person normally learns or is exposed to the

following values: achievement and

UNIT 3 - THE THEORY OF CONSUMER
success, activity and involvement,
BEHAVIOR
efficiency and practicality, progress,
material comfort, individualism, freedom,
humanitarianism, youthfulness, and fitness
OVERVIEW: and health.
This approach will make use of the concept
of marginal utility or what we call additional Every group or society has a culture,
satisfaction in explaining the behavior of and cultural influences on buying behavior
consumer’s demand. The students will be may vary greatly from country to country.
enlightened why an individual or a group of Failure to adjust to these differences can
people have different taste and preferences result in ineffective marketing or
which must be satisfied per unit of consumption embarrassing mistakes. For example,
of a good. The definition of words described business representatives of a U.S.
here implies that utility or satisfaction can be community trying to market itself in Taiwan
measured. The satisfaction obtained or found this out the hard way. Seeking more
acquired from successive units of a given foreign trade, they arrived in Taiwan
commodity and from various commodities can bearing gifts of green baseball caps. It
be ranked and compared. turned out that the trip was scheduled a
month before Taiwan elections, and that
green was the color of the political
opposition party. Worse yet, the visitors
learned after the fact that according to
Taiwan culture, a man wears green to
signify that his wife has been unfaithful.
The head of the community delegation later
noted, “I don’t know whatever happened to
those green hats, but the trip gave us an
understanding of the extreme differences
in our cultures.” International marketers
must understand the culture in each
international market and adapt their
marketing strategies accordingly.
1. Cultural Factors

Cultural factors exert the broadest and b. Subculture

deepest influence on consumer behavior. The Each culture contains smaller
marketer needs to understand the role played subcultures or groups of people with shared
by the buyer’s culture, subculture, and social value systems based on common life
class. experiences and situations. Subcultures
include nationalities, religions, racial
groups, and geographic regions. Many
a. Culture subcultures make up important market
Culture is the most basic cause of a segments, and marketers often design
person’s wants and behavior. Human products and marketing programs tailored
behavior is largely learned. Growing to their needs. Here are examples of four
up in a society, a child learns basic values, such important subculture groups.
perceptions, wants, and behaviors from the
family and other important institutions. A
 c. Social Class others whom the buyer respects.
Almost every society has some form of Manufacturers of products and brands
social class structure. Social Classes are subjected to strong group influence must
society’s relatively permanent and ordered figure out how to reach opinion leaders—
divisions whose members share similar people within a reference group who,
values, interests, and behaviors. Social because of special skills, knowledge,
class is not determined by a single factor, personality, or other characteristics, exert
such as income, but is measured as a influence on others.
combination of occupation, income,
education, wealth, and other variables. In
b. Family
some social systems, members of different
Family members can strongly influence
classes are reared for certain roles and
buyer behavior. The family is the most
cannot change their social positions.
important consumer buying organization in
Marketers are interested in social class
society, and it has been researched
because people within a given social class
extensively. Marketers are interested in the
tend to exhibit similar buying behavior.
roles and influence of the husband, wife,
Social classes show distinct product and
and children on the purchase of different
brand preferences in areas such as
products and services. Husband-wife
clothing, home furnishings, leisure activity,
involvement varies widely by product
and automobiles.
category and by stage in the buying
process. Buying roles change with evolving
2. Social Factors
consumer lifestyles Children may also have
A consumer’s behavior also is influenced by
a strong influence on family buying
social factors, such as the consumer’s small
decisions. For example, it ran ads to woo
groups, family, and social roles and status.
these “back-seat consumers” in Sports
Illustrated for Kids, which attracts mostly 8-
a. Groups
to 14- year-old boys. “We’re kidding
Many small groups influence a person’s
ourselves when we think kids aren’t aware
behavior. Groups that have a direct
of brands,” says Venture’s brand manager,
influence and to which a person belongs
adding that even she was surprised at how
are called membership groups. In contrast,
often parents told her that kids played a tie-
reference groups serve as direct (faceto-
breaking role in deciding which car to buy. In
face) or indirect points of comparison or
the case of expensive products and
reference in forming a person’s attitudes or
services, husbands and wives often make
behavior. Reference groups to which they
joint decisions.
do not belong often influence people.
Marketers try to identify the reference
c. Roles and Status
groups of their target markets. Reference
A person belongs to many groups-family,
groups expose a person to new behaviors
clubs, organizations. The person’s position in
and lifestyles, influence the person’s
each group can be defined in terms of
attitudes and self-concept, and create
both role and status. A role consists of the
pressures to conform that may affect the
activities people are expected to perform
person’s product and brand choices.
according to the persons around them.

The importance of group influence varies 3. Personal Factors

across products and brands. It tends to be
strongest when the product is visible to

2
 A buyer’s decisions also are influenced by People coming from the same
personal characteristics such as the buyer’s subculture, social class, and occupation
age and lifecycle stage, occupation, economic may have quite different lifestyles. Life
situation, lifestyle, and personality and self- style is a person’s pattern of living as
concept. expressed in his or her psychographics. It
involves measuring consumers’ major AIO
dimensions—activities (work, hobbies,
a. Age and Life-Cycle Stage
shopping, sports, social events), interests
People change the goods and services
(food, fashion, family, recreation), and
they buy over their lifetimes. Tastes in food,
opinions (about themselves, social issues,
clothes, furniture, and recreation are often
business, products). Lifestyle captures
age related. Buying is also shaped by the
something
stage of the family life cycle—the stages
through which families might pass as they
mature over time. Marketers often define e. Personality and Self-Concept
their target markets in terms of life-cycle Each person’s distinct personality
stage and develop appropriate products and influences his or her buying behavior.
marketing plans for each stage. Traditional Personality refers to the unique
family life-cycle stages include young singles psychological characteristics that lead to
and married couples with children. relatively consistent and lasting responses
to one’s own environment. Personality is
b. Occupation usually described in terms of traits such as
A person’s occupation affects the goods self-confidence, dominance, sociability,
and services bought. Blue-collar workers autonomy, defensiveness, adaptability, and
tend to buy more rugged work clothes, aggressiveness. Personality can be useful
whereas white-collar workers buy more in analyzing consumer behavior for certain
business suits. Marketers try to identify the product or brand choices. For example,
occupational groups that have an above- coffee marketers have discovered that
average interest in their products and heavy coffee drinkers tend to be high on
services. sociability. Thus, to attract customers,
Starbucks and other coffeehouses create
environments in which people can relax
A company can even specialize in making
and socialize over a cup of steaming
products needed by a given occupational
coffee.
group. Thus, computer software companies will
design different products for brand managers,
accountants, engineers, lawyers, and doctors. 4. Psychological Factors

c. Economic Situation A person’s buying choices are further

A person’s economic situation will affect influenced by four major psychological factors:
product choice. Marketers of income-sensitive motivation, perception, learning, and beliefs
goods watch trends in personal income, and attitudes.
savings, and interest rates. If economic
indicators point to a recession, marketers can
a. Motivation
take steps to redesign, reposition, and reprice
A person has many needs at any given time.
their products closely.
Some are biological, arising from states of
tension such as hunger, thirst, or discomfort.
d. Lifestyle
Others are psychological, arising from the need
3
for recognition, esteem, or belonging. Most of individual way. Perception is the process by
these needs will not be strong enough to which people select, organize, and interpret
motivate the person to act at a given point in information to form a meaningful picture of the
time. A need becomes a motive when it is world.
aroused to a sufficient level of intensity. A
motive (or drive) is a need that is sufficiently d. Learning
pressing to direct the person to seek When people act, they learn. Learning
satisfaction. Psychologists have developed describes changes in an individual’s behavior
theories of human motivation. Two of the most arising from experience. Learning theorists say
popular—the theories of Sigmund Freud and that most human behavior is learned. Learning
Abraham Maslow—have quite different occurs through the interplay of drives, stimuli,
meanings for consumer analysis and cues, responses, and reinforcement.
marketing.
e. Beliefs and Attitudes
b. Maslow’s Theory of Motivation Through doing and learning, people acquire
Abraham Maslow sought to explain why beliefs and attitudes. These, in turn, influence
people are driven by particular needs at their buying behavior. A belief is a descriptive
particular times. Why does one person spend thought that a person has about something.
much time and energy on personal safety and Buying behavior differs greatly for a tube of
another on gaining the esteem of others? toothpaste, a tennis racket, an expensive
Maslow’s answer is that human needs are camera, and a new car. More complex
arranged in a hierarchy, from the most pressing decisions usually involve more buying
to the least pressing. Maslow’s hierarchy of participants and more buyer deliberation.
needs is shown in Figure. In order of Figure shows types of consumer buying
importance, they are physiological needs, behavior based on the degree of buyer
safety needs, social needs, esteem needs, and involvement and the degree of differences
self-actualization needs. A person tries to among brands.
satisfy the most important need first. When that
need is satisfied, it will stop being a motivator
and the person will then try to satisfy the next
The students has to understand that using a
most important need. For example, starving
demographic profile in conducting research is
people (physiological need) will not take an
important to determine the taste and
interest in the latest happenings in the art world
preferences of every consumer.
(self-actualization needs), nor in how they are
seen or esteemed by others (social or esteem
needs), nor even in whether they are breathing
clean air (safety needs). But as each important REFERENCES:
need is satisfied, the next most important need
will come into play. Introductory Microeconomics, Third Edition by
Pagoso, Dinio & Villasis, 2006
c. Perception
A motivated person is ready to act. How the
person acts is influenced by his or her own LEARNING ACTIVITY:
perception of the situation. All of us learn by the
flow of information through our five senses: To create an individual portfolio of goods you
sight, hearing, smell, touch, and taste. purchased in 6 months Dec 2022 – June 2023
However, each of us receives, organizes, and
interprets this sensory information in an
4
 Utils is the unit of measurement for
satisfaction
Lesson 7 – Utility and Behavioral Factors

What is Utility?
The Law of Diminishing Marginal Utility
Utility refers to the degree of satisfaction per
unit of consumption of a good. It is a technical The law states that as one consumes more
term for satisfaction. Basically, there are two and more of a particular good, additional or
theories regarding consumer behavior namely, extra satisfaction decreases. According to
the cardinal utility theory and the ordinal utility Payumo,a fiipino author, this is more of a
theory. psychological particular good
The Cardinal Utility Theory is a theory which
states that utility is measurable. However, Utils
is the unit of measurement for satisfaction.
Note this example below Lesson 8 – The Indifference Curve, Budget
Line and Optimum Combination
The Indifference Curve
The Indifference curve shows different
combinations of two goods that can be
consumed that yield the same level of
satisfaction or utility. A series of
indifference curve is called an indifference
map.
Characteristics of indifference curves:
Table 7.1 1. More goods are preferrable to fewer
goods; this points to upper right
preferred points in lower left of utility
Tell the students to plot the data inside the curve diagram.
table and find out the sha[e of the curve, 2. More goods are substitutable; hence,
Analyze the points base on the barrio. utility curves slope downward to the
right.
Formula: MU = TU/Q 3. Diminishing marginal rate of
where: MU - Marginal Utility substitution between goods implies
utility curves always convex to the
TU - Total Utility origin.
4. Indifference curve are everywhere
Q - Quantity
dense, i.e. one through every point.
5. Indifference curves cannot cross
because if they did, then individual
The Ordinal Utility Theory is also known as would not be following a rational
the Indifference Theory which states that utility ordering.
is not measurable but can only be ranked or
compared.

5
 Table 8.2
Display slide to describe line AE
as the given budget line. If the
consumer spends all of his income
on Good Y, he could purchase 10
units. This is point A. If all income
is spent on Good X, he could
purchase 20 units of that good. This
is point E. By joining both points,
we can now draw the budget line

Fig. 8.1
Budget Line
A budget line is a locus of points that shows
different combinations of two goods that can be
purcahsed given the same money income or
budget. In constructing a budget line , one has
to determine the price of good x (Px) and
price of y (Py), and of course, with the
corresponding budget (B).
Example: Px = 10,Py = 20 and Budget (B) = AE.
200
Fig. 8.3
Budget = Px Qx + Py Qy
200 = 10 Qx + 20 Qy
Any point like F and G which are to the
Given Px = 10, Py = 20 and Budget (B) = right of the budget line represent unattainable
200. The combination of good X and Y that combinations that require more than P200
can be purchased is determined by the above budget, while at any point to the left of the
equation, otherwise known as a Budget budget line like point K, the consumer spends
Function. less than 200. All combinations on the budget
line are maximum and attainable or can be
purchased with the given budget.

LEARNING ACTIVITY/HOMEWORK:
Case Study: International Convergence of
Tastes