Analyzing Consumer Markets

“Consumer behavior is the study of how individuals, groups and organizations select, but,
use and dispose goods services, ideas or experiences to satisfy their needs and wants”.

A marketer must fully understand both theory and reality of consumer behavior.

Consumers make many buying decisions every day. Most large companies research
consumer buying decisions in great detail to answer questions about what consumers buy,
where they buy, how and how much they buy, when they buy and why they buy.

A consumer buyer’s behavior is influenced by cultural, social and personal factors.

Cultural factors exert the broadest and deepest influence.

The general question for marketer is, how do consumers respond to various marketing
efforts the company might use?

Characteristics affecting consumer behavior

Cultural Factors
Cultural factors exert a broad and deep influence on consumer behavior. The marketers
need to understand the role played by the buyer’s culture, sub culture and social class.

Culture – A set of basic valves, Perception, wants and behaviors learned by a number of
society from family and other important institutions.

E.g. In U.S.A. a child is normally learns or is exposed to the following values –

achievement and success, activity and involvement, efficiency and practicality, progress,
maternal comfort, individuals etc.

Every group/society has a culture and cultural influences on buyer behavior may vary
greatly from country to country. Failure to adjust to these differences can result in
ineffective Marketing or mistakes.

E.g. The cultural shift towards greater concern about health and fitness has created a
huge industry for health and fitness services. (exercise equipments and clothing , natural
food
Marketers are always trying to spot cultural shifts in order to discover new products that
might be wanted.

E.g. The cultural shift towards greater concern about health and fitness has created a
huge industry for health and fitness services. (exercise equipments and clothing , natural
food)
Sub culture – A group of people with shared value systems based on common life
experiences and situations.

Sub culture includes nationalities, religions, geographic region etc. Many sub cultures
make up important market segments and marketers often design products and marketing
programs tailored to their needs.

E.g. Hispanic consumer

African/American
Asian American
Nature consumer

Social Class – Relatively permanent and ordered divisions in a society whose members
share similar values, interests and behaviors.

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

Social factors
A consumer behavior also influenced by social factors such as the consumer’s small
groups, family and social roles and status.

•Groups – A person’s behavior is influenced by many small groups;

E.g. Reference group

•Family – The family is the most important consumer buying organization in society
and it has been researched extensively. Marketers are interested in the roles and
influence of the husband, wife and children on the purchase of different products
and services.

E.g. According to Lowe’s research women initiate 80% of all home-

improvement purchase.

•Role and status – A person belongs to many groups such as family, clubs,
organizations. The person’s positions in each group can be defined in terms of
both role and status. People usually chose products appropriate to their role and
status.
Eg - The major American social classes

Lower Class - Upper lowers 9% Lower Lowers 7%

Working class - 38%
Middle class - Upper Middle 12% Middle class 32%
Upper Class - Upper Upper 1% Lower Uppers 2%

Personal factors
A buyer’s decisions also are influenced by personal characteristics such as the buyer’s
age and life cycle stage, occupation, economic situation, life style and personality.

Age and life cycle stage

Consumer buying is shaped by the stage of the family life cycle. Traditional family life
cycle stages include young, singles and married couple with children . But today
marketers are increasingly catering to new stages – such as

•Unmarried couples
•Singles marrying later in life
•Childless couples
•Single parents
•Extended parents (those with young and adult children)

Occupation
A person’s occupation affects the goods and services bought. Marketers try to identify
the
occupational groups that have an above average interest in their products and services.

Economic Situation
A personal economic situation will affect product choice. Marketers of income sensitive
goods
watch trends in personal income, savings and interest rates. If economic indicators point
to a
recession, marketers can take steps to redesign, reposition and re-price the products
closely.

E.g. Rolex watches – High price

Timex More affordable watches

Lifestyle
A person’s pattern of living as expressed in his/her activities, interest and opinions (Add
the
Valls framework)

Personality and self concept

Each person’s personality influences his/her buying behavior. Personality usually
describes
items of trails such as self-confidence, dominance, sociability, adaptability and
 aggressiveness.

E.g. Coffee makers have discovered that heavy coffee drinkers tend to be high sociability.
Thus
to attract custom ers Starbucks, create environment in which people relax and socialize
over a
cup of coffee.
Psychological Factors
A person’s buying choices are further influenced by four major psychological factors
such as motivation, perception, learning and beliefs and attitude.

Motivation
A motive is a need that is sufficiently pressing to direct the person to seek satisfaction.
Psychologists have developed theories of human motivation.

a) Sigmund Freud
b) Abraham Maslow

Abraham Maslow – Hierarchy of needs


Perception
A motivated person is ready to act. How the person acts is influenced by his/her own
perception of the situation. Perception is the process by which people select, organize
and interpret information to form a meaningful picture of the world. There are three
perceptual processes:

1.Selective attention
2.Selective distortion
3.Selective retention

Selective attention – The tendency for people to screen out most of the information to
which they are exposed to.

E.g. – If people expose to 5000 ads per day it is impossible for a person to pay attention
to all these.

So marketers should work hard to attract consumer’s attention.

Selection distortion – The tendency of people to interpret information in a way that will support what they
already
believe.

E.g. – If a consumer distrust a company he might perceive even honest ads from the company as
 questionable.

Selective retention – Consumers are likely to remember good points to make about a brand they favor and
to forgot
good points made about competing brands.

Learning
When people act, they learn. Learning describes charges in an individual’s behavior arising from
experience.

E.g. – If a consumer buys a digital camera, if the experience is rewarding, the consumer will probably use
the cam era more and more.

Beliefs and attitudes

A belief is a descriptive thought that a person has about something. Belief may be based on real
knowledge, opinion or faith and may or may not carry on emotional charge.

Attitude – A person’s consistently favorable or unfavorable evaluations, feelings and tendencies toward an
object or idea.

The buyer decision process

Need recognition – This is the first stage of the buyer decision process in which the
consumers recognize a problem or need. The need can be triggered by internal stimuli
when one of the person’s norm al needs rises to a level of high enough to become drive.

E.g. An advertisement/discussion with friend might get you thin king about buying a new
car.

Information search – The stage of the buyer decision process in which the consumer is
search for more information, the consumer may simply have attention or may go into
active information search.

E.g. If a customer decides to buy a new car, at the least he will probably pay more
attention on car ads, cars owned by friends etc. (or read/talk). They can get info from
several sources.

Personal source (family, friend, neighbor etc.)

Commercial sources (advertising, sales people and dealers)
Public sources (mass media)
Experimental sources (handling, examining)

Evaluation or alternatives – The stage of the buyer decision process in which the
consumer uses information to evaluate alternative brands in the choice set.
E.g. It can be price, quality, reputation etc.

Marketers should study buyers to find out how they actually evaluate brand alternatives.
If they have what evaluative processes go on, marketers can take steps to influence the
buyers decision.

Purchase decision
The buyers decision about which brand to purchase. In the evaluation stage consumer
ranks brand and forms purchase intentions.

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 subdivisions: brand
(brand A), dealer (dealer 2), quantity (one computer) timing (weekend), and payment
method (Credit card).

Intervening Factors
Even if consumers form brand evaluations, two general factors can intervene between the
purchase intention and the purchase decision. The first is the attitudes of others. The
extent to which another person’s attitude reduced our preference for an alternative
depends on two things: (1) the intensity of the other person’s negative attitude toward
our preferred alternative and (2) out motivation to comply with the other person’s wishes.

The second factor is unanticipated situational factors that may erupt to change the
purchase by perceived risk.

1. Functional risk – The product does not perform up to expectations.

2. Physical risk - The product poses a threat to the physical well-being or health of
the use of others.
3. Financial risk – The product is not worth the price paid.
4. Social risk: The product results in embarrassment from others.
5. Psychological risk – The product affects the mental well-being of the user.
6. Time risk - The failure of the product results in an opportunity cost of finding
another satisfactory products.

Postpurchase Behavior

The marketer’s job therefore doesn’t end with the purchase. Marketers must monitor
postpuchase satisfaction, post purchase actions and post purchase product uses.

Postpurchase satisfaction - Satisfaction is a function of the closeness between

expectations
and the product’s perceived performance. If performance falls short of expectations, the
cosumer is disappointed; if it meets expectations, the consumer is satisfied; if it exceeds
expectations, the consumer is delighted. These feelings make a difference in whether
the
customer buys the product again and talks favorably or unfavorably about it to others.

Postpurchase Actions
If the consumer is satisfied, she is more likely to purchase the product again. The
satisfied customer will also tend to say good things about the brand to others. On the
other hand, dissatisfied consumers may abandon or return the product. The may seek
information that confirms its high value. They may take public action by complaining to
the company, going to a lawyer, or complaining to other groups (such as business,
private, or government agencies). Private actions include deciding to stop buying the
product (exit option) or warning friends (voice option).