Consumer Behaviour

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  • Consumer Behavior Consumer behavior refers to the buying behavior of final consumers -- individuals and households who buy goods and services for personal consumption. Model of Consumer Behavior Marketers control the stimuli or inputs consisting of the four Ps: Product, Place, Price, and Promotion. Environmental and situational influences, though perhaps beyond the control of the marketer, also influence many consumer choices. But what happens between the marketing stimuli input and the buyer’s response or output? That “black box” processing is the central question for marketers. Teaching Tip: You may wish to discuss the “buyer’s black box” in more detail at this stage. Students sometimes become involved in the controversy regarding the presence or absence of consciousness in consumers. Consider using a two-side in-class discussion: Side A: Experimental psychologists argue that what we call consciousness is merely a set of complex learned responses -- an ordinary physiological function. Side B: Sociologists and social psychologists argue that consciousness is greater than the sum of its physiological parts. For marketers, the issue is sometimes linked to free will: Do marketers create needs by conditioning consumers? Do marketers offer need-fulfillers to needs consumer’s create in their “black box?” Model of Consumer Behavior This CTR corresponds to Figure 5-1 on p. 135 and to the material on pp. 134-135.
  • Characteristics Affecting Consumer Behavior This CTR relates to Figure 5-2 on p.135 and previews the material on pp. 135-150. Influences on Consumers Cultural . Culture is the most basic influence on a person's values, priorities, and beliefs. Cultural shifts make marketing opportunities although most such changes are in secondary rather than core cultural values. Subcultures are important markets as these groups are often significantly different in their needs to warrant different marketing approaches. Social. Social class is determined by a combination of income, occupation, education, wealth and other variables. Social factors within one's class that affect consumer behavior include reference groups & aspirational groups. Families also exert strong social influences. Finally, each relationship a person has with his or her group carries with it certain roles and status that may carry consumptive responsibilities. Personal . Major personal factors are age and life cycle stage, occupation, economic situation, life style and personality/self-concept. Texts vary in their treatment of the PLC stages but it is clear that singles buy different products than do young marrieds with small children. Occupations differ in time constraints and social pressures to conform that affect consumption decisions. Lifestyles measured by AIO or VALS typologies can reveal different consumption patterns across otherwise dissimilar groups. The unique characteristics of each person that make up their personality also affect behavior. Psychological . Maslow's hierarchy reminds marketers that need states vary in their intensity or motivation. Perception is the process of organizing stimuli and is influenced by selective exposure, distortion, & retention. Learning occurs in response to the presentation of information linked to relevant drives, cues, responses, and reinforcement only some of which is under the control of the marketer. Beliefs and attitudes, though shaped by cultural and social forces, may vary considerably on the individual level.
  • Social Factors This CTR relates to the material on pp. 140-142. Group Influence on Brand Choice Groups vary in their influence on product and brand purchases as illustrated on the CTR. Consumers belong to several different membership groups. Primary Groups. Primary groups are those with which we have regular but informal interaction. These include family, friends, neighbors, and co-workers. Secondary Groups. Secondary groups are those with which we have more formal and less regular interaction such as religious groups, professional associations, and trade unions. Reference Groups. These groups serve as direct (face-to-face) or indirect points of comparison and evaluation in a person’s formation of attitudes or behavior. Aspirational Groups. This type of group is one to which the individual wishes to belong and emulates in adopting behaviors appropriate to that group. Opinion Leaders. These are people within a reference group who exert influence over others due to special knowledge, skill, personality, or other characteristic.
  • Factors Affecting Consumer Behavior: Personal This CTR corresponds to Table 5-2 on p. 142 and the material on pp. 142-146. Personal Factors Age and Family Life-Cycle Stage. Buyers’ choices are affected by changes in their age and family structure over time. Young singles have different tastes in clothes, furniture, food, and recreation than do middle aged persons with their own children. Older consumers continue to change in their preferences and additionally acquire new buyer needs such as increased health care needs. Occupation. A person’s occupation carries with it distinct consumptive needs. White collar workers need different clothes than blue collar workers. Also, occupations usually carry their own subcultural norms and values that influence buyer behavior. Economic Situation. Means constrain buyer behavior for almost everyone except for the most wealthy. Personality and Self-Concept. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting response to one’s own environment. Self-concept is the basic perception that people have about who they are. Lifestyle Lifestyle is a person’s pattern of living as expressed in her or his activities, interests, and opinions. Determining lifestyle involves measuring AIO dimensions -- the Activities , Interests , and Opinions of consumers. Psychographics. Lifestyle measures combined with demographic information can identify distinct market segments for consumer products and services. The best known of these methods, VALS 2, is addressed on the following CTR.
  • VALS 2 Segments This CTR corresponds to Figure 5-3 on p. 144 and relates to the material on pp. 143-145. VALS 2 Segments The VALS 2 Segmentation by lifestyle incorporates both psychological aspects such as principles, status, and action orientations as well as resource-based orientations (abundant versus minimal). Descriptions of each area include: Fulfilleds. Fulfilleds are principles oriented individuals who are mature responsible well-educated professionals. Leisure centers around the home but they are also well-informed about the world. High income but practical, value-oriented consumers. Believers. Believers principles oriented individuals who have more modest incomes, are conservative and predictable consumers who favor American products. Achievers. Achievers are status oriented individuals who get satisfaction from jobs and families. Conservatives who respect authority. Products show off success. Strivers. Strivers are status oriented individuals who seek to emulate achievers but have fewer resources. Experiencers. Experiencers are action oriented individuals who like to affect the environment in tangible ways. This group is active and outgoing and likes new things. Makers. Makers are action oriented individuals who also like to affect their environment but in more practical ways. They value self-sufficiency, family, and have little interest in the larger world. Actualizers. Actualizers are resource oriented individuals with the highest incomes and so many resources that they can indulge any or all self-orientations. Image is an expression of taste, independence, and character. They can buy anything; need nothing. Strugglers . Strugglers are resource oriented individuals who have the lowest income and tend to be brand loyal. Strugglers are concerned with survival.
  • Maslow’s Hierarchy of Needs Maslow suggests that lower level needs must be satisfied before individuals become motivated to satisfy higher level needs. Thus consumers will respond to lower level products and promotions until those needs are met. Only then can other marketing offers be of interest. Needs include: Physiological. Physical needs such as hunger, thirst, and bodily functions are the lowest level need and require satisfaction before other needs become important to the individual. Sometimes this helps students understand the difference between needs and wants. A thirsty person may still want an expensive car but if thirsty enough will take a drink of water. Safety. Safety needs for security and protection are the next level needs in the hierarchy. So long as physiological needs are met, safety needs will take precedence over other needs. Fear appeals for consumer products are often linked to safety needs. Social. Human beings are social, gregarious animals. We group together in part to fulfill physiological and safety needs but also because we enjoy and need the company of others. Going to malls to "hang out" fulfills social needs. Esteem. To be recognized as an individual fulfills esteem needs. Self-esteem is the value a person places on himself or herself. As lower level needs become more stable, esteem needs become more important to the individual. Self-actualization. Beyond esteem needs very successful people may still be driven to improve themselves and "accomplish something." These people are driven to self-actualize their potential. Maslow’s Hierarchy of Needs This CTR relates to the material on p. 146-147 and corresponds to Figure 5-4.
  • Types of Buying Decisions This CTR corresponds to Figure 5-5 on p. 151 and relates to the material on pp. 151-152. Types of Buying Decision Behavior Complex Buying Behavior. Consumers undertake this type of behavior when they are highly involved in a purchase and perceive differences among brands. Involvement increases with the product is expensive, infrequently purchased, risky, and highly self-expressive. Dissonance-Reducing Buying Behavior. Consumers engage in this behavior when they are highly involved with an expensive, infrequent, or risky purchase, but see little difference among brands. Without objective differentiation to confirm the purchase, buyers often seek support to reduce postpurchase dissonance -- the feeling they may have made the wrong decision. Habitual Buying Behavior. This behavior occurs under conditions of low consumer involvement and little significant brand differences. Consumers do not search extensively for information about brands. Brand familiarity aids in promoting products under essentially passive learning conditions. Variety-Seeking Buying Behavior. Consumers may seek variety when involvement is low and there are significant perceived differences among brands. Differences may be product features -- new taste, improvements, extra ingredients -- or promotional benefits such as coupons, rebates, and price reductions.
  • The Buyer Decision Making Process This CTR corresponds to Figure 5-6 on p. 153 and relates to the material on pp. 152-156. Teaching Tip: Consider asking students to describe some of their purchases decisions made at the beginning of the term and link them to steps in the process. Stages in the Buyer Decision Process Need Recognition. Problems are recognized when people sense a difference between an actual state and some desired state. Problem recognition can be triggered by either internal or external stimuli. Information Search. Consumers vary in the amount of information search they conduct. Information search may be a survey of information stored in memory or may be based upon information available externally. Search effort varies from heightened awareness corresponding to increased receptivity for relevant information to active information search modes where the person expends some energy to obtain information that is desired. External information vary in their informational and legitimizing characteristics. Riskier decisions usually elicit more search behavior than non-risky decisions. Evaluation of Alternatives. Following information search, the person compares decisional alternatives available. Criterion for evaluation compares product attributes of the alternatives against degrees of importance each attribute has in meeting needs, beliefs about the product or brand's ability and utility, and an evaluation procedure that ranks the alternatives by preference that forms an intention to buy. Purchase Decision. - The individual buys a product. Purchasing other than the intended product may be due to attitudes of others exerted after the evaluation of alternatives is completed or unexpected situational factors such as point of purchases promotions that affect the alternatives' ranking. Post-purchase Behavior. This involves comparing the expected performance of the product against the perceived performance received. Cognitive dissonance describes the tendency to accentuate benefits and downplay shortcomings.
  • Stages in the Adoption Process The new product adoption process parallels the buyer decision process but focuses more on the interaction of consumer needs with product adoption. The new product adoption process may work best to explain how regularly used products requiring re-purchase are considered for inclusion in the consumer's consumptive behavior patterns but may also apply to some durables as well. Awareness. In this stage the consumer is aware of the new product but lacks further information about it. Interest. The consumer is motivated to seek information about the new product. Evaluation. The consumer determines whether or not to try the new product. Trial. The consumer tries the new product on a small scale to test its efficacy in meeting his or her needs. Trial can be imagined use of the product in some cases. Adoption. The consumer decides to make use of the product on a regular basis. Stages in the Adoption Process This CTR relates to the material on p. 157.
  • Adoption of Innovations This CTR corresponds to Figure 5-7 on p. 157 and relates to the material on pp. 157-158. Individual Differences in Innovativeness Innovators. Innovators include the first 2.5% of buyers who adopt a new product idea. Innovators help get the product exposure but are not often perceived by the majority of potential buyers as typical consumers. Innovators like risk taking and enjoy buying new products. Innovators may purchase at skimming prices. Discussion Note: You might discuss the ethical implications of skimming. Is it fair? Also, are there cost considerations associated with new product development that make skimming to recover high start up costs more ethical than it may seem? Early Adopters. Early Adopters comprise about 13.5% of the buyers who adopt new products. This group serves as opinion leaders to the rest of the market and their product usage outcomes serve as motivation to later buyers to get the product. Early Majority. Early Majority are some 34% of buyers adopting the product. They are deliberate consumers who adopt new ideas before the average person but seldom lead the market. Late Majority. Late Majority comprise another 34% of buyers adopting the product. This group is skeptical of new products and only buys after the majority of the market has tried it. Laggards. Laggards are the final 16% of adopters and are tradition-bound. They are suspicious of change and only adopt innovation that have already become something of a tradition.
  • Influences on the Rate of Adoption of New Products This CTR relates to the material on pp. 158-159. Teaching Tip: The adoption of innovations may be initially confusing to students but they will usually become involved in discussion when new products of importance to them are used as examples. Product Characteristics Influences Relative Advantage. This refers to the degree to which the innovation appears superior to existing products. The greater the perceived relative advantage, the sooner the innovation will be adopted. Compatibility . This refers to the degree to which the innovation fits the values and experiences of the potential consumers. Increased compatibility will accelerate adoption of the innovation. Complexity . This refers to the degree to which the innovation is difficult to understand or use. Greater complexity will slow the rate of adoption of the innovation. Divisibility . This refers to the degree to which the innovation can be tried on a limited basis. Greater divisibility will help increase the rate of adoption of the innovation. Communicability . This refers to the degree to which the results of using the innovation can be observed or described to others. Greater communicability will increase the rate of adoption of innovation.
  • Consumer Behaviour

    1. 1. Consumer Behavior By Munif Ahmad Munif Ahmad
    2. 2.  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?” Munif Ahmad
    3. 3. SIMPLE MODEL FOR CONSUMERBEHAVIOUR re So lt u c ia l Cu Motives Attitudes Needs Consumer Purchase Business Decision Learning Family Perception Personality Economic Munif Ahmad
    4. 4. Model of Consumer BehaviorProduct Marketing and Marketing and Economic Other Stimuli Other StimuliPrice TechnologicalPlace PoliticalPromotion CulturalBuyer’s CharacteristicsDecision AffectingProcess Consumer BehaviorProduct Choice Purchase Buyer’s Response Buyer’s Response TimingBrand Choice PurchaseDealer Choice Amount Munif Ahmad
    5. 5. Characteristics Affecting Consumer Behavior Culture Social Personal Psychological Buyer Buyer Munif Ahmad
    6. 6. Factors Affecting Consumer Behavior: Culture  Most basic cause of a persons  Most basic cause of a persons wants and behavior. wants and behavior.  Values  Values  Perceptions  PerceptionsSubcultureSubculture Social Class Social Class••Groups of people with shared Groups of people with shared ••People within a social class People within a social classvalue systems based on common value systems based on common tend to exhibit similar buying tend to exhibit similar buyinglife experiences. life experiences. behavior. behavior.••North Indian Consumers North Indian Consumers ••Occupation Occupation••African American Consumers African American Consumers ••Income Income••Asian American Consumers Asian American Consumers ••Education Education••Mature Consumers Mature Consumers ••Wealth Wealth Munif Ahmad
    7. 7. Factors Affecting Consumer Behavior: Social Groups Groups••Membership Membership••Reference Reference Family Family••Husband, wife, kids Husband, wife, kids Social Factors Social Factors••Influencer, buyer, user Influencer, buyer, user Roles and Status Roles and Status Munif Ahmad
    8. 8. Factors Affecting Consumer Behavior: Personal Personal Influences Personal InfluencesAge and Family Life CycleAge and Family Life Cycle Occupation Occupation Stage Stage Economic Situation Economic Situation Personality & Self-Concept Personality & Self-Concept Lifestyle Identification Lifestyle Identification Activities Activities Opinions Opinions Interests Interests Munif Ahmad
    9. 9. VALS 2 Actualizers Abundant Resources Actualizers Abundant ResourcesPrinciple Oriented Status Oriented Action Oriented Fulfilleds Fulfilleds Achievers Achievers Experiencers Experiencers Believers Believers Strivers Strivers Makers Makers Strugglers Strugglers Minimal Resources Minimal Resources Munif Ahmad
    10. 10. Factors Affecting Consumer Behavior:Factors Affecting Consumer Behavior:PsychologicalPsychological Motivation Motivation Beliefs and Beliefs and Psychological Factors Perception Perception Attitudes Attitudes Learning Learning Munif Ahmad
    11. 11. 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) Munif Ahmad
    12. 12. 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 Munif Ahmad
    13. 13. The Buyer Decision Process Need Recognition Need Recognition Information Search Information Search Evaluation of Alternatives Evaluation of Alternatives Purchase Decision Purchase Decision Post-purchase Behavior Post-purchase Behavior Munif Ahmad
    14. 14. DECISION MAKING PROCESSESEXTERNAL INFLUENCES Experiences and Acquisitions SITUATIONS Culture Problem Subculture Recognition Demographics Social Status Information Reference Groups Search Family Marketing Activities SELF-CONCEPT Alternative Evaluation Desires and and Selection LIFESTYLE NeedsINTERNAL INFLUENCES Outlet Selection Perception and Purchases Learning Memory Post-purchase Motives Processes Personality SITUATIONS Emotions Experiences and Acquisitions Attitudes Munif Ahmad
    15. 15. The Buyer Decision ProcessThe Buyer Decision ProcessStep 1. Need RecognitionStep 1. Need Recognition Need Recognition Need Recognition Difference between an actual state and a desired state Difference between an actual state and a desired state Internal Stimuli Internal Stimuli External Stimuli External Stimuli •• Hunger Hunger ••TV advertising TV advertising •• Thirst Thirst •• Magazine ad Magazine ad •• A person’s normal A person’s normal •• Radio slogan needs Radio slogan needs ••Stimuli in the Stimuli in the environment environment Munif Ahmad
    16. 16. The Buyer Decision ProcessStep 2. Information Search Personal Sources •Family, friends, neighbors Personal Sources •Most influential source of information Commercial Sources •Advertising, salespeople Commercial Sources •Receives most information from these sources Public Sources •Mass Media Public Sources •Consumer-rating groups •Handling the product Experiential Sources Experiential Sources •Examining the product •Using the product Munif Ahmad
    17. 17. The Buyer Decision ProcessThe Buyer Decision ProcessStep 3. Evaluation of AlternativesStep 3. Evaluation of Alternatives Product Attributes Product Attributes Evaluation of Quality, Price, & Features Evaluation of Quality, Price, & Features Degree of Importance Degree of Importance Which attributes matter most to me? Which attributes matter most to me? Brand Beliefs Brand Beliefs What do IIbelieve about each available brand? What do believe about each available brand? Total Product Satisfaction Total Product Satisfaction Based on what I’m looking for, how satisfied Based on what I’m looking for, how satisfied would IIbe with each product? would be with each product? Evaluation Procedures Evaluation Procedures Choosing a product (and brand) based on one Choosing a product (and brand) based on one or more attributes. or more attributes. Munif Ahmad
    18. 18. The Buyer Decision ProcessStep 4. Purchase Decision Purchase Intention Purchase Intention Desire to buy the most preferred brand Desire to buy the most preferred brand Attitudes Unexpected of others situational factors Purchase Decision Purchase Decision Munif Ahmad
    19. 19. The Buyer Decision ProcessThe Buyer Decision ProcessStep 5. Postpurchase BehaviorStep 5. Postpurchase Behavior Consumer’s Expectations of Consumer’s Expectations of Product’s Performance Product’s Performance Product’s Perceived Performance Satisfied Satisfied Dissatisfied Dissatisfied Customer! Customer! Customer Customer Cognitive Dissonance Munif Ahmad
    20. 20. Stages in the Adoption Process Awareness Awareness Interest Interest Evaluation Evaluation Trial Trial Adoption Adoption Munif Ahmad
    21. 21. Adoption of InnovationsPercentage of Adopters Early Majority Late Majority Innovators Early 34% 34% Laggards Adopters 13.5% 16% 2.5% Time of Adoption Early Late Munif Ahmad
    22. 22. Influences on the Rate of Adoptionof New Products Communicability Relative Advantage Can results be easily Is the innovation observed or described superior to existing to others? products? Product Divisibility Characteristics CompatibilityCan 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? Munif Ahmad
    23. 23. Consumer Behavior Transcript•Consumer Buying Behavior refers to thebuying behavior of final consumers(individualsν Behavior Consumer is a broadlabel that refers to any individuals orhouseholds that use goods and servicesgenerated within the economy. A consumer isa person who uses any product or service. ν2.Consumer Buying & Study consumer behaviorto answer: “How do consumers respond tomarketing efforts the company might use?”(households) who buy goods and services forpersonal consumption. Munif Ahmad
    24. 24. Transcript Model of Consumer Product Price Behavior Stimuli Marketing and Other Economic Technological Place Political Promotion Cultural Buyer’s Characteristics Decision Affecting Buyer’s Black Box Consumer Process Behavior Product Choice Purchase Timing Brand Choice Buyer’s Response Purchase Dealer Choice Amount Munif Ahmad
    25. 25. Transcript•Perceptions Subculture Social Class•Groups of people with shared•People within a social class value systemsbased on tend to exhibit similar buying commonlife experiences. behavior.•North Indian Consumers•Occupation•African American Consumers • Income • AsianAmerican Consumers • Education • MatureConsumers • Wealthν Values ν Most basic causeof a persons wants and behavior. ν4. FactorsAffecting Consumer Behavior: Culture Munif Ahmad
    26. 26. Transcript5.Factors Affecting Consumer Behavior:Groups Social Membership • Reference •Family Husband, wife, kids Social Factors •• Influencer, buyer, user Roles and Status Factors Affecting Consumer Behavior:•6.Personal Personal Influences Age andFamily Life Cycle Occupation StageEconomic Situation Personality & Self-Concept Lifestyle Identification ActivitiesOpinions Interests Munif Ahmad
    27. 27. Transcript7. Factors Affecting Consumer Behavior:Psychological Motivation Beliefs andPsychological Factors Perception AttitudesLearning8. Maslow’s Hierarchy of NeedsSelfActualization (Self-development ) EsteemNeeds ( self-esteem, status) Social Needs(sense of belonging, love) Safety Needs(security, protection) Physiological Needs(hunger, thirst) Munif Ahmad
    28. 28. 9.Types of Buying Decisions High LowInvolvement Involvement Significantdifferences Complex Variety- between BuyingSeeking brands Behavior Behavior Fewdifferences Dissonance- Habitual betweenReducing Buying Buying brands BehaviorBehavior10. The Buyer Decision Process NeedRecognition Information Search Evaluation ofAlternatives Purchase Decision PostpurchaseBehavior Munif Ahmad
    29. 29. Transcript11.DECISION MAKING PROCESSES EXTERNALINFLUENCES Experiences and AcquisitionsSITUATIONS Culture Problem SubcultureRecognition Demographics Social StatusInformation Reference Groups Search FamilyMarketing Activities SELF-CONCEPT AlternativeEvaluation Desires and and Selection LIFESTYLENeeds INTERNAL INFLUENCES Outlet SelectionPerception and Purchases Learning Memory Post-purchase Motives Processes PersonalitySITUATIONS Emotions Experiences and AcquisitionsAttitudes Munif Ahmad
    30. 30. TranscriptEvaluation proceduresν Total product satisfaction νBrand beliefs ν Degree of importance 6. ExternalStimuli ν Product attributes 5. Internal Stimuli ν Itis affected by 2 (step:3) factors: ♣ Evaluation ofalternatives ν Experiential Sources state ν PublicSources actual state and a desired ♣ CommercialSources Difference between an ♣ Personal Sources(step:1) ν Need recognition ν Information search(step:2) ν12. Munif Ahmad
    31. 31. Transcript•Product’s Perceived PerformanceνDesire to buy the mostExpectations of preferred brandProduct’s Performance νConsumer’s ν Purchase Intention νPost purchase behavior (step:4)(step:5) ν Purchase decision ν13. Munif Ahmad

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