consumer behavior and segmentation
DESCRIPTION
Marketing : Consumer Behavior and SegmentationTRANSCRIPT
UNDERSTANDING MARKET
‘Consumer Behavior’
Session 3Chapter 5&6
Word-of-mouth Personal Needs Past Experience
Expected Product
Perceived Product
Product Delivery
Translation of perceptions into product-quality specifications
Management perceptions of consumer expectations
External communications to consumers
Gap 5
Gap 4
Gap 3
Gap 2
Gap 1
Consumer
Marketer
The Gaps Model
The Gapso Customer’s Gap
• Customer’s expectation not matching with customer’s perception (Gap 5)
o Provider’s Gaps
• Not Knowing what Customers Expect (Gap 1)
• Not Selecting Right Product Designs & Standards (Gap 2)
• Not Delivering to Product Standards (Gap 3)
• Not Matching Performance to Promises (Gap 4)
Consumer Behavior
Role of Marketing is:
To Understand the ‘INTERVENING PROCESS’
that Influences Buying Decision.
Think on:
Who buys? How do they buy?
When do they buy? Where do they buy?
Why do they buy? … … … …
o Consumer Buying Behavior• Buying behavior of individuals and households that buy products for
personal consumption.
o Stimulus Response Model• Marketing and other stimuli enter the buyer’s “black box” and produce
certain choice/purchase responses.
• Marketers must figure out what is inside of the buyer’s “black box” and how stimuli are changed to responses.
Consumer Behavior Model
Marketing & Other Stimuli
MarketingProductPricePlacePromotion
OtherEconomicTechnologicalPoliticalCultural
Buyer’s Black box
BuyerCharac-teristics
BuyerDecisionProcess
Buyer Responses
Product ChoiceBrand ChoiceDealer ChoicePurchase TimingPurchase Amount
Figure: Model of Buyer Behavior
Characteristics Affecting Consumer Behavior
o Culturalo Socialo Personalo Psychological
o Cultureo Subcultureo Social Class
• Upper class
• Middle Class
• Working Class
• Lower Class
Key Factors Key Factors
Characteristics Affecting Consumer Behavior
o Cultural
o Social
o Personal
o Psychological
o Groups• Membership
• Referenceo Aspirational groups
• Opinion leaderso Buzz marketing
o Family• Children can influence
o Roles and Status
Key Factors Key Factors
Characteristics Affecting Consumer Behavior
o Culturalo Socialo Personalo Psychological
o Age and life cycle
o Occupation
o Economic situation
o Lifestyle• Lifestyle segmentation
o Personality and self-concept• Brand personality
Key Factors Key Factors
Family Life Cycle & Banking NeedsStage Banking NeedsFinancial Situation
YoungSingle People
Few Financial Burdens; recreation oriented
Low-cost checking; auto loan; credit card
Full Nest I:Youngest childunder 6
Home purchasing peak;Liquid assets low; Many working mothers
Mortgage; Credit card; Revolving Credit Line; Bill Consolidation Loan
Full Nest II:Older coupleswith Dependent Children
Good Financial Position; Many Working Mothers
Home Improvement Loans;Equity Credit Lines;Money Mkt Deposit accountsInvestment services
Empty Nest:Older Couples;No child at home;One/ both Retired
Significantly reduced Income
Monthly Income Checks on CDs;Direct Deposit of Social Security
An Example
Characteristics Affecting Consumer Behavior
o Culturalo Socialo Personalo Psychological
o Motivation•Needs provide motives for consumer behavior
•Motivation researcho Maslow’s hierarchy of needs
o Perception•Selective attention, selective distortion, selective retention
o Learning•Drives, stimuli, cues, responses and reinforcement
o Beliefs and attitudes
Key Factors Key Factors
Maslow’s Hierarchy of Needs
Physiological Needs
Hunger, thirst
Self
actualization
Needs
Esteem Needs
Self-esteem
Belongingness & Love Needs
Friendship
Security & Safety Needs
Protection from physical harm
Once a Lower-level need is Satisfied,
a Higher-level need Emerges,
and Demands Satisfaction
Types of Buying Decision Behavior
Difference between brands
SignificanSignificantt
Complex buying
behavior
LowLow
FewFewDissonance-
reducing buying
behavior
Habitual buying
behavior
Variety-seeking buying
behavior
HighHigh
Involvement Level
Five Stages Buyer Decision Process
o Need recognitiono Information searcho Evaluation of
alternativeso Purchase decisiono Postpurchase behavior
o Needs can be triggered by:• Internal stimuli
o Normal needs become strong enough to drive behavior
• External stimulio Advertisementso Friends of friends
Process Process Stages Stages
o Need recognitiono Information searcho Evaluation of
alternativeso Purchase decisiono Postpurchase
behavior
o Consumers exhibit heightened attention or actively search for information.
o Sources of information:• Personal• Commercial• Public• Experiential
o Word-of-mouth
Process Process Stages Stages
Five Stages Buyer Decision Process
o Need recognitiono Information searcho Evaluation of
alternativeso Purchase decisiono Postpurchase
behavior
o Evaluation procedure depends on the consumer and the buying situation.
o Most buyers evaluate multiple attributes, each of which is weighted differently.
o At the end of the evaluation stage, purchase intentions are formed.
Process Process Stages Stages
Five Stages Buyer Decision Process
o Need recognitiono Information searcho Evaluation of
alternativeso Purchase decisiono Postpurchase behavior
o Two factors intercede between purchase intentions and the actual decision:
1. Attitudes of others
2. Unexpected situational factors
Process Process Stages Stages
Five Stages Buyer Decision Process
o Need recognitiono Information searcho Evaluation of
alternativeso Purchase decisiono Post-purchase behavior
o Satisfaction is important:
• Delighted consumers engage in positive word-of-mouth.
• Unhappy customers tell on average 11 other people.
• It costs more to attract a new customer than it does to retain an existing customer.
o Cognitive dissonance is common!
Process Process Stages Stages
Five Stages Buyer Decision Process
Marketing Research The process of planning, collecting and analyzing data relevant to a marketing decision.
• Much can be learnedlearned about consumers through marketing research by
o Collecting, recording, and analyzing data important in marketing products
o Communicating results to management
• Must be done prior and after the saleprior and after the sale
• Marketing Research ProcessDefine the Marketing ProblemChoose a Method of ResearchCollect the DataAnalyze the DataMake Recommendations to Management
Buyer Decision Process for New Products
o New Products are goods, services or ideas that are perceived by customers as new.
o Marketers should help consumers move through these stages:
o Awarenesso Interesto Evaluationo Trialo Adoption
o Individual Differences in Innovativeness• Consumers can be
classified into five adopter categories
o Innovators
o Early Adopters
o Early Majority
o Late Majority
o Laggards
Buyer Decision Process for New Products
o Product Characteristics and Adoption•Five product
characteristics influence the adoption rate
oRelative Advantage
oCompatibility
oComplexity
oDivisibility
oCommunicability
Business Markets: Buyer Behavior
o Marketing Structure and Demand
o Nature of the Buying Unit
o Types of Decisions and the Decision Process
o Compared to consumer market
• Business markets o have fewer but larger customers
• Business customers o are more geographically
concentrated
• Demand is differento Demand is derived o Demand is price inelastico Demand fluctuates more, and
changes more quickly
CharacteristicCharacteristicss
The buying behavior of organizations that buy goods/services for use in the production of other products and services or for the purpose of reselling or renting them to others at a profit.
o Marketing Structure and Demand
o Nature of the Buying Unit
o Types of Decisions and the Decision Process
o Compared to consumer purchases• Business purchases
involve more buyers in the decision process.
• Purchasing efforts are undertaken by professional buyers.
CharacteristicsCharacteristics
Business Markets: Buyer Behavior
o Marketing Structure and Demand
o Nature of the Buying Unit
o Types of Decisions and the Decision Process
oCompared to consumer purchases
• Business buyers face more complex buying decisions.
• Buying process is more formalized, more participants in the process:
o Userso Influencerso Deciderso Buyerso Gatekeepers
• Buyers and sellers work more closely together and build long-term relationships.
CharacteristicsCharacteristics
Business Markets: Buyer Behavior
o Stage 1: Problem Recognitiono Stage 2: General Need Descriptiono Stage 3: Product Specification
• Value analysis helps to reduce costs
o Stage 4: Supplier Search• Supplier development
o Stage 5: Proposal Solicitationo Stage 6: Supplier Selectiono Stage 7: Order-Routine Specification
• Blanket contracts are often used for maintenance, repair and operating items.
o Stage 8: Performance Review
Eight Stages Business Buying Process
Major Influences on Business Buyers
o Environmental
o Organizational
o Interpersonal
o Individual
o Economic trendso Supply conditionso Technological changeo Regulatory and political
environmentso Competitive
developmentso Culture and customs
Key Factors Key Factors
Major Influences on Business Buyers
o Environmental
o Organizational
o Interpersonal
o Individual
o Objectiveso Policieso Procedureso Organizational
structureo Systems
Key Factors Key Factors
Major Influences on Business Buyers
o Environmental
o Organizational
o Interpersonal
o Individual
o Authority
o Status
o Empathy
o Persuasiveness
Key Factors Key Factors
Major Influences on Business Buyers
o Environmental
o Organizational
o Interpersonal
o Individual
o Authorityo Ageo Educationo Job positiono Personalityo Risk attitudes
Key Factors Key Factors
o E-procurement is growing rapidly.o E-procurement offers many benefits:
o Access to new supplierso Lower purchasing costso Quicker order processing and delivery
Business Buying on the Internet
Strategies Influencing Customer Perception o Measure & manage Customer Satisfaction and Service Qualityo Aim for Service Quality & Satisfaction in every encountero Facilitate Adaptability & Flexibilityo Encourage Spontaneityo Help Employees cope with problem customero Manage Dimensions of Quality at encounters
o Ensure the Quality of Service
o Sound Distribution to the End Customer
o Ensure a Composite Promotional Effort
• Advertising
• Sales Promotion
• Personal Sales
• Public Relation
o Make Right Prices
Tips for Marketers
• Have Satisfied People who have (PAI)
• P = (right) Personality• A = (right) Attitude• I = Interest / Initiative
• Simplified Procedure• Proper Show-off• Keep good Relationship • Ensure cross-sell & repeat sell
Know your OrganizationKnow your ProductKnow your CustomersKnow your CompetitorsKnow your Process of SellingKnow Yourself