Consumer

Markets
and
Consumer
Buyer Behavior
• The latest generation of smart devices, from
Google glass to Nike fit band have allowed
users to track their exercise times, sleep
patterns, and food intake or carry the
internet around with them at all times,
mounted in the corner of their vision.
• Consumers paid close to 1500$ to be the first
to try Google glass.
• What makes people shell out so much to try
a virtually untested technology?
• What keeps other people from from not
trying?
• The answers to these lie in understanding
consumer behaviour.
Consumer Buying Behavior
• Consumer Buying Behavior refers to the buying
behavior of final consumers (individuals & households)
who buy goods and services for personal consumption.

• Consumer Market: All the individuals and households

who buy or acquire goods and services for personal
consumption.
 Understanding Consumer Behaviour

• Consumers make many buying decisions everyday.

• Most large companies research consumer buying decisions
in detail to know what consumers buy, where they buy,
how and how much they buy.
• The central question for marketers is how do consumers
react to various marketing efforts that the company might
use:
 Model of Consumer Behavior
Product Marketing
Marketing and
and Economic
Other
Other Stimuli
Stimuli
Price Technological
Place Political
Promotion Cultural

Buyer’s Characteristics
Decision Buyer’s
Buyer’s Black
Black Box
Box Affecting
Process Consumer
Behavior

Product Choice Purchase

Buyer’s
Buyer’s Response
Response Timing
Brand Choice
Purchase
Dealer Choice Amount
• The marketing and other stimuli enter the black box,
where are turned into a set of observable buyer
responses: product choice, brand choice, dealer choice,
purchase timing and purchase amount.

• Marketers must figure out what is in the buyer’s black box.

• He wants to understand how the stimuli are changed into

responses inside the buyer’s black box.
• This has two parts. The buyer characteristics influence
how he or she perceives and react to the stimuli.
• Second the buyer decision process affects the buyer’s
behaviour.
Characteristics Affecting
Consumer Behavior
Culture
Social
Personal
Psychological
Buyer
Buyer
 Factors Affecting Consumer Behavior:
Culture

•• Most
Most basic
basic cause
cause of of aa person's
person's wants wants andand
behavior.
behavior.
•• Culture:
Culture: Set
Setof
ofbasic
basicvalues,
values,perceptions,
perceptions,learned
learnedby
byaamember
memberof
ofsociety
society
from
fromfamily
family&&other
otherinstitutions.
institutions.

Subculture
Subculture Social
Social Class
Class
••Groups
Groupsofofpeople
peoplewith
withshared
shared ••People
Peoplewithin
withinaasocial
socialclass
class
value
valuesystems
systemsbased
basedon
oncommon
common tend
tendto
toexhibit
exhibitsimilar
similarbuying
buying
life
lifeexperiences.
experiences. behavior.
behavior.
••Hispanic
HispanicConsumers
Consumers ••Occupation
Occupation
••African
AfricanAmerican
AmericanConsumers
Consumers ••Income
Income
••Asian
AsianAmerican
AmericanConsumers
Consumers ••Education
Education
••Wealth
Wealth
 Factors Affecting Consumer Behavior:
Social
Groups
Groups
••Membership
Membership
••Reference,
Reference, opinion
opinion
leader
leader

Family
Family
••Husband,
Husband, wife,
wife, kids
kids Social
Social Factors
Factors
••Influencer,
Influencer, buyer,
buyer, user
user

Roles
Roles and
and Status
Status::activities
activities
people
peopleare
areexpected
expectedtotoperform.
[Link]
Each
role
rolecarries
carriesaastatus
statusreflecting
reflectingthe
the
general
generalesteem
esteemgiven
giventotoititby society..
bysociety
 Factors Affecting Consumer Behavior:
Personal

Personal
Personal Influences
Influences
Age
Age and
and Family
Family Life
Life Cycle
Cycle Occupation
Occupation
Stage
Stage

Economic
Economic Situation
Situation Personality
Personality && Self-Concept
Self-Concept

Lifestyle
Lifestyle Identification
Identification

Activities
Activities Opinions
Opinions

Interests
Interests
 Lifestyle

• Lifestyle: Lifestyle is a person’s pattern of living as expressed

in his or her activities, interests, and opinions.
• Activities: Work, hobbies, shopping, sports, social events.
• Interests: Food, fashion, family, recreation
• Opinions: About themselves , social issues, business,
products
• Several research firms have developed lifestyle
classifications.
• Most widely used is Values and Lifestyles (VALS) typology.
• It divides consumers into eight groups based on two major
dimensions: self-orientation and resources.
 VALS CLASSIFICATION
• Self- Orientation groups include:
• Principle oriented consumers who buy based on their
views of the world;
• Status oriented buyers who base their purchases on
the actions and opinions of others; and
• Action oriented buyers who are driven by their desire
for activity, variety and risk-taking.
• Consumers within each orientation are further
classified into those with abundant resources and
those with minimal resources
 VALS 2
ActualizersAbundant
Actualizers Abundant Resources
Resources

Principle OrientedStatus Oriented Action Oriented

Fulfilleds
Fulfilleds Achievers
Achievers Experiencers
Experiencers

Believers
Believers Strivers
Strivers Makers
Makers

Strugglers
Strugglers
Minimal
Minimal Resources
Resources
Factors
Factors Affecting
Affecting Consumer
Consumer Behavior:
Behavior:
Psychological
Psychological

Motivation
Motivation

Beliefs
Beliefs and
and Psychological
Factors PPerception
erception
Attitudes
Attitudes

Learning
Learning
 Psychological Factors

• Motivation: Inner drive to fulfill a need

• Perception: The way people organise and
interpret things
• Learning: Changes in an individual’s
behaviour arising from experience
• Beliefs : Descriptive thought
• Attitudes: A person’s favourable or
unfavourable evaluations or feelings toward
an object or idea.
Maslow’s Hierarchy of
Needs
Self
Actualization
(Self-development)

Esteem Needs
(self-esteem, status)
Social Needs
(sense of belonging, love)

Safety Needs
(security, protection)

Physiological Needs
(hunger, thirst)
 Situational Factors
• Store Atmosphere: Store Atmosphere or
Atmospherics refers to the unique
environment developed by certain retailers.
• Research shows that if used as part of
strategy, music, scent, lighting and even colour
can positively influence the purchase process.
• Salespeople
• Crowding
• In-store demonstrations:
• Packaging
• Temporal state: Our state of mind at any
particular time can alter our preconceived
notions of what we are going to purchase
Types
Types of
of Buying
Buying Decisions
Decisions

High Low
Involvement Involvement
Significant Complex Variety-
differences Buying Seeking
between
brands Behavior Behavior
Few Dissonance- Habitual
differences Reducing Buying
between Buying
brands Behavior Behavior
 Reasons for buying
• People buy one product or service over
another because they perceive it to be the
better value for them, that is, the ratio of
benefits to costs is higher for a particular
product or service than for other.
• However benefits can be subtle and less
rationally assessed.
• E.g. Riya Verma , who is thinking of buying a
new outfit for a job interview.
• She requires something fashionable but
professional looking and doesn’t want to
spend a lot of money.
• In making a decision about where she should
buy the outfit from, she asks herself:
• Which alternative gives me the best overall
value-the most appropriate, yet fashionable
outfit at the lowest price.
 Consumer Decision-Making Process: refers to
the steps that consumers go through before, during & after
purchase
Need
Need Recognition
Recognition

Information
Information Search
Search
Cultural,
Cultural, Social,
Social,
Individual
Individual and
and
Psychological Evaluation
Evaluation
Psychological of
Factors
Factors of Alternatives
Alternatives
affect
affect
all
all steps
steps Purchase
Purchase

Postpurchase
Postpurchase
Behavior
Behavior
 Need Recognition
• When a current product isn’t
Marketing helps
consumers recognize performing properly
(or create) an imbalance
between present status • When the consumer is running
and preferred state out of an product

• When another product seems

Preferred State
superior to the one currently used
The
The Buyer
Buyer Decision
Decision Process
Process
Step
Step 1.
1. Need
Need Recognition
Recognition

Need
Need Recognition
Recognition
Difference
Difference between
between an
an actual
actual state
state and
and aa desired
desired state
state

Internal
Internal Stimuli
Stimuli External
External Stimuli
Stimuli
•• Hunger
Hunger ••TV
TV advertising
advertising
•• Thirst
Thirst •• Magazine
Magazine ad
ad
•• AA person’s
person’s normal
normal •• Radio
needs Radio slogan
slogan
needs
••Stimuli
Stimuli in
in the
the
environment
environment
 Need vs Want
• If you are hungry, your need could be satisfied by a
healthy salad , but what you want is a bowl of pasta.
• Wants are goods or services that are not needed but
desired.
• Consumers needs like these can be classified as
functional, psychological or both.
• Functional need: driven by performance
• Psychological need: driven by status & personal
gratification
The Buyer Decision Process
Step 2. Information Search

Personal •Family, friends, neighbors

Personal Sources
Sources •Most influential source of
information

Commercial •Advertising, salespeople

Commercial Sources
Sources •Receives most information
from these sources

Public •Mass Media

Public Sources
Sources •Consumer-rating groups

•Handling the product

Experiential
Experiential Sources
Sources •Examining the product
•Using the product
The
The Buyer
Buyer Decision
Decision Process
Process
Step
Step 3.
3. Evaluation
Evaluation of
of Alternatives
Alternatives
Product
ProductAttributes
Attributes
Evaluation
Evaluationof
ofQuality,
Quality,Price,
Price,&&Features
Features

Degree
Degreeof
of Importance
Importance
Which
Whichattributes
attributesmatter
mattermost
mostto
tome?
me?

Brand
BrandBeliefs
Beliefs
What
Whatdo
doIIbelieve
believeabout
abouteach
eachavailable
availablebrand?
brand?

Total
Total Product
Product Satisfaction
Satisfaction
Based
Basedon
onwhat
whatI’m
I’mlooking
lookingfor,
for,how
howsatisfied
satisfied
would
wouldIIbe
bewith
witheach
eachproduct?
product?
Evaluation
EvaluationProcedures
Procedures
Choosing
Choosingaaproduct
product(and
(andbrand)
brand)based
basedon
onone
one
or
ormore
moreattributes.
attributes.
• Attribute sets: Consumer’s mind organises and
categorises alternatives to aid his or her
decision process.
• Universal sets include all possible choices for a
product category.
• Retrieval set: those brands or stores that can
be readily bought forth from memory.
• Evoked set: comprises the alternatives brands
that the consumer states he would consider
when making a purchase decision.
• Riya knows that there are lot of apparel
stores (universal set).
• However only some have the style she is
looking for, such as Zara, M&S, H &M
Shoppers Stop & Westside. (retrieval set)
• Finally, she thinks Zara & M & S, carry
business attire she would like so these stores
are in her evoked set.
 Criteria for Evaluation
• Determinant attributes : are product or
service features that are important to the
buyer and on which competing brands or
stores are perceived to offer.

• For buying a cereal, a consumer may

consider taste, calories, natural claims &
price as determinant attributes.
The Buyer Decision
Process
Step 4. Purchase Decision
Purchase
Purchase Intention
Intention
Desire
Desire to
to buy
buy the
the most
most preferred
preferred brand
brand

Attitudes Unexpected
of others situational
factors

Purchase
Purchase Decision
Decision
The
The Buyer
Buyer Decision
Decision Process
Process
Step
Step 5.
5. Postpurchase
Postpurchase Behavior
Behavior
Consumer’s
Consumer’s Expectations
Expectations of
of
Product’s
Product’s Performance
Performance
Product’s Perceived
Performance

Satisfied
Satisfied Dissatisfied
Dissatisfied
Customer!
Customer! Customer
Customer
Cognitive Dissonance
 Postpurchase Behavior

?
Cognitive Dissonance

Can minimize through:

Effective Communication
Follow-up
Did I make a good decision? Guarantees
Warranties
Did I buy the right product? Underpromise &
overdeliver
Did I get a good value?
• Postpurchase cognitive dissonance is an internal
conflict that arises from inconsistency between
two beliefs or between beliefs and behaviour.
• E.g you might have buyer’s remorse after
purchasing an expensive television because you
question whether this high priced version offers
appreciably better quality than a set of smaller
size.
• When Riya bought her interview outfit from M
& S, her sister loved it while her friends thought
it was more expensive than it looked
• Because of these mixed responses, some
dissonance resulted and led to an uncomfortable
feeling. she can now do the following to reduce
dissonance:
• Exchange the outfit
• Pay attention to positive information
• Seek more positive feedback from friends.
• Seek negative feedback about outfit from stores
not selected.
Sour Grapes–
a story of
cognitive
dissonance

…after being unable to reach the grapes the fox said, “these
grapes are probably sour, and if I had them I would not eat
them.”
--Aesop
Stages in the Adoption Process

Awareness
Awareness

Interest
Interest

Evaluation
Evaluation

Trial
Trial

Adoption
Adoption
 Adoption of
Percentage of Adopters
Innovations

Early Majority Late Majority

Innovators

Early
34% 34% Laggards
Adopters

13.5% 16%
2.5% Time of Adoption
Early Late
 Influences on the Rate of
Adoption of New Products
Communicability Relative Advantage
Can results be easily Is the innovation
observed or described superior to existing
to others? products?

Product
Divisibility Characteristics Compatibility
Can the innovation Does the innovation
be used on a fit the values and
trial basis? experience of the
target market?
Complexity
Is the innovation
difficult to
understand or
use?