CONSUMER MARKETS

& CONSUMER

BUYERBEHAVIOR

Newport institute communication & economics Karachi

Consumer

• The end buyer of a product

• In general buys for his ownself or for his family’s benefit

• For organizational purchases the word customer is used

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Consumer behavior

• The action that a person takes in:- Purchasing & using products & services- The mental & social processes that proceed

and follow these actions

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We are concerned with…

• Why consumers make the purchases that they make

• What factors influence consumer purchases?

• Who buys?• What are their choice criteria?• When do they buy?• How do they buy?• Where do they buy?• Likely buyers reaction to a marketing

strategy

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Model of buyer behavior

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Marketing & other stimuli

Marketing Others

Product Economic

Price Technolo-

gical

Place Political

Promotion Cultural

Buyers blackbox

Buyer Buyer

Charac- decision

teristics process

Buyer responses

Product choice

Brand choice

Dealer choice

Purchase timing

Purchase amount

Characteristics affecting consumer behavior

Cultural

Culture

Subculture

Social class

Social

Reference groups

Family

Roles & status

Personal

Age & life cycle stage

Occupation

Economic situation

Lifestyle

Personality & self concept

Psychological

Motivation

Perception

Learning

Beliefs & attitudes

B

U

Y

E

R

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Characteristics affecting consumer behavior

• Culture: Set of basic values, perceptions, wants & behaviors learned by a member of society from family & other institutions

- Cultural shift.

• Subculture: Group of people with shared value systems based on common life experiences & situations

• Social class: Measured by occupation, income, education & wealth

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Social factors:

• Reference groups – Aspiration groups / influencers

• Family – e.g. purchase of a car

• Roles & Status – e.g. Director Marketing

Characteristics affecting consumer behavior

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Social influences

Culture Behavior is learned so the traditions, values, attitudes of society all influence it

Social class Has a major influence on consumer’s behavior

Reference groups

Formal or informal groups to which we belong.

Family Key group in terms of attitudes, beliefs & learned behavior

Personal influences

Personal characteristics such as age, occupation, family lifestyle, lifestyle

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Personal factors:• Age & life cycle stage – Tastes in food,

clothes, furniture, recreation change with age• Occupation – e.g. purchase of rugged clothes

by a laborer• Economic situation• Life style – Lifestyle of a celebrity• Personality & self-concept

Characteristics affecting consumer behavior

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Brand personality traits

• Sincerity (down – earth, honest, cheerful)

• Excitement (daring, spirited, imaginative)

• Competence (reliable, intelligent & successful)

• Sophistication (upper class & charming)

• Ruggednes (outdoorsy & tough)

Psychological models

• Four key psychological influences:- Motivation- Perception- Learning, attitudes and beliefs- The buying situation

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Motives in buying• There are complex motives behind

purchasing decisions:• Often the underlying motive is different

from the stated motive.• Why do people buy Rolex waches?- For accurate time keeping?- OR as a status symbol?• Motives can be analyzed using Maslow’s

hierarchy

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Maslow’s hierarchy of needs

• Maslow’s theory applies to all aspects of human motivation

• The needs change with different levels i.e. a person moves up once his need at the bottom level is satisfied

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Maslow’s hierarchy of needsConsumer Markets & Consumer Buyer Behavior - 5

Perception

• The way an individual perceives an external stimuli will influence his reaction

• Causes of differences in reaction- Selective attention: we screen out the majority of stimulants- Selective distortion: the tendency to adjust to perceptions to conform to the current mindset

- Selective retention: We do not retain everything. Information that reinforces our attitudes & beliefs

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Learning attitudes & beliefs

• Learning relates to any changes in the long term & is associated with how the information is processed

- Conditional learning: reinforcement is

necessary to develop attitudes & beliefs

- Social learning: learning from others behavior

- Cognitive learning: use of positive powers of reasoning to develop attitudes & beliefs about a product (Particularly important for high involvement products)

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Consumer buying decision process

• Need recognition

• Information search

• Emergence of a range of alternatives

• Evaluation of alternatives

• Purchase decision

• Purchase

• Post purchase evaluation

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Types of buying behavior

• Routine or programmed: Habitual purchase – low involvement of buyer e.g. milk

• Limited decision making – some consideration & evaluation e.g. clothes

• Extensive decision making – High involvement buying, requires detailed consideration e.g. car

• Impulse buying – e.g. pack of crisps

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Types of buyers

• Opportunist – a switcher

• Dealer – seeks the best deal

• Creative – asks for a customized product

• Trader – asks for extras

• Negotiator – seeks discounts

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Roles in the buying process

• A no. of different individuals might contribute in the consumer market in the buying decision. Marketers need to be aware of the order inorder to exert influence:

- Initiator – suggests the purchase- Influencer – has knowledge & personal

authority influences the outcome- Decider – decides what, where & how to buy.- Buyer – makes the purchase- End user

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The economist’s perspective

• Demand is a function of:- Price- Income- Preference- Price of other goods- Expectations about the future

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Economic factors influencing demand

• Price:- Price of the product- Price of substitute

products- Price of

complimentary goods

• Disposable income:- State of the economy- Inflation- Employment/

unemployment- Wage rates

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Economic factors influencing demand

• Use of credit:- Availability- Interest rates- Credit terms

• Willingness to spend:

- Consumer’s confidence

- Future standard of living

- Competition for purchases

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Demand

• As price rises quantity demanded falls & viceversa

• Sensitivity to price changes varies

• Incase of:- Inelastic demand – Consumers are not

sensitive to price changes- Elastic demand – Consumers are highly

sensitive to price changes

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Consumer Income

• Money or nominal income: money received• Real income – purchasing power of money• Disposable income – money left after

compulsory deductions• Discretionary income – income which can be

used as we please after allowing for regular commitments such as utility bills etc.

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Income elasticity of demand

• As income rises so does the demand for goods & services

• Incase of some products a rise in income leads to a disproportionately small rise in demand whereas in others it leads to a disproportionately large rise in demand

• Refers to the responsiveness of demand to change in income

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Income elasticity of demand

• Luxury products – very elastic with respect to income

• Basic necessities – inelastic with respect to income

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