Transcript Managing change in hard times

The most important
thing is to forecast
where customers are
moving, and be in
front of them.
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How do consumer characteristics influence
buying behavior?
What major psychological processes
influence consumer responses to the
marketing program?
How do consumers make purchasing
decisions?
How do marketers analyze consumer
decision making?
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Consumers make many buying decisions
everyday and buying decision is the focal
point of the marketer’s effort.
Marketers can study actual consumer
purchases to find out what they buy, where
and how much, but learning the why’s of the
consumer buying behavior is not easy- the
answer is locked deep within the consumer’s
mind.
Buyer’s Black Box
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Many different factors affect consumer
buying behavior. Buying behavior is never
simple.
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Understanding it, however, is the essential
task of marketing management.
Consumer buyer behavior refers to the buying
behavior of final consumers(individuals and
households who buy goods and services for
personal consumption).
Consumer market refers to all of the personal
consumption of final consumers
1)The American consumer market consists of about
287 million people.
2)These people consume trillions of dollars of
goods and services each year.
3)The world consumer market consists of more
than 6.2 billion people.
4)Consumers vary tremendously in age, income,
education level, and tastes.
Cultural Factors
Social Factors
Personal Factors
Psychological Factors
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Cultural factors exert the broadest and
deepest influence on consumer behavior.
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The marketer needs to understand the role
played by the buyer’s culture, subculture, and social class.
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Culture is the set of basic values, perceptions,
wants, and behaviors learned by a member of
society from family and other important
institutions.
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Culture is the most basic cause of a person’s
wants and behavior.
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Every group or society has a culture and
cultural influences on buying behavior may
vary greatly from one country to another.
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Marketers are always trying to spot cultural
shifts in order to imagine new
products that might be wanted.
Fast Facts About American Culture:
The average American:
 chews 300 sticks of gum a year
 goes to the movies 9 times a year
 takes 4 trips per year
 attends a sporting event 7 times each year
Each culture contains smaller subcultures.
Subculture are groups of people within a
culture with shared value systems
based on common life experiences
and situations.
1. Nationalities
2.Religions
3. Racial Groups
4.Geographic Regions
Many of these subcultures make up important
market segments and many times products
are designed for them.
Examples of important subculture groups
include:
 Hispanic
 African American
 Asian American
 Mature consumers
1) Hispanic consumers:
one third of the US population.
Hispanic consumers tend to buy more branded,
higher quality products.
 There are 35 million consumers in this group, they
spend $425 billion on goods and services.
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2) African American consumers:
 This group has a tremendous purchasing power. This
group has a buying power of $527 billion and, if they
were a separate nation, would rank among the top 15
in the world.
 They appear to be very
price conscious, are
motivated by quality and selection, and emphasize
brand name and loyalty.
3) Asian American consumers:
 This group is the fastest-growing and most
affluent U.S. demographic segment and now
number more than 10 million with disposable
income of $229 billion annually.
 Language and cultural tradition appear to be
the largest barrier to effectively marketing to
this group.
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Because of its rapid growth, however, this
group will receive increased attention from
marketers .
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More than 90% of the Asian American Go
online regularly and are most comfortable
with internet technology such as online
banking
4) Mature consumers:
 very attractive market.
 The entire U.S baby boom generation, the
largest and the wealthiest demographic
cohort in the country.
 Mature consumers are not stuck in their ways
Social class :
Is the relatively permanent and ordered division
in a society whose members share similar
values, interests, and behaviors.
 Social class is not determined by a single
factor such as income but is measured as a
combination
of
occupation,
income,
education, wealth, and other variables.
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In some social systems, members of different classes
are reared for certain roles and can’t change their
social positions.
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In other country, however, the lines between social
classes are not fixed and rigid, people can move to a
higher social class or drop into a lower one.
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Marketers are interested in social class
because within a given social class tend to
exhibit similar buying behavior.
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Social classes show distinct product and
brand preferences in areas such as clothing ,
home furnishings, and automobiles.
Social scientists have identified seven American social
classes:
a)Upper Uppers (less than 1 percent).
b)Lower Uppers (about 2 percent).
c)Upper Middles (about 12 percent).
d)Middle Class (about 32 percent).
e)Working Class (about 38 percent).
f)Upper Lowers (about 9 percent).
g)Lower Lowers (about 7 percent).
Reference
Groups
Family
Status
Social Roles
Consumer
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A consumer’s behavior is influenced by social
factors.
These include small groups, family, and
social roles and status
A person’s behavior is influenced by many small groups.
There are several specialized group formations within the
larger configuration.
Reference groups:
1. Membership groups
▪ Primary groups
▪ Secondary groups
2. Aspirational groups
3. Dissociative groups
4. Opinion leaders
Reference groups:
Groups that have a direct (face-to-face) or indirect
influence on the person’s attitudes or behavior.
People are often influenced by reference groups
to which they do not belong.
Membership groups:
Groups that have a direct influence on a person’s
behavior; they are groups to which a person
belongs.
 Primary groups:
Person interacts informally such as family ,friends ,
neighbors.
 Secondary groups:
Person tend to be formal and require less
interaction such as religious , professional and
trade union groups.
Reference groups influence members in at least three
ways:
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Reference groups expose a person to new
behaviors and lifestyles.
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Influence the person’s attitudes and self-concept.
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They also create pressures to conform that may
affect the person’s product and brand choices.
People are influenced by groups to which they
don’t belong:
 Aspirational group:
A group to which an individual wishes to belong.
Dissociative group:
A group to which an individual reject to join
because their values and behaviors.
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Word-of-mouth influence and buzz
marketing.
Opinion leaders:
people within a reference group who
have their special skills ,knowledge ,
personality , to exert social influence
on others.
 Also called influentials or leading
adopters
 Marketers identify them to use as
brand ambassadors.
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Online Social Networks are
online communities where
people socialize or exchange
information and opinions.
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Include
blogs,
social
networking sites (facebook),
virtual worlds (second life).
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A consumer’s purchases are also influenced
by family members.
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The influence can be very strong because
the family is the most important consumerbuying organization in society. It has been
extensively researched.
There are two kinds of families in the buyer’s
life:
1. Family of orientation:
Consists of Parents & relatives.
In America 40% of families have auto insurance
with the same company as the husband’s
parents.
2. Family of procreation:
Consists of husband & wife & children.
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Marketers are interested in the roles and
influence of the husband, wife and children
on the purchase of different products and
services.
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The wife traditionally has been the main
purchasing agent for the family.
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Children may also have a strong influence on
family buying decisions.
Studies found that kids influence family
decisions about where they take vacations ,
what cars or cell phones they buy.
As a result , marketers of cars , full service
restaurants , cell phones are now placing ads
on the children oriented TV networks.
Social roles and status
are the groups, family,
clubs, and organizations
that a person belongs to
that can define role and
social status.
 A role consists of the
activities that people
expected to perform
according to the persons
around them.
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Each role carries a status reflecting the
general esteem given to it by society.
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People usually choose products appropriate
to their roles and status.
A buyer’s decisions are also influenced by
personal characteristics such the buyer’s
age and life-cycle stage, occupation,
economic situation, lifestyle, personality
and self-concept.
Age
Selfconcept
Life cycle
stage
Lifestyle
Occupation
Values
Wealth
Personality
Age
21 y.
What are their critical life
events at their age?
Life Cycle
What are their current psychological
life stages that matter?
Age and life-cycle stage
 People change the goods and services they
buy over their lifetimes. Tastes in food,
clothes, furniture and recreation are age
related.
 Buying is also shaped by the stage of the
family life cycle that is the stages through
which families might pass as they mature
over time.
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Traditional family life cycle stages include
young singles and married couples with
children.
The nontraditional stages such as unmarried
couples, singles marrying later in life, single
parents , extended parents ( those with
young adult children returning home ) and
others
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RBC Royal Bank stages
 Youth: younger than 18
 Getting started: 18–35 who are going through first
experiences, first credit card, first car , first child.
 Builders: 35–50 in their peak earning years, as
they build careers and family, they tend to borrow
more than they invest.
• Accumulators: 50–60
Worry about saving for retirement and invested
wisely.
• Preservers: over 60
Want to maximize their retirement income to
maintain a desired lifestyle.
Occupation
What are their consumption
Patterns due to their current
Occupations?
Occupation:
A person’s occupation affects the goods and
services bought (software bought by
accountants, lawyers, and doctors).
 Blue workers tend to buy more rugged work
clothes, whereas executives buy more
business suits.
 A company can specialize in making products
needed by a given occupational group.
Wealth
How much are they willing
To spend?
Economic situation includes trends in:
Personal
income
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Savings
Interest
rates
If economic indicators point to a recession,
marketers can take steps to redesign , and
reprice their products closely.
The economic situation of the buyer is very important
in purchase consideration.
 If a person fears losing their job, their purchasing
habits generally change.
 If the person perceives that their economic situation
is going to improve, they might consider making a
major purchase.
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Lifestyle
Values
What are the things that they believe
in and are important to them?
What would benefit them for their way
of living?
People from the same social strata can have
very different lifestyles.
A lifestyle :
is a person’s pattern of living as expressed in
his or her psychographics (such as activities,
interests, and opinions).
 Lifestyle profiles a person’s whole pattern of
acting and interacting in the world. It is more
than the person’s social class or personality.
Examples include:
 Activities (work, hobbies, shopping, etc.).
 Interests (food, fashion, recreation, etc.).
 Opinions (about themselves, social issues,
business, etc.).
The most widely used lifestyle classification is the
SRI Values and Lifestyles (VALS) typology.
 VALS classifies people according to their
consumption tendencies by how they spend their
time and money.
 A person could change positions over time. It is felt
that a person’s lifestyle does affect their purchase
behavior.
 Groups are further subdivided based on selforientation and resources.
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Principle-oriented consumers who buy based
on their views of the world.
Status-oriented consumers who base their
purchases on the actions and opinions of
others.
Action-oriented buyers who are driven by
their desire for activity , variety, and risk
taking.
Resources:
can be either abundant or minimal depending on
whether the buyer has high or low levels of
income, education, health, self-confidence,
energy, and other factors.
Personality
What are their traits and
characteristics?
Personality :
refers to the unique psychological characteristics
that lead to consistent and lasting responses to
the consumer’s environment.
Personality is described in terms of traits (such as
self-confidence, dominance sociability, etc.).
The self-concept:
describes the self-image.
The basic idea is that people’s possessions
contribute to and reflect their identities. (how
one views oneself)
 Each person’s personality and self-concept will
influence their buying behavior.
 Personality can be useful for analyzing consumer
behavior for certain brand or product choices.
Personal
Factors
Dominance
Autonomy
Defensiveness
Adaptability
Aggressiveness
A brand personality:
is the specific mix of the human traits that may
be attributed to a particular brand.
 One researcher identified five brand
personality traits:
Brand Personality
Sincerity
Excitement
Competence
Sophistication
Ruggedness
1.
2.
3.
4.
5.
Sincerity ( honest, wholesome, and cheerful)
Excitement ( imaginative and up-to date)
Competence ( reliable , intelligent and
successful )
Sophistication ( upper class and charming)
Ruggedness ( tough and outdoorsy)
Motivation
Perception
Learning
Beliefs and attitudes
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Ernest Dichter’s research found:
 Consumers resist prunes because prunes are
wrinkled looking and remind people of old age.
 Men smoke cigars as an adult version of thumb
sucking.
 Women prefer vegetable shortening to animal
fats because the latter arouse a sense of guilt over
killing animals.
 Women don’t trust cake mixes unless they require
adding an egg, because this helps them feel they
are giving “birth.”
1. Perception
His interpretation of information
2. Motivation
His drive to act
3. Learning
His change in behavior due to experience
4. Memory
His retention of experience and ideas
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The starting point for understanding consumer
behavior is the stimulus-response
The marketer’s task is to understand what happens
in the consumer’s consciousness between the
arrival of the outside marketing stimuli and the
ultimate purchase decisions.
A person has many needs at any given time. Some needs are:
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Biogenic (arise from physiological states of tension
such as hunger).
Others are psychogenic and arise from a need for
recognition, esteem, or belonging.
A motive is a need that is sufficiently pressing to
drive the person to act.
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Motivation research refers to qualitative
research designed to probe consumer’s hidden ,
subconscious motivations.
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Psychologists have developed theories of
human motivation, the most popular- the
theories of psychologists Frued ,Maslow
,Herzberg’s theories.
Freud’s
Theory
Maslow’s
Hierarchy
of Needs
Herzberg’s
Two-Factor
Theory
Behavior
is guided by
subconscious
motivations
Behavior
is driven by
lowest,
unmet need
Behavior is
guided by
motivating
and hygiene
factors
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Sigmund Freud assumed that the
psychological forces shaping people’s behavior are
largely unconscious, and that a person cannot fully
understand his or her own motivations.
A technique called laddering can be used to trace a
person’s motivations from the stated instrumental
ones to the more terminal ones.
Motivation researchers often collect “in-depth
interviews” to uncover deeper motives triggered
by a product.
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Projective techniques such as word association, sentence
completion, and role-playing are used.
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Abraham Maslow sought to explain why
people are driven by particular needs at
particular times.
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Maslow’s answer is that human needs are
arranged in a hierarchy, from the most pressing
to the least pressing.
 In order of importance, they are:
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▪ Physiological needs.
▪ Safety needs.
▪ Social needs.
▪ Esteem needs.
▪ Self-actualization needs.
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Frederick Herzberg developed a two-factor
theory that distinguishes dissatisfiers (factors
that cause dissatisfaction) from satisfiers
(factors that cause satisfaction). The absence
of dissatisfiers is not enough; satisfiers must
be present to motivate a purchase.
 Herzberg’s theory has two implications:
▪ Sellers should do their best to avoid
dissatisfies.
▪ Sellers should identify the major satisfiers or
motivators of purchase in the market and
supply them. These satisfiers will make the
major difference as to which brand the
customer buys.
Selective Attention
Selective Retention
Selective Distortion
Subliminal Perception
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How the motivated person actually acts is
influenced by his or her view or perception of
the situation.
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Perception is the process by which an
individual selects, organizes, and interprets
information inputs to create a meaningful
picture of the world.
Selective Attention
Selective Retention
Subliminal Perception
Selective Distortion
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It has been estimated that a person is exposed
to over 1,500 ads or brand communications a
day. Because a person cannot possibly attend
to all of these, most stimuli will be screened
out—a process called selective attention.
 Selective attention means that marketers
have to work hard to attract consumers’
notice.
▪People are more likely to notice stimuli
that relates to a current need.
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Selective distortion is the tendency to
interpret information in a way that will fit our
preconceptions. Consumers will often distort
information to be consistent with prior brands
and product beliefs.
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People will fail to register much information to
which they are exposed in memory, but will tend to
retain information that supports their attitudes and
beliefs.
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Because of selective retention, we are likely to
remember good points about a product we like and
forget good points about competing products.
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Learning involves changes in an individual’s
behavior arising from experience, and occurs
through interplay of:
Drives
 Stimuli
 Cues
 Responses
 Reinforcement
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A drive : a strong internal stimulus that calls
for action.
A drive becomes a motive when its directed
towards a particular stimulus object.
Cues are minor stimuli that determine when,
where and how the person responds
The consumer’s response to his or her
interest in buying the product
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All information and experiences individuals
encounter as they go through life can end up in
their long-term memory.
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These basic psychological processes play an
important role in understanding how
consumers actually make their buying
decisions. Marketers must understand every
facet of consumer behavior.
Complex buying behavior
Dissonance-reducing buying behavior
Habitual buying behavior
Variety-seeking buying behavior
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When consumers are highly involved in a
purchase and perceive significant differences
among the brands. Consumers maybe highly
involved when the product is expensive, risky
and purchased infrequently
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Marketers need to help buyers learn about
product-class attributes& their relative
importance. They need to differentiate their
brand features, by describing them using print
media with long copy
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Occurs when consumers are highly involved with
an expensive , risky purchase but see little
differences among brands
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Consumers might experience post purchase
dissonance when they notice certain
disadvantages of the purchased brand or hear
favorable things about brands not purchased
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Occurs under conditions of low consumer
involvement and little significant brand
difference
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Consumers appear to have low involvement with
most low cost, frequently purchased products
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Ad repetition creates brand familiarity rather
than brand conviction “ consumers don’t form
strong attitudes toward a brand, they select the
brand because its familiar
Four Types of Buying Behavior
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In situations characterized by low consumer
involvement but significant perceived brand
differences. In such cases consumers often do
a lot of brand switching
Brand switching occurs for the sake of variety
rather than because of dissatisfaction .
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The buying process starts when the buyer recognizes a
problem or need.
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The need can be triggered by internal or external stimuli.
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Marketers need to identify the circumstances that trigger a
particular need so that they can develop marketing
strategies that trigger consumer interest.
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An aroused consumer will be inclined to search for
more information. We can distinguish between two
types of arousal.
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The milder state is called heightened attention
where a person simply becomes more receptive to
information about a product.
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The second level is active information search
where a person looks for reading material, going
online, etc. to learn about the product.
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sources to which the consumer will turn and
the relative influence each will have on the
subsequent purchase decision. These
information sources fall into four groups:
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Of key interest to the marketer are the major
information
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Personal (family, friends).
 Commercial (advertising, Web sites,
salespeople).
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Public (mass media, consumer organizations).
 Experiential (handling, examining, using the
product).
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Generally speaking the consumer receives
the most information about a product from
commercial sources.
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The most effective information often comes
from personal sources or public sources that
are independent authorities.
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The Internet has changed information
search. Most consumers are hybrid
consumers.
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The consumer will come to know only a
subset of these brands (awareness sent).
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Some brands will meet initial buying criteria
(consideration set).
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No single process is used by all consumers or by
one consumer in all buying situations. The most
current models see the process as cognitively
orientated.
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First, the consumer is trying to satisfy a
need.
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Second, the consumer is looking for certain
benefits from the product solution.
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Third, the consumer sees each product as a
bundle of attributes with varying abilities for
delivering the benefits sought to satisfy this
need.
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Evaluations often reflect beliefs and attitudes.
Through experience and learning, people
acquire beliefs and attitudes. These in turn
influence buying behavior.
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Belief —a descriptive thought that a person
holds about something.
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Attitude—a person’s enduring favorable or
unfavorable evaluation, emotional feeling,
and action tendencies toward some object
or idea.
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Attitudes put people into a frame of mind.
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Attitudes lead people to behave in a fairly
consistent way toward similar objects.
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Attitudes can be very difficult to change.
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In the evaluation stage, the consumer forms
preferences among the brands in the choice
set. The consumer may also form an intention
to buy the most preferred brand. In executing a
purchase intention, the consumer may make
up to five sub decisions:
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Brand.
Dealer.
Quantity.
Timing.
Payment-method.
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A consumer’s decision to modify, postpone,
or avoid a purchase decision is heavily
influenced by perceived risk. There are many
types of risks that consumers may perceive in
buying and consuming a product:
Functional
Physical
Financial
Social
Psychological
Time
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The satisfaction or dissatisfaction that the
consumer feels about the purchase
Relationship between:
 Consumer’s expectations
 Product’s perceived performance
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The larger the gap between expectation and
performance, the greater the consumer’s
dissatisfaction
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Cognitive dissonance is the discomfort caused
by a post-purchase conflict
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Customer satisfaction is a key to building
profitable relationships with consumers—to
keeping and growing consumers and reaping
their customer lifetime value
Business organizations do not only sell.
They also buy vast quantities of raw
materials manufactured , components,
plant and equipment, supplies , and
business services .
The business market versus the consumer
market
Adoption process is the mental process an
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individual goes through from first learning
about an innovation to final regular use.
Stages in the process include:
Awareness
Interest
Evaluation
Trial
Adoption
Influence of Product Characteristics on Rate of
Adoption
Relative
advantage
Compatibility
Divisibility
Complexity
Communicability