sense of guilt over killing animals.Women don’t trust cake mixes unless they require adding an egg, because this helps them feel they are giving

“

birth.

”Slide71

The consumer’s mind responds according to…

1. Perception

His interpretation

of information2. MotivationHis drive to act

3. Learning

His change in

behavior

due to experience

4. Memory

His retention of experience and ideasSlide72

The starting point for understanding consumer behavior is the

stimulus-response

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.KEY PSYCHOLOGICAL PROCESSES Slide73

A person has many needs at any given time.

Some needs are

:

Biogenic (arise from physiological states of tension such as hunger).Others are psychogenic and arise from a need for recognition, esteem, or belonging.

A motive

is a need that is sufficiently pressing to drive the person to act

.

Motivation research

refers to qualitative research designed to probe consumer’s hidden , subconscious motivations.

M

otivationSlide74

Psychologists have developed theories of human motivation, the most popular- the theories of psychologists

Frued

,Maslow ,Herzberg’s theories.MotivationSlide75

Motivation

Freud’s

Theory

Behavioris guided by subconsciousmotivationsMaslow’s

Hierarchy

of Needs

Behavior

is driven by

lowest,

unmet need

Herzberg’s

Two-Factor

Theory

Behavior is

guided by

motivating

and hygiene

factorsSlide76

Sigmund Freud assumed that the psychological forces shaping people’s behavior are largely unconscious, and that a person cannot fully understand his or her own motivations

.

Freud’s Theory Slide77

A technique called laddering can be used to trace a person’s motivations from the stated instrumental ones to the more terminal ones.

Motivation researchers often collect “in-depth interviews” to uncover deeper motives triggered by a product.

Projective techniques

such as word association, sentence completion, and role-playing are used. Freud’s Theory Slide78

Maslow’s Hierarchy of NeedsSlide79

Abraham Maslow sought to explain why people are driven by particular needs at particular times.

Maslow’s Theory Slide80

Maslow’s answer is that human needs are arranged in a hierarchy, from the most pressing to the least pressing.

In order of importance, they are:

Physiological needs. Safety needs.Social needs.Esteem needs.Self-actualization needs.Slide81

Herzberg’s Two-Factor TheorySlide82

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; satisfiers must be present to motivate a purchase. Herzberg’s Theory Slide83

Herzberg’s theory has two implications:

Sellers should do their best to avoid

dissatisfies.

Sellers should identify the major satisfiers or motivators of purchase in the market and supply them. These satisfiers will make the major difference as to which brand the customer buys. Slide84

Perception

Selective Attention

Subliminal Perception

Selective Retention

Selective DistortionSlide85

How the motivated person actually acts is influenced by his or her view or perception of the situation.

Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world.

Perception Slide86

Perceptual processes

Selective Attention

Subliminal Perception

Selective Retention

Selective DistortionSlide87

It has been estimated that a person is exposed to over 1,500 ads or brand communi­cations a day. Because a person cannot possibly attend to all of these, most stimuli will be screened out—a process called selective attention.

Selective Attention Slide88

Selective attention means that marketers have to work hard to attract consumers

’

notice.

People are more likely to notice stimuli that relates to a current need.Slide89

Selective distortion is the tendency to interpret information in a way that will fit our preconceptions. Consumers will often distort information to be consistent with prior brands and product beliefs.

Selective Distortion Slide90

People will fail to register much information to which they are exposed in memory, but will tend to retain information that supports their attitudes and beliefs.

Because of

selective retention, we are likely to remember good points about a product we like and forget good points about competing products.Selective Retention Slide91

Learning involves changes in an individual’s behavior arising from experience, and occurs through interplay of

:

Drives

StimuliCuesResponsesReinforcement

Learning Slide92

A drive : a strong internal stimulus that calls for action.

A drive becomes a motive when its directed towards a particular stimulus object.

Cues

are minor stimuli that determine when, where and how the person respondsThe consumer’s response to his or her interest in buying the productSlide93

All information and experiences individuals encounter as they go through life can end up in their long-term memory.

MemorySlide94

These basic psychological processes play an important role in understanding how consumers actually make their buying decisions. Marketers must understand every facet of consumer behavior.

THE BUYING DECISION PROCESS: THE FIVE-STAGE MODELSlide95

Types of Buying Decision BehaviorSlide96

When consumers are highly involved in a purchase and perceive significant differences among the brands. Consumers maybe highly involved when the product is expensive, risky and purchased infrequently

Marketers need to help buyers learn about product-class attributes& their relative importance. They need to differentiate their brand features, by describing them using print media with long copy

Complex buying behaviorSlide97

Occurs when consumers are highly involved with an expensive , risky purchase but see little differences among brands

Consumers might experience post purchase dissonance when they notice certain disadvantages of the purchased brand or hear favorable things about brands not purchased

Dissonance-reducing buying behaviorSlide98

Occurs under conditions of low consumer involvement and little significant brand difference

Consumers appear to have low involvement with most low cost, frequently purchased products

Ad repetition creates brand familiarity rather than brand conviction “ consumers don’t form strong attitudes toward a brand, they select the brand because its familiar

Habitual buying behaviorSlide99

Types of Buying Decision Behavior

Four Types of Buying BehaviorSlide100

In situations characterized by low consumer involvement but significant perceived brand differences. In such cases consumers often do a lot of brand switchingBrand switching occurs for the sake of variety rather than because of dissatisfaction .

Variety-seeking buying behaviorSlide101

Consumer Buying ProcessSlide102

The buying process starts when the buyer recognizes a problem or need.

The need can be triggered by internal or external stimuli.

Marketers need to identify the circumstances that trigger a particular need so that they can develop marketing strategies that trigger consumer interest.

Problem RecognitionSlide103

An aroused consumer

will be inclined to search for more information. We can distinguish between two types of arousal.

The milder state is called heightened attention where a person simply becomes more receptive to information about a product. The second level is active information search where a person looks for reading material, going online, etc. to learn about the product.Information searchSlide104

sources to which the consumer will turn and the relative influence each will have on the subsequent purchase decision. These information sources fall into four groups:

Of key interest to the marketer are the major informationSlide105

Personal

(family, friends

).

Commercial (advertising, Web sites, salespeople).Public (mass media, consumer organizations).Experiential (handling, examining, using the product).Slide106

Generally speaking the consumer receives the most information about a product from commercial sources.

The most effective information often comes from personal sources or public sources that are independent authorities.

The Internet has changed information search. Most consumers are hybrid consumers. Slide107

The consumer will come to know only a subset of these brands (awareness sent).

Some brands will meet initial buying criteria (consideration set).Slide108

Figure 6.5 Successive Sets Involved in Consumer Decision MakingSlide109

No single process is used by all consumers or by one consumer in all buying situations. The most current models see the process as cognitively orientated.

Evaluation of AlternativesSlide110

First, the consumer is trying to satisfy a need.

Second, the consumer is looking for certain benefits from the product solution.

Third, the consumer sees each product as a bundle of attributes with varying abilities for delivering the benefits sought to satisfy this need.Slide111

Evaluations often reflect beliefs and attitudes. Through experience and learning, people acquire beliefs and attitudes. These in turn influence buying behavior.

Beliefs and AttitudesSlide112

Belief —a descriptive thought that a person holds about something.

Attitude

—a person’s enduring favorable or unfavorable evaluation, emotional feeling, and action tendencies toward some object or idea.Slide113

Attitudes put people into a frame of mind.

Attitudes lead people to behave in a fairly consistent way toward similar objects.

Attitudes can be very difficult to change.Slide114

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 sub decisions:

Purchase DecisionsSlide115

Brand.Dealer.

Quantity.

Timing.

Payment-method.Slide116

Table 6.4 A Consumer’s Evaluation of Brand Beliefs About LaptopsSlide117

Figure 6.6 Stages between Evaluation of Alternatives and PurchaseSlide118

A consumer’s decision to modify, postpone, or avoid a purchase decision is heavily influenced by perceived risk. There are many types of risks that consumers may perceive in buying and consuming a product:Slide119

Perceived Risk

Functional

Physical

Financial

Social

Psychological

TimeSlide120

The satisfaction or dissatisfaction that the consumer feels about the purchase

Relationship between:

Consumer’s expectations

Product’s perceived performanceThe larger the gap between expectation and performance, the greater the consumer’s dissatisfactionCognitive dissonance is the discomfort caused by a post-purchase conflict

Post-Purchase DecisionSlide121

Customer satisfaction is a key to building profitable relationships with consumers—to keeping and growing consumers and reaping their customer lifetime value

Post-Purchase DecisionSlide122

Business organizations

Business organizations do not only sell. They also buy vast quantities of raw materials manufactured , components, plant and equipment, supplies , and business services .Slide123

Major

Influences on

Industrial

Buying BehaviorSlide124

The business market versus the consumer

marketSlide125

Participants in the Business Buying ProcessSlide126

The Buyer Decision Process for New Products

Adoption process

is the mental process an individual goes through from first learning about an innovation to final regular use.

Stages in the process include:Slide127

The Buyer Decision Process for New Products

Influence of Product Characteristics on Rate of AdoptionSlide128

How Customers Use and Dispose of ProductsSlide129