CONSUMER BEHAVIOR AND MARKETING

MAIN POINTS TO BE DISCUSSED:-

1. Understand the consumer market and the major factors that influence
consumer buyer behavior.
2. Identify and discuss the stages in the buyer decision process.
3. Describe the adoption and diffusion process for new products.
4. Define the business market and identify the major factors that
influence business buyer behavior.
5. List and define the steps in the business buying decision process
Case study: Harley Davidson Motor Cycles.
Harleys HOGS capture 23% of all US bike sales and 50% of the heavy weight
motorcycle market segment. For several years running, sales have outstripped supply
with customer waiting lists of up to two years for popular models. During just the past 6
years, Harley sales have more than doubled, and more and earnings have tripled.
How is this happening for Harley Davidson?
Harley Davidsons marketers spend a great deal time of time thinking about customers
and their buying behavior. They want to know who their customers are. What they think
and how they feel? They also want to know what is that makes Harley buyers so loyal?
Harley management put top priority on understanding customers and what makes them
tick?
Who rides Harley?
The average Harley customer is a 46 year old husband with a median household income
of $78,000. More than 10 % of Harley purchases are made by woman.

To gain a better understanding of customers deeper motivations, Harley Davidson

conducted Focus groups in which they analyzed their customers opinion. It then mailed
out 160,000 surveys. The research revealed seven core customer types. They are
1. adventure loving traditionalists
2. sensitive pragmatists
3. stylish status seekers
4. laid back campers
5. classy capitalists
6. cool headed loners
7. Cocky misfits.
Its much more than a machine says the analyst. Its part of their own self expression
and lifestyle. Such strong emotions and motivations are captured in a classy Harley
Davidson advertisement.

CONSUMER BUYING BEHAVIOR

Consumer Buying Behavior refers to the buying behavior of people who buy goods and
services for personal use. Consumer market consists of all the people (Individuals and
households) who buy or acquire goods and services for personal consumption. The world
consumer market consists of more than 6.6 billion people.
Consumer Behavior due to spot marketing
Consumers make many buying decisions every day. Most large companies research
consumers buying decisions in great detail to answer questions about what consumers
buy, where they buy, how and how much they buy, when they buy, why they buy. But
learning about whys of customers are not so easy. The answers are often locked deep in
the consumers mind.

The central question for marketers is : How do consumers respond to various marketing
efforts the company might use? The starting point is the stimulus-response model of
buyer behavior shown below.

The figure shows that marketing and other stimuli enter consumers BLACK BOX and
produce certain responses. Marketers must figure out what is in the buyers black box.
Marketing stimuli consists of four Ps. Product, Price, Place, and Promotion. Other stimuli
include major forces and events in the buyers environment such as Economic,
Technological, Political and Cultural. All these inputs enter the buyers black box where
they are turned into a set of observable buyer responses such as Product choice, Brand
choice, Dealer choice, Purchase timing and Purchase amount.
The marketer wants to understand how the stimuli are changed into responses inside the
consumers black box which has two parts. First, the Buyers characteristics influence
how he or she perceives and reacts to stimuli. Second, the buyers decision process itself
affects the buyers behavior.
CHARACTERISTICS AFFECTING THE CONSUMER BEHAVIOR
Consumer purchases are influenced strongly by cultural, social, personal, and
psychological characteristics as shown in the figure below.

Culture:
Culture is the most basic cause of a person's wants and behavior.

Culture is learned from family, church, school, peers, and colleagues.

Culture reflects basic values, perceptions, wants, and behaviors.

Cultural shifts create opportunities for new products or may otherwise

influence consumer behavior.

Subculture

Groups of people with shared value systems based on common life

experiences.

Major Groups

Hispanic Consumers

African-American Consumers

Asian-American Consumers

Mature Consumers

Social Class
Almost every society has some form of social structure. Social classes are Societys
relatively permanent and ordered divisions whose members share similar values,
interests, and behaviors. 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 classes show distinct product and brand preferences in
areas such as Clothing, home furnishing, leisure activities and automobiles.

Social Factors:
A consumers behavior also influenced by social factors such as the consumers small
groups, family and social roles and status.

Groups:

A persons behavior is influenced by many small groups. Manufacturers of products and

brands subjected to strong group influence must figure out how to reach opinion leaders.
An opinion leader is a person within a reference group who because of special skills,
knowledge, personality, or other characteristics exerts on others.
An aspirational group is one to which an individual wishes to belong.

Family:

Most important consumer buying organization in the society.

Family members can strongly influence buyer behavior.

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

Roles and Status:

A person belongs to many groups such as family, clubs, organizations etc. The
persons position in each group can be defined in terms of both role and status. A role
consists of the activities people are expected to perform according to the persons
around them. Each role carries a status reflecting the general esteem given it to by the
society.

People usually choose products appropriate to their roles and status.

Eg. As a brand manager, she will buy the kind of clothing that reflects her role and
status in her company.

Role = Expected activities

Status = Esteem given to role by society

Personal Factors
A buyers decisions are also influenced by personal characteristics such as the buyers
age, life cycle stages , occupation, economic situation , lifestyle, personality and self
concept.

Age and Life-Cycle Stage

People change the goods they buy over their lifetimes.

Traditional family life-cycle stages include young singles and married

couples with children.

Occupation

Economic Situation

Occupation influences the purchase of clothing and other goods.

Some goods and services are especially income-sensitive.

Lifestyle:

People coming from the same subculture, social class and occupation may
have different lifestyles. Lifestyle is a persons Pattern of living as
expressed in his or her psychographics. It involves measuring consumers
major AIO dimensions. They are

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

Interests ( food, fashion, family, recreation)

Opinions ( about themselves, social issues, business, products)

Personality & Self-Concept

Each persons distinct personality influences his or her buying behavior. Personality
refers to the unique psychological characteristics that lead to relatively consistent and
lasting responses to ones own environment. Personality is usually described in terms of
traits such as self confidence, dominance, sociability etc.

Personality can be useful in identifying consumer behavior for certain products or brand
choices.
For example, Coffee marketers have discovered that heavy coffee drinkers tend to be
high on sociability. Thus to attract customers, Starbucks and other coffee houses create
environments in which people can relax and socialize over a cup of steaming coffee.
Many marketers use a concept related to personality- A persons self concept (Also called
self image). Self-concept (self image) suggests that peoples possessions contribute to and
reflect their identities. That is We are what we have. Thus in order to understand
consumer behavior, the marketer must first understand the relationship between consumer
self concept and possessions.

Psychological factors
A persons buying choices are further influenced by four major psychological factors.
They are motivation, perception, learning, beliefs and attitudes.
Motives and Needs
A person has many needs at any given 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 motive (or drive) is a need that is sufficiently pressing to direct the person
to seek satisfaction.

Maslows hierarchy of needs explains why people are driven by needs at

particular times

Maslows hierarchy of needs implies that lower level needs must be satisfied
prior to higher level needs.

Physiological needs

Safety needs

Social needs

Esteem needs

Self-Actualization

Application of Maslows Hierarchy of Needs to the Marketing of Cars

THE BUYER DECISION PROCESS DUE TO SPOT MARKETING

So far we have looked at the influences that affect buyers. Now we will study at how
consumers make buying decisions. Clearly the buying process starts long before the
actual process and continues long after. Marketers need to focus on the entire buying
process rather on just the purchase decision. Marketers need to understand the various
influences and decision stages that customer move through when making a purchase
decision at that time marketer use spot marketing.
By conducting consumer research based on these individual stages, the marketer can
develop suitable marketing actions to influence each of the stages leading to the
purchase decision
Buyer decision process

The figure suggests that consumer pass through all the five stages with every purchase.
But in more routine purchases, consumers often skip or reverse some of the stages.
Step #1 = Need Recognition
The buying process starts with need recognition- The buyer recognizes a problem or
need. The need can be triggered by internal stimuli when one of the persons normal
needs such as hunger, thirst, sex etc.

Buyer becomes aware of a difference between a desired state and an actual

condition.

Individual may be unaware of the problem or need.

Marketers may use sales personnel, advertising, and packaging to trigger

recognition of needs or problems.

Recognition speed can be slow or fast.

Step #2 = Information Search

An interested consumer may or may not search for more information. If the consumers
drive is strong and a satisfying product is near at hand, the consumer is likely to buy it
then. If not the consumer may store the need in memory or undertake an information
search related to the need.
As more information is obtained, the consumer awareness and knowledge of the available
brands and features increases.

This stage begins after the consumer becomes aware of the problem or need.

The search for information about products will help resolve the problem or satisfy
the need.

There are various sources of information.

Sources of Information

Personal

Commercial

Public

Experiential

- Most effective source

- Family, friends, neighbors

- Advertising, salespeople
- Receives the most
information from these
sources

- Mass Media
- Consumer-rating groups

- Handling the product

- Examining the product
- Using the product

Step #3= Alternative Evaluation

Consumer is now confronted with a number of options

Choice involves element of risk

Consumer will evaluate product options based on different evaluative criteria or

attributes

Consumer will apply different decision rules depending on complexity of the

decision

Step #4= Purchase Decision

In the evaluation stage, the customer ranks brands and forms purchase intentions.
Generally, the consumers purchase decisions will be to buy the most preferred brand. But
two factors can come between the purchase intention and purchase decision.

The first factor is the attitude of the others. If someone important to you thinks that you
should buy the lowest priced car, then the chances of your buying a more expensive car
are reduced.
The second factor is unexpected situational factors. The consumer may form a purchase
intention based on factors such as expected income, expected price, and expected product
benefits. However, unexpected events may change the purchase intention. For example,
the economy might turn very bad, a close competitor might drop its price , or a friend
might report being disappointed in your preferred car. Thus preferences and even
purchase intentions do not always result in actual purchase choice.
Step #5= Post Purchase

Consumer could experience satisfaction, dissatisfaction or dissonance

Marketers job is to reduce customers fear of negative outcomes and provide post
purchase (after sales) services
Cognitive dissonance:
A buyers doubts shortly after a purchase about whether it was the right decision.
Consumer satisfaction is a function of consumer expectations and perceived product
performance.

Performance < Expectations

Disappointment

Performance = Expectations

Satisfaction

Performance > Expectations

Delight

Linking the Buying Decision Process and Psychological Influences

Linking the Buying Decision Process to Marketing Strategies