Module 3 Identifying & Selecting Market

Identifying and selecting Market After going through this module,

you will be able to: Understand Consumer Buying Behavior

and Consumer Decision Making Process

Understand Business Market and Buying Decision Process

Understand Segmentation to Consumer Markets and Business Market

Understand Targeting and Position

Consumer Buying Behavior Consumer Buying Behavior refers to the buying

behavior of final consumer – individuals & house holds who buy goods & services for personal consumption. All of these final consumers combine to make up the consumer market.

They vary tremendously in age, income, education level, & tastes.

They also buy an incredible variety of goods & services.

How these diverse consumers connect with other & with other elements of the world around them impacts their choices among various products, services, & companies.

Model of Consumer Behavior

Consumers make many buying decisions every day.

It is not easy to learn about whys of CBB.

Most large companies do research on consumer buying decisions in great detail to answer questions about What consumers buy, where they buy, how & when they buy, why they buy.

Model of Consumer Behavior Often many consumers themselves

don’t know exactly what influences their purchases.

95% of the thought, emotion, & learning occur in the unconscious mind.

The challenging question to marketer is: How do consumers respond to various

marketing efforts the company might use?

Model of Consumer Behavior

Marketing stimuli consist of the 4 P’s. Other stimuli includes major forces & events in the buyer’s Environment: Economic, Technological, Political, & Cultural.

Marketers wants to understand how the stimuli are changed into responses.

Model of Consumer Behavior

Marketing & other Stimuli Marketing Other Product Economic Price Technological Place Political Promotion Cultural

Buyer’s Black Box

Buyer Buyer character- decision istics process

Buyer Responses

Product Choice Brand Choice Dealer Choice Purchase Timing Purchase Amount

Characteristics Affecting CB

Consumer purchases are influenced strongly by: Culture, Social, Personal, and Psychological Characteristics

Psychological

Motivation

Perception

Learning

Beliefs & Attitudes

PersonalAge & life-cycle stage

OccupationEconomicSituation

Lifestyle

Personality &Self-concept

Social

Reference groups

Family

Roles & Status

Buyer

Culture

Culture

Subculture

Social Class

Characteristics Affecting CB CULTURE Culture: The set of basic values,

perceptions, wants, & behaviors learned by a member of society from family & other important institutions

Subculture: A group of people with shared value systems based on common life experiences & situations

Social Class: Relatively permanent & ordered divisions in a society similar values, interests, & behaviors

Characteristics Affecting CB SOCIAL FACTORS Group: Two or more people who interact

to accomplish individual or mutual goals Family: It can strongly influence Buyer

Behavior. Marketers are interested in the roles & influence of husband, wife, & children in the purchase of different products & services

Roles & Status: A person belongs to many groups-family, clubs, organizations

Characteristics Affecting CB PERSONAL FACTORS Age & Family Life-Cycle Stage: People

change the goods & services they buy over their lifetimes. Tastes in food, clothes, furniture & recreation are often are related.

Buying is also shaped by the stage of the family life cycle – the stages through which families might pass as they mature over time.

Marketers often define their target markets in terms of life-cycle stage & develop appropriate products & marketing plans for each stage.

PERSONAL FACTORS Occupation: A person’s occupation

affects the goods & services bought. Blue-collar workers tend to buy more rugged work cloths, whereas executives buy more business suits.

Marketers try to identify the occupational groups that have an above-average interest in their products & services.

A company can even specialize in making products needed by a given occupational group

PERSONAL FACTORS Economic Situation: A person’s economic

situation will affect product choice. Marketers of income-sensitive goods watch

trends in personal income, savings, & interest rates.

If economic indicators points to a recession, marketers can take steps to redesign, reposition, & reprise their products closely

Life Style People coming form the same subculture,

social class, & occupation may have quite different lifestyles.

Lifestyle is a person’s pattern of living as expressed in his or her psychographics. It involves measuring consumers’ major AIO dimensions

Activities (work, hobbies, shopping, sport, social events)

Interests (food, fashion, family, recreation) Opinions (about themselves, social issues,

business, products) Life style captures something more than

the person’s social class or personality.

Personality and self-concept Personality: Each person’s distinct

personality influences his or her buying behavior.

Personality is the unique psychological characteristics that lead to relatively consistent & lasting responses to one’s own environment.

Personality is usually described in terms of traits such as self-confidence, dominance, sociability, autonomy, defensiveness, adaptability & aggressiveness

Psychological Factors Motivation: A person has many needs at

a time, some are Biological, arising from states of tension such as hunger, thirst, or discomfort.

Others are Psychological, arising from the need for recognition, esteem, or belonging.

A need becomes a motive when it is aroused to a sufficient level of intensity

A motive (or drive) need is sufficiently pressing to direct the person to seek satisfaction of the need

Psychological Factors

Physiological Needs (Hunger, Thirst)

Safety Needs (Security, Protection)

Social Needs (Sense of Belonging, Love)

Esteem Needs(Self-esteem, recognition, Status)

(Self-development& realization)

Self-Actualization

Needs

Psychological Factors Perception: A motivated person is ready

to act. How the person acts is influenced by his or her own perception of the situation

All of us learn by the flow of information through our five senses: sight, hearing, smell, touch, & tastes

Perception is a process by which people select, organize, & interpret information to form a meaningful picture of the world

Psychological Factors Learning: when people act they learn. Learning describes changes in an

individual’s behavior arising from experience

Learning theorists say that most human behavior is learned.

Learning occurs through the interplay of drives, stimuli, cues, responses, & reinforcement

Changes in an individual’s behavior arishing from experience

Psychological Factors Beliefs & Attitudes: through doing & learning,

people acquire beliefs & attitudes These, in turn, influence their buying behavior A Beliefs is a descriptive thought that a person

holds about something Attitudes: A person’s consistently favorable or

unfavorable evaluations, feelings, & tendencies toward an object or idea

Attitudes are difficult to change People have attitudes regarding religion, politics,

clothes, music, food, and almost everything else.

Types of Buying Decision Behavior Complex Buying Behavior: CBB in situations

characterized by high consumer involvement in a purchase & significant perceived differences among brands

Dissonance-Reducing Buying Behavior: CBB in situations characterized by high involvement but few perceived differences among brands

Habitual Buying Behavior: CBB in situations characterized by low consumer involvement & few significant perceived brand differences

Variety-Seeking Buying Behavior: CBB buying behavior in situations characterized by low consumer involvement but significant perceived brand differences.

Four Types of Buying Decision Behavior

Complex Buying

Behavior

Dissonance-Reducing

Buying Behavior

Variety-Seeking

Buying Behavior

Habitual Buying

Behavior

High Involvement

Low Involvement

Significant Differences

Between Brands

Few Differences

Between Brands

Consumer Decision Making Why consumer marketing difficult? The mix of the people is constantly

changing Not only is it difficult to anticipate what

marketing program will work, but what worked yesterday may not work today – or tomorrow

Another changing is understanding how consumers make decisions

The consumer Buying-Decision Process Need recognition: The consumer is moved to

action by a need or desire Identification of alternatives: The consumer

identifies alternative products & brands & collects information about them

Evaluation of alternatives: The consumer weighs the pros & cons of the alternatives identified

Decisions: The consumer decides to buy or not to buy & makes other decisions related to the purchase

Post purchase behavior: The consumer seeks reassurance that the choice made was the correct one

The consumer Buying-Decision Process

NeedRecognition

Evaluation ofAlternatives

InformationSearch

PurchaseDecision

Post-purchaseBehavior

The consumer Buying-Decision ProcessSOCIAL & GROUP FORCES

CultureSubcultureSocial ClassReference GroupFamily & Households

PSYCHOLOGICAL FORCES

MotivationPerceptionLearningPersonalityAttitude

SITUATIONAL FACTORS

When WhereWhyConditions

Under which Consumers buy

INFORMATION

CommercialSources

Social Sources

CONSUMER BUYING-DECOSIONPROCESSNeed Recognition

Identification of Alternatives

Evaluation of Alternatives

Purchase & Related Decisions

Post-purchase Behavior

The consumer Buying-Decision Process Need Recognition: The first stage of the

buyer decision process, in which the consumer recognizes a problem

Information Search: The stage of the buyer decision process in which the consumer is aroused to search for more information; the consumer may simply have heightened attention or may go into active information search

Alternative Evaluation: The stage of the buyer decision process in which the consumer uses information to evaluate alternative brands in the choice set

The consumer Buying-Decision Process

Purchase Decision: The buyer’s decision about which brand to purchase

Post-purchase Behavior: The stage of the buyer decision process in which consumers take further action after purchase, based on their satisfaction or dissatisfaction

The consumer Buying-Decision Process – Possible Variations The consumer can withdraw at any stage

prior to the actual purchase if the need diminishes or no satisfactory alternative are available

The stages usually are of different lengths, may overlap, & some may even be skipped

The consumer is often involved in several different buying decisions simultaneously, & the out come of one can affect the others

Importance of Business Buying Companies are making less & buying

more: Toyota annually buys $15 billion worth of parts, materials & services from US suppliers for use in its production both in US & overseas. When outside suppliers become this significant, buying becomes a prime strategic issue

Firms are under intense quality & time pressures: To reduce reworking costs & improve efficiency, firms cannot tolerate defective parts and supplies

Firms are concentrating their purchases: To get what they need, companies are dealing with fewer suppliers but are developing long-term “partnering” relationships with them.

Nature & Scope of Business Market Business market consists of all individuals &

organizations that buy goods & services for one or more of the following purposes:

To make other goods & services: Dell buys microprocessors to make computers, & Henredon buys wood to make furniture

To resell to other business users or consumers: ReCellular, Inc., buys used cellular phones & wireless equipment to refurbish & sell to business customers

To conduct the organization’s operations: The university of Vermont buys office supplies & computer software for use in the registrar’s office

So, any good or service purchased for a reason other than personal or consumption is part of Business Market, and each buyer within this market is termed as a Business user.