3. analyzing consumer markexsxsxts 24.pdf

Copyright © 2016 Pearson Education Ltd. 4-1
Chapter
Chapter
3
3
Analyzing
Consumer
Markets

Two Diff Categories of Consumers

Consumer Behavior
• Consumer behavior 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…

Models of Buyer / (Consumer)
behavior

Figure 3.1 Model of Consumer Behavior

Factors Influencing
Consumer Behavior

What Influences Consumer
Behavior?
Behavior?
• Cultural factors
– Culture
– Subcultures
– Social classes

1. What is Culture?
Culture is the fundamental determinant
of a person’s wants and behaviors
acquired through socialization
processes with family and other key
institutions.
i.e. Value, Preferences, Perception and
Behavior is formed depending on the
culture

1.A Subcultures :
More Specific Identification & Socialization of members
Nationalities
Religions
Racial groups
Geographic regions

1.B Social Classes:
are Homogenous social stratifications in society whose
members share similar values, Interests and Behaviour.
Determined : Education  Occupation Income
Upper uppers
Lower uppers
Upper middles
Middle class
Working class
Upper lowers
Lower lowers

Characteristics of Social Classes
• Within a class, people tend to behave
alike
• Social class conveys perceptions of
inferior or superior position
• Class may be indicated by a cluster of
variables (occupation, income, wealth)
• Class designation is mobile over time

Behavior?
Behavior?
2) Social factors
Reference groups
Cliques
Family
Roles and status

2.A Reference Groups: Influences
 Exposes an Individual to New behaviour and life style
Attitude and self concept
They creat pressure for conformity that affects product and brand choices
OPINION
LEADERS

2.C Roles : Activities a person is expected to perform
2.D Status
What degree of status is
associated with various
occupational roles?

Behavior?
Behavior?
• 3) Personal factors
– Age/stage in life cycle
– Occupation and
economic
circumstances
– Personality and self-
concept
– Lifestyle and values

3. Personal Factors
Age
Values
Life cycle
stage
Occupation
Personality
Self-
concept
Wealth
Lifestyle

Brand Personality and self-image
Sincerity
Excitement
Competence
Sophistication
Ruggedness

Lifestyle Influences :
Activity, Interest & Openion (AIO)
Multi-tasking
Time-starved
Money-constrained

Faysal Bank of
Pakistan has
extended
banking hours
for time-pressed
executives.

Key Psychological Processes
Motivation
Perception
Learning
Emotions
Memory

Motivation
Freud’s
Theory
Behavior
is guided by
subconscious
motivations
Maslow’s
Hierarchy
of Needs
Behavior
is driven by
the lowest,
unmet need
Herzberg’s
Two-Factor
Theory
Behavior is
guided by
motivating
and hygiene
factors

Herzberg’s Two-Factor Theory

• Perception
– The process by
which we select,
organize, and
interpret information
inputs to create a
meaningful picture
of the world

Perception
Selective Attention
Subliminal Perception
Selective Retention
Selective Distortion

Learning / Memory
Data Input
Forgotten
/Lost
Forgotten
/Lost
Forgotten
/Lost

Copyright © 2022, 2016, 2012 Pearson Education, Inc. All Rights Reserved
Memory (1 of 3)
• Memory models
– Short-term memory—a temporary and limited
repository of information
– Long-term memory—a more permanent, essentially
unlimited repository
▪ Episodic memory
▪ Semantic memory
▪ Procedural memory

Associative Network Memory /
(ANM) model
• Nodes : - are stored information ..
connected by
• Links are the connecting strings that
vary in strength
• Brand Association consists of all brand
related thoughts, feelings, perception,
images, experience, belief, attitude and so
on that become linked to the brand node

Associative Network Memory /
(ANM) model contd…

Buying Decision Making Process
Marketer have to undergo the various
influences on buyers and develop an
understanding of how consumers actually
make their decision…
Marketer must identify:
1.Who makes the decision
2.Involvement level in the buying decision
3.Steps in the Buying Process

The Buying
The Buying
Decision Process
Decision Process
• The consumer typically
passes through five stages
– Problem recognition
– Information search
– Evaluation of alternatives
– Purchase decision
– Postpurchase behavior

3 “Stage Model” of
Consumer Buying Decision Process
1.Problem Recognition
2.Information Search
3.Evaluation
4.Purchase Decision
5.Postpurchase Behavior

3.1 Problem Recognition
• Buying process starts when the buyer
recognizes a problem or need.
Internal Stimuli
External Stimuli:-

Sources of Information
Personal
Experiential
Public
Commercial
3.2 INFORMATION SEARCH
i.Heightened Attention (Milder Search)
ii.Active Information Search

Successive Sets Involved in
Consumer Decision Making

Evaluation of Alternatives
Basic concept of Consumer Evaluation Process :
1.Consumer is trying to satisfy the need
2.Consumer is looking for certain benefits from
product solution
3.Consumer see the product as a bundle of
attributes with varying abilities for delivering
the benefits sought to satisfy the need

Evaluation contd..
• Belief:- is a descriptive thought that a
person holds about something
• Attitude:- are person’s enduring
favorable or unfavorable evaluations,
emotional feeling and action tendencies
toward some object or idea

EVM: Expectancy Value Model
Attitude towards brands are formed
through attribute evaluation procedure
Computer ATTRIBUTES
Memory
(40%)
Graphics
(30%)
Size &
Weight
(20%)
Price (10%)
A 8 9 6 9
B 7 7 7 7
C 10 4 3 2
D 5 3 8 5
Computer A : 0.4x8 + 0.3x9 + 0.2x6 + 0.1x9 = 8
Computer B :------------------------------------------ =7
Computer C :------------------------------------------ =6
Computer D :------------------------------------------ =5

Moderating Effects on Consumer
Moderating Effects on Consumer
Decision Making
Decision Making
• Elaboration Likelihood Model-ELM
–Involvement & Consumer Decision
Making
• Central Route of persuasion -HI
• Peripheral route of Persuasion-LI
• Variety-Seeking Buying Behavior

Heuristics
Heuristics :- Are Mental Short cuts / Thumb Rule
Conjunctive : Customer Sets Min Acceptable cut off level for each
attribute and choose the first alternative that meets the min standard
Lexicographic :Choose the best brand on the basis of its
perceived most important attribute

Stages between Evaluation of
Alternatives and Purchase

Perceived Risk
Functional
Physical
Financial
Social
Psychological
Opportunity /Time

The Buying Decision Process
The Buying Decision Process
• Postpurchase behavior
– Postpurchase satisfaction
– Postpurchase actions
• +VE AND -VE
– Postpurchase uses and
disposal
• Use (Shampoo/ Tooth Paste)
• Replacement
• Tie act of replacement with
events.

THE BUYER DECISION PROCESS
THE BUYER DECISION PROCESS
Postpurchase
Behavior
Cognitive dissonance is
buyer discomfort caused
by postpurchase conflict.

Figure 6.7 How Customers Use and
Dispose of Products

Behavioral Economics
• Decision Heuristics
–Availability heuristic
• Consumers base their predictions on the quickness and
ease with which a particular example of an outcome comes
to mind. For example, a recent product failure may lead
consumers to inflate the likelihood of a future product failure
and make them more inclined to purchase a product
warranty.
–Representativeness heuristic:
• One reason package appearances may be so similar for different brands
in the same product category is that marketers want their products to be
seen as representative of the category as a whole.

• Decision Heuristics
–Conjuction Fallacy:
• People’s false belief that the probability of two events occurring
jointly is greater than the probability of either event occurring
independently
–Anchoring and adjustment heuristic:
• Consumers arrive at an initial judgment and then adjust it—
sometimes only reluctantly—based on additional information. For
services marketers, a strong first impression is critical to
establishing a favorable anchor so subsequent experiences will be
interpreted in a more favorable light.

Behavioral Economics:
Framing
Framing
Comparative Advertisement
• Twice the cleaning Power
Breaking the bigger amount into
smaller
• Per month
• Per day
Showing bigger benefits
• Warranty for 24 months v/s 2 years

Framing
Framing

• Framing
– Mental accounting
• 1. Consumers tend to segregate gains. : Listing multiple benefits of a large
industrial product, for example, can make the sum of the parts seem greater
than the whole.
• 2. Consumers tend to integrate losses. Marketers have a distinct
advantage in selling something if its cost can be added to another large
purchase. House buyers are more inclined to view additional expenditures
favorably given the already high price of buying a house.
• 3. Consumers tend to integrate smaller losses with larger gains. The
“cancellation” principle might explain why withholding taxes from monthly
paychecks is less painful than making large, lump-sum tax payments—the
smaller withholdings are more likely to be overshadowed by the larger pay
amount.
• 4. Consumers tend to segregate small gains from large losses. The
“silver lining” principle might explain the popularity of rebates on big-ticket
purchases such as cars.

3. analyzing consumer markexsxsxts 24.pdf

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