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Analyzing Consumer Markets

1. Consumer behavior is 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. Understanding consumer behavior is important for marketing managers. 2. Consumer behavior is influenced by cultural, social, personal, and psychological factors. Marketers must understand the consumer decision-making process which involves problem recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior. 3. The level of consumer involvement in a purchase depends on factors like previous experience, interest, perceived risk, situation, and social visibility. High involvement purchases require more extensive decision making.

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65 views30 pages

Analyzing Consumer Markets

1. Consumer behavior is 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. Understanding consumer behavior is important for marketing managers. 2. Consumer behavior is influenced by cultural, social, personal, and psychological factors. Marketers must understand the consumer decision-making process which involves problem recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior. 3. The level of consumer involvement in a purchase depends on factors like previous experience, interest, perceived risk, situation, and social visibility. High involvement purchases require more extensive decision making.

Uploaded by

chitta4iter
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Analyzing Consumer Markets

What is 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

• Explain why marketing managers should understand consumer behavior

• Influenced by cultural, social, and personal factors

Source; Kotler and Keller


Model of Consumer behavior

Source; Kotler and Keller


Point to ponder on consumer markets
• Based on your experience of comparison websites. How does the site assist
consumers in the evaluation stage of choosing a vehicle? How you narrow down the
number of brands? Please share your experience.

• Suppose you are the new marketing manager for a firm that produces a line of
athletic shoes to be targeted to the college student subculture. For your boss, write
a memo in which you list some product attributes that might appeal to this
subculture, list the steps in customers’ purchase process. Is there a role of marketing
and recommend appropriate advertising that can influence their decision.

• Family members play many different roles in the buying process. How your family
decisions vary. Please indicate the family member on whom you attach importance
for a particular decision.

• Assume you are involved in the following consumer decision situations: a) choosing
a fast-food restaurant to go to with a new friend, b) buying ear phone and c) buying
jeans to wear. Share your experience
Situational Influences
• Purchase tasks
• Social surroundings
• Physical surroundings
• Temporal effects
• Antecedent states

Source: Grewal
Personal Influences
• Opinion leadership
• Learning
• Beliefs and attitudes
• Lifestyle
• Life cycle and changes

Source: Grewal
Motivation theory

Herzberg’s
Freud’s Two-Factor
Maslow Theory Theory
Theory
Behavior Behavior is
Hierarchy is guided by guided by
of needs subconscious dissatisfiers
motivations and
satisfiers

Source; Kotler and Keller


Learning
• Classical conditioning
• Operant conditioning

Source; Kotler and Keller


Beliefs and Attitudes
• Self-concept
• Attitude formation
• Attitude change

Source; Kotler and Keller


Lifestyle
• Identified by how people spend their time and resources
• Recognized by what people consider important in their environment
• Identified by:
• Self-perception
• World image

Source; Kotler and Keller


Perception

Selective attention

Selective distortion Selective retention

Subliminal perception

Source; Kotler and Keller


Key Psychological Processes

• Memory
– Short-term vs. long-term memory
– Associative network memory model
– Brand associations
– Memory encoding
– Memory retrieval

Source; Kotler and Keller


Modern Family Life Cycle Stages and Flows

Source: Grewal
Psychological Processes
• Motivation
• Personality

Source; Kotler and Keller


Motives
• Strong needs or wants
• Directs an individual towards need satisfaction
• Maslow’s hierarchy of needs
• Paradigm for explanation of motives
Buying Decision Process

Source; Kotler and Keller


Problem/Need recognition
• Result of an imbalance between actual and desired states
Stimulus

Any unit of input affecting


one or more of the five
Present Preferred
Status State senses:
Marketing helps consumers •sight
recognize •smell
Recognition of functional needs
an imbalance
Pertains between
to product/service performance •taste
present
Recognition status and
of psychological preferred
needs
•touch
state.to personal gratification associated with
Relates
products/services •hearing Source: Lamb et al.
Information search
Internal Information Search

• Internal
RecallInformation
informationSearch
in memory

• Recall information in memory

External Information search

• Seek information in outside environment


• Nonmarketing controlled
• Marketing controlled
Factors Affecting Information Search
• Perceived benefits versus perceived costs
• Internal locus of control
• External locus of control
• Actual versus perceived risk
Sets involved in decision making

Source; Kotler and Keller


Evaluation of alternatives

Evoked Set Analyze product


attributes

Use cutoff criteria

Rank attributes by
importance
Purchase!
Source: Lamb et al.
Confirmatory v/s Non-confirmatory model

Conjunctive heuristic

Lexicographic heuristic

Elimination-by-aspects heuristic
Cognitive Dissonance

Consumers can reduce dissonance


Cognitive Inner tension that by:
Dissonance a consumer
experiences after ❑ Seeking information that reinforces
recognizing an positive ideas about the purchase
inconsistency
❑ Avoiding information that contradicts the
between behavior purchase decision
and values or
❑ Revoking the original decision by
opinions.
returning the product

Source: Lamb et al.


Intervening factor

Source; Kotler and Keller


Types of risk
• Physical risk
• Financial risk
• Functional risk
• Social risk
• Psychological risk
• Time risk

Source; Kotler and Keller


Post-Purchase Outcomes

Build realistic expectations


Demonstrate correct product use
Encourage customer feedback
Make periodic customer contacts

• Leads to buyer’s remorse


– Inconsistency between beliefs and
behaviours
• Feelings of:
– Regret
– Uneasiness

• Develops over a long period of


time
• Result of multiple repeat
purchases from a single firm

Source: Lamb et al.


Customer Product Use/Disposal

Source; Kotler and Keller


Consumer Buying Decisions
and Consumer Involvement

Routine Limited Extensive


Response Decision Decision
Behavior Making Making

Less High
Involvement Involvement

Source: Lamb et al.


Moderating effects and
Behavioural economics
• Low-involvement Consumer Decision Making
• Variety-Seeking Buying Behavior
• Decision Heuristics
• Availability heuristic
• Representativeness heuristic
• Anchoring and adjustment heuristic
• Framing
• Mental accounting

Source: Lamb et al.


Factors Determining the Level of Consumer
Involvement
Previous Experience

Interest

Perceived Risk of
Negative Consequences

Situation

Social Visibility

Source: Lamb et al.

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