CONSUMER MARKETS AND CONSUMER BUYER BEHAVIOR

TOPIC OUTLINE
1. Model of Consumer Behavior
2. Characteristics Affecting Consumer Behavior
3. Types of Buying Behavior
4. The Buyer Decision Process
5. Consumer Behavior Across International Borders

CONSUMER BUYER BEHAVIOR

 Refers to the buying behavior of final consumers—individuals and households who buy
goods and services for personal consumption.
 Is the process a consumer goes through to make decisions regarding the purchase, use, and
disposal of goods and services.

All of these consumers combine to make up the consumer market.

CONSUMER MARKET
 Refers to all of the personal consumption of final consumers.
 Consumers around the world vary tremendously in age, income, education level, and tastes.
They also buy an incredible variety of goods and services.

 How consumers make their choices among these products takes us into an interesting field
of personal, cultural, and social influences and the consumer behavior that results from it.
 The world consumer market consists of more than 6.6 billion people who annually consume
an estimated $65 trillion worth of goods and services.

MODEL OF CONSUMER BEHAVIOR

 Consumers make buying decisions every day, leading to many different types of purchases.
 Most marketers undertake consumer research to try to learn more about: what consumers
buy, who buys, how they buy, when they buy, where they buy and most importantly, why
they buy?
 The central question for marketers is as follows: How do consumers respond to various
marketing efforts the company might use? The starting point is the stimulus-response model
of buyer behavior.

STIMULUS RESPONSE MODEL OF BUYER BEHAVIOR SHOWN BELOW:

The figure shows that marketing and other stimuli enter consumer’s BLACK BOX and produce
certain responses. Marketers must figure out what is in the buyer’s black box.

Marketing stimuli consists of four Ps. Product, Price, Place, and Promotion. Other stimuli include
major forces and events in the buyer’s environment such as Economic, Technological, Political and
Cultural.

All these inputs enter the buyer’s black box where they are turned into a set of observable buyer
responses such as Product Choice, Brand Choice, Dealer Choice, Purchase Timing and Purchase
Amount.

The marketers want to understand how the stimuli are changed into responses inside the
consumer’s black box which has two parts:
 First, the buyer’s characteristics influence how he or she perceives and reacts to stimuli.
 Second, the buyer’s decision process itself affects the buyer’s behavior.

CHARACTERISTICS AFFECTING THE CONSUMER BEHAVIOR

Consumer purchases are influenced strongly by cultural, social, personal, and psychological
characteristics.
1. CULTURAL FACTORS
A marketer needs to understand the role played by the buyer’s:
 Culture
 Subculture
 Social Class

2. SOCIAL FACTORS
A consumer’s behavior also influenced by social factors such as the consumer’s:
 Reference Groups
 Family
  Roles and Status

3. PERSONAL FACTORS
A buyer’s decisions are also influenced by personal characteristics such as the buyer’s:
 Age and Life-cycle Stage
 Occupation
 Economic Situation
 Lifestyle
 Personality and Self-concept

4. PSYCHOLOGICAL FACTORS
A person’s buying choices are further influenced by four major psychological factors:
 Motivation
 Perception
 Learning
 Beliefs and Attitudes

CULTURAL FACTORS
1. CULTURE is the learned values, perceptions, wants, and behavior from family and other
important institutions.

2. SUBCULTURES are groups of people within a culture with shared value systems based on
common life experiences and situations. Subcultures include nationalities, religions, racial
groups and geographic regions. Marketers often design products tailored to their needs.

3. SOCIAL CLASSES are society’s relatively permanent and ordered divisions whose members
share similar values, interests, and behaviors. Social class is not determined by a single factor,
but is measured as a combination of occupation, income, education, wealth and other variables.
THE MAJOR SOCIAL CLASSES:
 Upper Class
 Middle Class
 Working Class
 Lower Class

SOCIAL FACTORS
A consumer’s behavior also influenced by social factors such as the consumer’s small groups, family
and social roles and status.
1. GROUPS
 MEMBERSHIP GROUPS have a direct influence and to which a person belongs.
 ASPIRATIONAL GROUPS are groups to which an individual wishes to belong.
 REFERENCE GROUPS are groups that form a comparison or reference in forming
attitudes or behavior.
 Manufacturers of products and brands subjected to strong group influence must
figure out how to reach opinion leaders. Opinion Leaders are people within a
 reference group with special skills, knowledge, personality, or other characteristics
that can exert social influence on others.
 Buzz marketing enlists opinion leaders to spread the word.
 Social networking is a new form of buzz marketing

2. FAMILY
 The most important consumer-buying organization in society.
 Family members can strongly influence buyer behavior.
 Marketers are interested in the roles and influence of the husband, wife and children on the
purchase of different products and services.

3. SOCIAL ROLES AND STATUS are the groups, family, clubs, and organizations to which a
person belongs that can define role and social status.
 A role consists of the activities people are expected to perform according to the persons
around them. Each role carries a status reflecting the general esteem given it to by the
society.
 People usually choose products appropriate to their roles and status.

PERSONAL FACTORS
A buyer’s decisions are also influenced by personal characteristics such as the buyer’s age, life cycle
stages, occupation, economic situation, lifestyle, personality and self-concept.
1. AGE AND LIFE-CYCLE STAGE
 People change the goods they buy over their lifetimes.
 Life-cycle Stages
o YOUTH—younger than 18 years
o GETTING STARTED—18-35 years
o BUILDERS—35-50 years
o ACCUMULATORS—50-60 years
o PRESERVERS—over 60 years

2. OCCUPATION
 Affects the goods and services bought by consumers.

3. ECONOMIC SITUATION
 Some goods and services are especially income-sensitive. Economic situation includes trends
in:
o Personal income
o Savings
o Interest Rates

4. LIFESTYLE:
People coming from the same subculture, social class and occupation may have different
lifestyles.
 Lifestyle is a person’s pattern of living as expressed in his or her psychographics. It involves
measuring consumer’s major AIO dimensions. They are
o Activities ( work, hobbies, shopping, sports, social events)
 o Interests ( food, fashion, family, recreation)
o Opinions ( about themselves, social issues, business, products)

5. PERSONALITY & SELF-CONCEPT

 Each person’s distinct personality influences his or her buying behavior. Personality refers
to the unique psychological characteristics that lead to relatively consistent and lasting
responses to one’s own environment.
 Personality can be useful in identifying consumer behavior for certain products or brand
choices.
 BRAND PERSONALITY refers to the specific mix of human traits that may be attributed
to a particular brand: Sincerity, Excitement, Competence, Sophistication and Roughness.
 Many marketers use a concept related to personality- A person’s self-concept (Also called
self -image). SELF-CONCEPT suggests that people’s possessions contribute to and reflect
their identities. That is “We are what we have”.
 Thus in order to understand consumer behavior, the marketer must first understand the
relationship between consumer self-concept and possessions.

PSYCHOLOGICAL FACTORS
A person’s buying choices are further influenced by four major psychological factors. They are
motivation, perception, learning, beliefs and attitudes.

1. MOTIVATION
A MOTIVE (OR DRIVE) is a need that is sufficiently pressing to direct the person to seek
satisfaction.

MOTIVATION RESEARCH refers to qualitative research designed to probe consumers’

hidden, subconscious motivations.

A person has many needs at any given time. Some are biological arising from states of tension
such as hunger, thirst or discomfort. Others are psychological arising from the need for
recognition, esteem or belonging.

ABRAHAM MASLOW’S HIERARCHY OF NEEDS

-Explains why people are driven
by needs at particular times.
-Human needs are arranged in a hierarchy
from most pressing to least pressing.
-Implies that lower level needs
must be satisfied prior to higher level needs.

2. PERCEPTION is the process by which people select, organize, and interpret information to
form a meaningful picture of the world from three perceptual processes:
 SELECTIVE ATTENTION- is the tendency for people to screen out most of the information
to which they are exposed.
  SELECTIVE DISTORTION- is the tendency for people to interpret information in a way
that will support what they already believe.
 SELECTIVE RETENTION- is the tendency to remember good points made about a brand
they favor and to forget good points about competing brands.

3. LEARNING is the changes in an individual’s behavior arising from experience and occurs
through interplay of:
o Drives
o Stimuli
o Cues
o Responses
o Reinforcement

4. BELIEFS AND ATTITUDES-Through doing and learning, people acquire their beliefs and
attitudes. These, in turn, influence their buying behavior.

BELIEF is a descriptive thought that a person has about something based on:
o Knowledge
o Opinion
o Faith

ATTITUDES describe a person’s relatively consistent evaluations, feelings, and tendencies

toward an object or idea.

TYPES OF BUYING DECISION BEHAVIOR

1. Complex Buying Behavior
2. Dissonance-reducing Buying Behavior
3. Habitual Buying Behavior
4. Variety-seeking Buying Behavior

COMPLEX BUYING BEHAVIOR

 Occurs when consumers are highly motivated in a purchase and perceive significant
differences among brands.
 Purchasers are highly motivated when:
o Product is expensive
o Product is risky
o Product is purchased infrequently
o Product is highly self-expressive

DISSONANCE-REDUCING BUYING BEHAVIOR

 Occurs when consumers are highly involved with an expensive, infrequent, or risky
purchase, but see little difference among brands.
  Post-purchase Dissonance occurs when the consumer notices certain disadvantages of the
product purchased or hears favorable things about a product not purchased.

HABITUAL BUYING BEHAVIOR

 Occurs when consumers have low involvement and there is little significant brand difference.

VARIETY-SEEKING BUYING BEHAVIOR

 Occurs when consumers have low involvement and there are significant brand difference.

THE BUYER DECISION PROCESS

The figure suggests that consumer pass through all the five stages with every purchase. But in more
routine purchases, consumers often skip or reverse some of the stages.

FIVE STAGES IN THE BUYER DECISION PROCESS

1. Need Recognition
2. Information Search
3. Evaluation of Alternatives
4. Purchase Decision
5. Post-purchase Behavior

1. NEED RECOGNITION
The buying process starts with need recognition- Need Recognition occurs when the buyer
recognizes a problem or need generated by:
 Internal Stimuli
 External Stimuli

2. INFORMATION SEARCH
Information Search is the amount of information needed in the buying process and depends on:
 The strength of the drive,
 The amount of information you start with,
 The ease of obtaining the information,
 The value placed on the additional information, and
  The satisfaction from searching
SOURCES OF INFORMATION:
o Personal Sources—family and friends
o Commercial Sources—advertising, Internet
o Public Sources—mass media, consumer-rating organizations
o Experiential Sources—handling, examining, using the product
3. EVALUATION OF ALTERNATIVES
Evaluation of Alternatives is how the consumer processes information to arrive at brand
choices.
4. PURCHASE DECISION
The purchase decision is the act by the consumer to buy the most preferred brand. The
purchase decision can be affected by:
o Attitudes of others
o Unexpected situational factors
5. POST-PURCHASE DECISION
 The post-purchase decision is the satisfaction or dissatisfaction the consumer feels
about the purchase.
 Relationship between:
o Consumer’s expectations
o Product’s perceived performance
 Customer satisfaction is a key to building profitable relationships with consumers—to
keeping and growing consumers and reaping their customer lifetime value.

 The larger the gap between expectation and performance, the greater the consumer’s
dissatisfaction.
 Cognitive dissonance, or discomfort caused by post-purchase conflict, occurs in most
major purchases.
 Marketers job is to reduce customers fear of negative outcomes and provide post
purchase (after sales) services.

THE BUYER DECISION PROCESS FOR NEW PRODUCTS

A NEW PRODUCT is a good, service, or idea that is perceived by some potential customers as new.

The ADOPTION PROCESS is the mental process through which an individual passes from first
learning about an innovation to final adoption. Adoption is the decision by an individual to become
a regular user of the product.

STAGES IN THE ADOPTION PROCESS

Consumers go through five stages in the process of adopting a new product:
 1. AWARENESS: is when the consumer becomes aware of the new product, but lacks
information about it.
2. INTEREST: is when the consumer seeks information about the new product.
3. EVALUATION: is when the consumer considers whether trying the new product makes
sense.
4. TRIAL: is when the consumer tries the new product on a small scale to improve his or her
estimate of value.
5. ADOPTION: is when the consumer decides to make full and regular use of the product.

INDIVIDUAL DIFFERENCES IN INNOVATION

 EARLY ADOPTERS are opinion leaders and adopt new ideas early but cautiously.
 EARLY MAJORITY are deliberate and adopt new ideas before the average person.
 LATE MAJORITY are skeptical and adopt new ideas only after the majority of people have
tried it.
 LAGGARDS are suspicious of changes and adopt new ideas only when they become
tradition.

CONSUMER BEHAVIOR ACROSS INTERNATIONAL BORDERS

Understanding consumer behavior is difficult enough for companies marketing within the boarder
of a single country. For companies operating in many countries, however, understanding and
serving the needs of consumers can be intimidating.

Although, consumers in different countries may have something in common, their attitudes, values,
and behaviors often vary greatly.

International marketers must understand such differences and amend their products and
marketing plans accordingly.

INTERNATIONAL CONSUMER BEHAVIOR

 Values, attitudes and behaviors differ greatly in other countries.
 Physical differences exist which require changes in the marketing mix.
 Customs vary from country to country.
 Marketers must decide the degree to which they will adapt their marketing