Consumer behavior

Consumer behavior

The overview of buying process

Why to study consumers behavior?

The study of consumers helps firms and organizations improve their marketing strategies by understanding issues such as how:

1) The psychology of how consumers think, feel, reason, and select between different alternatives (e.g., brands, products, and retailers);

2) The behavior of consumers while shopping or making other marketing decisions;

3) The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media);

Definitions

• Customer behavior:

1) a broad term that covers both individual consumers who buy goods and services for their own use and organizational buyers who purchase business products

2) the process through which the ultimate buyer makes purchase decisions

Consumer behavior involves the use and disposal of products as well as the study of how they are purchased. Since many environmental problems result from product disposal (e.g., motor oil being sent into sewage systems to save the recycling fee, or garbage piling up at landfills) this is also an area of interest.

The impact of consumer behavior on society is also of relevance. For example, aggressive marketing of high fat foods, or aggressive marketing of easy credit, may have serious repercussions for the national health and economy.

Fast-Moving Consumer Goods (FMCG’s)

These are high volume, low unit value but with fast purchase e.g. ready meals, newspapers, soap, and cooking oil

Consumer Durables

These have low volume but high unit value e.g. cars, fridges/freezers, cookers, television sets, washing machines, computers etc.

Soft Goods

These are similar to consumer durables except that they wear out more quickly and therefore have shorter replacement cycle e.g. clothes, shoes etc.

Characteristics Affecting Consumer Behavior

1. Cultural Factors2. Social Factors3. Personal Factors4. Psychological Factors 5. Situational Factors

1. Cultural Factors

• Culture – Culture is the fundamental determinant of a person’s wants and behaviour. The growing child acquires a set of values, perceptions, preferences and the behaviour through his or her family and other key institutions.

• Culture is often the most powerful cause of a person's needs, wants and behavior.

• Characteristics of Culture– Culture is learned. – Certain aspects of culture never change.– Cultural shifts create opportunities.– Subcultures can be of even greater interest to

marketers than cultures.

Culture

A child grown in USA is exposed to the following values: achievements and success, efficiency and practicality, progress, material comfort, individualism, freedom and youthfulness. What about a child grown in Ghana? In Ukraine?

Subculture

Each culture consists of smaller group (subculture) of people with shared value systems based on common life experiences and situations. These subcultures can be ethnic, religious, racial or regional groups as well as those that form around music groups. Nestle Gh Ltd (MaggieHomowoCooking contest) Guinness & MTN have been exploiting our festivals to promote and build their brands and Corporate Image.

Social Class

Social classes reflect not only income but also other indicators such as occupation, area of residence, education, and wealth. Social classes show distinct product and brand preferences in many areas, including clothing, home furnishing, leisure activities, automobiles, and media consumption

2. Social Factors

Group Membership: Anyone knows that people act differently in groups than they do on their own. Since many of the things we buy are consumed in the presence of others, group behaviours are important to marketers

• Groups:– Reference Groups– Aspirational Groups– Dissociative Groups

• Opinion Leaders• Family• Roles and Status

Social Factors

The Family

This is probably the most important consumer buying organization in society. Family members constitute the most influential primary reference group. Marketers are interested in the roles and relative influence of the husband, wife, and children in the purchase of a large variety of products and services.

Toyota caters to family buying influences.

• Age and Life-Cycle Stage– Tastes and preferences change over time.

• Occupation– Occupation influences the purchase of clothing, cars, memberships, etc.

• Economic Situation– Income-sensitive goods– Counter-cyclical goods

3. Personal Factors

4. Psychological Factors

Psychology helps marketers understand the ‘why” and “how” of consumer behavior. In the psychological situation, consumer buying behavior is influenced by four factors including: Motivation, Perception, Learning, and Beliefs & Attitudes.

Motivation

Motivation is an inner state that energizes, activates, moves or channels behavior towards certain goals (Assael).

Motivation arises from perceived needs. These can be grouped into biogenic (e.g. thirst, hunger, discomfort) and psychogenic needs (arise from psychological state of tension such as esteem, belongingness).

Perception

A motivated person is ready to act. How the motivated person actually acts is influenced by his or her perception of the situation. Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful image of a situation.

Beliefs & Attitudes• Lifestyle (determines how people choose to spend

their time, money, and energy and that reflects their values, tastes, and preferences Consumers often choose goods, services and activities that are associated with a certain lifestyle.)

• Personality (The idea is that brands also have personalities, and that consumers are likely to choose brands whose personality matches their own. )

• Self-Concept (an individual’s self-image that is composed of a mixture of beliefs, observations, and feelings about personal attributes. Self-image is how a person thinks of himself or he thinks others think of him.)

5. Situational Factors

• The Physical Environment: Marketers are aware that factors such as decor,

smells, lighting, music, crowding, and even temperature can significantly influence many purchases. Many retailers are focusing on adequate packing, cyber-hangout and in-store display to influence the consumer decision-making process.

4) How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.

Generating Beliefs Through Advertising

• Statements must be– Perceived– Comprehended– Remembered– Believed (at least in part)

Product Personality Issues• Gender– Often used for brand personalities– Some product perceived as masculine (coffee and

toothpaste) while others as feminine (bath soap and shampoo)

• Geography– Actual locations like Philadelphia cream cheese and

Arizona iced tea– Fictitious names also used such as Hidden Valley and Bear

Creek• Color– Color combinations in packaging and products denotes

personality

Marketers often use a fictitious location to help with personality.

BLUE• Commands respect• IBM holds the title to blue• Associated with club soda• Men seek products packaged in blue• Houses painted blue are avoided• Low-calorie, skim milk• Coffee in a blue can perceived as “mild”

YELLOW• Caution, novelty, temporary, warmth• Eyes register it faster• Coffee in yellow can perceived as “weak”• Stops traffic• Sells a house

GREEN• Secure, natural, relaxed or easy- going, living

things• Good work environment• Associated with vegetables and chewing gum• Canada Dry ginger ale sales increased when it

changed sugar-free package from red to green and white

RED• Human, exciting, hot, passionate, strong• Makes food “smell” better• Coffee in a red can perceived as “rich”• Women have a preference for bluish red• Men have a preference for yellowish red• Coca-Cola “owns” red

WHITE• Goodness, purity, chastity, cleanliness,

delicacy, refinement, formality• Suggests reduced calories• Pure and wholesome food• Clean, bath products, feminine

BLACK• Sophistication, power, authority, mystery• Powerful clothing• High-tech electronics• Regal, wealthy, stately• Suggests premium price

Positioning Through Creating Beliefs

• “It’s not delivery; it’s De Journo!”• “Wal-Mart. Always low prices.

Always.”• “I just saved a bunch of money on

my auto insurance.”• “U-um Good!” (Campbell’s Soup)

Consumer Research Methods

Market research is often needed to ensure that we produce what customers really want and not what we think they

want.

There are two main approaches to marketing:

1) Primary research;2) Secondary research.

1. Primary research

Primary research is research that you design and conduct yourself. For example, you may need to find out whether consumers would prefer that your soft drinks be sweater or tarter.

1. Secondary research

Secondary research involves using information that others have already put together. For example, if you are thinking about starting a business making clothes for tall people, you don’t need to question people about how tall they are to find out how many tall people exist—that information has already been published

The Buyer Decision Process

Need Recognition

Buyers recognize a need or problem as a result of internal or external stimuli.

Marketing communications often stimulate need recognition.

Hungry yet?

Triggering Need Recognition

Information Search

• High vs. Low Involvement Purchases

• Cost vs. Benefit Model• “Big-Ticket” Anomolies• Cognitive Economy

edmunds.com

Information Sources

– Personal• Family, friends, neighbors, and casual or work acquaintances

– Commercial• Advertising, salespeople, dealers, Web sites, packaging, and displays

– Public• Mass media articles or news

programs, Internet searches, consumer rating organizations

– Experiential• Using, handling, examining or

sampling the product

Which source is most influential?

• ELM: Central vs. Peripheral Route processing

• Some Types of Evaluation Calculus:– Compensatory vs. Non-compensatory– Weighted Tally Processes– Elimination-by-aspects– Lexicographic– “Checkbox Choice”– Affect Referral

Evaluation of Alternatives

Purchase Decision

• Intentions to purchase are sometimes interrupted.

• Potential “Interrupters”:– Attitudes & influences of others– Unexpected situational

factors– Buyer’s Remorse– Speed of decision

Postpurchase Behavior

• Consumer satisfaction/dissatisfaction results from gaps between expectations and perceived performance.

– Performance BELOW Expectations → Disappointment– Performance EQUALS Expectations → Satisfaction– Performance GREATER than Expectations → Delight– Performance MUCH GREATER than Expectations →

Expectation Recalibration

• Cognitive Dissonance: “Did I make the right purchase? Should I have bought this?”

• Minimize dissonance by:– Offering mechanisms for making complaints

(Customer Service, 800 hotlines, e-mail, etc.)– Being responsive to problems and questions– Advertising (remind consumer why choice made sense)– Minimizing the potential for product misuse (good product

instructions) and “Poke-Yoke”.

Cognitive Dissonance

Not everyone adopts at the same pace.

• Innovators: venturesome, try new ideas at some risk.

• Early adopters: opinion leaders who adopt new ideas early, but carefully.

• Early majority: deliberate adopters, who adopt before the average person.

• Late majority: skeptical, adopt only after the majority of people have tried a product.

• Laggards: last to adopt, tradition bound, and skeptical of change.

Product Adopter Categories

Adopter Categorization Distribution

In-Class Activity – WHY WE BUY

Choose a product, product line, brand, or company and answer the following:

• What are the obvious (i.e. more superficial) reasons why consumers buy these products? • What are the not-so-obvious, more deep-seated reasons/motivations why consumers buy

these products? • What are the obvious (i.e. more superficial) reasons why consumers do not buy these

products? • What are the not-so-obvious, more deep-seated reasons/motivations why consumers do not

buy these products?

• Choose one or more of the above reasons/motivations to buy or not buy and provide an appropriate implication for Marketing strategy.