Chapter 6 - Analysing Consumer Market

Analyzing Consumer Markets

Marketing Management, 13th ed

6

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-2

Kotler on Marketing

The most important thing is to forecast where customers are moving, and be in front of them.


Chapter Questions

• 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?


Figure 6.1 Model of Consumer Behavior


• a. Many different factors affect consumer buying behavior. Buying behavior is never simple. Understanding it, however, is the essential task of marketing management.

b. Consumer buying behavior refers to the buying behavior of final consumers — individuals and households who buy goods and services for personal consumption


• c. The consumer market is all the individuals and households who buy or acquire goods and services for personal consumption.

• 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.


What Influences Consumer Behavior?

Cultural FactorsCultural Factors

Social FactorsSocial Factors

Personal FactorsPersonal Factors


Cultural Factors

• b. Cultural factors exert the broadest and deepest influence on consumer behavior.

• The marketer needs to understand the role played by the buyer’s culture, subculture, and social class.


• c. Culture is the set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions.

• 1). Culture is the most basic cause of a person’s wants and behavior


• 3). 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


• d. Each culture contains smaller subcultures.

• Subculture is a group of people with shared value systems based on common life experiences and situations.


Subcultures

Nationalities Nationalities

ReligionsReligions

Racial groupsRacial groups

Geographic regionsGeographic regions


• Many of these subcultures make up important market segments and many times products are designed for them. Examples of important subcultural groups include:


• 1). Hispanic consumers. There are 35 million consumers in this group, they spend $425 billion on goods and services. This group is very brand loyal and favor companies who show interest in them.


• 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. This group is growing in affluence and sophistication. Some companies have developed special products, packaging, and appeals for this group. 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. Because of its rapid growth, however, this group will receive increased attention from marketers.


Social class


Social Factors

Referencegroups

Social roles

Statuses

Family


• f. Almost every society has some form of social class structure.

• Social class is the relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors.


• 1). 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.


• 2). Social scientists have identified seven American social classes: (See Table 6.1)

• 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).


Table 7.1: Characteristics of Major U.S. Social Classes

See text for complete table

1. Upper Uppers

(less than 1%)

The social elite who live on inherited wealth. They give large sums to charity, run the debutante balls, maintain more than one home, and send their children to the finest schools. They are a market for jewelry, antiques, homes, and vacations. They often buy and dress conservatively. Although small as a group, they serve as a reference group to the extent that their consumption decisions are imitated by the other social classes.

2. Lower Uppers

(about 2%)

Persons, usually from the middle class, who have earned high income or wealth through exceptional ability in the professions or business. They tend to be active in social and civic affairs and to buy the symbols of status for themselves and their children. They include the nouveau riche, whose pattern of conspicuous consumption is designed to impress those below them.


• 3). Marketers are interested in social class because people within a given social class tend to exhibit similar behavior, including buying behavior.

• This is most evident in the selection of clothing, home furnishings, leisure activity, and automobiles.


• Social Factors• Reference Groups

• Reference groups• Membership groups• Primary groups• Secondary groups• Aspirational groups• Dissociative groups• Opinion leader

Influencing Buyer Behavior


Social Factors

• g. A consumer’s behavior is influenced by social factors. These include small groups, family, and social roles and status


Social Factors

• h. A person’s behavior is influenced by many small groups. There are several specialized group formations within the larger configuration:


Social Factors

• 1). Membership groups are groups that have a direct influence on a person’s behavior; they are groups to which a person belongs.

• 2). Reference groups are groups that 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.


-Aspirational groups

-Dissociative groups

- Primary groups

-Secondary groups

-Opinion leader



Social Factors

• a). An aspirational group is a group to which an individual wishes to belong

• b). Reference groups expose a person to new behaviors and lifestyles.

c). Influence the person’s attitudes and self-concept.

d). They also create pressures to conform that may affect the person’s product and brand choices.


Social Factors

• e). An opinion leader is a person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert influence on others. Marketers try to identify opinion leaders and direct products and communications toward them.


• Family• Family of procreation• Family of orientation

Roles and Statuses• Role

• Status



Social Factors

• i. A consumer’s purchases are also influenced by family members. The influence can be very strong because the family is the most important consumer-buying organization in society. It has been extensively researched.


Family

• k. A person belongs to many groups and the person’s position within each group can be defined in terms of both role and status. A role is the activities a person is expected to perform according to the people around him or her. Status is the general esteem given to a role by society. People often choose products that show their status in society.


Table 7.2: Stages in the Family Life Cycle

See text for complete table

1. Bachelor stage:

Young, single, not living at home

Few financial burdens. Fashion opinion leaders. Recreation oriented. Buy: basic home equipment, furniture, cars, equipment for the mating game; vacations.

2. Newly married couples:

Young, no children

Highest purchase rate and highest average purchase of durables: cars, appliances, furniture, vacations.

3. Full nest I:

Youngest child under six

Home purchasing at peak. Liquid assets low. Interested in new products, advertised products. Buy: washers, dryers, TV, baby food, chest rubs and cough medicines, vitamins, dolls, wagons, sleds, skates.

4. Full nest II:

Youngest child six or over

Financial position better. Less influenced by advertising. Buy larger-size packages, multiple-unit deals. Buy: many foods, cleaning materials, bicycles, music lessons, pianos.


Roles and Statuses

• j. Marketers are interested in the roles and influence of the husband, wife, and children in the purchase of different products and services. Buying roles change with evolving lifestyles (such as more females working outside the home). Marketers try to identify the influencer role in a family unit (such as children).


With the “graying” of the American populace, With the “graying” of the American populace, marketers have begun to shift images and marketers have begun to shift images and cultural references in advertising from things cultural references in advertising from things that are relevant to the twenty-somethings to that are relevant to the twenty-somethings to images of active seniors, and soundtracks images of active seniors, and soundtracks from the sixties and seventies. Can you from the sixties and seventies. Can you identify any particular identify any particular ad campaigns that fit ad campaigns that fit this pattern?this pattern?


Personal Factors

Age

Values

Life cyclestage

Occupation

Personality

Self-concept

Wealth

Lifestyle


Personal Factors

• l. 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.

• m. People change the goods and services that they buy over their lifetimes. Part of these changes are shaped by the family life cycle (stages throughout which families might pass as they mature over time). The traditional life cycle stages are being modified as people form new lifestyles (such single parenting).


• n. A person’s occupation affects the goods and services bought (software bought by accountants, lawyers, and doctors).

• o. 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.


• p. 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.


• 1). Examples include:

a). Activities (work, hobbies, shopping, etc.).

• b). Interests (food, fashion, recreation, etc.).

• c). Opinions (about themselves, social issues, business, etc.).


• 2). 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 self-orientation and resources. (See Figure 6.3)


a). Self-orientation groups include:

1]. Principle-oriented consumers who buy based on their views of the world.

• 2]. Status-oriented consumers who base their purchases on the actions and opinions of others.

• 3]. 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. Note: See SRI’s Web site at www.sri-bi.com for additional information. A survey can be filled out at the site to determine your SRI VALS position.


• q. Each person’s personality and self-concept will influence their buying behavior.

• Personality is a person’s unique psychological characteristics that lead to relatively consistent and lasting responses to his or her own environment. Personality is usually described in terms of traits (such as self-confidence, dominance sociability, etc.). Personality can be useful for analyzing consumer behavior for certain brand or product choices.


• 1). A brand personality is the specific mix of human traits that may be attributed to a particular brand.

• 2). Five brand personalities might be: a). Sincerity. Down to earth. cheerful.

wholesome b). Excitement. Daring ,spirited,up-

to-date, imaginative. c). Competence. Reliable , intelligent and

successful d). Sophistication. Upper class- charming

e). Ruggedness. tough


Brand Personality

SinceritySincerity

ExcitementExcitement

CompetenceCompetence

SophisticationSophistication

RuggednessRuggedness


• r. 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)


Key Psychological Processes

Motivation

MemoryLearning

Perception


Motivation

Freud’sTheory

Behavioris guided by subconsciousmotivations

Maslow’sHierarchyof Needs

Behavioris driven by

lowest, unmet need

Herzberg’sTwo-Factor

Theory

Behavior isguided by motivating

and hygienefactors


Maslow’s Hierarchy of Needs


Herzberg’s Two-Factor Theory


Perception

Selective Attention

Subliminal Perception

Selective Retention

Selective Distortion


Figure 6.4 Consumer Buying Process

Problem Recognition

Information Search

Evaluation

Purchase Decision

PostpurchaseBehavior


• 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.”



KEY PSYCHOLOGICAL PROCESSES

• The starting point for understanding consumer behavior is the stimulus-respons

• 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:

• 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.

•

Motivation: Freud, Maslow, Herzberg


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. Freud’s Theory

Freud’s Theory


• 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.

• Projective techniques such as word association, sentence completion, and role-playing are used. Customer 2 is mixed profitability.


Maslow’s Theory

• Abraham Maslow sought to explain why people are driven by particular

needs at particular times.

•


• 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: •

• Physiological needs.

• Safety needs.

• Social needs.

• Esteem needs.

• Self-actualization needs.


• 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


• Herzberg’s theory has two implications:

• Sellers should do their best to avoid dissatisfiers.

• 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.


Perception

• How the motivated person actually acts is influenced by his or her view or perception of the situation.

• Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world.


• Perception depends not only on the physical stimuli, but also on the stimuli’s relation to the surrounding field and on conditions within the individual.

• The key point is that perceptions vary widely among individuals exposed to the same reality.

• In marketing, perceptions are more important than the reality, as it is perceptions will affect consumers’ actual behavior.


Selective Attention

• It has been estimated that a person is exposed to over 1,500 ads or brand communi cations 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.


Selective Distortion

• 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.


Selective Retention

• 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.

• Because of selective retention, we are likely to remember good points about a product we like and forget good points about competing products.


Learning

• Learning involves changes in an individual’s behavior arising from experience.


Memory

• All information and experiences individuals encounter as they go through life can end up in their long-term memory.

•


• 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.

•

THE BUYING DECISION PROCESS: THE FIVE-STAGE MODEL


Problem Recognition

• The buying process starts when the buyer recognizes a problem or need.

• The need can be triggered by internal or external stimuli.

• Marketers need to identify the circumstances that trigger a particular need so that they can develop marketing strategies that trigger consumer interest.

•


• An aroused consumer will be inclined to search for more information. We can distinguish between two types of arousal.

• The milder state is called heightened attention where a person simply becomes more receptive to information about a product.

• The second level is active information search where a person looks for reading material, going online, etc. to learn about the product.


• 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:

• Of key interest to the marketer are the major information


• Personal (family, friends).

• Commercial (advertising, Web sites, salespeople).

• Public (mass media, consumer organizations).

• Experiential (handling, examining, using the product).


• Generally speaking the consumer receives the most information about a product from commercial sources.

• The most effective information often comes from personal sources or public sources that are independent authorities.

• The Internet has changed information search. Most consumers are hybrid consumers.

•


• The consumer will come to know only a subset of these brands (awareness sent).

• Some brands will meet initial buying criteria (consideration set).


Evaluation of Alternatives

• 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.


• First, the consumer is trying to satisfy a need.

• Second, the consumer is looking for certain benefits from the product solution.

• Third, the consumer sees each product as a bundle of attributes with varying abilities for delivering the benefits sought to satisfy this need.


Beliefs and Attitudes

• Evaluations often reflect beliefs and attitudes. Through experience and learning, people acquire beliefs and attitudes. These in turn influence buying behavior.


• Belief —a descriptive thought that a person holds about something.

• Attitude—a person’s enduring favorable or unfavorable evaluation, emotional feeling, and action tendencies toward some object or idea.


• Attitudes put people into a frame of mind.

• Attitudes lead people to behave in a fairly consistent way toward similar objects.

• Attitudes can be very difficult to change.


Purchase Decisions

• 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:


• Brand.

• Dealer.

• Quantity.

• Timing.

• Payment-method.


• 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 risk. • Physical risk.• Financial risk.• Social risk.• Psychological risk.• Time risk.


Business organizations

Business organizations do not only sell. They also buy vast quantities of raw materials manufactured , components, plant and equipment, supplies , and business services .


Figure 8.1: Major Influences on Industrial Buying Behavior


The business market versus the consumer The business market versus the consumer marketmarket


Participants in the Business Buying Process

• 1- Environmental Factors 2-Organizational Factors -Purchasing-Department Upgrading

-Centralized Purchasing

-Decentralized Purchasing of Small Ticket Items

-Internet Purchasing

Major Influences on Buying Decisions


Figure 6.5 Successive Sets Involved in Consumer Decision Making


Table 6.4 A Consumer’s Evaluation of Brand Beliefs About Laptops


Figure 6.6 Stages between Evaluation of Alternatives and Purchase


Perceived Risk

FunctionalFunctional

PhysicalPhysical

FinancialFinancial

SocialSocial

PsychologicalPsychological

TimeTime


Figure 6.7 How Customers Use and Dispose of Products

Documents

Chapter 6 - Analysing Consumer Market