Analyzing Consumer Markets
The aim of marketing is to meet and satisfy target customers’ needs and wants better than competitors. Marketers must have a thorough understanding of how consumers think, feel, and act and offer clear value to each and every target consumer. Successful marketing requires that companies fully connect with their customers. Adopting a holistic marketing orientation means understanding customers— gaining a 360-degree view of both their daily lives and the changes that occur during their lifetimes so the right products are always marketed to the right customers in the right way.
Consumer behavior is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. 2 Marketers must fully understand both the theory and reality of consumer behavior. A consumer’s buying behavior is influenced by: Cultural Factors (culture / subculture / social classes): •Culture is the fundamental determinant of a person’s wants and behavior. •Subcultures that provide more specific identification and socialization for their members.
Subcultures include nationalities, religions, racial groups, and geographic regions. •Social classes, members who share similar values, interests, and behavior. Social Factors: – Reference Groups •A person’s reference groups are all the groups that have a direct (face to- face) or indirect influence on their attitudes or behavior. + membership groups: primary groups / secondary groups •Reference groups influence members in at least three ways: + Aspirational groups are those a person hopes to join + Dissociative groups are those whose values or behavior an individual rejects.
Opinion leader is the person who offers informal advice or information about a specific product or product category, such as which of several brands is best or how a particular product may be used. – Family •The most important consumer buying organization in society, and family members constitute the most influential primary reference group. + The family of orientation consists of parents and siblings. + The family of procreation, a more direct influence on everyday buying behavior is—namely, the person’s spouse and children. – Roles and status •A role consists of the activities a person is expected to perform.
Each role in turn connotes a status. People choose products that reflect and communicate their role and their actual or desired status in society. Personal Factors: Personal characteristics that influence a buyer’s decision include age and stage in the life cycle, occupation and economic circumstances, personality and self-concept, and lifestyle and values. – Age and stage in the life cycle •Psychological life-cycle stages may matter •Marketers should also consider critical life events or transitions – Occupation and economic circumstances – Personality and self-concept
By personality, we mean a set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli (including buying behavior). •Brand personality as the specific mix of human traits that we can attribute to a particular brand. •Consumers often choose and use brands with a brand personality consistent with their actual self-concept (how we view ourselves), although the match may instead be based on the consumer’s ideal self-concept (how we would like to view ourselves) or even on others’ self-concept (how we think others see us).
Lifestyle and values •A lifestyle is a person’s pattern of living in the world as expressed in activities, interests, and opinions. •Lifestyles are shaped partly by whether consumers are money constrained or time constrained. •Companies aiming to serve money-constrained consumers will create lower-cost products and services. •Time constrained. Consumers who experience time famine are prone to multitasking, doing two or more things at the same time. They will also pay others to perform tasks because time is more important to them than money.
Consumer decisions are also influenced by core values, the belief systems that underlie attitudes and behaviors. Key Psychological Processes The starting point for understanding consumer behavior is the stimulus-response model. Four key psychological processes—motivation, perception, learning, and memory—fundamentally influence consumer responses. Motivation: Freud, Maslow, Herzberg A need becomes a motive when it is aroused to a sufficient level of intensity to drive us to act. Motivation has both direction—we select one goal over another—and intensity—we pursue the goal with more or less vigor.
Perception A motivated person is ready to act—how is influenced by his or her perception of the situation. In marketing, perceptions are more important than reality, because perceptions affect consumers’ actual behavior. Perception is the process by which we select, organize, and interpret information inputs to create a meaningful picture of the world. People emerge with different perceptions of the same object because of three perceptual processes: selective attention, selective distortion, and selective retention.
Subliminal perception: Consumers are not consciously aware of them, yet they affect behavior. Learning When we act, we learn. Learning induces changes in our behavior arising from experience. Most human behavior is learned, although much learning is incidental. •Drive is a strong internal stimulus impelling action. •Cues are minor stimuli that determine when, where, and how a person responds. Generalization vs. Discrimination •Generalization: generalize the response to similar stimule •Discrimination: differences in sets of similar stimuli and can adjust our responses accordingly.
Emotions Consumer response is not all cognitive and rational; much may be emotional and invoke different kinds of feelings. Memory •Short-term memory (STM) •Long-term memory (LTM) + Associative network memory model: set of nodes and links that allow store in the memory network, including verbal, visual, abstract, and contextual. The Buying Decision Process: The Five-Stage Model •Problem Recognition: the buying process starts when the buyer recognizes a problem or need triggered by internal or external stimuli.
Information Search: consumers often search for limited amounts of information. Two levels of engagement: + Heightened attention: at this level a person simply becomes more receptive to information about a product. + Active information search: looking for reading material, phoning friends, going online, and visiting stores to learn about the product. Information sources: + Personal / Commercial / Public / Experiential Search dynamics: By gathering information, the consumer learns about competing brands and their features.
Market partitioning: identify the hierarchy of attributes that guide consumer decision making in order to understand different competitive forces and how these various sets get formed. Buyers may first decide they want to buy a German car, then Audi, and then the A4 model of Audi. •Evaluation of Alternatives: the consumer sees each product as a bundle of attributes with varying abilities to deliver the benefits. Beliefs and attitudes: A belief is a descriptive thought that a person holds about something.
Just as important are attitudes, a person’s enduring favorable or unfavorable evaluations, emotional feelings, and action tendencies toward some object or idea. Expectancy-value model: of attitude formation posits that consumers evaluate products and services by combining their brand beliefs—the positives and negatives—according to importance. •Purchase Decision: In executing a purchase intention, the consumer may make up to five subdecisions: brand (brand A), dealer (dealer 2), quantity (one computer), timing (weekend), and payment method (credit card).
Perceived risk: Functional, physical, financial, social, psychological and time risk. •Postpurchase Behavior: Disappointed > Satisfied > Delighted Behavioral Decision Theory and Behavioral Economics Consumers don’t always process information or make decisions in a deliberate, rational manner. Consumers are constructive decision makers and subject to many contextual influences. They often exhibit low involvement in their decisions, using many heuristics as a result.