Newport institute communication & economics Karachi

CONSUMER
MARKETS
&
CONSUMER
BUYER
BEHAVIOR
 Consumer Markets & Consumer Buyer Behavior - 5

Consumer

• The end buyer of a product

• In general buys for his ownself or for his
family’s benefit
• For organizational purchases the word
customer is used
 Consumer Markets & Consumer Buyer Behavior - 5

Consumer behavior

• The action that a person takes in:

- Purchasing & using products & services
- The mental & social processes that proceed
and follow these actions
 Consumer Markets & Consumer Buyer Behavior - 5

We are concerned with…

• Why consumers make the purchases
that they make
• What factors influence consumer
purchases?
• Who buys?
• What are their choice criteria?
• When do they buy?
• How do they buy?
• Where do they buy?
• Likely buyers reaction to a marketing
strategy
 Consumer Markets & Consumer Buyer Behavior - 5

Model of buyer behavior

Marketing & other Buyers blackbox Buyer responses
stimuli
Marketing Others
Buyer Buyer Product choice
Product Economic
Charac- decision Brand choice
Price Technolo-
teristics process Dealer choice
gical
Purchase timing
Place Political
Promotion Cultural Purchase amount
 Consumer Markets & Consumer Buyer Behavior - 5

Characteristics affecting consumer

behavior
Cultural
Social
Personal
Culture Psychological
Reference Age & life
cycle stage Motivation B
groups
Occupation Perception U
Subculture Economic Learning Y
Family
situation Beliefs & E
Lifestyle attitudes
R
Roles &
Social class status Personality &
self concept
 Consumer Markets & Consumer Buyer Behavior - 5

Characteristics affecting consumer

behavior
• Culture: Set of basic values, perceptions,
wants & behaviors learned by a member of
society from family & other institutions
- Cultural shift.
• Subculture: Group of people with shared
value systems based on common life
experiences & situations
• Social class: Measured by occupation,
income, education & wealth
 Consumer Markets & Consumer Buyer Behavior - 5

Characteristics affecting
consumer behavior
Social factors:
• Reference groups – Aspiration groups /
influencers
• Family – e.g. purchase of a car
• Roles & Status – e.g. Director Marketing
 Consumer Markets & Consumer Buyer Behavior - 5

Social influences
Culture Behavior is learned so the traditions,
values, attitudes of society all
influence it
Social class Has a major influence on consumer’s
behavior
Reference Formal or informal groups to which
groups we belong.
Family Key group in terms of attitudes,
beliefs & learned behavior
Personal Personal characteristics such as age,
influences occupation, family lifestyle, lifestyle
 Consumer Markets & Consumer Buyer Behavior - 5

Characteristics affecting
consumer behavior
Personal factors:
• Age & life cycle stage – Tastes in food,
clothes, furniture, recreation change with age
• Occupation – e.g. purchase of rugged clothes
by a laborer
• Economic situation
• Life style – Lifestyle of a celebrity
• Personality & self-concept
 Brand personality traits

• Sincerity (down – earth, honest, cheerful)

• Excitement (daring, spirited, imaginative)
• Competence (reliable, intelligent &
successful)
• Sophistication (upper class & charming)
• Ruggednes (outdoorsy & tough)
 Consumer Markets & Consumer Buyer Behavior - 5

Psychological models

• Four key psychological influences:

- Motivation
- Perception
- Learning, attitudes and beliefs
- The buying situation
 Consumer Markets & Consumer Buyer Behavior - 5

Motives in buying
• There are complex motives behind
purchasing decisions:
• Often the underlying motive is different
from the stated motive.
• Why do people buy Rolex waches?
- For accurate time keeping?
- OR as a status symbol?
• Motives can be analyzed using Maslow’s
hierarchy
 Consumer Markets & Consumer Buyer Behavior - 5

Maslow’s hierarchy of needs

• Maslow’s theory applies to all aspects of

human motivation
• The needs change with different levels i.e.
a person moves up once his need at the
bottom level is satisfied
 Consumer Markets & Consumer Buyer Behavior - 5

Maslow’s hierarchy of needs

 Consumer Markets & Consumer Buyer Behavior - 5

Perception
• The way an individual perceives an external
stimuli will influence his reaction
• Causes of differences in reaction
- Selective attention: we screen out the
majority of stimulants
- Selective distortion: the tendency to adjust to
perceptions to conform to the current mindset
- Selective retention: We do not retain
everything. Information that reinforces our
attitudes & beliefs
 Consumer Markets & Consumer Buyer Behavior - 5

Learning attitudes & beliefs

• Learning relates to any changes in the long term
& is associated with how the information is
processed
- Conditional learning: reinforcement is
necessary to develop attitudes & beliefs
- Social learning: learning from others behavior
- Cognitive learning: use of positive powers of
reasoning to develop attitudes & beliefs about
a product (Particularly important for high
involvement products)
 Consumer Markets & Consumer Buyer Behavior - 5

Consumer buying decision process

• Need recognition
• Information search
• Emergence of a range
of alternatives
• Evaluation of
alternatives
• Purchase decision
• Purchase
• Post purchase
evaluation
 Consumer Markets & Consumer Buyer Behavior - 5

Types of buying behavior

• Routine or programmed: Habitual purchase
– low involvement of buyer e.g. milk
• Limited decision making – some
consideration & evaluation e.g. clothes
• Extensive decision making – High
involvement buying, requires detailed
consideration e.g. car
• Impulse buying – e.g. pack of crisps
 Consumer Markets & Consumer Buyer Behavior - 5

Types of buyers

• Opportunist – a switcher
• Dealer – seeks the best deal
• Creative – asks for a customized product
• Trader – asks for extras
• Negotiator – seeks discounts
 Consumer Markets & Consumer Buyer Behavior - 5

Roles in the buying process

• A no. of different individuals might contribute in
the consumer market in the buying decision.
Marketers need to be aware of the order inorder
to exert influence:
- Initiator – suggests the purchase
- Influencer – has knowledge & personal
authority influences the outcome
- Decider – decides what, where & how to buy.
- Buyer – makes the purchase
- End user
 Consumer Markets & Consumer Buyer Behavior - 5

The economist’s perspective

• Demand is a function of:

- Price
- Income
- Preference
- Price of other goods
- Expectations about the future
 Consumer Markets & Consumer Buyer Behavior - 5

Economic factors influencing

demand
• Price: • Disposable income:
- Price of the product - State of the economy
- Price of substitute - Inflation
products - Employment/unemplo
- Price of yment
complimentary goods - Wage rates
 Consumer Markets & Consumer Buyer Behavior - 5

Economic factors influencing

demand
• Use of credit: • Willingness to
- Availability spend:
- Interest rates - Consumer’s
- Credit terms confidence
- Future standard of
living
- Competition for
purchases
 Consumer Markets & Consumer Buyer Behavior - 5

Demand

• As price rises quantity demanded falls &

viceversa
• Sensitivity to price changes varies
• Incase of:
- Inelastic demand – Consumers are not
sensitive to price changes
- Elastic demand – Consumers are highly
sensitive to price changes
 Consumer Markets & Consumer Buyer Behavior - 5

Consumer Income
• Money or nominal income: money received
• Real income – purchasing power of money
• Disposable income – money left after
compulsory deductions
• Discretionary income – income which can be
used as we please after allowing for regular
commitments such as utility bills etc.
 Consumer Markets & Consumer Buyer Behavior - 5

Income elasticity of demand

• As income rises so does the demand for
goods & services
• Incase of some products a rise in income
leads to a disproportionately small rise in
demand whereas in others it leads to a
disproportionately large rise in demand
• Refers to the responsiveness of demand
to change in income
 Consumer Markets & Consumer Buyer Behavior - 5

Income elasticity of demand

• Luxury products – very elastic with respect
to income
• Basic necessities – inelastic with respect
to income