Consumer Markets

and
Consumer Buyer Behavior
 Consumer Buying Behavior
Consumer Buying Behavior refers to the
buying behavior of final consumers
(individuals & households) who buy goods
and services for personal consumption.

Study consumer behavior to answer:

“How do consumers respond to marketing
efforts the company might use?”
Levels of Consumer Decision Making

Extensive Problem
Solving

Limited Problem
Solving

Routine Response
Behaviour
Model of Consumer Behavior
Product Marketing and Economic
Other Stimuli
Price Technological
Place Political
Promotion Cultural

Buyer’s Characteristics
Decision Buyer’s Black Box Affecting
Process Consumer
Behavior

Product Choice Purchase

Buyer’s Response Timing
Brand Choice
Purchase
Dealer Choice Amount
Characteristics Affecting
Consumer Behavior
Culture
Social
Personal
Psychological
Buyer
 Factors Affecting Consumer Behavior:
Culture
 Most basic cause of a person's wants and behavior.
 Values
 Perceptions

Subculture Social Class

• Groups of people with shared • People within a social class
value systems based on tend to exhibit similar buying
common life experiences. behavior.
• Hispanic Consumers • Occupation
• African American Consumers • Income
• Asian American Consumers • Education
• Mature Consumers • Wealth
 Factors Affecting Consumer Behavior:
Social
Groups
•Membership
•Reference

Family
• Husband, wife, kids Social Factors
• Influencer, buyer, user

Roles and Status

Malcolm Gladwell’s observations
Three factors ignite public interest in an idea
1. Law of few : three types of people help to
spread an idea- Mavens, Connectors &
Salesmen
2. Stickiness: How the idea motivates the people
to act
3. Power of context: Whether those spreading the
idea are able to organize groups and
communities around it.
 Factors Affecting Consumer Behavior:
Personal
Personal Influences

Age and Family Life Cycle

Occupation
Stage

Economic Situation Personality & Self-Concept

Lifestyle Identification

Activities Opinions

Interests
 VALS 2 Actualizers Abundant Resources

Principle Oriented Status Oriented Action Oriented

Fulfilleds
Achievers Experiencers
(Innovator)

Believers Strivers Makers

Strugglers
Minimal Resources
 VALS – According to SRI Int’l
Innovator. These consumers are on the leading edge of change,
have the highest incomes, and such high self-esteem and abundant
resources that they can induldge in any or all self-orientations. They
are located above the rectangle. Image is important to them as an
expression of taste, independence, and character. Their consumer
choices are directed toward the "finer things in life."

Thinkers. These consumers are the high-resource group of those

who are motivated by ideals. They are mature, responsible, well-
educated professionals. Their leisure activities center on their
homes, but they are well informed about what goes on in the world
and are open to new ideas and social change. They have high
incomes but are practical consumers and rational decision makers.
 Vals..ctd..
Believers. These consumers are the low-resource group of those
who are motivated by ideals. They are conservative and
predictable consumers who favor American products and
established brands. Their lives are centered on family, church,
community, and the nation. They have modest incomes.

Achievers. These consumers are the high-resource group of those

who are motivated by achievement. They are successful work-
oriented people who get their satisfaction from their jobs and
families. They are politically conservative and respect authority and
the status quo. They favor established products and services that
show off their success to their peers.
 Vals..ctd..
Strivers. These consumers are the low-resource group of those who are
motivated by achievements. They have values very similar to achievers
but have fewer economic, social, and psychological resources. Style is
extremely important to them as they strive to emulate people they
admire.

Experiencers. These consumers are the high-resource group of those

who are motivated by self-expression. They are the youngest of all the
segments, with a median age of 25. They have a lot of energy, which
they pour to physical exercise and social activities. They are avid
consumers, spending heavily on clothing, fast-foods, music, and other
youthful favorites, with particular emphasis on new products and
services.
 Vals..ctd..
Makers. These consumers are the low-resource group of those who are
motivated by self-expression. They are practical people who value self-
sufficiency. They are focused on the familiar-family, work, and physical
recreation-and have little interest in the broader world. As consumers,
they appreciate practical and functional products.

Survivors. These consumers have the lowest incomes. They have too
few resources to be included in any consumer self-orientation and are
thus located below the rectangle. They are the oldest of all the
segments, with a median age of 61. Within their limited means, they
tend to be brand-loyal consumers.
 Psychological factors affecting
Consumer Behaviour

Motivation

Beliefs and Psychological

Factors Perception
Attitudes

Learning
Maslow’s Hierarchy of Needs
Self
Actualization
(Self-development)

Esteem Needs
(self-esteem, status)
Social Needs
(sense of belonging, love)

Safety Needs
(security, protection)

Physiological Needs
(hunger, thirst)
The Buyer Decision Process

Need Recognition

Information Search

Evaluation of Alternatives

Purchase Decision

Postpurchase Behavior
 The Buyer Decision Process
Step 1. Need Recognition

Need Recognition
Difference between an actual state and a desired state

Internal Stimuli External Stimuli

• Hunger • TV advertising

• Thirst • Magazine ad
• A person’s normal • Radio slogan
needs
•Stimuli in the
environment
 The Buyer Decision Process
Step 2. Information Search

Personal Sources •Family, friends, neighbors

•Most influential source of
information

Commercial Sources •Advertising, salespeople

•Receives most information
from these sources

Public Sources •Mass Media

•Consumer-rating groups

•Handling the product

Experiential Sources •Examining the product
•Using the product
 The Buyer Decision Process
Step 3. Evaluation of Alternatives
Product Attributes
Evaluation of Quality, Price, & Features

Degree of Importance
Which attributes matter most to me?

Brand Beliefs
What do I believe about each available brand?

Total Product Satisfaction

Based on what I’m looking for, how satisfied
would I be with each product?

Evaluation Procedures
Choosing a product (and brand) based on one
or more attributes.
 The Buyer Decision Process
Step 4. Purchase Decision
Purchase Intention
Desire to buy the most preferred brand

Attitudes Unexpected
of others situational
factors

Purchase Decision
 The Buyer Decision Process
Step 5. PostPurchase Decision
Consumer’s Expectations of
Product’s Performance

Product’s Perceived
Performance

Satisfied Dissatisfied
Customer! Customer

Cognitive Dissonance
 Types of Buying Decisions

High Low
Involvement Involvement
Significant Complex Variety-
differences Buying Seeking
between
brands Behavior Behavior
Few Dissonance- Habitual
differences Reducing Buying
between Buying
brands Behavior Behavior
Stages in the Adoption Process

Awareness

Interest

Evaluation

Trial

Adoption
Adoption of Innovations
Percentage of Adopters

Early Majority Late Majority

Innovators

Early
34% 34% Laggards
Adopters

13.5% 16%
2.5% Time of Adoption
Early Late
Influences on the Rate of Adoption
of New Products

Communicability Relative Advantage

Can results be easily Is the innovation
observed or described superior to existing
to others? products?

Product
Divisibility Characteristics Compatibility
Can the innovation Does the innovation
be used on a fit the values and
trial basis? experience of the
target market?
Complexity
Is the innovation
difficult to
understand or use?
Decision Rules

 Strategies used by consumers to guide decision making.

 Some decision rules use product characteristics to guide
decisions.
 Compensatory
 Non-compensatory
 Some decision rules rely on stored information in
consumers’ memories to guide decisions.
Noncompensatory Decision Rules

 Conjunctive Decision Rule

 Consumer sets a minimum standard for each
attribute and if a brand fails to pass any
standard, it is dropped from consideration.
 Reduces a large consideration set to a manageable size.
 Often used in conjunction with another decision rule.
Noncompensatory Decision Rules
 Disjunctive Decision Rule
 Consumer sets a minimum acceptable standard
as the cutoff point for each attribute--any brand
that exceeds the cutoff point is accepted.
 Reduces large consideration set to a more manageable
number of alternatives.
 Consumer may settle for the first satisfactory brand as
final choice or may use another decision rule.
Noncompensatory Decision Rules

 Lexicographic Decision Rule

 The consumer ranks the attributes according to
importance and then selects the brand that is
superior on the most important attribute.
 If one brand ranks sufficiently high on just one attribute,
it will be selected regardless of how it scores on other
attributes.
 Decision Heuristics
 Availability heuristics: Consumers base their predictions
on the quickness and ease with which a particular
example of an outcome comes to mind. For eg. A recent
product failure may lead a consumer to inflate the
likelihood of a future failure and hence may seek more
product warranty
 Representatives heuristics: Predictions based on the
similarity of the outcomes. Eg. Shampoo brands having
similar package/colour may be as a representative of the
category as a whole
 Decision Heuristics

 Anchoring and adjustment heuristics:

Consumers arrive at an initial judgement and
then adjust it based on additional information. Eg
Services sector believe in creating a strong
impression in the first meeting itself so that the
subsequent experiences can be evaluated in that
light.
 Framing

 Decision framing is the manner in which choices

are presented to and seen by the decision maker.
 Mental Accounting
 Refers to the way the consumers code, categorize
and evaluate the financial outcomes of choices.
 According to Chicago based researcher Richard
Thaler, mental accounting is based on a set of key
core principles:
Segregate gains
Integrate losses
Integrate smaller loses into larger gains
Segregate small gains from large losses
Compensatory Decision Rule
 Select the best overall brand
 Consumer evaluates brand options in terms of
each relevant attribute and computes a
weighted or summated score for each brand.
The consumer chooses the brand with the
highest score.
 A compensatory model because a positive score on one
attribute can outweigh a negative score on another
attribute.