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   Dominant Family Purchase
   Demographic Factors
   The Consumer Buying Process
   Maslow‘s hierarchy of needs
   Socioeconomic classification scheme
   Types of buyer behaviour
   The Buying Decision Process
   Organisational Buyer Behaviour
What is Consumer Behavior?

-How many times throughout the day do people make
product decisions?
-If you stop to think about it, many product decisions are
made every day, some without much thought.
-What should I wear? What should I eat? What am I going
to do today?
-Many product decisions are answered routinely every day
and they help move the economy of cities, countries and
ultimately the world.
-Product decisions also shape life for the consumer.
-How can simple decisions be so important?
-Why do marketers spend millions of dollars to uncover
the reasons behind these decisions?
What is Consumer Behavior?

-Consumer  behavior: it is the study of consumers and the processes they use to
choose, use (consume), and dispose of products and services (impacts the world).
-Consumer behavior incorporates ideas from several sciences including
psychology, biology, chemistry and economics.

-―All marketing decisions are based on assumptions and knowledge of consumer
behavior‖ (Hawkins and Mothersbaugh, 2007).

-Researching consumer behavior is a complex process, but understanding consumer
behavior is critical to marketers-they can use it to:
          -Provide value and customer satisfaction.
          -Effectively target customers.
          -Enhance the value of the company.
          -Improve products and services.
          -Create a competitive advantage
          -Understand how customers view our products vs their competitors' products.
          -Apply marketing strategies toward a positive affect on society (encourage
          people to support charities, promote healthy habits, reduce drug use etc.)
PRODUCT          DOMINANT         TYPICAL DECISION
                    DECISION
                     MAKER
Women‘s casual        Wife              Price, style
   clothing
  Vacations      Syncratic (both)     Whether to go,
                                          where
 Men‘s casual       Husband          Type, price, style
   clothing
Life insurance      Husband         Company, coverage

 Homeowner‘s        Husband         Company, coverage
  insurance
  Household           Wife          Style, brand, price
  appliances
   Age
   Stage in family life cycle
   Occupation
   Economic circumstances
   Lifestyle
   social influence variables
      family background
      reference groups
      roles and status
Marketing Inputs
 Marketing Inputs
                                                          Purchase
 Product
Product                                                   Decisions
 Price
Price                     Consumer                        Product Choice
 Promotion                                                Location Choice
Promotion
 Place                                                    Brand Choice
                                                          Other Choices
Place



                    Psychological Inputs
                    Culture
                    Attitude
                    Learning
                    Perception




                                           Cohen (1991)
Maslow‘s Hierarchy of Needs

                     Self
                     Actualisation

           Esteem
            Social

           Safety

         Physiological
Class name       Social status         Occupation of head of        % of
                                             household            populatio
                                                                     n
    A            Upper middle            Higher managerial,          3
                                          administrative or
                                            professional
    B               Middle            Intermediate managerial,       14
                                          administrative or
                                            professional
   C1            Lower middle          Supervisors or clerical,
                                         junior managerial,          27
                                          administrative or
                                            professional
   C2           Skilled working        Skilled manual workers        25

    D              Working            Semiskilled and unskilled      19
                                              workers
    E        Those at lowest levels     Pensioners, widows,          12
                of subsistence         casual or lower-grade
                                              workers
http://www.nivelessocioeconomicos.com/index.php?op
tion=com_content&task=view&id=32&Itemid=110


Portal Niveles Socioeconómicos - Criterios de
Clasificación Socioeconómica
Value and Relationship Quality

-Consumers choose goods and services based on the
assumption that they will be rewarded with value and
satisfaction.
-Consumption is the process by which goods and services are
used and assigned a level of value by the consumer.
-That level could be positive, if the customer was satisfied, or it
could be negative if they did not find any value in their purchase.
-Marketers have to provide the right combination of
quality, price and customer service in order to give customers
positive value and satisfaction.
-That will in turn create happy, loyal customers. The formula
looks like this:

Quality + Price + Customer Service = Value and Satisfaction
Value and Relationship Quality
-If a product/service is provided
 that has low quality, and a high
 price, that does not create a
happy, satisfied customer.
-At the same time, having a great
 product at the best possible price
 means nothing if the customer is
treated badly, or not provided with
 the opportunity to return unwanted
 items.
So what is meant by 'Quality?'

Quality is a product or service's ability to meet the customers' need or want.
-Quality is difficult to define, and varies with each consumer, however we can take a look
at some of the components of quality for products and services:

Products
Performance- The product does what it is supposed to do.
Features- The product includes all the specifications that it says it has or that are
required, this includes safety measures.
Reliability- The product performs consistently.
Durability- When the product is being used it has to last under the conditions of normal
use.
Serviceability- The product is easy to maintain or repair either by the consumer or by
providing a warranty which says the company will provide repairs.
Aesthetics- This is important to consumers, products have to look good, and this
contributes to a brand equity and identity.
Perception- Even if the product has good quality, if the customer does not think so, then it
won't sell. The customer has to have positive feelings about the product, the company, the
brand name and the employees.
So what is meant by 'Quality?‗
Services
Responsiveness- Services are performed in a prompt manner.
Reliability-The service is performed right, the first time, and all
subsequent times.
Assurance- Knowledgeable and friendly employees are essential
as customers will equate employees behavior with the entire
company. If a customer has a bad experience with an
employee, they will be less likely to purchase from the entire
company's offerings. Customers expect technical competence
and professionalism from salespeople.
Empathy-Providing individualized attention to customers will
make them feel special and keep them coming back.
Tangibles- Some services provide physical evidence that they
occurred, for example a restaurant cooks (service) and provides
the food (product).
Why People Buy

-Marketers spend millions of dollars trying to understand why people buy products and
services.
-Sometimes it seems that there is no reason for a purchase, but in reality there is always a
reason.
-Many factors are involved in a customers' buying decision, any one of which can become
the deciding factor, such as:

-Conspicuous consumption: Lavish spending for the purpose of displaying wealth or social
status; preference for buying increases with price.
-Snob effect: Desire to buy something nobody else has; preference for buying increases
with rarity or scarcity.
-Bandwagon effect: Desire to buy something everybody else is buying; preference for
buying increases with perceived popularity.
-Economic: To enhance their lifestyle or to fulfill two of Maslow's needs: physiological
(food, shelter) and Safety and Security.
-Psychological: This is the study of how people interact with their environment, products
are consumed to enhance their well being, for example air fresheners, furniture and
convection ovens.
Why People Buy

-Sociological- The study of the thoughts, feelings, and behaviors of group
interaction, especially in a social setting. People want to feel accepted and loved
by their peers and they need to consume products that will appeal to their
chosen groups. For example a consumer wants to join a kayaking team would
have to purchase the proper gear, clothing and maybe even music genre in
order to fit in with the group.
-Practical- Consumers purchase products because they need them to
survive, such as shoes and medicine.
-Impractical- is the opposite of practical, purchasing products that are not
necessary.
-Rational- Purchases are made with logical, thought out reasoning.
-Irrational- products are purchased for foolish or absurd reasons.
-Factual- Purchasing products based on researched reports.
-Emotional- purchasing products based on feelings
-Buy to satisfy a need (for a reason).
-Buy to satisfy a want (desire).
Other reason why people buy
-Complex buyer behaviour e.g. Intel Pentium
Processor
-Dissonance-reducing behaviour (brand
reduces after-sales discomfort)
-Habitual buying behaviour e.g. salt - little
difference
-Variety seeking behaviour- significant brand
differences e.g soap powder
-recognition of the need e.g a new PC
-choice of involvement level (time and effort justified)
e.g. two week ends
-identification of alternatives e.g. Dell, PC World
-evaluation of alternatives e.g. price, customer
service, software support, printer/scanner package
-decision- choice made e.g Epsom
-action e.g buy Epsom model from Best Buy
-post-purchase behaviour e.g. use, breakdowns, etc
Internal Influences – Learning

-Consumer behavior is largely learned behavior.
-Learning is a change of behavior following an interaction
between a person and their environment.
-A person touches a hot stove and then gets hurt, because of
that interaction they learn not to touch the hot stove again.
-Most attitudes, values, tastes, behaviors, preferences, symbolic
meanings and feelings are acquired through learning.
-People buy things and then make decisions for future
purchases based on if they liked the
product, quality, service, and price.
-Social organizations help people learn "appropriate" beliefs
about issues like drinking and driving, proper nutrition, etc.
-Companies that help their customers learn about their products
and create positive feelings with their product, service, brand
name, and employees-have a competitive advantage.
Internal Influences – Memory

-Marketing messages can be effective only if the consumer correctly
understands the messages, and remembers them when needed.
-Memory refers to a consumer's ability to understand the marketing
messages and assign them value and meaning.
-Value and meaning always together.
-The value and meaning assigned is largely determined by internal
factors, (thoughts, feelings, emotion, attitude, perception, motivation,
personality, lifestyle) which are different for each consumer.

-For example, a consumer who drinks lots of milk, sees an
advertisement that says "Get Milk?" and since they already have positive
feelings for the product they will purchase more milk, whereas a
consumer who does not enjoy drinking milk and sees the same ad, may
dismiss the ad or may try drinking more milk for a short period of time
and then decrease consumption again.
Internal Influences – Memory

Three things influence consumer's ability to understand messages:

Physical Characteristics of message

Imagery: When the brand name, words, and slogan work together to create an image in the mind of the consumer, it will
invoke ideas, feelings and objects, and a direct recovery of past experiences. Disney is big on evoking nostalgia and past
experiences, they want adult customers to remember being taken to the Disney parks as a child and then repeat the
experiences with their own children. Much of their advertisement depicts families having wonderful experiences
together, while the adults are remembering being there as children.

Color: Colors have an enormous impact on marketing messages, and color affects consumers in a subjective manner, so
that most of the time consumers don‘t even know they are being affected! For example, in the US, the color red makes
people eat 25% more, therefore most restaurants use red as their main color. ( Home :: McDonalds.com ; Welcome to
KFC.com ; Jack in the Box – Home ).
The meaning and value assigned to colors changes with the culture, so marketers need to be fully aware of how color is
interpreted by different groups of people. For example, the Starbucks Coffee Company logo is green, but when they
opened shops in Malaysia, they had to change the logo to brown because in that culture green is associated with sickness.

Font: The presentation of words and how they are shaped will also enhance the marketing message and contribute to the
value and meaning. For example, these two different fonts for a cigarette company will convey entirely different
meanings, and may attract two different customers.

                                                     Caribou Cigarettes
                                                     Caribou Cigarettes

-The first logo is block style, bold and more intense and may be more masculine. The second is a script font, with more
curls, softer lines and may be more feminine.
-So which is better? Well, that depends on the product and the target market you are trying to attract.
Internal Influences – Memory

-Simplicity of the message: A simple message is generally easier to
understand. Using short phrases and easy to read terminology, such as
―heart healthy‖ will quickly and easily convey the message that the product
is good for your heart. ( Aceite Capullo )

-Consistency of the message: The message needs to fit in with the
surrounding information—style, color, text, photographs, music—all have to
work together. For example, showing a television ad for travel to the
Caribbean will have soft, flowing fonts, bright colors, and reggae music. It
can sometimes be an advantage to have inconsistent messages, some
consumers may remember the ad more if some of the elements don‘t make
sense.

-Source of the message: Consumers will be more likely to remember and
purchase products endorsed by credible sources, animated characters or
celebrities. They have to be likeable, have some expertise or at least
pretend that they have expertise), be trustworthy, and attractive.
Internal Influences – Memory

Characteristics of the message receiver (consumer)

-Intelligence: unless you are specifically marketing a product to extremely intelligent individuals, it is best to word
marketing messages on a level most people can understand, and don‘t ever talk to your customers in a way that
would make them feel inferior.

-Involvement: A customer with higher levels of involvement with the product, service and marketing information will
have more recall than a consumer with less involvement. Creating more interest in the product and making a website
more interactive will help to increase sales. More involvement means more sales.

-Familiarity: Generally, the more familiar a customer is with a product, the more likely they are to purchase it;
however, having too much familiarity can lead to adaptation, when customers become tired of their ―familiar‖
purchases and seek out novelty items. For example, in the US in the 1990s, ketchup sales began slipping and to
revamp sales, ketchup manufacturers created green and purple ketchup, these novelty items boosted sales, but only
for a few months, when consumers became tired of them.

-Expectations: If the customer doesn‘t know what to expect from the product or service, then they are not going to
purchase it. This explains why familiar brand names like Campbell‘s Soup, Coca-Cola and Disney do not change their
logos—customers are familiar with them, have positive thoughts about them and know what to expect.

-Physical limits: Marketers need to remember that some consumers have limitations such as hearing impairment or
color blindness and this needs to be taken into consideration when creating marketing messages
Internal Influences – Memory

Characteristics of the environment


-Intensity of information: If a consumer is overloaded with stimuli in an environment, they are much more
likely to avoid the ad, or not comprehend it at all.
Let's face it, we live in a world cluttered with advertisements, it can be difficult to break through all of it and
get to your target market customers. Marketers have to be more creative since customers can now skip
commercials (thanks to recordable television); marketers use product placement in the actual movie or
television show, the characters in the show use the brand name products and may even talk about how they
like the brand name. This is all part of the advertising. Marketers are also making use of new social
marketing movements such as Twitter and Facebook that can be programmed to reach customers that want
to see your marketing messages.


-Framing: Messages can be framed to seem positive or negative and this will affect how customers assign
value. "If you don't use sunscreen, you could get skin cancer" or "Use sunscreen to moisturize and protect
your delicate skin".


-Timing: Many factors will influence how a message is interpreted and assigned value including: amount of
time customer has to view a message, time of day, and type of medium used. A customer driving in the
morning 70mph past a billboard for coffee may only have a few seconds to interpret the message, but since
it is a time of day when that product is most consumed, they may be more likely to act on the message.
Internal Influences - Emotion and Perception

A. Emotion

-Emotion is difficult to define, and even more difficult to predict.
-However, they are important to marketers because consumers tend to react to
marketing messages and make purchases based on feelings and emotions.
-Emotion can be used to create product benefits.
-Such as with Cheerios cereal; its commercials feature families having wonderful
moments together, that couldn't have happened without those products.
-Emotion in advertising enhances attention, attraction, and is processed more by
the consumer and may be remembered better.

-These are elements of the relationship between emotion and understanding:
-Self control- the ability to control your emotions
-Emotional empathy- the ability to understand other people's emotions
-Positive/negative outlook- a person's outlook on life can be optimistic or
depressed and negative; most people fall somewhere in between-
-Productivity- ability to use emotions to solve problems
Internal Influences - Emotion and Perception

B. Perception

-Perception is the process by which people select, organize, and
interpret information.
-Perception has four major steps:
1. Exposure - When a stimulus (like a billboard) comes within range
of your senses (vision)
2. Attention - Determined by the individual and the situation;
Nerves pass the information onto the brain for processing
3. Interpretation - when marketing messages are assigned meaning
4. Memory:
a. Short-term—for immediate decision making
b. Long-term—for retention
Internal Influences - Motivation

-Motivation is an internal state that drives us to satisfy needs.
-Motivation is the energizing force that activates behavior.
-Once we recognize that we have a need, a state of tension exists
that drives the consumer to the goal of reducing this tension and
eliminating the need.
-Consequently, only unmet needs motivate

-According to Maslow's hierarchy of human needs, for each need
there are positives gained and negatives that are avoided by
meeting that particular set of needs.
-Products that are purchased because of a need will satisfy a goal
and avoid unwanted consequences.
-For example, people need to feel secure so they purchase smoke
detectors, therefore gaining protection and avoiding loss and fear of
fire, only unmet needs motivate.
Internal Influences - Motivation



     Need                     Gained                 Avoided
                              Creativity,
     Self-Actualization                              Unfulfilled potential
                              accomplishment

                              Pride, recognition,
     Esteem                                          Failure, inadequacy
                              prestige

                              Acceptance,            Rejection,
     Social
                              popularity             embarrassment

     Security                 Safety, protection     Loss, danger, fear

     Physiological            Health, comfort        Sickness, discomfort

              Positives and Negatives for Each Need (Based on Maslow)
Internal Influences - Motivation

According to McGuire, there are 12 psychological motives, 12
reasons why consumers are motivated to make purchases:

1. Need for consistency
2. Need for attribute causation
3. Need to categorize
4. Need for cues
5. Need for independence
6. Need for self-expression
7. Need for ego-defense
8. Need for reinforcement
9. Need for affiliation
10. Need for modeling
11. Need for novelty
12 Need for Assertion
Internal Influences - Motivation

1. Need for consistency
People have a basic desire to have all parts of themselves consistent and they
purchase products that fulfill this need. People that listen to country music will
purchase products like cowboy boots, heavy duty trucks and pets.

2. Need for attribute causation
People have the need to determine who or what causes things to happen to
them. Some people choose to attribute it to themselves, fate or an outside force
like God.

3. Need to categorize
Categories allow people to process a large amount of information. Vehicles are
categorized into cars, SUV's, light trucks, heavy duty trucks, van, sporty, mid-
size, hybrid, electric and so on. This helps consumers quickly narrow down their
choices when purchasing a vehicle.

4. Need for cues
Most people will view others' behavior and infer what they feel and think.
Clothing plays an important role in presenting image of a person. People quickly
judge others by the clothing they are wearing and the vehicle they drive.
Internal Influences - Motivation

5. Need for independence
Americans strive for individuality and self-expression and many products are
marketed as "limited edition" or being different and unique
The Japanese culture discourages individuality and focuses on affiliation, and behavior
that enhances family and culture.

6. Need for self-expression
Americans are known for letting others know who and what they are by their
extravagant purchases, especially clothing and cars. Who really needs a $1,200 pen?
What is that saying about that person?

7. Need for ego-defense
The need to defend your identity. An insecure customer will purchase well-known
brand names for fear of being labeled socially incorrect.

8. Need for reinforcement
People are motivated to act because they are rewarded for doing it. For
example, showing off a new diamond ring to your friends creates acceptance and
approval.
Internal Influences - Motivation

9. Need for affiliation
Affiliation is the need to develop mutually helpful and satisfying relationships with
others, which is a critical part of all people's lives.

10. Need for modeling
Conformity and the need to base behavior on that of others. This is the major motivation of
children, tweens (8-12 year olds), and especially teenagers-and in their social world
conformity mean acceptance.

11. Need for novelty
People have variety seeking-behavior and this may be a reason for brand switching and
impulse buys, but that depends on the person. People experiencing rapid life changes will
seek stability, while people in stable life situations will seek change. The travel industry uses
this by changing up their ads and showing adventure vacations where people are actively
having fun and some ads showing relaxing vacations where people are swinging in a
hammock.

12. Need for Assertion
Customer's need to engage in activities that will increase self-esteem and self-esteem in the
eyes of others. Most consumers respond positively to ads that appeal to this need. In an
advertisement for a ladies razor, it will say "show off your beautiful legs to your man," this
will appeal to women by showing that the product increases your self-esteem.
Internal Influences - Lifestyle and Attitude

A. Lifestyle

-Lifestyle is a common word to explain complicated consumer
behaviors.
Lifestyle is a way to segment people into groups based on three
things: opinions, attitudes and activities.
-Lifestyle means the ways groups of consumers spend time and
money.
-Lifestyle can include things like bowling, cooking, car
racing, kayaking, attending charity events, having pets, interest
in politics, watching sporting events and so on
Internal Influences - Lifestyle and Attitude

A. Lifestyle

-Lifestyle is a common word to explain complicated consumer behaviors.
Lifestyle is a way to segment people into groups based on three things:
opinions, attitudes and activities.
-Lifestyle means the ways groups of consumers spend time and money.
-Lifestyle can include things like bowling, cooking, car
racing, kayaking, attending charity events, having pets, interest in
politics, watching sporting events and so on.

-Everyone has two lifestyles-the one they are currently in and the one they
want to be in, which is always better than the current one.
-Marketers exploit this desire to move into a better lifestyle by showcasing
people who are better off than the intended target market in their ads.
-For example most ads targeting children show children that are almost too
old for the product, this appeals to younger children who desire to be like
them.
Internal Influences - Lifestyle and Attitude

B. Attitude

-An attitude is an internal evaluation, expressed outwardly about a person, object or issue.
-There are three components of attitude - affect, behavior and cognition.
-This is sometimes called the ABC's of attitude.
-These three components work together to form a hierarchy of effects:

 Purchase                                 Hierarchy of effects
 High involvement                         Belief—affect—behavior
 Low involvement                          Belief—behavior—affect
 Experiential                             Affect—behavior—belief
 Behavioral Influence                     Behavior—belief—affect

-In a purchase that requires a high level of involvement, such as a car, consumers will
consider various choices and develop beliefs about each choice; then they develop feelings
about the products (affect); and finally they act on the behavior and decide to purchase, or
not.
-Whereas with a behavioral influence, the customer will act first (purchase), then develop
beliefs about their purchase and that leads to developing feelings about the product or
service.
Internal Influences - Lifestyle and Attitude

ELM Model (Petty and Cacioppo, 1981)
One theory about attitude change is the Elaboration Likelihood Model (ELM).
This model shows how attitudes are changed based on the level of
involvement in the purchase. As soon as a message is received a consumer
begins to process it, depending on the level of involvement and motivation
it will then follow one of two routes—the central route or the peripheral
route.

The central route: If the consumer is highly involved in the purchase, then
they will put forth considerable effort toward understanding the marketing
messages. They will look for cues in the message that pertain to the
product, its attributes, and advantages.

The peripheral route: If the consumer is not highly involved in the
purchase, or lacks the motivation to process information, they are more
likely to pay attention to the attractiveness of the people in the
advertisement, images and music, which are all non-product related
information. These cues play a major role in persuading consumers to
purchase. This usually leads to a product attitude change that doesn‘t last.
External influences - Introduction

What are external influences in consumer behavior?

-What a consumer eats, wears, and believes are all learned and influenced by the
culture they live in, their family, childhood and social environment.
-All of these are external factors that affect purchases.

A list of the external influences that affect consumer behavior:
Age
Race
Gender
Education level
Cross-cultural influences
Sub-cultures (Hispanic-American)
Social status (upper, middle, lower)
Customs, Beliefs, Expectations, Traditions, Habits
Reference groups are groups that have shared beliefs, interests and behaviors
and influence a consumer‘s behavior:
External influences - Introduction

-People are social and they want to belong to special groups.
-Group members share common interests, influence each
other, and share rules and values.
-Primary groups are those with the most influence, such as
family members; secondary groups have less interaction than
the primary group, such as clubs and organizations.
-As children grow into teenagers, their parents become less of
an influence and peer groups become more of an influence.
-All groups exert what is called social power; some groups have
more power than others over consumers‘ decisions.
External influences - Introduction

        Type of Social Power   Description                    Example
        Referent               A person likes a group and     A teenager wants to join a
                               acts like them so the group    popular group, so they begin
                               will accept them               to dress like them and listen
                                                              to their groups‘ chosen music
        Legitimate             Membership comes with          A boss has authority over his
                               agreements and there will be   employees and can fire them if
                               consequences for               they don‘t do an adequate job
                               nonconformity
        Expert                 Groups have knowledge that    Consumers who want to be
                               others want to gain           members of The American
                                                             Medical Association seek to
                                                             gain their knowledge of health
                                                             and wellness
        Reward                 Groups with power to give     A school soccer team can give
                               rewards to members            trophies to their best players
                                                             (members)
        Coercive               A group can penalize          In the army, soldiers who do
                               members for not following the not report for duty on time
                               rules                         can be forced to do manual
                                                             labor or even get kicked out of
                                                             the army
External influences – Introduction

-External influences can also include situational influences, sometimes called
atmospherics—sensory items in an environment that may change buying patterns, such as
music, color, smell, and lighting.
-If a store plays loud rock music, they may attract young adults, but drive away older
consumers. Color is a huge influence on behavior, but is also dependent on culture, since
different cultures perceive colors differently. In the US white is a color worn at weddings, and
in China, red is the color of choice for weddings. Many bakeries will pump the smell of their
treats outside the store, so that passersby will be more likely to want to come in.

-Before making a purchase, consumers will go through an external information search. They
will go through this search in order to evaluate the alternatives and narrow down their list of
choices. It includes:
Personal experience- have they purchased this product before? How do they feel about it?
Websites/Internet search- researching the quality of the product
Knowledge- someone with little or no knowledge of the product will need lots of information
Friends/reference groups- consumers ask friends, family and coworkers about their
experiences with the product.
Advertising and promotions-

-A purchase may be ultimately made due to Heuristics. This is a personal set of values that
everyone has and it causes consumers to buy what they are comfortable buying, such as
purchasing from specific countries of origin, or products that they are brand loyal to.
External Influences - Family Life Cycle (FLC)

-Family life cycle is defined as what type of family the target market consumer is in.
-DINKS are ―double income no kids‖ and SINKS are ―single income no kids‖.
-Marketers love to target the DINKS and SINKS because they have lots of discretionary income and no children to spend it
on, so they spend their extra money on themselves, their house, their pets and vacations.

Stages of the Family Life Cycle (FLC)
-Young and single
-Engaged couples
-DINKS (Double Income No Kids)
-SINKS (Single Income No Kids)
-Married with children: Babies, Toddlers, Elementary School Age (5-7), Tweens (8-12), Teens (13-17), Older
-Single parents
-Empty nester
-Boomerang Kids (adult children who have moved back in with their parents)
-Extended parents (grandparents raising their grandchildren)
-Blended Families (stepchildren)
-Recently divorced
-Same-sex singles/couples
-Retired - Wealthy or Medicare dependent

The engaged couples and the recently divorced spend money on similar products, although for different reasons.
Engaged couples are buying products to begin a life together and the recently divorced are buying products that they
already had and now need to replace.
Extended parents are grandparents taking care of their grandchildren.
Same sex couples and singles are grouped together whether they have children or not, because of their lifestyle and
interests.
An empty nester is someone whose children are now grown adults and have moved out of the house.
Boomerang kids are adult children who are living with their parents.
External Influences - Consumer Culture

-Culture includes knowledge, belief, art, law, morals, customs, and any other
capabilities and habits acquired by humans as members of society.

-How does culture affect consumer behavior? Whatever a person consumes will
determine their level of acceptance in their society. If someone does not act
consistently with cultural expectations, they risk not being accepted in society.

-What happens when a company ignores culture? McDonald‘s is one of the most
popular restaurants in the world. At their American based restaurants they serve
beef hamburgers, but when they decided to open restaurants in India, they used
lamb meat for their hamburgers, because the Indian people do not eat cow meat; if
McDonald‘s had ignored this cultural difference they would not have been successful
in India! That was the problem when The Walt Disney Company opened EuroDisney
outside Paris; it was almost a failure because Disney ignored the culture. The French
people drink wine at very young ages and prefer sugar on their popcorn, not salt,
like Americans. Disney did not accommodate their theme park until they realized
that the French people were indeed their target market, so they changed the name
of the park to Disneyland Paris and made modifications to their menus and also to
the wait lines in the park.
External Influences - Consumer Culture

                      Behavior             Meaning in the US           Meaning in other
                                                                       cultures
                      Consuming wine and   Those under the age of      In European countries it
                      beer                 21 are not allowed to       is common for children
                                           drink alcohol               to drink wine/beer at
                                                                       family meals; when in a
                                                                       bar in Korea you pour
                                                                       drinks for your friends
                                                                       and family first, then wait
                                                                       for them to pour your
                                                                       drink
                      Drinking coffee      Generally adults drink it In Turkey, coffee is a
                                           in the morning because special drink that you
                                           of the caffeine, and        serve to guests; in Italy
                                           giving coffee to a child is coffee is enjoyed after a
                                           not accepted                family meal; in China tea
                                                                       is the drink of choice
                      Cooking pork ribs    Grilled outside at a        Jewish and Muslims do
                                           backyard party              not eat pork
                      Kissing              To express romantic         In many cultures kissing
                                           feelings about someone is acceptable when
                                                                       greeting a friend
                      Using the number 7   Lucky number                Unlucky number in
                                                                       Kenya, Singapore and
                                                                       Ghana
External Influences - Consumer Culture

-Factors that Define a Culture:
i. Individual/Collective: The culture in the US is an individualistic society, where people generally
look out for themselves; The Japanese culture focuses on the collective, and people work to
better society as a whole.
ii. Extended/Limited Family: In the US, families move away from each other and generally don‘t
live together in the same house; In many Asian and European countries, parents, kids,
grandparents and even aunts and uncles live together in the same house.
iii. Adult/Child: Different cultures will define when someone is an adult. In the US it is 18 years
old, but in some South American countries it is 14 or 15 years old. In the Hebrew culture a boy
becomes a man at 13 during his Bar Mitzvah ceremony. In the Hispanic culture a girl becomes an
adult at 15th birthday party.
iv. Masculine/Feminine: Cultures define the roles of men and women differently, including their
rank, and prestige in society.
v. Youth/Age: The value placed on Elders depends on the culture
vi. Cleanliness: In the US, cleanliness is very important, in fact most of the products advertised
on American TV claim to improve cleaning; In other cultures showering on a daily basis is
unnecessary.
vii. Tradition/Change: Some societies prefer traditions over making changes.
viii. Hard work/Leisure: In some cultures hard work is valued over leisure time.
ix. Sensual gratification/Abstinence: The Netherlands is a society that openly talks about and
advertises sexual activity; in Muslim societies those topics are taboo, and women who get
pregnant before marriage are often shunned.
External Influences - Social Environment and Social Class

Social Environment
Reference groups have an influence on purchasing behavior, but the level of influence will
depend on where the product will be consumed—in public or in private—and whether the
product is a want or a need.




                        GROUP INFLUENCE ON PRODUCT AND BRAND SELECTION
                                    Need                        Want
          Public                    Example: fast food lunch    Example: yacht
                                    A product used in public    A product used in public
                                    that you need               that you want
                                    weak group influence for    strong group influence for
                                    product selection, strong   product selection, strong
                                    group influence for brand   group influence for brand
                                    selection                   selection
          Private                   Example: bed sheets         Example: hot tub
                                    A product used in private   A product used in private
                                    that you need               that you want
                                    weak group influence for    strong group influence for
                                    product selection, weak     product selection, weak
                                    group influence for brand   group influence for brand
                                    selection                   selection
External Influences - Social Environment and Social Class

Social Class
Populations can be subdivided into groups who members share similar hobbies, opinions, and
activities. In general, people have two lifestyles—the one they are in and the one they strive to be
in, which is usually better than their current situation. It is important for a marketer to
understand the subdivisions of society in order to better choose target markets for their
products and services.
External Influences - Social Environment and Social Class
                                                PROFILE OF THE AMERICAN CLASS STRUCTURE
                        CLASS           % Pop         INCOME         EDUCATION     OCCUPATION       DESCRIPTION
Social Class                                                         LEVEL
                        Upper-Upper     .3%           $5 million and Graduate      CEO,             Inherited
                                                      up             Degree        Executives,      wealth,
                                                                                   Senator          aristocratic,
                                                                                                    fund charities,
                                                                                                    ―old money‖,
                                                                                                    participate in
                                                                                                    politics
                        Upper           1.2          $2 million     Graduate        Executive,      Entrepreneurs,
                                                                    Degree          professional    Sports Stars,
                                                                                                    Entertainers
                        Lower-Upper     12.5         $250,000       Graduate        Executive,      Education is
                                                                    Degree, medical Professional,   important,
                                                                    degree          Doctor          involved in arts
                        Middle Class    32           $100,000       College Degree Office workers, Insecure due to
                                                                                    managers        economic
                                                                                                    fluctuations,
                                                                                                    live in the
                                                                                                    suburbs
                        Working Class   38           $50,000        High school     Teacher,        Skilled workers,
                                                                                    plumber,        may be in
                                                                                                    danger of
                                                                                                    falling into a
                                                                                                    lower class
                        Lower           9            $20,000        Some High       Janitor, farmer Poorly
                                                                    School                          educated, low
                                                                                                    income, work as
                                                                                                    laborers
                        Lower-Lower     7            $9,000 and     Grade School    Minimum wage Unskilled, may
                                                     under                          or unemployed be unemployed
                                                                                                    for long periods
                                                                                                    of time, receive
                                                                                                    government
                                                                                                    support
External Influences - Social Environment and Social Class

Social Class                                    PROFILE OF THE MEXICAN CLASS STRUCTURE
                        CLASS                         % Pop                      DESCRIPTION
                        A (muy rica y bien acomodada) 0.6%                       Muy altos ingresos; médicos,
                                                                                 abogados, políticos,
                                                                                 funcionarios de gobierno,
                                                                                 presidentes de la república
                                                                                 (medio millón o más USD)
                        B (clase rica)                1.93%                      Altos ingresos, $100,000 a
                                                                                 400,000 USD
                        C1 (clase alta)                                          Profesionistas con ingresos
                                                                                 fuertes (50,000 a 90,000 USD)
                        C2 (clase media alta)                                     Tienen ingresos mensuales de
                                                     18.54%
                                                                                  20,000 a 40,000 USD. Alto
                                                                                  poder adquisitivo; puestos de
                                                                                  altos ejecutivos y directivos.
                        D (clase media media)        27.23%                       Ingreso mensual de 10,000 a
                                                                                  19,000 USD; casas de lujo
                                                                                  ejecutivas de alto poder
                                                                                  adquisitivo.
                        E (clase media baja)         21.42%                       Ingresos mensuales de 1,000 a
                                                                                  9,000 USD; poder adquisitivo
                                                                                  mediano.
                        F (clase popular)            30.28%                       De 100 a 300 USD mensuales;
                                                                                  para muchos países de AL; la
                                                                                  mayoría de la población se
                                                                                  encuentra en este nivel
External Influences - Family Influences (Birth Order)

-Where a child places in the birth order can have an effect on how they see themselves, and
therefore affects their consumer behavior.
-The middle child often seems to have the most negative impressions of his lot in life.
-Younger children always want to be able to do the things older brothers are allowed to do.
-And older brothers may feel that the younger ones get away with things they were not able to
do when they were the same age. Here are the levels of birth order:

(1) Only Child
-Pampered and spoiled
-Is center of attention; often enjoys position. May feel special.
-Relies on service from others rather than own efforts.
-Feels unfairly treated when doesn't get own way.
-Likelier to hold a professional position.
-Concerned with meeting parents‘ expectations.
-Confident.
-Pays Attention to Detail.
-Good in School.
-Overly Critical.
External Influences - Family Influences (Birth Order)

(2) Oldest Child
-Is only child for period of time; used to being center of attention.
-Believes must gain and hold superiority over other children.
-Being right, controlling often important.
-Strives to keep or regain parents' attention through conformity. If this failed, chooses to misbehave.
-May develop competent, responsible behavior or become very discouraged.
-Sometime strives to protect and help others.
-Confident and determined.
-Born Leader and organized.
-Eager to Please.
-Likes to Avoid Trouble.

(3) Second Oldest Child
-Never has parents' undivided attention.
-Always has sibling ahead who's more advanced.
-Acts as if in race, trying to catch up or overtake first child. If first child is "good," second may
become "bad." Develops abilities first child doesn't exhibit. If first child successful, may feel uncertain
of self and abilities.
-May be rebel.
-Feels "squeezed" if third child is born.
-May push down other brothers.
External Influences - Family Influences (Birth Order)

(4) Middle Child of Three brothers
-Has neither the rights of oldest nor privileges of youngest.
-May feel like they don‘t have place in family.
-Becomes discouraged and "problem child" or elevates self by pushing down other brothers.
-Is adaptable.
-Learns to deal with both oldest and youngest brothers.

(5) Youngest Sibling
-Feels every one bigger and more capable.
-Expects others to do things, make decisions, take responsibility.
-Becomes boss of family in getting service and own way.
-Develops feelings of inferiority or becomes "speeder" and overtakes older siblings.
-Remains "The Baby." Places others in service.
I-f youngest of three, often allies with oldest child against middle child.
-Persistent and affectionate
-Crave the Spotlight
‗The decision-making process by which formal
      organisations establish the need for
     purchased products and services, and
     identify, evaluate, and choose among
       alternative brands and suppliers‘

                 Kotler and Armstrong (1989)
-Organisation purpose- Goodyear Tyres
-Derived demand- follows cars and lorries
-Concentrated purchasing- stockholdings of
rubber
-Direct dealings- large purchaser of basic
rubber - no intermediaries
-Specialist activities- learns about the
product
-Multiple purchase influences- DMU -
Decision making unit
Characteristics of organisational
buyer behaviour
                  2. General
  1. Problem                      3. Product
                  Description
  Recognition                    Specifications
                   of Need

                                 5. Acquisition
  4. Supplier   Organizational   and Analysis
     Search     Buying Process    of Proposals



                  7. Selection
  6. Supplier                    8. Performance
                       of
   Selection                         Review
                 Order Routine
Buying a Machine Vision System (example):
•Economic Outlook:
                                      Domestic & Global
                                      •Pace of Technological
                     Environmental
A projected change                    Change
                         Forces
in business                           •Global Trade Relations
conditions can
drastically alter                     •Goals, Objectives, and
buying plan.         Organizational   Strategies
                        Forces        •Organizational Position
  Organizational                      of Purchasing
     Buying
    Behavior                          •Roles, relative
                        Group         influence, and patterns
                        Forces        of interaction of buying
                                      decision participants


                                      •Job function, past
                       Individual
                                      experience, and buying
                         Forces
                                      motives of individual
                                      decision participants

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Comportamiento del Consumidor

  • 1.
  • 2. Dominant Family Purchase  Demographic Factors  The Consumer Buying Process  Maslow‘s hierarchy of needs  Socioeconomic classification scheme  Types of buyer behaviour  The Buying Decision Process  Organisational Buyer Behaviour
  • 3. What is Consumer Behavior? -How many times throughout the day do people make product decisions? -If you stop to think about it, many product decisions are made every day, some without much thought. -What should I wear? What should I eat? What am I going to do today? -Many product decisions are answered routinely every day and they help move the economy of cities, countries and ultimately the world. -Product decisions also shape life for the consumer. -How can simple decisions be so important? -Why do marketers spend millions of dollars to uncover the reasons behind these decisions?
  • 4. What is Consumer Behavior? -Consumer behavior: it is the study of consumers and the processes they use to choose, use (consume), and dispose of products and services (impacts the world). -Consumer behavior incorporates ideas from several sciences including psychology, biology, chemistry and economics. -―All marketing decisions are based on assumptions and knowledge of consumer behavior‖ (Hawkins and Mothersbaugh, 2007). -Researching consumer behavior is a complex process, but understanding consumer behavior is critical to marketers-they can use it to: -Provide value and customer satisfaction. -Effectively target customers. -Enhance the value of the company. -Improve products and services. -Create a competitive advantage -Understand how customers view our products vs their competitors' products. -Apply marketing strategies toward a positive affect on society (encourage people to support charities, promote healthy habits, reduce drug use etc.)
  • 5. PRODUCT DOMINANT TYPICAL DECISION DECISION MAKER Women‘s casual Wife Price, style clothing Vacations Syncratic (both) Whether to go, where Men‘s casual Husband Type, price, style clothing Life insurance Husband Company, coverage Homeowner‘s Husband Company, coverage insurance Household Wife Style, brand, price appliances
  • 6. Age  Stage in family life cycle  Occupation  Economic circumstances  Lifestyle  social influence variables  family background  reference groups  roles and status
  • 7. Marketing Inputs Marketing Inputs Purchase Product Product Decisions Price Price Consumer Product Choice Promotion Location Choice Promotion Place Brand Choice Other Choices Place Psychological Inputs Culture Attitude Learning Perception Cohen (1991)
  • 8. Maslow‘s Hierarchy of Needs Self Actualisation Esteem Social Safety Physiological
  • 9. Class name Social status Occupation of head of % of household populatio n A Upper middle Higher managerial, 3 administrative or professional B Middle Intermediate managerial, 14 administrative or professional C1 Lower middle Supervisors or clerical, junior managerial, 27 administrative or professional C2 Skilled working Skilled manual workers 25 D Working Semiskilled and unskilled 19 workers E Those at lowest levels Pensioners, widows, 12 of subsistence casual or lower-grade workers
  • 11. Value and Relationship Quality -Consumers choose goods and services based on the assumption that they will be rewarded with value and satisfaction. -Consumption is the process by which goods and services are used and assigned a level of value by the consumer. -That level could be positive, if the customer was satisfied, or it could be negative if they did not find any value in their purchase. -Marketers have to provide the right combination of quality, price and customer service in order to give customers positive value and satisfaction. -That will in turn create happy, loyal customers. The formula looks like this: Quality + Price + Customer Service = Value and Satisfaction
  • 12. Value and Relationship Quality -If a product/service is provided that has low quality, and a high price, that does not create a happy, satisfied customer. -At the same time, having a great product at the best possible price means nothing if the customer is treated badly, or not provided with the opportunity to return unwanted items.
  • 13. So what is meant by 'Quality?' Quality is a product or service's ability to meet the customers' need or want. -Quality is difficult to define, and varies with each consumer, however we can take a look at some of the components of quality for products and services: Products Performance- The product does what it is supposed to do. Features- The product includes all the specifications that it says it has or that are required, this includes safety measures. Reliability- The product performs consistently. Durability- When the product is being used it has to last under the conditions of normal use. Serviceability- The product is easy to maintain or repair either by the consumer or by providing a warranty which says the company will provide repairs. Aesthetics- This is important to consumers, products have to look good, and this contributes to a brand equity and identity. Perception- Even if the product has good quality, if the customer does not think so, then it won't sell. The customer has to have positive feelings about the product, the company, the brand name and the employees.
  • 14. So what is meant by 'Quality?‗ Services Responsiveness- Services are performed in a prompt manner. Reliability-The service is performed right, the first time, and all subsequent times. Assurance- Knowledgeable and friendly employees are essential as customers will equate employees behavior with the entire company. If a customer has a bad experience with an employee, they will be less likely to purchase from the entire company's offerings. Customers expect technical competence and professionalism from salespeople. Empathy-Providing individualized attention to customers will make them feel special and keep them coming back. Tangibles- Some services provide physical evidence that they occurred, for example a restaurant cooks (service) and provides the food (product).
  • 15. Why People Buy -Marketers spend millions of dollars trying to understand why people buy products and services. -Sometimes it seems that there is no reason for a purchase, but in reality there is always a reason. -Many factors are involved in a customers' buying decision, any one of which can become the deciding factor, such as: -Conspicuous consumption: Lavish spending for the purpose of displaying wealth or social status; preference for buying increases with price. -Snob effect: Desire to buy something nobody else has; preference for buying increases with rarity or scarcity. -Bandwagon effect: Desire to buy something everybody else is buying; preference for buying increases with perceived popularity. -Economic: To enhance their lifestyle or to fulfill two of Maslow's needs: physiological (food, shelter) and Safety and Security. -Psychological: This is the study of how people interact with their environment, products are consumed to enhance their well being, for example air fresheners, furniture and convection ovens.
  • 16. Why People Buy -Sociological- The study of the thoughts, feelings, and behaviors of group interaction, especially in a social setting. People want to feel accepted and loved by their peers and they need to consume products that will appeal to their chosen groups. For example a consumer wants to join a kayaking team would have to purchase the proper gear, clothing and maybe even music genre in order to fit in with the group. -Practical- Consumers purchase products because they need them to survive, such as shoes and medicine. -Impractical- is the opposite of practical, purchasing products that are not necessary. -Rational- Purchases are made with logical, thought out reasoning. -Irrational- products are purchased for foolish or absurd reasons. -Factual- Purchasing products based on researched reports. -Emotional- purchasing products based on feelings -Buy to satisfy a need (for a reason). -Buy to satisfy a want (desire).
  • 17. Other reason why people buy
  • 18. -Complex buyer behaviour e.g. Intel Pentium Processor -Dissonance-reducing behaviour (brand reduces after-sales discomfort) -Habitual buying behaviour e.g. salt - little difference -Variety seeking behaviour- significant brand differences e.g soap powder
  • 19. -recognition of the need e.g a new PC -choice of involvement level (time and effort justified) e.g. two week ends -identification of alternatives e.g. Dell, PC World -evaluation of alternatives e.g. price, customer service, software support, printer/scanner package -decision- choice made e.g Epsom -action e.g buy Epsom model from Best Buy -post-purchase behaviour e.g. use, breakdowns, etc
  • 20. Internal Influences – Learning -Consumer behavior is largely learned behavior. -Learning is a change of behavior following an interaction between a person and their environment. -A person touches a hot stove and then gets hurt, because of that interaction they learn not to touch the hot stove again. -Most attitudes, values, tastes, behaviors, preferences, symbolic meanings and feelings are acquired through learning. -People buy things and then make decisions for future purchases based on if they liked the product, quality, service, and price. -Social organizations help people learn "appropriate" beliefs about issues like drinking and driving, proper nutrition, etc. -Companies that help their customers learn about their products and create positive feelings with their product, service, brand name, and employees-have a competitive advantage.
  • 21. Internal Influences – Memory -Marketing messages can be effective only if the consumer correctly understands the messages, and remembers them when needed. -Memory refers to a consumer's ability to understand the marketing messages and assign them value and meaning. -Value and meaning always together. -The value and meaning assigned is largely determined by internal factors, (thoughts, feelings, emotion, attitude, perception, motivation, personality, lifestyle) which are different for each consumer. -For example, a consumer who drinks lots of milk, sees an advertisement that says "Get Milk?" and since they already have positive feelings for the product they will purchase more milk, whereas a consumer who does not enjoy drinking milk and sees the same ad, may dismiss the ad or may try drinking more milk for a short period of time and then decrease consumption again.
  • 22. Internal Influences – Memory Three things influence consumer's ability to understand messages: Physical Characteristics of message Imagery: When the brand name, words, and slogan work together to create an image in the mind of the consumer, it will invoke ideas, feelings and objects, and a direct recovery of past experiences. Disney is big on evoking nostalgia and past experiences, they want adult customers to remember being taken to the Disney parks as a child and then repeat the experiences with their own children. Much of their advertisement depicts families having wonderful experiences together, while the adults are remembering being there as children. Color: Colors have an enormous impact on marketing messages, and color affects consumers in a subjective manner, so that most of the time consumers don‘t even know they are being affected! For example, in the US, the color red makes people eat 25% more, therefore most restaurants use red as their main color. ( Home :: McDonalds.com ; Welcome to KFC.com ; Jack in the Box – Home ). The meaning and value assigned to colors changes with the culture, so marketers need to be fully aware of how color is interpreted by different groups of people. For example, the Starbucks Coffee Company logo is green, but when they opened shops in Malaysia, they had to change the logo to brown because in that culture green is associated with sickness. Font: The presentation of words and how they are shaped will also enhance the marketing message and contribute to the value and meaning. For example, these two different fonts for a cigarette company will convey entirely different meanings, and may attract two different customers. Caribou Cigarettes Caribou Cigarettes -The first logo is block style, bold and more intense and may be more masculine. The second is a script font, with more curls, softer lines and may be more feminine. -So which is better? Well, that depends on the product and the target market you are trying to attract.
  • 23. Internal Influences – Memory -Simplicity of the message: A simple message is generally easier to understand. Using short phrases and easy to read terminology, such as ―heart healthy‖ will quickly and easily convey the message that the product is good for your heart. ( Aceite Capullo ) -Consistency of the message: The message needs to fit in with the surrounding information—style, color, text, photographs, music—all have to work together. For example, showing a television ad for travel to the Caribbean will have soft, flowing fonts, bright colors, and reggae music. It can sometimes be an advantage to have inconsistent messages, some consumers may remember the ad more if some of the elements don‘t make sense. -Source of the message: Consumers will be more likely to remember and purchase products endorsed by credible sources, animated characters or celebrities. They have to be likeable, have some expertise or at least pretend that they have expertise), be trustworthy, and attractive.
  • 24. Internal Influences – Memory Characteristics of the message receiver (consumer) -Intelligence: unless you are specifically marketing a product to extremely intelligent individuals, it is best to word marketing messages on a level most people can understand, and don‘t ever talk to your customers in a way that would make them feel inferior. -Involvement: A customer with higher levels of involvement with the product, service and marketing information will have more recall than a consumer with less involvement. Creating more interest in the product and making a website more interactive will help to increase sales. More involvement means more sales. -Familiarity: Generally, the more familiar a customer is with a product, the more likely they are to purchase it; however, having too much familiarity can lead to adaptation, when customers become tired of their ―familiar‖ purchases and seek out novelty items. For example, in the US in the 1990s, ketchup sales began slipping and to revamp sales, ketchup manufacturers created green and purple ketchup, these novelty items boosted sales, but only for a few months, when consumers became tired of them. -Expectations: If the customer doesn‘t know what to expect from the product or service, then they are not going to purchase it. This explains why familiar brand names like Campbell‘s Soup, Coca-Cola and Disney do not change their logos—customers are familiar with them, have positive thoughts about them and know what to expect. -Physical limits: Marketers need to remember that some consumers have limitations such as hearing impairment or color blindness and this needs to be taken into consideration when creating marketing messages
  • 25. Internal Influences – Memory Characteristics of the environment -Intensity of information: If a consumer is overloaded with stimuli in an environment, they are much more likely to avoid the ad, or not comprehend it at all. Let's face it, we live in a world cluttered with advertisements, it can be difficult to break through all of it and get to your target market customers. Marketers have to be more creative since customers can now skip commercials (thanks to recordable television); marketers use product placement in the actual movie or television show, the characters in the show use the brand name products and may even talk about how they like the brand name. This is all part of the advertising. Marketers are also making use of new social marketing movements such as Twitter and Facebook that can be programmed to reach customers that want to see your marketing messages. -Framing: Messages can be framed to seem positive or negative and this will affect how customers assign value. "If you don't use sunscreen, you could get skin cancer" or "Use sunscreen to moisturize and protect your delicate skin". -Timing: Many factors will influence how a message is interpreted and assigned value including: amount of time customer has to view a message, time of day, and type of medium used. A customer driving in the morning 70mph past a billboard for coffee may only have a few seconds to interpret the message, but since it is a time of day when that product is most consumed, they may be more likely to act on the message.
  • 26. Internal Influences - Emotion and Perception A. Emotion -Emotion is difficult to define, and even more difficult to predict. -However, they are important to marketers because consumers tend to react to marketing messages and make purchases based on feelings and emotions. -Emotion can be used to create product benefits. -Such as with Cheerios cereal; its commercials feature families having wonderful moments together, that couldn't have happened without those products. -Emotion in advertising enhances attention, attraction, and is processed more by the consumer and may be remembered better. -These are elements of the relationship between emotion and understanding: -Self control- the ability to control your emotions -Emotional empathy- the ability to understand other people's emotions -Positive/negative outlook- a person's outlook on life can be optimistic or depressed and negative; most people fall somewhere in between- -Productivity- ability to use emotions to solve problems
  • 27. Internal Influences - Emotion and Perception B. Perception -Perception is the process by which people select, organize, and interpret information. -Perception has four major steps: 1. Exposure - When a stimulus (like a billboard) comes within range of your senses (vision) 2. Attention - Determined by the individual and the situation; Nerves pass the information onto the brain for processing 3. Interpretation - when marketing messages are assigned meaning 4. Memory: a. Short-term—for immediate decision making b. Long-term—for retention
  • 28. Internal Influences - Motivation -Motivation is an internal state that drives us to satisfy needs. -Motivation is the energizing force that activates behavior. -Once we recognize that we have a need, a state of tension exists that drives the consumer to the goal of reducing this tension and eliminating the need. -Consequently, only unmet needs motivate -According to Maslow's hierarchy of human needs, for each need there are positives gained and negatives that are avoided by meeting that particular set of needs. -Products that are purchased because of a need will satisfy a goal and avoid unwanted consequences. -For example, people need to feel secure so they purchase smoke detectors, therefore gaining protection and avoiding loss and fear of fire, only unmet needs motivate.
  • 29. Internal Influences - Motivation Need Gained Avoided Creativity, Self-Actualization Unfulfilled potential accomplishment Pride, recognition, Esteem Failure, inadequacy prestige Acceptance, Rejection, Social popularity embarrassment Security Safety, protection Loss, danger, fear Physiological Health, comfort Sickness, discomfort Positives and Negatives for Each Need (Based on Maslow)
  • 30. Internal Influences - Motivation According to McGuire, there are 12 psychological motives, 12 reasons why consumers are motivated to make purchases: 1. Need for consistency 2. Need for attribute causation 3. Need to categorize 4. Need for cues 5. Need for independence 6. Need for self-expression 7. Need for ego-defense 8. Need for reinforcement 9. Need for affiliation 10. Need for modeling 11. Need for novelty 12 Need for Assertion
  • 31. Internal Influences - Motivation 1. Need for consistency People have a basic desire to have all parts of themselves consistent and they purchase products that fulfill this need. People that listen to country music will purchase products like cowboy boots, heavy duty trucks and pets. 2. Need for attribute causation People have the need to determine who or what causes things to happen to them. Some people choose to attribute it to themselves, fate or an outside force like God. 3. Need to categorize Categories allow people to process a large amount of information. Vehicles are categorized into cars, SUV's, light trucks, heavy duty trucks, van, sporty, mid- size, hybrid, electric and so on. This helps consumers quickly narrow down their choices when purchasing a vehicle. 4. Need for cues Most people will view others' behavior and infer what they feel and think. Clothing plays an important role in presenting image of a person. People quickly judge others by the clothing they are wearing and the vehicle they drive.
  • 32. Internal Influences - Motivation 5. Need for independence Americans strive for individuality and self-expression and many products are marketed as "limited edition" or being different and unique The Japanese culture discourages individuality and focuses on affiliation, and behavior that enhances family and culture. 6. Need for self-expression Americans are known for letting others know who and what they are by their extravagant purchases, especially clothing and cars. Who really needs a $1,200 pen? What is that saying about that person? 7. Need for ego-defense The need to defend your identity. An insecure customer will purchase well-known brand names for fear of being labeled socially incorrect. 8. Need for reinforcement People are motivated to act because they are rewarded for doing it. For example, showing off a new diamond ring to your friends creates acceptance and approval.
  • 33. Internal Influences - Motivation 9. Need for affiliation Affiliation is the need to develop mutually helpful and satisfying relationships with others, which is a critical part of all people's lives. 10. Need for modeling Conformity and the need to base behavior on that of others. This is the major motivation of children, tweens (8-12 year olds), and especially teenagers-and in their social world conformity mean acceptance. 11. Need for novelty People have variety seeking-behavior and this may be a reason for brand switching and impulse buys, but that depends on the person. People experiencing rapid life changes will seek stability, while people in stable life situations will seek change. The travel industry uses this by changing up their ads and showing adventure vacations where people are actively having fun and some ads showing relaxing vacations where people are swinging in a hammock. 12. Need for Assertion Customer's need to engage in activities that will increase self-esteem and self-esteem in the eyes of others. Most consumers respond positively to ads that appeal to this need. In an advertisement for a ladies razor, it will say "show off your beautiful legs to your man," this will appeal to women by showing that the product increases your self-esteem.
  • 34. Internal Influences - Lifestyle and Attitude A. Lifestyle -Lifestyle is a common word to explain complicated consumer behaviors. Lifestyle is a way to segment people into groups based on three things: opinions, attitudes and activities. -Lifestyle means the ways groups of consumers spend time and money. -Lifestyle can include things like bowling, cooking, car racing, kayaking, attending charity events, having pets, interest in politics, watching sporting events and so on
  • 35. Internal Influences - Lifestyle and Attitude A. Lifestyle -Lifestyle is a common word to explain complicated consumer behaviors. Lifestyle is a way to segment people into groups based on three things: opinions, attitudes and activities. -Lifestyle means the ways groups of consumers spend time and money. -Lifestyle can include things like bowling, cooking, car racing, kayaking, attending charity events, having pets, interest in politics, watching sporting events and so on. -Everyone has two lifestyles-the one they are currently in and the one they want to be in, which is always better than the current one. -Marketers exploit this desire to move into a better lifestyle by showcasing people who are better off than the intended target market in their ads. -For example most ads targeting children show children that are almost too old for the product, this appeals to younger children who desire to be like them.
  • 36. Internal Influences - Lifestyle and Attitude B. Attitude -An attitude is an internal evaluation, expressed outwardly about a person, object or issue. -There are three components of attitude - affect, behavior and cognition. -This is sometimes called the ABC's of attitude. -These three components work together to form a hierarchy of effects: Purchase Hierarchy of effects High involvement Belief—affect—behavior Low involvement Belief—behavior—affect Experiential Affect—behavior—belief Behavioral Influence Behavior—belief—affect -In a purchase that requires a high level of involvement, such as a car, consumers will consider various choices and develop beliefs about each choice; then they develop feelings about the products (affect); and finally they act on the behavior and decide to purchase, or not. -Whereas with a behavioral influence, the customer will act first (purchase), then develop beliefs about their purchase and that leads to developing feelings about the product or service.
  • 37. Internal Influences - Lifestyle and Attitude ELM Model (Petty and Cacioppo, 1981) One theory about attitude change is the Elaboration Likelihood Model (ELM). This model shows how attitudes are changed based on the level of involvement in the purchase. As soon as a message is received a consumer begins to process it, depending on the level of involvement and motivation it will then follow one of two routes—the central route or the peripheral route. The central route: If the consumer is highly involved in the purchase, then they will put forth considerable effort toward understanding the marketing messages. They will look for cues in the message that pertain to the product, its attributes, and advantages. The peripheral route: If the consumer is not highly involved in the purchase, or lacks the motivation to process information, they are more likely to pay attention to the attractiveness of the people in the advertisement, images and music, which are all non-product related information. These cues play a major role in persuading consumers to purchase. This usually leads to a product attitude change that doesn‘t last.
  • 38. External influences - Introduction What are external influences in consumer behavior? -What a consumer eats, wears, and believes are all learned and influenced by the culture they live in, their family, childhood and social environment. -All of these are external factors that affect purchases. A list of the external influences that affect consumer behavior: Age Race Gender Education level Cross-cultural influences Sub-cultures (Hispanic-American) Social status (upper, middle, lower) Customs, Beliefs, Expectations, Traditions, Habits Reference groups are groups that have shared beliefs, interests and behaviors and influence a consumer‘s behavior:
  • 39. External influences - Introduction -People are social and they want to belong to special groups. -Group members share common interests, influence each other, and share rules and values. -Primary groups are those with the most influence, such as family members; secondary groups have less interaction than the primary group, such as clubs and organizations. -As children grow into teenagers, their parents become less of an influence and peer groups become more of an influence. -All groups exert what is called social power; some groups have more power than others over consumers‘ decisions.
  • 40. External influences - Introduction Type of Social Power Description Example Referent A person likes a group and A teenager wants to join a acts like them so the group popular group, so they begin will accept them to dress like them and listen to their groups‘ chosen music Legitimate Membership comes with A boss has authority over his agreements and there will be employees and can fire them if consequences for they don‘t do an adequate job nonconformity Expert Groups have knowledge that Consumers who want to be others want to gain members of The American Medical Association seek to gain their knowledge of health and wellness Reward Groups with power to give A school soccer team can give rewards to members trophies to their best players (members) Coercive A group can penalize In the army, soldiers who do members for not following the not report for duty on time rules can be forced to do manual labor or even get kicked out of the army
  • 41. External influences – Introduction -External influences can also include situational influences, sometimes called atmospherics—sensory items in an environment that may change buying patterns, such as music, color, smell, and lighting. -If a store plays loud rock music, they may attract young adults, but drive away older consumers. Color is a huge influence on behavior, but is also dependent on culture, since different cultures perceive colors differently. In the US white is a color worn at weddings, and in China, red is the color of choice for weddings. Many bakeries will pump the smell of their treats outside the store, so that passersby will be more likely to want to come in. -Before making a purchase, consumers will go through an external information search. They will go through this search in order to evaluate the alternatives and narrow down their list of choices. It includes: Personal experience- have they purchased this product before? How do they feel about it? Websites/Internet search- researching the quality of the product Knowledge- someone with little or no knowledge of the product will need lots of information Friends/reference groups- consumers ask friends, family and coworkers about their experiences with the product. Advertising and promotions- -A purchase may be ultimately made due to Heuristics. This is a personal set of values that everyone has and it causes consumers to buy what they are comfortable buying, such as purchasing from specific countries of origin, or products that they are brand loyal to.
  • 42. External Influences - Family Life Cycle (FLC) -Family life cycle is defined as what type of family the target market consumer is in. -DINKS are ―double income no kids‖ and SINKS are ―single income no kids‖. -Marketers love to target the DINKS and SINKS because they have lots of discretionary income and no children to spend it on, so they spend their extra money on themselves, their house, their pets and vacations. Stages of the Family Life Cycle (FLC) -Young and single -Engaged couples -DINKS (Double Income No Kids) -SINKS (Single Income No Kids) -Married with children: Babies, Toddlers, Elementary School Age (5-7), Tweens (8-12), Teens (13-17), Older -Single parents -Empty nester -Boomerang Kids (adult children who have moved back in with their parents) -Extended parents (grandparents raising their grandchildren) -Blended Families (stepchildren) -Recently divorced -Same-sex singles/couples -Retired - Wealthy or Medicare dependent The engaged couples and the recently divorced spend money on similar products, although for different reasons. Engaged couples are buying products to begin a life together and the recently divorced are buying products that they already had and now need to replace. Extended parents are grandparents taking care of their grandchildren. Same sex couples and singles are grouped together whether they have children or not, because of their lifestyle and interests. An empty nester is someone whose children are now grown adults and have moved out of the house. Boomerang kids are adult children who are living with their parents.
  • 43. External Influences - Consumer Culture -Culture includes knowledge, belief, art, law, morals, customs, and any other capabilities and habits acquired by humans as members of society. -How does culture affect consumer behavior? Whatever a person consumes will determine their level of acceptance in their society. If someone does not act consistently with cultural expectations, they risk not being accepted in society. -What happens when a company ignores culture? McDonald‘s is one of the most popular restaurants in the world. At their American based restaurants they serve beef hamburgers, but when they decided to open restaurants in India, they used lamb meat for their hamburgers, because the Indian people do not eat cow meat; if McDonald‘s had ignored this cultural difference they would not have been successful in India! That was the problem when The Walt Disney Company opened EuroDisney outside Paris; it was almost a failure because Disney ignored the culture. The French people drink wine at very young ages and prefer sugar on their popcorn, not salt, like Americans. Disney did not accommodate their theme park until they realized that the French people were indeed their target market, so they changed the name of the park to Disneyland Paris and made modifications to their menus and also to the wait lines in the park.
  • 44. External Influences - Consumer Culture Behavior Meaning in the US Meaning in other cultures Consuming wine and Those under the age of In European countries it beer 21 are not allowed to is common for children drink alcohol to drink wine/beer at family meals; when in a bar in Korea you pour drinks for your friends and family first, then wait for them to pour your drink Drinking coffee Generally adults drink it In Turkey, coffee is a in the morning because special drink that you of the caffeine, and serve to guests; in Italy giving coffee to a child is coffee is enjoyed after a not accepted family meal; in China tea is the drink of choice Cooking pork ribs Grilled outside at a Jewish and Muslims do backyard party not eat pork Kissing To express romantic In many cultures kissing feelings about someone is acceptable when greeting a friend Using the number 7 Lucky number Unlucky number in Kenya, Singapore and Ghana
  • 45. External Influences - Consumer Culture -Factors that Define a Culture: i. Individual/Collective: The culture in the US is an individualistic society, where people generally look out for themselves; The Japanese culture focuses on the collective, and people work to better society as a whole. ii. Extended/Limited Family: In the US, families move away from each other and generally don‘t live together in the same house; In many Asian and European countries, parents, kids, grandparents and even aunts and uncles live together in the same house. iii. Adult/Child: Different cultures will define when someone is an adult. In the US it is 18 years old, but in some South American countries it is 14 or 15 years old. In the Hebrew culture a boy becomes a man at 13 during his Bar Mitzvah ceremony. In the Hispanic culture a girl becomes an adult at 15th birthday party. iv. Masculine/Feminine: Cultures define the roles of men and women differently, including their rank, and prestige in society. v. Youth/Age: The value placed on Elders depends on the culture vi. Cleanliness: In the US, cleanliness is very important, in fact most of the products advertised on American TV claim to improve cleaning; In other cultures showering on a daily basis is unnecessary. vii. Tradition/Change: Some societies prefer traditions over making changes. viii. Hard work/Leisure: In some cultures hard work is valued over leisure time. ix. Sensual gratification/Abstinence: The Netherlands is a society that openly talks about and advertises sexual activity; in Muslim societies those topics are taboo, and women who get pregnant before marriage are often shunned.
  • 46. External Influences - Social Environment and Social Class Social Environment Reference groups have an influence on purchasing behavior, but the level of influence will depend on where the product will be consumed—in public or in private—and whether the product is a want or a need. GROUP INFLUENCE ON PRODUCT AND BRAND SELECTION Need Want Public Example: fast food lunch Example: yacht A product used in public A product used in public that you need that you want weak group influence for strong group influence for product selection, strong product selection, strong group influence for brand group influence for brand selection selection Private Example: bed sheets Example: hot tub A product used in private A product used in private that you need that you want weak group influence for strong group influence for product selection, weak product selection, weak group influence for brand group influence for brand selection selection
  • 47. External Influences - Social Environment and Social Class Social Class Populations can be subdivided into groups who members share similar hobbies, opinions, and activities. In general, people have two lifestyles—the one they are in and the one they strive to be in, which is usually better than their current situation. It is important for a marketer to understand the subdivisions of society in order to better choose target markets for their products and services.
  • 48. External Influences - Social Environment and Social Class PROFILE OF THE AMERICAN CLASS STRUCTURE CLASS % Pop INCOME EDUCATION OCCUPATION DESCRIPTION Social Class LEVEL Upper-Upper .3% $5 million and Graduate CEO, Inherited up Degree Executives, wealth, Senator aristocratic, fund charities, ―old money‖, participate in politics Upper 1.2 $2 million Graduate Executive, Entrepreneurs, Degree professional Sports Stars, Entertainers Lower-Upper 12.5 $250,000 Graduate Executive, Education is Degree, medical Professional, important, degree Doctor involved in arts Middle Class 32 $100,000 College Degree Office workers, Insecure due to managers economic fluctuations, live in the suburbs Working Class 38 $50,000 High school Teacher, Skilled workers, plumber, may be in danger of falling into a lower class Lower 9 $20,000 Some High Janitor, farmer Poorly School educated, low income, work as laborers Lower-Lower 7 $9,000 and Grade School Minimum wage Unskilled, may under or unemployed be unemployed for long periods of time, receive government support
  • 49. External Influences - Social Environment and Social Class Social Class PROFILE OF THE MEXICAN CLASS STRUCTURE CLASS % Pop DESCRIPTION A (muy rica y bien acomodada) 0.6% Muy altos ingresos; médicos, abogados, políticos, funcionarios de gobierno, presidentes de la república (medio millón o más USD) B (clase rica) 1.93% Altos ingresos, $100,000 a 400,000 USD C1 (clase alta) Profesionistas con ingresos fuertes (50,000 a 90,000 USD) C2 (clase media alta) Tienen ingresos mensuales de 18.54% 20,000 a 40,000 USD. Alto poder adquisitivo; puestos de altos ejecutivos y directivos. D (clase media media) 27.23% Ingreso mensual de 10,000 a 19,000 USD; casas de lujo ejecutivas de alto poder adquisitivo. E (clase media baja) 21.42% Ingresos mensuales de 1,000 a 9,000 USD; poder adquisitivo mediano. F (clase popular) 30.28% De 100 a 300 USD mensuales; para muchos países de AL; la mayoría de la población se encuentra en este nivel
  • 50. External Influences - Family Influences (Birth Order) -Where a child places in the birth order can have an effect on how they see themselves, and therefore affects their consumer behavior. -The middle child often seems to have the most negative impressions of his lot in life. -Younger children always want to be able to do the things older brothers are allowed to do. -And older brothers may feel that the younger ones get away with things they were not able to do when they were the same age. Here are the levels of birth order: (1) Only Child -Pampered and spoiled -Is center of attention; often enjoys position. May feel special. -Relies on service from others rather than own efforts. -Feels unfairly treated when doesn't get own way. -Likelier to hold a professional position. -Concerned with meeting parents‘ expectations. -Confident. -Pays Attention to Detail. -Good in School. -Overly Critical.
  • 51. External Influences - Family Influences (Birth Order) (2) Oldest Child -Is only child for period of time; used to being center of attention. -Believes must gain and hold superiority over other children. -Being right, controlling often important. -Strives to keep or regain parents' attention through conformity. If this failed, chooses to misbehave. -May develop competent, responsible behavior or become very discouraged. -Sometime strives to protect and help others. -Confident and determined. -Born Leader and organized. -Eager to Please. -Likes to Avoid Trouble. (3) Second Oldest Child -Never has parents' undivided attention. -Always has sibling ahead who's more advanced. -Acts as if in race, trying to catch up or overtake first child. If first child is "good," second may become "bad." Develops abilities first child doesn't exhibit. If first child successful, may feel uncertain of self and abilities. -May be rebel. -Feels "squeezed" if third child is born. -May push down other brothers.
  • 52. External Influences - Family Influences (Birth Order) (4) Middle Child of Three brothers -Has neither the rights of oldest nor privileges of youngest. -May feel like they don‘t have place in family. -Becomes discouraged and "problem child" or elevates self by pushing down other brothers. -Is adaptable. -Learns to deal with both oldest and youngest brothers. (5) Youngest Sibling -Feels every one bigger and more capable. -Expects others to do things, make decisions, take responsibility. -Becomes boss of family in getting service and own way. -Develops feelings of inferiority or becomes "speeder" and overtakes older siblings. -Remains "The Baby." Places others in service. I-f youngest of three, often allies with oldest child against middle child. -Persistent and affectionate -Crave the Spotlight
  • 53. ‗The decision-making process by which formal organisations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers‘ Kotler and Armstrong (1989)
  • 54. -Organisation purpose- Goodyear Tyres -Derived demand- follows cars and lorries -Concentrated purchasing- stockholdings of rubber -Direct dealings- large purchaser of basic rubber - no intermediaries -Specialist activities- learns about the product -Multiple purchase influences- DMU - Decision making unit
  • 55. Characteristics of organisational buyer behaviour 2. General 1. Problem 3. Product Description Recognition Specifications of Need 5. Acquisition 4. Supplier Organizational and Analysis Search Buying Process of Proposals 7. Selection 6. Supplier 8. Performance of Selection Review Order Routine
  • 56. Buying a Machine Vision System (example):
  • 57. •Economic Outlook: Domestic & Global •Pace of Technological Environmental A projected change Change Forces in business •Global Trade Relations conditions can drastically alter •Goals, Objectives, and buying plan. Organizational Strategies Forces •Organizational Position Organizational of Purchasing Buying Behavior •Roles, relative Group influence, and patterns Forces of interaction of buying decision participants •Job function, past Individual experience, and buying Forces motives of individual decision participants