LESSON 3: ANALYZING CONSUMER MARKETS

Marketers need a comprehensive understanding of consumer psychology and lifestyle to create tailored value
propositions. For example, Patanjali's success in India is attributed to its focus on aligning its products with consumer
needs and values.

I. THE MODEL OF CONSUMER BEHAVIOR

The consumer behavior model shows how cultural, social, and personal factors influence the buying process,
alongside psychological drivers like motivation, perception, and memory. The buying journey includes stages such as
need recognition, information search, evaluation, decision-making, and post-purchase behavior.

A. Key Consumer Characteristics

1. Cultural Factors
• Culture defines norms, values, and behaviors, shaping what consumers want and how they fulfill those
wants.
• Subcultures like nationality, religion, or geographic regions often necessitate specialized marketing efforts.
• Social stratification and class distinctions significantly influence consumption patterns. For example:
o Individualistic cultures favor self-expression and trend-following.
o Collectivist cultures emphasize group harmony and trusted retail relationships.
2. Social Factors
• Reference Groups: Family, friends, coworkers, and aspirational groups heavily influence decisions. Opinion
leaders and influencers play a critical role in shaping preferences.
• Family:
o Orientation family imparts values and beliefs.
o Procreation family influences everyday purchases, especially high-ticket items.
o Changing gender roles and growing purchasing power among children and teens are reshaping
traditional dynamics.
3. Personal Factors
• Age and Lifecycle
o Purchases vary across life stages (e.g., singles vs. families vs. retirees).
o Critical life events (e.g., marriage, childbirth, relocation) create new consumer needs.
• Occupation and Economic Circumstances
o Job roles and income levels affect product preferences.
o Economic conditions like recessions can shift demand toward discount brands or value-based
marketing.
• Personality and Self-Concept
o Consumers align brand personalities with their actual, ideal, or perceived self-concepts.
o High "self-monitors" are influenced by how products reflect on them in social contexts.
• Values and Lifestyle
o Core values drive long-term consumer decisions. Marketers can target inner values to influence outward
behaviors.
 o Lifestyles reflect an individual's activities, interests, and opinions, which are influenced by time and
money constraints.

Key Insights for Marketers

1. Localized Strategies- Understanding cultural nuances is vital when entering new markets. For instance,
collectivist societies value trust and reputation, favoring traditional stores over e-commerce.
2. Adapting to Trends- As roles evolve within families and technology reshapes consumer behavior, brands must
innovate to remain relevant, e.g., leveraging social media for younger audiences.
3. Lifestyle Integration- Products offering convenience, time-saving, or multitasking benefits resonate with modern,
time-strapped consumers.

B. Consumer Psychology

This is a comprehensive outline of psychological influences on consumer behavior, touching on critical processes
such as motivation, perception, learning, and memory. Below is a summarized breakdown of the key insights:

1. Consumer Motivation
• Consumer Needs
o Basic Needs: Physiological (e.g., food, water) and psychological (e.g., recognition, belonging).
o Maslow's Hierarchy of Needs: Explains prioritization of needs from physiological to self-actualization.
o Needs to Wants: Needs evolve into wants shaped by cultural and societal factors.
o Demand: Wants backed by purchasing power.
o Marketers do not create needs but align products to fulfill existing ones (e.g., status needs linked to luxury
brands).

• Motivation as an Action Driver

o Direction and intensity guide goal selection and pursuit vigor.
o Motivation Research- In-depth psychological methods (e.g., word association) uncover underlying
consumer motives.

2. Perception
• Definition:
o Perception interprets stimuli, influenced by the consumer's internal and external conditions.
o Perception often outweighs objective reality in influencing behavior.
• Selective Perception Processes
o Selective Attention: Consumers filter stimuli based on relevance and novelty.
o Selective Distortion: Information is interpreted to fit preexisting beliefs.
o Selective Retention: Consumers are more likely to retain favorable information about preferred
products.
• Practical Applications
 o Intrusive and unexpected marketing tactics (e.g., unique ads) can bypass attention filters.
o Strong brands benefit from positive perception biases.

3. Emotions
• Emotional Responses in Marketing:
Brands elicit emotional connections (e.g., pride, joy) that complement functional benefits.
Emotional appeals, such as nostalgia or storytelling, foster consumer engagement.
Case Examples:
Successful Campaigns: U by Kotex’s “Break the Cycle” and Ray-Ban’s “Never Hide.”
Nostalgia marketing, like retro product designs and advertising, taps into positive consumer emotions.
• Emotion-Driven Behaviors:
Emotional states influence decisions (e.g., fear affecting social proof strategies).
Visual emotional cues (e.g., sad faces) can motivate actions, such as donations.

4. Memory
• Types of Memory:
o Short-Term Memory: Limited and temporary information repository.
o Long-Term Memory: Includes
▪ Episodic: Personal experiences.
▪ Semantic: General world knowledge.
▪ Procedural: Skills and habits.
• Associative Memory Models
o Memory works as interconnected nodes and links, activated based on strength of association.
o Brand associations shape consumer recall and preferences.
• Marketing Implications
o Packaging, in-store displays, and advertising serve as retrieval cues.
o Strong, positive associations improve brand recall and word-of-mouth.
• Challenges in Memory
o Interference Effects: Overcrowded markets dilute brand recall.
o Selective Retention: Consumers favorably remember preferred products and overlook competing
alternatives.

II. The Buying Decision Process Overview

Marketers can better understand and influence consumer behavior by analyzing who, what, why, when, where, and how
customers make purchasing decisions.
1. Who? Identifies decision-makers and influencers in the purchasing process.
2. What? Explores the needs and wants satisfied by the product or service.
3. Why? Uncovers the benefits customers seek in brands or products.
4. Where? Highlights the purchase locations (online/offline) and situational factors.
5. When? Examines timing, seasonality, and purchase triggers.
6. How? Evaluates consumer perceptions, attitudes, and the role of external influences.

A. Buying Process

1. Problem Recognition

The buying process begins when a consumer recognizes a need, triggered by internal (e.g., hunger, thirst) or external
stimuli (e.g., an ad or a peer's purchase). Marketers should identify triggers and design campaigns to spark interest. Key
drivers for problem recognition include:
• Natural depletion (e.g., replacing used items like toothpaste).
• Dissatisfaction with current offerings.
• Lifestyle changes (e.g., new job, birth of a child).
• Social influences (e.g., opinions of friends or peers).
2. Information Search
Consumers gather information at two levels:
• Heightened attention: Passive reception of relevant information.
• Active search: Actively seeking information through various sources.
Information Sources:
• Personal: Family, friends, peers.
• Commercial: Advertising, websites, salespeople.
• Public: Media, social media, independent reviews.
• Experiential: Handling or using the product.

Although consumers often rely on marketer-driven sources, personal and experiential sources tend to be more influential.
Search behaviors vary based on involvement, product type, and how information is presented. Recommendation engines
like Amazon’s collaborative filtering system enhance search relevance and purchase likelihood.

3. Evaluation of Alternatives
Consumers weigh the pros and cons of options based on beliefs and attitudes:
• Beliefs: Perceptions of truth about a product, valid or not.
• Attitudes: Enduring positive or negative evaluations that influence consistent behavior.
Key concepts in evaluation:
• Consumers seek products that fulfill specific needs.
• Products are seen as bundles of attributes offering benefits (e.g., hotels—location, cleanliness).
• Over choice can hinder decision-making; marketers can simplify decisions by reducing options or emphasizing
unique attributes.

Expectancy-Value Model - Consumers evaluate brands by combining their beliefs about attributes with the importance
they assign to those attributes. Companies can improve appeal by:
• Redesigning products to improve attributes.
• Communicating benefits effectively.
• Highlighting competitors’ drawbacks.
• Emphasizing attributes where the brand excels.

Purchase Decision Process

1. Evaluation Stage:
o Consumers develop preferences for brands and form intentions to purchase based on perceived value.
o Decisions involve several aspects: brand, channel, quantity, timing, and payment method.
o Heuristics: Consumers often rely on mental shortcuts, especially under time or cognitive constraints.
2. Decision Heuristics:
 o Compensatory Models: Positive attributes can offset negatives (e.g., expectancy-value model).
o Non-compensatory Models: Attributes are evaluated in isolation, simplifying decisions but potentially
leading to different choices.
o Choice Architecture: Structuring environments (e.g., 100-calorie packs) nudges consumers toward
specific behaviors.
3. Level of Consumer Involvement:
o High Involvement: Central route decision-making involves detailed evaluation of critical product
information.
o Low Involvement: Peripheral route decisions rely on cues like celebrity endorsements or emotional
appeals.
o Techniques to increase involvement include linking products to personal issues, emotions, or adding new
features.

4. Intervening Factors:
o Attitudes of Others: Influence depends on the intensity of the other person’s view and closeness to the
consumer.
o Situational Factors: Unexpected events (e.g., financial setbacks) can alter intentions.
o Perceived Risks: Functional, financial, social, and other risks impact decisions, prompting consumers to
seek information or choose trusted brands.

Postpurchase Behavior
1. Satisfaction:
o Satisfaction depends on the gap between expectations and product performance.
o Outcomes influence repurchase likelihood, advocacy, or dissatisfaction (e.g., returns, complaints).
2. Postpurchase Actions:
o Satisfied customers may become brand advocates.
o Dissatisfied consumers might return products, complain, or share negative feedback publicly or privately.
3. Product Use and Disposal:
o Consumption Rate: Faster consumption increases repurchase frequency.
o Marketers can encourage replacement by:
▪ Linking replacement to events (e.g., battery changes during daylight saving).
▪ Offering subscriptions (e.g., Dollar Shave Club, Blue Apron).
▪ Providing usage indicators (e.g., battery gauges, razor strips).

Implications for Marketers

• Align strategies with the consumer’s level of involvement and perceived risks.
• Use postpurchase communication to reinforce satisfaction and reduce returns.
• Educate consumers about optimal product usage and replacement to drive loyalty and repeat purchases.