Chapter 5

Consumer Markets and Consumer

Buyer Behaviour
Model of Consumer Behaviour
 Fresh understandings of customers and the marketplace derived from marketing information that
become the basis for creating customer value and relationships.
Characteristics Affecting Consumer Behaviour
 Consumer purchases are influenced strongly by cultural, social, personal, and psychological

characteristics, as shown in Figure 5.2

1) Cultural Factors
Culture

 The set of basic values, perceptions, wants, and behaviors learned by a member of society from

family and other important institutions.

Subculture

 A group of people with shared value systems based on common life experiences and
situations

 Each culture contains smaller subcultures

 Subcultures include nationalities, religions, racial groups, and geographic regions.

 Tapal Danedar – a national brand by Tapal (culture)

 Tapal Mezban – a ‘Sindhi’ brand by Tapal (subculture)

 Tapal Tezdam – a ‘Punjabi‘ brand by Tapal (subculture

 Social Stratification – strata(s) in society

Social Classes
 Social classes are society’s relatively permanent and ordered divisions whose

members share similar values, interests,

and behaviors. For examples, upper class, middle class

Characteristics of a social classes:

 Tend to behave similarly
 Defines position in society
 Defined by many variables together (no one variable like income to define it)
 Individuals move up or down in classes
2) Social Factors
Reference Groups
 All the groups that have a direct (face-to-face) or indirect influence on a person’s attitudes or behaviour, regardless of

whether that individual is an actual member or not.

Important groups to which people belong:
1) Primary Groups
 primary groups are groups with which the person interacts fairly continuously and informally, such as family, friends,

neighbors.
2) Secondary Groups
 Secondary groups tend to be more formal and require less continuous interaction. Such as professional and trade

union groups
Important Groups to which people do not belong:
1) Aspirational Group
 An aspirational group is one to which the individual wishes to belong, as when a young cricket player hopes to
someday emulate cricket stars like Wasim Akram and play cricket
2) Dissociative Group
 Dissociative groups are those groups to which a person does not belong and whose values, norms or behaviour an
individual rejects
Opinion Leader

 A person within a reference group who, because of special skills, knowledge, personality, or other

characteristics, exert social influence on others.

Word-of-mouth influence

 The impact of the personal words and recommendations of trusted friends, family, associates, and

other consumers on buying behavior.

Buzz Marketing

 Buzz marketing involves enlisting or even creating opinion leaders to serve as “brand

ambassadors” who spread the word about a company’s products

Online Social Networks

 Online social networks are online communities where people socialize or exchange information and

opinions.
Family
 Most important Consumer buying organization in the society.

Roles and Status

 A role consists of the activities people are expected to perform according to the people
around them. Each role carries a status reflecting the general esteem given to it by
society.

 People usually choose products appropriate to their roles and status. Consider the
various roles a working mother plays. In her company, she may play the role of a brand
manager; in her family, she plays the role of wife and mother; at her favorite sporting
events, she plays the role of avid fan. As a brand manager, she will buy the kind of
clothing that reflects her role and status in her company.

 Marketers are interested in roles and relative influence of family members in purchasing
3) Personal Factors
Age and Life-Cycle Stage
 Marketers often define their target markets in terms of life-cycle stage and develop
appropriate products for each stage
 Family life-cycle stages include young singles and married couples with children and others
 Psychological Life Cycle – the behaviour people exhibit as they go through passages in life,
such as becoming a parent, is not necessarily fixed but changes with the times.
 Critical Life Events – Births, marriage, relocation
Occupation and Economic Situation
 A person’s occupation effects the goods and services bought. Blue-collar workers tend to buy
more rugged work clothes, whereas, executives buy more business suits.
 A person’s economic situation will affect product choice.
 Economic Considerations include spendable income, savings and assets, debts and borrowing
power, attitude towards spending and saving
Lifestyle and Values
Lifestyle
 Person’s pattern of living in the world as expressed in activities,
interests and opinions

Lifestyles partly shaped by:

 Time-constraints
 Money-constraints

Core Values:
 They are the belief systems that underlie consumer attitudes and
behaviors and strongly influence consumer behavior
Personality and Self-Concept
Personality

 Set of distinguishing human psychological traits that lead to relatively consistent and enduring
responses to environmental stimuli

 Personality is usually described in terms of traits such as self-confidence, dominance, sociability,

autonomy, defensiveness, adaptability, and aggressiveness
Brand Personality
 Specific mix of human traits that may be attributed to a particular brand

Five brand personality traits

 Sincerity (down-to-earth, honest, wholesome, and cheerful) -------> Dove
 Excitement (daring, spirited, imaginative, and up-to-date) ------> Apple
 Competence(reliable, intelligent, and successful) ----------> Dawlance
 Sophistication (glamorous, upper class, charming) ---------> Rolls Royce
 Ruggedness (outdoorsy and tough) --------> Range Rover
“Your personality determines what you consume, what TV shows you watch, what
Consumers often choose and use brands that have a brand personality consistent with their
own:
 actual self-concept (how we view ourselves)
 ideal self-concept (how we would like to view ourselves)
 Apple’s classic campaign – I’m a Mac and I’m a PC
 The message was that if you see yourself as young and with it, you need a Mac.
4) Psychological Factors/Processes

The key psychological factors or processes are as following:

1) Motivation
2) Perception
3) Learning
4) Beliefs and Attitudes
5) Emotions
6) Memory
Motivation
Needs and Motives
Needs can be:
 Biogenic (hunger, thirst etc)
 Psychogenic (need for self-recognition, self-esteem)
Motive
 Need with a sufficient intensity pressing a person to “act”

Theories of Human Motivation:

 Freud
 Maslow
 Herzberg
Theories of Human Motivation | Sigmund Freud

 Sigmund Freud assumes that people are largely unconscious about the real
psychological forces shaping their behaviour

 Freud’s theory suggests that a person’s buying decisions are affected by

subconscious motives that even the buyer may not fully understand.

 Marketers try to understand what all “motives” a product can satisfy

 Why we buy ‘branded’ stuff?

Reliability? Quality? Status Symbol?

 Apple iPhone
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Theories of Human Motivation | Frederick Herzberg
 Frederick Herzberg developed a two-factor theory that distinguishes dissatisfiers
from satisfiers
Satisfiers
 Factors that cause satisfaction
Dissatisfiers
 Factors that cause dissatisfaction

 The absence of dissatisfiers is not enough to motivate a purchase; satisfiers

must be present.

 For example, a computer that does not come with a warranty would be a
dissatisfier. Yet the presence of a product warranty would not act as a satisfier
or motivator of a purchase because it is not a source of intrinsic satisfaction.
Perception
How a “motivated” person actually acts depends on:
Perception: The process by which an individual selects, organizes and interprets
information inputs to create a meaningful picture of the world

 Perception actually affects consumers’ behaviors

Three key perceptual processes

 Selective Attention – People “selectively attend” to messages
 Selective Distortion – “Distort” information about a brand as “I” think it is
 Selective Retention – Remember good points about a brand you like and forget
good points made about competing brands

Subliminal Perception
 Controlling the subconscious of consumer by subliminal messages – not proven
Perception
How a “motivated” person actually acts depends on:

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

 Perception actually affects consumers’ behaviors

Three key perceptual processes

 Selective Attention – People “selectively attend” to messages

 Selective Distortion – “Distort” information about a brand as “I” think it is. For example, if you distrust a
company, you might perceive even honest ads from the company as questionable.

 Selective Retention – Remember good points about a brand you like and forget good points made about
competing brands

Subliminal Perception
Learning
Learning
 Changes in an individual’s behavior arising from experience
 Most human behavior is “learned”
 Learning occurs through the interplay of drives, stimuli, cues, responses and reinforcement
1) Drive
 A strong internal stimulus that calls for action.
 For example, a person’s drive for self-actualization might motivate him or her to look into buying a camera
2) Cues
Minor stimuli determining when, where and how a person respond.
For example, the person might spot several camera brands in a shop window or hear of a special sale price
3) Responses
Cues influence a consumer’s response to his or her interest in buying the product
Responses
4) Reinforcement
Based on experience, response may be reinforced
 Tendency to “generalize”
Apple makes good cellphones; therefore all products (including online TV streaming services) by Apple are also good! –
Opportunity: making use of a ‘brand’
 Discrimination – a person has learned to recognize differences in sets of similar stimuli and can adjust responses
Beliefs and Attitudes
Belief
 A descriptive thought that a person holds about something

Attitude
 A person’s consistently favorable or unfavorable evaluations, feelings, and tendencies
toward an object or idea.

Emotions

 Consumers responses may be emotional

 A brand or product may make a consumer feel: proud, excited or even confident


Memory
Short-term memory (STM) --------> a temporary and limited repository of information

Long-term memory (LTM) --------> a more permanent, essentially unlimited repository.

 Associative Network Memory model vis-à-vis consumer brand
knowledge => consumer brand knowledge might consist as a brand
node in consumer’s mind with a variety of association
 The associative network memory model views LTM as a set of nodes and links.
 Nodes are stored information connected by links that vary in strength
 Brand associations consists of all brand-related thoughts, feelings, perceptions, images,
experiences, beliefs etc…
 Marketers need to ensure right experiences are created for their brand so it stays
“rightly” in memory
 Two Memory Processes
Memory Process | Encoding
 Memory encoding describes how and where information gets into memory
 More attention placed on information => stronger the resulting association in memory
 Existing brand associations also impact encoding process for newly formed associations

Memory Process | Retrieval

 Memory retrieval is the way information gets out of memory
 Key factors affecting the process:
 Presence of other product information

 the time between exposure to information and encoding matters – the longer the time
delay, the weaker the association
 Information may be available but may require “retrieval cues or reminders” to be
retrieved
The Buying Decision Process

 The Five-Stage Model Need

Recognition
A Psychological Process which needs
to be understood by Marketers
Information
Search

Evaluation
of
Alternatives

Purchase
Decision

Post-
Purchase
Behavior
The Buying Decision Process

Stage 1: Problem Recognition

 A buyer recognizes a problem……i.e. “a need”

 Either stimulated by
 Internal Stimuli (Hunger, Thirst, Tiredness)
 External Stimuli (Seeing an ad)

 Marketers:
 Need to identify circumstances that trigger a particular need
 Can Devise campaigns to generate external stimuli
Particularly for high-end, luxury items
The Buying Decision Process

Stage 2: Information Search

 An interested consumer will be inclined to search for more information
 Now he or she wants to buy and is looking for information
 Two levels of interest:
 Milder: Heightened Attention (pays attention to communication)
 Sharper: Active information search (finding information)

 Information sources:
 Personal (family, friends, neighbours)
 Commercial (advertising, salespeople, displays)
 Public (mass media, consumer rating organizations, internet searches)
 Experiential (handling, examining, using the product)


The Buying Decision Process
Stage 2: Information Search
 Information Sets (buying a LCD TV)

Total Set Awareness Set Consideration Set Choice Set Decision

ALL THE BRANDS WHICH I KNOW WHICH I CAN BUY WHICH I “LIKE” MY FINAL PICK

• Sony • Sony • Sony • Sony • FINAL

• Samsung • Samsung • Samsung • Samsung DECISION
• LG • LG • Phillips
• Phillips • Phillips • Nobel/TCL
• Nobel/TCL • Nobel/TCL
• Panasonic
• Acer
The Buying Decision Process

Stage 3: Evaluation of Alternatives

 While buying, a consumer is:
 Trying to satisfy a need
 Looking for certain benefits from the product solution
 Seeing each product as a bundle of attributes with varying abilities for delivering the benefits

 Consumers pay most attention to products that deliver sought-after benefits

 Hotels : location, cleanliness, atmosphere, price
 Mouth wash: colour, effectiveness, germ-killing capacity, taste/flavour, price
 Tyres : safety, tread life, ride quality, price

 Beliefs & Attitudes

 Evaluation reflects Beliefs & Attitudes
 People’s beliefs and attitudes affect their buying behavior
 Expectancy-Value Model
 Consumers Evaluate Products/Services by combining their brand beliefs – positives and negatives – according to
importance
Stage 4: Purchase Decision
Two factors can come between purchase intention and purchase Intention:
i) Attitude of others. For example, someone important to you thinks
that you should buy a low-priced car
ii) Unexpected/unanticipated situational factors such as expected

income, expected price, and expected product benefits

 Five decisions during actual purchase:

 Brand
 Source/Shop/Retailer/Dealer
 Quantity
 Timing
 Payment Method
 Further Considerations & Different [perceived] risks
Functional risk: the product does not perform to expectations.
Physical risk: the product poses a threat to the physical well-being or health of the user or
others.
Financial risk: the product is not worth the price paid.
Social risk: the product results in embarrassment in front of others.
Psychological risk: the product does not conform to the consumer’s perceived self-image.
Time risk: the failure of the product results in an opportunity cost of finding another
Stage 5: Post-Purchase Behavior
Impacts future engagement of customer
 Post-Purchase Satisfaction
 Satisfaction depends on customer expectations and the product’s perceived performance
 If product falls short of expectations, the consumer is disappointed
 If product meets expectations, the consumer is satisfied
 If product exceeds expectations, the consumer is delighted

 Post-Purchase Actions
 Subsequent re-buy or abandoning (forever may be)
 Telling to others

 Post-Purchase Use & Disposal

 Sales Frequency depends on product consumption rate
Quickly finished => Quick re-buying
 Also observe how they “dispose” it