Analyzing Consumer Markets

Marketing Management
(Philip Kotler & Kevin Lane Keller)

- Nadeem Jafri
Consumer behaviour 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.
Effective marketing requires insights into
consumers’ minds. It ensures that the right products
are conceived, produced and offered to the right
consumers in the right way.
What Influences Consumer Behaviour?
• Cultural Factors: Culture, subculture and social class are
particularly important influencers on consumer buying
behaviour.

– Culture: It is the fundamental determinant of a person’s wants

and behaviour. A growing child acquires a set of values,
perceptions, preferences and behaviours through his or her
family and other key institutions.

– Subculture: Nationalities, Religions, Racial Groups and

Geographic regions. When these subcultures become large and
affluent enough, companies design specialized marketing
programs to serve them.
What Influences Consumer Behaviour?
– Social Class: Relatively homogenous and enduring divisions, which are
hierarchically ordered and whose members share similar values,
interests and behaviour.
• Indian marketers use a term called socioeconomic classification
(SEC), which uses a combination of the education and occupation
of the chief wage earner of the household to classify the buyers in
the urban areas.
• This classifies the urban household into broad 8 categories A1, A2,
B1, B2, C, D, E1, E2
• For the rural areas, the system uses the occupation of the chief
wage earner and the type of the house to classify households into
four broad category R1 to R4 in the descending order of purchase
potential
• These social classes differ in their brand preferences and media
habits.
• Page 147-148
What Influences Consumer Behaviour?
• Social Factors:

– Reference Groups
• Membership groups (Primary): Family, Friends, Neighbours, Co-workers
• Membership groups (Secondary): Religious, Professional, trade-unions etc
• Aspirational groups: A person hopes to join
• Dissociative groups: Are those whose value or behaviour an individual
rejects.

– Family: The family is the most important consumer buying organisation in society,
and family members constitute the most influential primary reference group
• Family of orientation: Parents and siblings
• Family of procreation: Spouse and children

– Roles and Status: A role consists of the activities a person is expected to perform.
Each role carries a status.
What Influences Consumer Behaviour?
• Personal Factors:
– Age and stage in the lifestyle: People buy different goods and
services over a lifetime. Taste in food, clothes, furniture and recreation
is often age related.

– Occupation and Economic Circumstances: A blue-collar worker will

buy products according to his needs while a company president will buy
suits, air-travel and country club memberships. Product choice is greatly
affected by economic circumstances: Spendable income, savings and
assets, debts, borrowing power and attitudes toward spending and
saving.

– Personality and Self-Concept: Each person has personality

characteristics that influence buying behaviour. This can be a useful
variable analysing consumer brand preferences.
What Influences Consumer Behaviour?
– Personality and Self-Concept (Continued): A specific mix of
human traits that may be attributed to a particular brand is Brand
Personality.

• According to Stanford’s Jennifer Aaker brand personalities

have following five traits:
– Sincerity (down-to-earth, honest, wholesome, and
cheerful)
– Excitement (daring, spirited, imaginative and up-to-date)
– Competence (reliable, intelligent and successful)
– Sophistication (upper-class and charming)
– Ruggedness (outdoorsy and tough)
What Influences Consumer Behaviour?
– Lifestyle and values: Lifestyle are shaped partly by whether the
consumers are money-constrained or time-constrained.
• The study on Indian males has classified them into four
groups:
– Traditional: Conservative, driven by values, cherishes
family
– Pleasure Seeker: Self-oriented, driven by status and
status symbol. A risk-taker, pleasure seeker, young and
unmarried.
– Social Chameleon: Hypocrite of sorts who wants to
project the right image. Tech-savvy and individualistic.
– Intrinsic Progressive: The futuristic person. Believes in
family values and equality of sexes.
• Consumer decisions are also influenced by core values, the
belief systems that underlie consumer attitudes and
behaviours.
 Model for Consumer Behaviour
Consumer
Psychology

Motivation
Perception
Learning
Buying Purchase
Memory Decision Decision
Marketing Process
Other Stimuli
Stimuli
Problem Recognition
Information search
Product & Services Evaluation of Product Choice
Economic Brand Choice
Price alternatives
Technological Purchase amount
Distribution Purchase decision
Political Purchase timing
Communications Post purchase
Cultural Payment method
behaviour

Consumer
Characteristics

Cultural
Social
Personal
 Key Psychological Processes
• Motivation
• Perception
• Learning
• Memory
 Motivation
• A need becomes a motive when it is aroused to a sufficient level of intensity.
A motive is a need that is sufficiently pressing to drive the person to act.

– Freud’s Theory: Sigmund Freud assumed that the psychological forces shaping
people’s behaviour largely unconscious, and that a person cannot fully
understand his own motivations.
• Motivation researchers often collect “in-depth interviews” with a few dozen
consumers to uncover deeper motives triggered by a product. They use
various projective techniques such as word association, sentence
completion, picture interpretation, and role playing.

– Herzberg’s Theory: Frederick Herzberg developed a two-factor theory that

distinguishes dissatisfiers (factors that cause dissatisfaction) and satisfiers
(factors that cause satisfaction). Absence of dissatisfiers is not enough; satisfiers
must be present to motivate a purchase.
• Thus this theory has two implications. First the sellers should do their best to
avoid dissatisfier and second the seller should identify the major satisfiers
and motivators. (For example in case of computer the ease of usage is
satisfiers while absence of warranty is dissatisfier)
 Motivation
• Maslow’s Hierarchy of Needs: Human needs are arranged in a
hierarchy from the most pressing to the least pressing needs.

Self-
Actualisation
(Self
development
& realisation)

Esteem Needs
(self-esteem, recognition, status)

Social Needs
(Sense of belonging, love)

Safety Needs
(Security, Protection)

Physiological Needs
(food, water, shelter)
 Perception
• It is the process by which an individual selects, organises and interprets information
inputs to create a meaningful picture of words.
• Perceptions can widely vary among individuals exposed to same reality, for some a
fast talking salesperson is aggressive and insincere; for another he is intelligent and
helpful.
– Selective Attention:
• People are more likely to notice stimuli that relate to a current need.
• People are more likely to notice stimuli that they anticipate.
• People are more likely to notice stimuli whose deviations are large in relation to the
normal size of the stimuli (For eg. Rs. 100 off than Rs. 5 off)
– Selective Distortion:
• Tendency to interpret the information in a way that will fit our preconceptions.
– Selective Retention:
• People will tend to retain the information which supports their belief and attitudes.
– Subliminal Perception:
• Marketers embed covert, subliminal messages in ads or packages. This subtle
messages affect the consumer behaviour
 Learning
• Learning involves changes in an individual’s behaviour arising from
experience.

– A drive is a strong internal stimulus impelling action

– Cues are minor stimuli that determine when, where and how a person
responds.
– Discrimination means that the person has learned to recognize
differences in sets of similar stimuli and can adjust responses
accordingly.
 Memory
• All the information and experiences that we encounter as we go
through life can end up in our long-term memory.

• Cognitive psychologists distinguish between short-term memory

(STM)- a temporary repository of information and Long-term
memory (LTM) – a more permanent repository.
 The Buying Decision Process: The Five
stage Model
Problem
Recognition

Information
Search

The milder search

State is heigtened Evaluation of
attention,
here a person simply alternatives
becomes more receptive
for information Here, first the consumer
Next stage is active is trying to satisfy a need.
information search, here Second the consumer Purchase
he looks for reading is looking for certain
material, calling friends benefits. decision
etc. Third the consumer sees
Key influences on Each product as a bundle
purchase decision: of attributes with varying abilities
• Personal; family & friends For delivering the benefits sought Post-purchase
• Commercial; sales To satisfy this need.
person, dealers Attributes of interest vary to buyers: Behaviour
• Public. Mass media •Cameras. Pictures, sharpness, speed
• Experiential. Handling, •Hotels. Location, cleanliness, Price
examining •Mouthwash. Color, taste, flavour
•Tires. Safety, durability, ride
 Beliefs and Attitudes
• Evaluations often reflects beliefs and attitudes. Through
experience and learning, people acquire beliefs and
attitudes. These in turn influence buying behaviour.
– A belief is a descriptive thought that a person holds about
something.
– An attitude is a person’s enduring favourable and unfavourable
evaluation, emotional feeling and action tendencies toward some
object or idea.
 Purchase Decisions
• The expectancy-value model is a compensatory in that perceived good
things for a product can help overcome perceived bad things. But
consumers may not want to invest so much of time and they take mental
short cuts.
• While with non-compensatory models of consumer choice, positive and
negative attribute considerations do not necessarily net out. Evaluating
attributes more in isolation makes decision making easier.
– Conjunctive heuristic: Minimum acceptable cutoff level for each
attribute and chooses the first alternative that meets this minimum
standards.
– Lexicographic heuristic: The consumer chooses the best brand on the
basis of its perceived most important attribute.
– Elimination by aspects heuristic: The consumer compares brands on
an attribute selected probabilistically – where the probability of choosing
an attribute is positively related to its importance and brands are
eliminated if they do not meet minimum acceptance cutoff levels.
 Purchase Decision
Steps between evaluation and
Purchase decision Purchase
Decision

Unanticipated
Attitudes of
Situational
Others
factors

ere are many different types of risk that consumer

y perceive in buying and consuming a product: Purchase Intervening Factors that influence
Functional risk: Does not perform as expected Intention purchase decision:
Physical risk: threat to physical well-being
Financial risk: Not worth the price 1) Attitude of Others
Social risk: It can be an embarrassment to use 1) The intensity of the other
Psychological risk: affects the mental well being person’s negative attitude towards
Time risk: The failure of the product results in the the preferred brand
opportunity cost of finding another product 2) The consumer’s motivation to
Evaluation of comply with the other person

alternatives 2) Unanticipated Situational factors

 Postpurchase Behaviour
• Post purchase satisfaction: If performance falls short of expectations the
consumer is disappointed. If it meets expectations the consumer is satisfied. If
it exceeds expectations the consumer is delighted.

• Post purchase Actions: A satisfied consumer is normally a repeat buyer

while a dissatisfied consumer may abandon or return the product. Dissatisfied
customer may take private action of warning friends against the product usage
and quitting the usage of the product himself, he may take public actions like
complaining to the company, going to lawyer, or complaining to other groups.

• Post Purchase Use and Disposal: Marketers should know how the
consumers use and dispose the product. A key driver of sales frequency is
product consumption rate – the more quickly buyer consumer a product, the
sooner they may be back in the market to repurchase it. (For eg. Certain
antiseptic cream are also shown as beauty cream this is to enhance product
consumption. Concept of bringing old product and get discount on the new
one is also to help consumer dispose the old product and lure him to purchase
the new one.)
 ELM model of attitude change

Advertisement
Petty and Cacioppo
Have proposed the framework
No
Which predicts when the audience Motivation to
Member will cognitively elaborate Process Information
Peripheral Cue Present
And Follow the central route. Two
Factors in ELM are significant; an Yes
Audience member’s motivation to
Yes
Process information and ability to Ability to
No
Process information. When both the Process Information
Motivation and ability is high consumer
Would process centrally if either of them Yes
Is low they would process peripheraly. Peripheral Route
to Attitude Change
Central Route to
Attitude Change
 Other theories of Consumer Decision
Making
• Low-involvement marketing strategies: Many products are bought under conditions of
low involvement; products that are relatively cheap, frequently purchased and are
perceived as low risk.
– Marketers use four techniques to convert it into one with high-involvement:
• They link the product to some involving issue (Colgate is suraksha chakra)
• They link the product to some personal situation (Coke: Aao jashan manale
and Cadbury ad: Mooh mitha karo)
• They design advertising to trigger personal values like ego defense (Surf ads
on samajhdari)
• They might introduce some important feature to the product (“Kya aapke tooth
paste main namak hai?”

• Variety-Seeking Buying Behaviour (low involvement): Brand switching occurs for the
sake of variety rather than dissatisfaction for eg. Cookies, chocolates, soft drinks etc.
– The market leader will try to encourage habitual buying behaviour by dominating
the shelf space with a variety of related but different product versions, avoiding out
of stock situation and sponsoring frequent reminder advertising
– Challenger firms will encourage variety seeking by offering lower prices, deals,
coupons, free samples and advertising that tries to break the consumer’s purchase
and consumption cycle and presents reasons for trying something new.