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Consumer Behavior and Segmentation

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Marketing : Consumer Behavior and Segmentation

Marketing : Consumer Behavior and Segmentation

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  • 1. UNDERSTANDING MARKET ‘ Consumer Behavior’ Session 3 Chapter 5&6
  • 2. The Gaps Model Word-of-mouth Personal Needs Past Experience Expected Product Perceived Product Product Delivery Translation of perceptions into product-quality specifications Management perceptions of consumer expectations External communications to consumers Gap 5 Gap 4 Gap 3 Gap 2 Gap 1 Consumer Marketer
  • 3. The Gaps
    • Customer’s Gap
      • Customer’s expectation not matching with customer’s perception (Gap 5)
    • Provider’s Gaps
      • Not Knowing what Customers Expect (Gap 1)
      • Not Selecting Right Product Designs & Standards (Gap 2)
      • Not Delivering to Product Standards (Gap 3)
      • Not Matching Performance to Promises (Gap 4)
  • 4. Consumer Behavior
    • Role of Marketing is:
    • To Understand the ‘ INTERVENING PROCESS’
    • that Influences Buying Decision.
    • Think on:
    • Who buys? How do they buy? When do they buy? Where do they buy? Why do they buy? … … … …
  • 5.
    • Consumer Buying Behavior
      • Buying behavior of individuals and households that buy products for personal consumption.
    • Stimulus Response Model
      • Marketing and other stimuli enter the buyer’s “black box” and produce certain choice/purchase responses.
      • Marketers must figure out what is inside of the buyer’s “black box” and how stimuli are changed to responses.
    Consumer Behavior Model Marketing & Other Stimuli Marketing Product Price Place Promotion Other Economic Technological Political Cultural Buyer’s Black box Buyer Charac- teristics Buyer Decision Process Buyer Responses Product Choice Brand Choice Dealer Choice Purchase Timing Purchase Amount Figure: Model of Buyer Behavior
  • 6. Characteristics Affecting Consumer Behavior
    • Cultural
    • Social
    • Personal
    • Psychological
    • Culture
    • Subculture
    • Social Class
      • Upper class
      • Middle Class
      • Working Class
      • Lower Class
    Key Factors
  • 7. Characteristics Affecting Consumer Behavior
    • Cultural
    • Social
    • Personal
    • Psychological
    • Groups
      • Membership
      • Reference
        • Aspirational groups
      • Opinion leaders
        • Buzz marketing
    • Family
      • Children can influence
    • Roles and Status
    Key Factors
  • 8. Characteristics Affecting Consumer Behavior
    • Cultural
    • Social
    • Personal
    • Psychological
    • Age and life cycle
    • Occupation
    • Economic situation
    • Lifestyle
      • Lifestyle segmentation
    • Personality and self-concept
      • Brand personality
    Key Factors
  • 9. Family Life Cycle & Banking Needs An Example Stage Banking Needs Financial Situation Young Single People Few Financial Burdens; recreation oriented Low-cost checking; auto loan; credit card Full Nest I: Youngest child under 6 Home purchasing peak; Liquid assets low; Many working mothers Mortgage; Credit card; Revolving Credit Line; Bill Consolidation Loan Full Nest II: Older couples with Dependent Children Good Financial Position; Many Working Mothers Home Improvement Loans; Equity Credit Lines; Money Mkt Deposit accounts Investment services Empty Nest: Older Couples; No child at home; One/ both Retired Significantly reduced Income Monthly Income Checks on CDs; Direct Deposit of Social Security
  • 10. Characteristics Affecting Consumer Behavior
    • Cultural
    • Social
    • Personal
    • Psychological
    • Motivation
      • Needs provide motives for consumer behavior
      • Motivation research
        • Maslow’s hierarchy of needs
    • Perception
      • Selective attention, selective distortion, selective retention
    • Learning
      • Drives, stimuli, cues, responses and reinforcement
    • Beliefs and attitudes
    Key Factors
  • 11. Maslow’s Hierarchy of Needs Once a Lower-level need is Satisfied, a Higher-level need Emerges, and Demands Satisfaction Physiological Needs Hunger, thirst Self actualization Needs Esteem Needs Self-esteem Belongingness & Love Needs Friendship Security & Safety Needs Protection from physical harm
  • 12. Types of Buying Decision Behavior Difference between brands Significant Complex buying behavior Low Few Dissonance-reducing buying behavior Habitual buying behavior Variety-seeking buying behavior High Involvement Level
  • 13. Five Stages Buyer Decision Process
    • Need recognition
    • Information search
    • Evaluation of alternatives
    • Purchase decision
    • Postpurchase behavior
    • Needs can be triggered by:
      • Internal stimuli
        • Normal needs become strong enough to drive behavior
      • External stimuli
        • Advertisements
        • Friends of friends
    Process Stages
  • 14.
    • Need recognition
    • Information search
    • Evaluation of alternatives
    • Purchase decision
    • Postpurchase behavior
    • Consumers exhibit heightened attention or actively search for information.
    • Sources of information:
      • Personal
      • Commercial
      • Public
      • Experiential
    • Word-of-mouth
    Process Stages Five Stages Buyer Decision Process
  • 15.
    • Need recognition
    • Information search
    • Evaluation of alternatives
    • Purchase decision
    • Postpurchase behavior
    • Evaluation procedure depends on the consumer and the buying situation.
    • Most buyers evaluate multiple attributes, each of which is weighted differently.
    • At the end of the evaluation stage, purchase intentions are formed.
    Process Stages Five Stages Buyer Decision Process
  • 16.
    • Need recognition
    • Information search
    • Evaluation of alternatives
    • Purchase decision
    • Postpurchase behavior
    • Two factors intercede between purchase intentions and the actual decision:
      • Attitudes of others
      • Unexpected situational factors
    Process Stages Five Stages Buyer Decision Process
  • 17.
    • Need recognition
    • Information search
    • Evaluation of alternatives
    • Purchase decision
    • Post-purchase behavior
    • Satisfaction is important:
      • Delighted consumers engage in positive word-of-mouth.
      • Unhappy customers tell on average 11 other people.
      • It costs more to attract a new customer than it does to retain an existing customer.
    • Cognitive dissonance is common!
    Process Stages Five Stages Buyer Decision Process
  • 18. Marketing Research
    • The process of planning, collecting and analyzing data relevant to a marketing decision.
      • Much can be learned about consumers through marketing research by
        • Collecting, recording, and analyzing data important in marketing products
        • Communicating results to management
      • Must be done prior and after the sale
      • Marketing Research Process
    • Define the Marketing Problem
    • Choose a Method of Research
    • Collect the Data
    • Analyze the Data
    • Make Recommendations to Management
  • 19. Buyer Decision Process for New Products
    • New Products are goods, services or ideas that are perceived by customers as new.
    • Marketers should help consumers move through these stages:
        • Awareness
        • Interest
        • Evaluation
        • Trial
        • Adoption
  • 20.
    • Individual Differences in Innovativeness
      • Consumers can be classified into five adopter categories
        • Innovators
        • Early Adopters
        • Early Majority
        • Late Majority
        • Laggards
    Buyer Decision Process for New Products
    • Product Characteristics and Adoption
      • Five product characteristics influence the adoption rate
        • Relative Advantage
        • Compatibility
        • Complexity
        • Divisibility
        • Communicability
  • 21. Business Markets: Buyer Behavior
    • Marketing Structure and Demand
    • Nature of the Buying Unit
    • Types of Decisions and the Decision Process
    • Compared to consumer market
      • Business markets
        • have fewer but larger customers
      • Business customers
        • are more geographically concentrated
      • Demand is different
        • Demand is derived
        • Demand is price inelastic
        • Demand fluctuates more, and changes more quickly
    Characteristics
      • The buying behavior of organizations that buy goods/services for use in the production of other products and services or for the purpose of reselling or renting them to others at a profit.
  • 22.
    • Marketing Structure and Demand
    • Nature of the Buying Unit
    • Types of Decisions and the Decision Process
    • Compared to consumer purchases
      • Business purchases involve more buyers in the decision process .
      • Purchasing efforts are undertaken by professional buyers .
    Characteristics Business Markets: Buyer Behavior
  • 23.
    • Marketing Structure and Demand
    • Nature of the Buying Unit
    • Types of Decisions and the Decision Process
    • Compared to consumer purchases
      • Business buyers face more complex buying decisions .
      • Buying process is more formalized , more participants in the process:
        • Users
        • Influencers
        • Deciders
        • Buyers
        • Gatekeepers
      • Buyers and sellers work more closely together and build long-term relationships .
    Characteristics Business Markets: Buyer Behavior
  • 24.
    • Stage 1 : Problem Recognition
    • Stage 2 : General Need Description
    • Stage 3 : Product Specification
      • Value analysis helps to reduce costs
    • Stage 4 : Supplier Search
      • Supplier development
    • Stage 5 : Proposal Solicitation
    • Stage 6 : Supplier Selection
    • Stage 7 : Order-Routine Specification
      • Blanket contracts are often used for maintenance, repair and operating items.
    • Stage 8 : Performance Review
    Eight Stages Business Buying Process
  • 25. Major Influences on Business Buyers
    • Environmental
    • Organizational
    • Interpersonal
    • Individual
    • Economic trends
    • Supply conditions
    • Technological change
    • Regulatory and political environments
    • Competitive developments
    • Culture and customs
    Key Factors
  • 26. Major Influences on Business Buyers
    • Environmental
    • Organizational
    • Interpersonal
    • Individual
    • Objectives
    • Policies
    • Procedures
    • Organizational structure
    • Systems
    Key Factors
  • 27. Major Influences on Business Buyers
    • Environmental
    • Organizational
    • Interpersonal
    • Individual
    • Authority
    • Status
    • Empathy
    • Persuasiveness
    Key Factors
  • 28. Major Influences on Business Buyers
    • Environmental
    • Organizational
    • Interpersonal
    • Individual
    • Authority
    • Age
    • Education
    • Job position
    • Personality
    • Risk attitudes
    Key Factors
  • 29.
    • E-procurement is growing rapidly.
    • E-procurement offers many benefits:
        • Access to new suppliers
        • Lower purchasing costs
        • Quicker order processing and delivery
    Business Buying on the Internet Strategies Influencing Customer Perception
    • Measure & manage Customer Satisfaction and Service Quality
    • Aim for Service Quality & Satisfaction in every encounter
    • Facilitate Adaptability & Flexibility
    • Encourage Spontaneity
    • Help Employees cope with problem customer
    • Manage Dimensions of Quality at encounters
  • 30.
    • Ensure the Quality of Service
    • Sound Distribution to the End Customer
    • Ensure a Composite Promotional Effort
      • Advertising
      • Sales Promotion
      • Personal Sales
      • Public Relation
    • Make Right Prices
    Tips for Marketers
    • Have Satisfied People who have (PAI)
      • P = (right) Personality
      • A = (right) Attitude
      • I = Interest / Initiative
    • Simplified Procedure
    • Proper Show-off
    • Keep good Relationship
    • Ensure cross-sell & repeat sell
    Know your Organization Know your Product Know your Customers Know your Competitors Know your Process of Selling Know Yourself