CONSUMER MARKETS AND BUYER BEHAVIOR

Consumer Buyer Behavior Consumer Buyer Behavior : The buying behavior of final consumers- individuals and households who buy goods and services for personal consumption.. The objectives

6 CONSUMER MARKETS AND BUYER BEHAVIOR

consumers-individuals and households who buy goods and services for

Consumer Buyer Behavior

 Consumer Buyer Behavior : The buying behavior of final consumers- individuals and households who buy goods and services for personal consumption

Kotler and Armstrong, 2013

Consumer Behavior : It is the process by which individuals or groups select, use,

or dispose of goods, services, ideas, or experiences to satisfy needs and wants

Sheth and Krishnan, 2004

 Consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services,

experiences, or ideas to satisfy needs and the impacts that these processes have

on the consumer and society Hawkins, Mothersbagh, and Best, 2007

The objectives of the current chapter are described.

Objectives

Understand the model of consumer buyer behavior

Understand the major factors that influence consumer buyer behavior

Understand the different stages of the buyer decision process

To understand consumer behavior, we need to understand how consumers perceive, learn, and make decisions to satisfy their needs and wants.

Model: Stimulus-Response of Buyer Behavior

How do consumers respond to various marketing efforts the company use?

Cultural

Buyer’s Black Box

Buyer characteristics

Buyer Decision Process

Buyer Responses

Product choice Brand Choice Dealer choice Purchase timing Purchase amount

- 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.

Factors Affecting Consumer Behavior

There are complex factors in the black box that influence buyer behavior that can be categorized.

Age and lifecycle Economic situation Occupation Lifestyle Personality

Psychological

Motivational Perceptual Learning Beliefs and attitudes

Motivational Perceptual Learning Beliefs and attitudes

BUYER

Cultural Factors

Cultural factors exert the broadest and deepest influence on consumer behavior

The set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions

(e.g Color red, funeral, Campbell’s soup)

۵ Culture is the complex whole that includes knowledge, belief, art, law, morals,

customs, and any other capabilities and habits acquired by humans as members

۵ Culture is the collective programming of the mind that distinguishes the

members of one category of people from those of another (Geert Hofstede)

Let’s take a look at the definitions about culture.

The diversity of cultures around world is also reflected in languages

CULTURE WATCH: Using English as a Marketing Tool in Japan

In Japan, consumer packaged goods have English, French, or German labels to

suggest a stylish, Western look A Westerner may wonder what the copywriters

wish to achieve English on the label of City Original Coffee proclaims "Ease Your

Bosoms This coffee has carefully selected high quality beans and roasted by our

all the experience." The intended message: Drinking the coffee provides a

relaxing break and "takes a load off your chest." One expert believes these

messages highlight differences between Japanese and other languages Many

Western languages lack exact equivalents for the rich variety of Japanese words

that convey feelings This presents difficulties for copywriters trying to render

feelings in a language other than Japanese

Q: Why are Japanese retailers unconcerned that the messages are syntactically

suspect ?

Culture Watch: Using English as a Marketing Tool in Japan Example

The important distinction between cultures suggested by Hall is that between HIGH and LOW context cultures which are described below.

High and Low Context Cultures

HIGH CONTEXT

- Nonverbal messages are full of important and intended meanings

- When words are spoken, “reading between the lines” is important emphasis

on background, basic values -The meaning of individual behavior and speech changes depending on the situation or context

- Less emphasis on legal paper work

- Focus on personal reputation

- Latin American countries, Japan, and industrializing Asian countries

LOW CONTEXT

- Messages are explicit and specific

- Words carry all information (intentions are expressed verbally)

- Reliance on legal paperwork

- Focus on non-personal documentation of credibility

- Low context cultures can be found in culturally diverse countries such as Switzerland, US, and Germany

The high and low context cultures across different countries are illustrated below.

High and Low Context Cultures

H/L Communication Style

A US business man picked up a German client from his hotel near LAX and asked what kind of food he wanted for dinner He said, “something local.” Now in LA, the local food is Mexican food We went to a great Mexican restaurant in Santa Monica and had it all When we were done I asked him how he like the food He responded rather blandly, “It wasn’t very good”.

Germans being low-context oriented, they deliver information without any social padding If it was Americans in the same situation, the answer would more likely be

“It was pretty good but a bit too spicy.” A Japanese would answer “It was very good Thanks.” But he would never order Mexican food again

Example

Social Factors

Social factors influence on consumer behavior in terms of reference groups, family, and social roles and responsibilities

Two or more people who interact to accomplish individual or mutual goals.

(e.g Membership group, aspirational group, dissociative group, category group)

Reference

Group

Family members can strongly influence buyer behavior

Family

The reference group influences consumers via following factors

1 Information influence (expert opinions, opinion leaders, experience of colleagues)

2 Comparative influence (individuals follow group pattern)

3 Normative influence (individuals follow group norm) Examples

1 Collaborative decision making (buying a house, vacation, children education)

2 Self-administration (cigarette, liquor, cosmetics)

3 Wife-controlled (house ware, detergent, food)

4 Husband-controlled (automobile) Examples

Personal Factors

Personal factors also influence on consumer behavior in terms of age and life cycle stage, occupation, economic situation, lifestyle, and personality & self-concept.

Consumer’s buying behavior is shaped by the stage of life cycle.

(e.g Nontraditional stages such as unmarried couple, marrying later in life, childless couple, single parent)

Age and

Life cycle

A person’s occupation affects the goods and services bought.

A person’s economic situation will affect product choice

Lifestyle

A person’s distinct personality influences his or her buying behavior.

(e.g self-confidence, dominance, sociability, autonomy, adaptability)

Personality

and

Self-concept

The most widely used lifestyle classifications, research firms developed is VALS

(Values and Lifestyles developed by SRI consulting).

segmenting the consumer marketplace on the basis of the personality traits that drive consumer

behavior

 The are motivated by ideals They are well-educated and seek out information in decision-making process They are conservative, practical consumers: they look for durability, functionality, and value in products they buy.

 They have goal-oriented lifestyles and a deep commitment to career and family They are politically conservative and respect authority They prefer prestige products to demonstrate success to their peers They like variety of time-saving devices.

 They are motivated by self-expression As young, enthusiastic and impulsive consumers, their energy finds an outlet in exercise, sports, outdoor recreation, and social activities They spend comparatively high portion of income on fashion, entertainment, and socializing.

Characteristics of VAL Category

The VALS categories are described below (1/2)

 The are trendy and fun-loving They are concerned about the opinions and approvals of others Money defines success for them They emulate the purchases of people with greater material wealth They are active consumers because shopping is both social activity and an opportunity to demonstrate to peers their ability to buy.

 Like experiencers, they are motivated by self-expression by working on building a house, raising children, fixing a car, or growing vegetables They are suspicious to new ideas and unimpressed by material possession They buy basic products (prefer value to luxury)

 They live narrowly focus lives Due to shortage of resources, they must focus on meeting needs rather than fulfilling desires They are cautious with loyal to favorite brands as long as they can purchase them at a discount stores.

Characteristics of VAL Category

The VALS categories are described below (2/2)

VALS Questionnaire Results

The example of VALS survey is described below.

Homework

a What is your VALS type? Do

you agree with the assessment?

b How can marketers use VALS

information to serve consumers better?

Example

1 A descriptive thought that a person holds about something

2 A person’s consistently favorable/unfavorable evaluations, feelings, and tendency toward an object or idea

Beliefs

and

Attitudes

Maslow’s Hierarchy of Needs

 A person tries to satisfy the most important need first.

 When the need is satisfied, it will stop being a “motivator” and a person will try to satisfy the next most important need.

 Without most pressing needs being satisfied, the next phase won’t be satisfied

 (e.g starving people will not take interest how they are seen or esteemed by others (esteem needs), or what’s happening in the art world (self-actualization))

Maslow’s hierarchy of needs explain why people are driven by particular needs by

particular times.

The tendency of people to screen out most of the information to which they are exposed

Types of Perceptual Information Processing

Amongst exposed stimuli, people form different perceptions of the same stimulus due

to three perceptual processes.

Buyer Decision Process

The buyer decision process is illustrated below.

Need Recognition

Information Search

Evaluation of Alternatives

Purchase Decision

Post-purchase Behavior

The first stage of

information

The consumer uses information to evaluate alternative brands in the

choice set

The buyer’s decision about which brand to purchase

The consumers take further action after purchase, based on their satisfaction or dis- satisfaction

Need Recognition

Types of Need

The precise understanding of consumer’s need is the very first step to understand consumer behavior.

1 Utilitarian Need

Satisfying practical need of the consumer

-Focused on thinking and cognition of

practicality

(e.g house ware, machinery)

2 Self-expressive Need

-Focused on individual characteristic

(e.g suit, cosmetics, accesory, perfume)

3 Hedonic Need

-Focused on feeling and affection

(e.g music, travel)

To arouse purchase urge

Current state Ideal state

GAP!!!

SearchTypes of Information Source

The consumer’s evaluation of the product or service starts from information search.

Advertisement Promotion

Outer-marketer WOM

Expert opinion

Newspaper Magazine

Attention: Yerkes-Dodson’s Law

processing Ability

Info-High

Attention focus Arousal level

Proper

Loose Attention

Narrow Attention

- Attention and Arousal are closely related to each other

-If arousal is too low, attention is loose, and your ability to process info is also low

- If arousal is too high, attention is too focused and becomes narrow, so that you are not able to process information correctly

Useful Theory

SearchPerception: Information Distortion Perception: Information Organization

Information selection can be perceived in distored

manner

1 Perceptual defense ( 방방)

People tend not to perceive certain object or

information that are opposite to his/her belief

(e.g advertisement, cigarette smoker tend to

avoid smoking-free campaign)

2 Perceptual vigilance ( 방방)

On typical situation, people tend to perceive

certain object or information better than normal

situation

(e.g Starved group tend to perceive food-related

words relatively faster than other words)

Characteristic of Information organization process can be twofold

1 Categorization (방방방) People tend to organize information of new products based on their prior knowledge (e.g resale vale of Hyundai Accent vs

Benz)

2 Integration (방방방) People tend to perceive information as “organized whole” rather than “individuali- zed”

(e.g Halo effect)Some of the information perception theories are described below.

Evaluation of

Alternatives

Types of Evaluation

When consumers evaluate product and service, they use both internal sources of

information (memory) as well as external sources.

1 Stimulus-based

(e.g purchasing unknown/unused products)

2 Memory-based

(e.g selecting experienced goods and services)

3 Out of sight, out of mind

(except, comparatively more number of superior

attributes, exaggeration)

Useful Theory

Category vs Attribute

1 Categorization ( 항항 ) e.g Bird-eagle, canary, parrot

2 Attribute ( 항항 ) Intrinsic: color, size, styles Extrinsic: brand, country of origin, price

Example:

500 candidates have applied to A company where it only plans to hire 20 new employees.

Methods

1 Read all the details of the documents each candidates handed in Interview every individuals to make evaluation

2 Make an assessment based on the important list of items such as the level of

When consumers making decisions about the purchase, they make the complicated problems simple and make decisions on their own called “decision fallacy”.

Types of Decision fallacy

seeking buying behavior Dissonance-

Variety-reducing buying behavior

Habitual buying behavior

High Involvement Low Involvement

Significant diff.

b/w Brands

Few diff.

b/w Brands

The customer’s dissatisfaction will not disappear automatically, but the company must eagerly participate in solving those problems.

A shop assistant explained how/why such

a thing can happen to the customer politely ( 1 ) The shop assistant proposed that, In order to straighten things out, it can either be quick fixed or if the customer wishes, he can get a brand new one for her ( 2 ) The customer does not need a new coat right away, so she decided

to get a brand new one ( 3 ) DS=Department Store

Marketing strategy vs Consumer behavior

The connectivity between marketing strategy and consumer behavior can be illustrated

as following.

Model of Consumer Behavior

Cultural Social Personal Psychological

Marketing Strategy

Need recognition Information Search Evaluation of Alternatives Purchase Decision Postpurchase Behavior

S T P

Seeking New Customers