consumer buyer behavior and consumer markets

CONSUMER BUYER BEHAVIOR AND CONSUMER

MARKETS

HARLEY DAVIDSON ‘You don’t see people tattooing Yamaha

on their bodies’ Consumer T-shirts saying “ I rather push a

Harley than drive a Honda’ Harley Captures 23 % of all U.S bike sales

and 50% of all heavy weight segment For several years sales have outstripped

supply During last 5 years Harley Sales have

increased by 50% and earnings have jumped by 75%.

HARLEY DAVIDSONHarley Management puts top priority on

understanding customer wants and what makes them tick.

Who their customers are What they think How they feel Why they buy a Harley

FOCUS GROUP RESEARCHSeven Core Customer Types1) Adventure loving traditionalists2) Sensitive pragmatist3) Stylish status seekers4) Laid back campers5) Classy capitalists6) Cool headed loners7) Cocky Misfits

HARLEYS UNIVERSAL APPEAL“Independence Freedom and Power”

Analyst: ‘Its much more than a machine, its part of their own self expression and lifestyle

Analyst: The toughest baddest guy on the block. Never mind that you are a dentist or an accountant. You ( feel ) wicked astride all that power.

Harley Dealer: ‘We sell a dream here’

CLASSIC HARLEY AD

Tagline: When was the last time you felt this strongly about anything.

CONSUMER BUYER BEHAVIOUR The buying behavior of final consumers-

individuals and households who buy goods and services for final personal consumption

ANSWER TO QUESTIONS What consumers buy? Where they buy? How much they buy ? When they buy ? Why they buy ?

CONSUMER BUYER BEHAVIOR

Buying Decisions are made at an unconscious level

So What is the central question for

marketers?

How do consumers respond to the various marketing efforts the company might use.

STIMULUS RESPONSE MODEL OF BUYER BEHAVIOR

Marketing and other

StimuliMarketing OtherProduct EconomicPrice Political Place CulturalPromotion Technological

Buyers Black Box

Buyers Characteristics Buyers Decision

Process

Buyer ResponsesProduct ChoiceBrand ChoiceDealer Choice

Purchase TimingPurchase Amount

CHARACTERISTICS AFFECTING CONSUMER BEHAVIOR

Cultural

•Culture•Subculture•Social Class

Social•Reference Groups•Family•Roles and Status

Personal

•Age and Lifecycle Stage•Occupation•Economic Situation•Lifestyle•Personality and SelfConcept

Psychological

•Perception•Motivation•Learning•Beliefs and Attitudes

CULTURAL FACTORS Culture: The set of basic values, perceptions,

wants and behavior learned by a member of society from family and other important institutions.

-Cultural Shifts

Health and Fitness

Informality

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

-Geographic, Racial groups,Nationalities,Religions

AD TARGETING VARIOUS SUB CULTURES IN USA

SOCIAL CLASSSocial Class: Relatively permanent and

ordered divisions in a society whose members share similar values, interests and behavior

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.

SOCIAL FACTORSSocial Factors are Groups,Family, Social

Roles and StatusGroupsMembership Groups

Opinion Leader

Reference Groups

Buzz Marketing-Tremor and Vocal Point

Social Networking-Chevy Tahoe

FamilyRoles and Status

AMERICAN IDOL AND COKE

BUZZ MARKETING: TREMOR AND VOCAL POINT “ The most powerful form of marketing is a

message from a trusted friend.” Most companies see a dramatic 10-30%

increase in sales after employing the word of mouth network

Examples: Shamrock Farms launched a new chocolate –malt flavored milk

P&G Dawn Direct Foam Detergent Tremor Vocal Point Connectors

IMITATION…

PERSONAL FACTORS

Age Life Cycle Stage

Occupation Lifestyle

Personality Self Concept

Age and Life Cycle StageRBC Royal Bank five stage segments1. Youth-Less than 182. Getting Started-18-353. Builders-35-504. Accumulators-50-605. Preservers-over 60

Occupation

Economic SituationExample: Rolex Timex Khadi Khas/Khadi Lesac/Lesac Casual

LIFESTYLELifestyle A persons pattern of living as expressed

in his or her activities, interests and opinions.

It profiles a persons whole pattern of acting and interacting in the world.

Measure Customers major AIO dimensions Activities:Interests:Opinions:

VALS

Two Major Dimensions

1) Primary Motivations

2) Resources

Ideals

Thinkers

Believers

Achievements

Achievers

Strivers

Self-Expression

Experiencers

Makers

Innovators

Survivors

TWO MAJOR DIMENSIONS OF VALS Primary MotivationsIdeals: Guided by Knowledge and PrinciplesAchievement: Look for product and services

that demonstrate success to their peers Self Expression: Desire social or physical

activity, variety and risk Resources Income, education, health, self -confidence,

energy and other factors- high or lowExample: Iron City Beer

Personality The unique psychological characteristics

that lead to relatively consistent and lasting responses to ones own environment.

Brand Personality The specific mix of human traits that

may be attributed to a particular brand

FIVE BRAND PERSONALITY TRAITS Sincerity: Down to Earth, Wholesome

and Cheerful Excitement: Daring, Spirited,

Imaginative and Up to Date Competence: Reliable, Intelligent and

Successful Sophistication: Upper Class and

Charming Ruggedness: Outdoorsy and Tough

EXAMPLESRuggedness: Levis, NikeExcitement: MTV, Pepsi, Mountain DewCompetence: Banks, Dawn, CNN, IBA,

IoBMSophistication: Rolex, Ameer Adnan, Sana

Safinas Sincerity: Campbell soup.

SELF CONCEPT Self Concept ( Self Image ) Peoples

possessions contribute to and reflect their identities

“We are what we have”Example : Apple

PSYCHOLOGICAL FACTORS Four Major Psychological FactorsMotivationPerceptionLearningBeliefs and Attitudes

MOTIVATIONTwo kinds of needs: 1) Biological

2) Psychological

Motive: a need that is sufficiently pressing to direct the person to seek satisfaction of the need

Two Popular Motivation Theories

1. Sigmund Freud

2. Abraham Maslow:

MOTIVATIONSigmund Freud: suggests that people are

largely unconscious about the real psychological forces shaping their behavior

Motivation Research:

MASLOW’S HIERARCHY OF NEEDS

Self Actualization NeedsSelf-Development and Realization

Esteem NeedsSelf-Esteem, Recognition, Status

Social NeedsSense of Belonging, Love

Safety NeedsSecurity, protection

Physiological NeedsHunger Thirst

PERCEPTION The process by which people select organize,

and interpret information to form meaningful picture of the world

Three perceptual processes1. Selective Attention: The tendency for people to

screen out most of the information to which they are exposed

2. Selective Distortion: the tendency of people to interpret information in a way that will support what they already believe.

3. Selective Retention: likely to remember the good points made about a brand they favor and to forget good points made about competing brands.

Subliminal Advertising

LEARNING, BELIEFS AND ATTITUDESLearning: Changes in an individuals behavior

arising from experienceLearning takes place through the interplay of

drives, stimuli, cues, responses and reinforcement.

A drive is a strong internal stimulus that calls for action

A drive becomes a motive when it is directed towards a particular object

Cues are minor stimuli that determine when, where and how the customers respond.

CUE

BELIEFS AND ATTITUDEBeliefs: A descriptive thought that a

person has about something.Example: LaysAttitude: A persons relatively consistently

evaluations, feelings and tendencies towards an object or idea

Got Milk! Example

CHANGING ATTITUDES TOWARDS MILK

GOT MILK !

FOUR TYPES OF BUYER BEHAVIOR

High Involvement

Low Involvement

Significant Differences Between Brands

Complex Buying Behavior

Variety Seeking Buying Behavior

Few Differences Between Brands

Dissonance Reducing Buying Behavior

Habitual Buying Behavior

TYPES OF BUYING DECISION MAKINGComplex Buying Behavior: in situations

characterized by high consumer involvement in a purchase and significant perceived differences between brands.

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

Habitual Buying Behavior: in situations characterized by low customer involvement and few significant perceived brand differentness

Variety Seeking Buying Behavior: situations characterized by low consumer involvement but significant perceived brand differences

Complex Buying Behavior

When the product is expensive1. Risky2. Purchased infrequenly3. Highly Self ExpressiveThe Buyer has much to learn about the

product category

Complex Buying Behavior

What does the marketer need to do?

THE BUYER DECISION PROCESS

Need Recognition

Information Search

Evaluation of Alternatives

Purchase Decisions

Post Purchase Behavior

THE BUYER DECISION PROCESS Need Recognition- the first stage of the buyer

decision process in which the buyer recognizes a need or problem.

Information Search –the stage of the buyer decision process in which the consumer is aroused to search for more information.

Evaluation of Alternatives- the stage of the buyer decision process in which the user uses information to evaluate alternative brands in the choice set.

Purchase Decisions - the buyers decision about which brand to purchase.

Post Purchase Behavior -the stage of the buyer decision process in which the consumer takes further action after purchase, based on satisfaction or dissatisfaction.

Cognitive Dissonance- Buyer discomfort caused by post-purchase conflict.

NEED RECOGNITIONInternal StimulusExternal Stimulus

INFORMATION SEARCHPersonal SourcesCommercial SourcesPublic SourcesExperiential Sources

EVALUATION OF ALTERNATIVES Evaluation of AlternativesCar ExampleStylingOperating EconomyWarrantyPrice

PURCHASE DECISION Two factors can come between the

purchase intention and purchase decision.

1: Attitude of others2. Unexpected Situational Factors

POST PURCHASE BEHAVIOUR

Why is it important to satisfy customers? Marketers should go beyond merely

meeting the expectation of consumers- they aim to delight them- Example Lexus,Boing

Measure Customer Satisfaction Regularly

Encourage customers to complain

THE BUYER DECISION PROCESS FOR NEW PRODUCTS

STAGES IN THE ADOPTION PROCESSConsumers go through five stages in the

process of adopting a new productAwarenessInterestEvaluationTrialAdoption

INDIVIDUAL DIFFERENCE IN INNOVATIVENESS People differ in their readiness to try

new products .

Adopter Groups

Innovators 2.5%

Early Adopters 13.5%

Early Majority 34%

Late Majority 34%

Laggards 16%

INFLUENCE OF PRODUCT CHARACTERISTICS ON RATE OF ADOPTION

Relative Advantage