Unit 3 – The Consumer Market

The consumer market is made up of households who purchase goods and services for their
own use and consumption. The following are the main factors influencing consumer
behaviour with respect to the goods and services requested and brand preference:

1. Cultural Factors
a. Culture:
Culture is concerned with a set of basic values traditions and behaviours learnt
by a member of society from his/her family, other institutions as well as his/her
country of origin. The main traditions of a country are reflected in an individual’s
consumer behaviour when purchasing food and beverages, home furnishing,
cars, clothing and leisure activities. For example, British people are used to
drinking English breakfast tea with warm milk. On the other hand, Turkish people
prefer apple tea, were as Asians prefer herbal tea.

b. Sub-Culture:
These are smaller cultures within the main culture. Sub-culture is influenced by
individual’s nationalities, religions and races as well as geographic regions. Malta
is experiencing a multicultural scenario and marketers are currently experiencing
several opportunities by designing tailor made marketing mix operations suitable
for different nationalities. This includes Russian, Chinese, Bulgarian, and
Hungarian supermarkets or convenience shops, among others.

c. Social Class:
These are divisions within a society which are hierarchically ordered defining the
level within which an individual belongs to. The following are the major factors
defining an individual’s social class division; income, wealth, education (academic
and vocational) and occupation. The following are the three social class divisions;
lower class (these people would often struggle to purchase the basic needs),
middle class (these people would often purchase their basic needs and some
want), and upper class (these people would often purchase wants and give
preference to brands which derive a psychological reward). People may move up
or down the social class ladder depending on the economic state of the country,
their lifestyle pattern and their personal economic circumstances.

2. Social Factors
a. Reference Groups:
These are individuals or groups with whom the consumer interacts thus affecting
his/her consumer behaviour. The closer the reference group is to the individual
the more influence they are likely to exert. Reference groups include friends,
 neighbours, colleagues at work, educational institutions, social groups, religious
groups, personalities and celebrities (aspirational reference groups), etc.
Peer pressure is considered to be particularly important in referencing an
individual’s consumer behaviour, “to fit in” individuals may need to purchase
specific goods and services and affect brand choices which the reference group
commands.

b. Family:
This is considered to be the most influential social group. Within traditional
families it is noted that husband-wife involvement has changed dramatically over
the past decade since family roles have changed. Joint influences have also been
introduced, children’s involvement in family decision making is particularly
important and marketers are likely to use promotional strategies to target
children since they are considered to be an easy target (pester power).

c. Roles and Status:

A role is the position an individual occupies in a given society. Each role carries a
status that respective role would command an image which society considers to
be relevant. The more public and individual’s role is the more it is likely to
influence his/her consumer behaviour. Thus, a company director is expected to
drive luxury cars, wear branded clothes, and purchase expensive holidays.

3. Personal Factors
a. Age and Life-Cycle:
Most goods and services are age related, for example Plasmon design products
tailored for babies and toddlers of different age brackets. Nestle offer a wide
range of Mio products and the famous baby milk powder Nan. The family life
cycle is also highly influential in an individuals’ consumer behaviour, for example
families with young children would often prefer travel packages featuring theme
parks, water parks, family resorts and family friendly cruise liners and
destinations. On the other hand, younger generations would often opt for
destinations featuring night life such as Ibiza, Ayapana, Amsterdam, etc.

b. Occupation:
Some of the goods and services being marketed are occupation related. Textile
manufacturing firms design uniforms tailored to different occupations, for
example Bortex clothing design uniforms for white collar workers (office people).
The following firms design uniforms both for white collar and blue-collar workers
(tradesmen); BTI uniforms, Jon David, Eagle K wear, Yorkie clothing etc. Anastasi
and Briffa Ltd sell industrial tools to tradesmen.
 c. Economic Circumstances:
The financial state of the household influences his/her consumer behaviour.
During times of recession, consumers become more price sensitive and are likely
to opt for lower priced products. On the other hand, when the economy passes
through an economic boom, consumers are likely to benefit from a higher
disposal income, thus opting for superior quality brands giving more importance
to wants.

d. Lifestyle:
This is an individual’s way of living expressed by his/her interest, hobbies and
behaviours. An individual’s lifestyle pattern influences his/her food and beverage
preference, clothing options, home furnishing and leisure activities.

e. Personality:
These are characterizable traits an individual possesses which eventually affect
his/herself concept, thus declaring a consumer behaviour. Marketers cannot
change consumers’ personality traits; however, episodes may lead to
modifications in personality thus leading to changes in consumer behaviour
preferences. The following are some examples of distinguishing personality
traits; introvert vs extrovert, dependent vs independent, cautious vs risk taker,
safety vs adventurous, conservative vs assertive.
Most goods and services individuals purchase would often be considered as
‘glass-self’: that is product and brand choices help an individual to express
his/her personality. For example, introverted people are likely to give preference
to products and brands which are less eye-catching thus moving away from being
centre of attention. On the other hand, extroverted people are likely to prefer
bright and easily distinguishable colours and product features.

4. Psychological Factors
a. Motivation:
This is the drive to act. An individual’s motivation is triggered by his/her intrinsic
stimulus (drive that comes from within) or extrinsic stimulus (drive that is
triggered by reference groups and marketers through promotional efforts).

b. Perception:
This is the way an individual interprets someone or something. This is very much
influenced by episodes and expectations; thus, an individual may see a specific
sales person as competent, kind, outgoing and helpful. On the other hand,
another shopper may see the same sales person as less competent, arrogant and
unhelpful.

c. Learning:
 Learning describes changes in an individual’s behaviour arising from experience.
When people act, they learn. Most human behaviour is learnt.
d. Beliefs:
A belief is a descriptive thought that an individual holds about someone or
something. Beliefs are based on faith, opinions and real knowledge. Marketers
are interested in the belief’s consumers hold about products and brands since
these influence their brand and product images and consumer behaviour. If
individuals have incorrect beliefs then these may prevent purchase and
marketers would have to launch campaigns to correct beliefs thus creating a
purchase condition.

e. Attitudes:
Attitudes describe individuals’ relatively consistent exclusions, feelings and
tendencies towards a product or firm’s representatives. Attitudes put people in a
frame of mind of liking or disliking someone or something, of moving towards or
away from them. Attitudes are very much dependent on reference group
influences and individuals’ personality traits. If an individual has strong and
negative attitudes about a product or sales representative, then the firm must
launch a campaign to correct it. However, this may prove to be very difficult with
certain people and marketers may decide to withdraw that product or move to
other markets. Thus, it is imperative to hire front line staff members who give
positive first impressions through their appearance and opening remarks thus
aiding in creating a positive attitude.

Types of Consumer Buying Decision Behaviours

1. Complex-Buying Decision Behaviour:
This buying behaviour applies to goods and services which are purchased occasionally
and cost a considerable amount of money. There is high involvement in the decision
making and a high-risk factor thus, stage two and three of the buyer process take a
considerable amount of time to materialise, time duration will however depend on
urgency of purchase and personality factors. Examples of complex goods and services
include property, cars, furniture, electronic equipment, designer clothing, long haul
holidays and investments.

2. Habitual-Buying Decision Behaviour:

This concerns goods and services which are purchased regularly and cost less than
complex products. There is often less involvement in the purchase decision and a lower
risk factor involved. It is however important to distinguish between the following two
evaluations:
a. Brand Significant Products;
 This concerns those products were high perceived differences among brands are
enforced and customers are likely to be brand loyal and brand loyalty bound. It is
however important to note that stages two and three of the process do not take
much of the buyers’ time. Customers are likely to make significant brand
difference when purchasing food and beverage, detergence and household
maintenance products, among others.

b. Brand Insignificant Products;

This purchase behaviour concerns those goods and services were there are
insignificant differences. There is often no involvement in the purchase decision
and stages two and three of the process are bypassed. This includes matches,
salt, pepper, sugar, etc.

3. Variety-Seeking Buying Decision Behaviour:

This buying decision behaviour applies in the case were buyers decide to opt for
alternative products for the sake of variety. This is particularly relevant in the case of
habitual products even though it may also materialise with complex products. This is
often effective either because the consumer would want to try something different or
simply out of boredom rather than dissatisfaction. Marketers would still experience a
decrease in market share and therefore a product line would help the buyer to opt for
different products but remain loyal to the brand.

4. Dissonance-Reducing Buying Decision Behaviour:

This buying decision behaviour is characterised by instances where the individual
evaluates alternative brands without prior knowledge, expertise or he/she experiences
uncertainty. The buyer is often unable to determine and perceive any differences among
alternative brands. In such cases the buyer may shop around to learn what is available
but is likely to relay on his/her instinct or the sales representative’s input. Thus, an
element of discomfort may be experienced and if this is not threated well it may result
in anxiety and eventually dissatisfaction. Thus, marketers would have to adopt effective
promotional campaigns, this may include persuasive advertising efforts as well as sales
people follow up communication. This buying decision behaviour may be experienced
with newly emerging products were little to no information is available (smart tv
introduced). Other examples include mattresses, curtains, carpets, jewellery, kitchen-
ware.

Consumer Buyer Process

1. Problem/Need Recognition:
This is the stage were the individual recognises the need to purchase a specific good or
service. Problem recognition may arise either through intrinsic stimulus or extrinsic
stimulus. In the case of intrinsic stimulus, the individual is able to decide independently
 thus formulating a need. In the case of extrinsic stimulus, problem recognition is often
recognised through reference groups’ references or marketers’ promotional strategies.

2. Information Search:
Once a need is recognised it is imperative to collect information about the need
concerned following purchasing power considerations. The individual will than look for
information about possible products and alternatives. The following are the different
sources of information: personal sources (reference groups), commercial sources
(advertising and personal selling), and experiential sources (handling, examining or past
experience with product or brand).

3. Evaluation of Alternatives:
Once information is collected it is important to analyse the short-listed options
comparing price and quality differences. This is very much based on the information
gathered but also personal opinions.

4. Purchase Decision:
This stage is characterised by product choice. The buyer is likely to opt for that good or
service and brand that he/she considers to be the most appealing. It is important to note
that a purchase intention may not materialise into a purchase decision due to
unexpected situational factors. This may arise due to changes in expected prices,
product availability, changes in priorities and other people’s recommendations. This is
particularly relevant with complex products were significant time may elapse between
information search and purchase decision.

5. Post Purchase Behaviour:

Once the good or service is purchased and/or used, the buyer evaluates whether he/she
is satisfied with the purchase affected. If the buyer experiences a feeling of satisfaction
than not only is he/she likely to purchase the product again but he/she is likely to
influence on average 3-5 people positively through recommendations. However, if the
buyer experiences a feeling of dissatisfaction than not only, he/she is unlikely to
purchase that product again but he/she is also likely to influence an average of 13-15
people negatively through bad mouthing. Thus, it is important to take the necessary
corrective action in order to reduce or eliminate dissatisfaction. This may involve
repairing or replacing the product or providing relevant compensation. It is also
important to remark that the negative influence of dissatisfaction will depend on
whether the individual is mildly dissatisfied or ‘hopping-mad’.