Analyzing Consumer Markets: Marketing Management, 13 Ed

Module-2
Analyzing
Consumer Markets
Marketing Management, 13th ed

Kotler on
Marketing
The most
important
thing is to
forecast
where
customers
are moving,
and be in
front of them.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-2
Chapter Questions
• How do consumer characteristics

influence buying behavior?
• What major psychological processes
influence consumer responses to the
marketing program?
• How do consumers make purchasing
decisions?
• How do marketers analyze consumer
decision making?
Figure 6.1
Model of Consumer Behavior

• a. Many different factors affect consumer buying behavior. Buying
behavior is never simple. Understanding it, however, is the essential
task of marketing management.
b. Consumer buying behavior refers to the buying behavior of final
consumers — individuals and households who buy goods and
services for personal consumption
• c. The consumer market is all the individuals and households who
buy or acquire goods and services for personal consumption.
• 1). The American consumer market consists of about 287 million
people.
• 2). These people consume trillions of dollars of goods and services
each year.
• 3). The world consumer market consists of more than 6.2 billion
people.
• 4). Consumers vary tremendously in age, income, education level,
and tastes.

What Influences
Consumer Behavior?
Cultural Factors
Social Factors
Personal Factors

Cultural Factors
• b. Cultural factors exert the broadest and deepest influence on
consumer behavior.
• The marketer needs to understand the role played by the buyer’s
culture, subculture, and social class.
• c. Culture is the set of basic values, perceptions, wants, and
behaviors learned by a member of society from family and other
important institutions.
• 1)Culture is the most basic cause of a person’s wants and
behavior
• 3)Marketers are always trying to spot cultural shifts in order to
imagine new products that might be wanted.
• d. Each culture contains smaller subcultures.
• Subculture is a group of people with shared value systems based
on common life experiences and situations.

Subcultures
Nationalities
Religions
Racial groups
Geographic regions

• Many of these subcultures make up important market segments and
many times products are designed for them. Examples of important
subcultural groups include:
• 1). Hispanic consumers. There are 35 million consumers in this group,
they spend $425 billion on goods and services. This group is very brand
loyal and favor companies who show interest in them.
• 2). African American consumers. This group has a tremendous
purchasing power. This group has a buying power of $527 billion and, if
they were a separate nation, would rank among the top 15 in the world.
This group is growing in affluence and sophistication. Some companies
have developed special products, packaging, and appeals for this group.
They appear to be very price conscious, are motivated by quality and
selection, and emphasize brand name and loyalty.
• 3). Asian American consumers. This group is the fastest-growing and
most affluent U.S. demographic segment and now number more than 10
million with disposable income of $229 billion annually. Language and
cultural tradition appear to be the largest barrier to effectively marketing to
this group. Because of its rapid growth, however, this group will receive
increased attention from marketers
Social class:
Social Factors
Reference
Family
groups
Social
Statuses
roles

• f. Almost every society has some form of social
class structure.
• Social class is the relatively permanent and
ordered divisions in a society whose members
share similar values, interests, and behaviors.
1). 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.

• 2). Social scientists have identified seven
American social classes: (See Table 6.1)
• a). Upper Uppers (less than 1 percent).
• b). Lower Uppers (about 2 percent).
• c). Upper Middles (about 12 percent).
• d). Middle Class (about 32 percent).
• e). Working Class (about 38 percent).
• f). Upper Lowers (about 9 percent).
• g). Lower Lowers (about 7 percent).

Table 7.1: Characteristics of Major U.S. Social Classes
1. Upper Uppers The social elite who live on inherited wealth. They give
(less than 1%) large sums to charity, run the debutante balls, maintain
more than one home, and send their children to the finest
schools. They are a market for jewelry, antiques, homes,
and vacations. They often buy and dress conservatively.
Although small as a group, they serve as a reference
group to the extent that their consumption decisions are
imitated by the other social classes.
2. Lower Uppers Persons, usually from the middle class, who have
(about 2%) earned high income or wealth through exceptional
ability in the professions or business. They tend to be
active in social and civic affairs and to buy the symbols of
status for themselves and their children. They include the
nouveau riche, whose pattern of conspicuous
consumption is designed to impress those below them.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

See text for complete 6-13
table
• 3). Marketers are interested in social
class because people within a given
social class tend to exhibit similar
behavior, including buying behavior.
• This is most evident in the selection of
clothing, home furnishings, leisure
activity, and automobiles.

Social Factors
• A consumer’s behavior is influenced by

social factors. These include small
groups, family, and social roles and
status.
• A person’s behavior is influenced by
many small groups. There are several
specialized group formations within the
larger configuration:

Social Factors
• Membership groups are groups that have a

direct influence on a person’s behavior; they
are groups to which a person belongs.
• Reference groups are groups that that have a

direct (face-to-face) or indirect influence on
the person’s attitudes or behavior. People are
often influenced by reference groups to which
they do not belong.

Social Factors
• An aspirational group is a group to which an individual wishes to

belong
• Reference groups expose a person to new behaviors and lifestyles.
• Influence the person’s attitudes and self-concept.
• They also create pressures to conform that may affect the person’s
product and brand choices.
• An opinion leader is a person within a reference group who, because
of special skills, knowledge, personality, or other characteristics, exert
influence on others. Marketers try to identify opinion leaders and direct
products and communications toward them.

Influencing Buyer Behavior
• Family
• Family of procreation
• Family of orientation
Roles and Statuses
• Role
• Status

Family
• A consumer’s purchases are also influenced by family
members. The influence can be very strong because the
family is the most important consumer-buying
organization in society. It has been extensively
researched.
• A person belongs to many groups and the person’s
position within each group can be defined in terms of
both role and status. A role is the activities a person is
expected to perform according to the people around him
or her. Status is the general esteem given to a role by
society. People often choose products that show
their status in society.

Table 7.2: Stages in the Family Life Cycle
1. Bachelor stage: Few financial burdens. Fashion opinion leaders.

Young, single, not living Recreation oriented. Buy: basic home equipment,
at home furniture, cars, equipment for the mating game;
vacations.
2. Newly married Highest purchase rate and highest average
couples: purchase of durables: cars, appliances, furniture,
Young, no children vacations.
3. Full nest I: Home purchasing at peak. Liquid assets low.
Youngest child under six Interested in new products, advertised products.
Buy: washers, dryers, TV, baby food, chest rubs
and cough medicines, vitamins, dolls, wagons,
sleds, skates.
4. Full nest II: Financial position better. Less influenced by
Youngest child six or over advertising. Buy larger-size packages, multiple-
unit deals. Buy: many foods, cleaning materials,
bicycles, music lessons, pianos.
See text for complete table

Roles and Statuses
• j. Marketers are interested in the roles

and influence of the husband, wife, and
children in the purchase of different
products and services. Buying roles
change with evolving lifestyles (such
as more females working outside the
home). Marketers try to identify the
influencer role in a family unit (such as
children).
Personal Factors
Age
Self- Life cycle
concept stage
Lifestyle Occupation
Values Wealth
Personality

Personal Factors
• A buyer’s decisions are also influenced by personal characteristics such the
buyer’s age and life-cycle stage, occupation, economic situation, lifestyle,
personality and self-concept.
• People change the goods and services that they buy over their lifetimes. Part of
these changes are shaped by the family life cycle (stages throughout which
families might pass as they mature over time). The traditional life cycle stages
are being modified as people form new lifestyles (such single parenting).
• A person’s occupation affects the goods and services bought (software bought
by accountants, lawyers, and doctors).
• The economic situation of the buyer is very important in purchase consideration.

If a person fears losing their job, their purchasing habits generally change. If the
person perceives that their economic situation is going to improve, they might
consider making a major purchase.
• People from the same social strata can have very different lifestyles. A lifestyle
is a person’s pattern of living as expressed in his or her psychographics (such
as activities, interests, and opinions). Lifestyle profiles a person’s whole pattern
of acting and interacting in the world. It is more than the person’s social class or
personality.
• 1). Examples include:
a). Activities (work, hobbies, shopping,
etc.).
• b). Interests (food, fashion, recreation,
etc.).
• c). Opinions (about themselves, social
issues, business, etc.).

• The most widely used lifestyle classification
is the SRI Values and Lifestyles (VALS)
typology. VALS classifies people according
to their consumption tendencies by how they
spend their time and money. A person could
change positions over time. It is felt that a
person’s lifestyle does affect their purchase
behavior. Groups are further subdivided
based on self-orientation and resources.
(See Figure 6.3)

a). Self-orientation groups include:
1]. Principle-oriented consumers who

buy based on their views of the world.
• 2]. Status-oriented consumers who
base their purchases on the actions
and opinions of others.
• 3]. Action-oriented buyers who are
driven by their desire for activity,
variety, and risk taking.

• ). Resources can be either abundant or
minimal depending on whether the buyer has
high or low levels of income, education,
health, self- confidence, energy, and other
factors. Note: See SRI’s Web site at www.sri-
bi.com for additional information. A survey
can be filled out at the site to determine your
SRI VALS position.

Personality:
Each person’s personality and self-concept will
influence their buying behavior.
• Personality is a person’s unique psychological
characteristics that lead to relatively consistent
and lasting responses to his or her own
environment. Personality is usually described
in terms of traits (such as self-confidence,
dominance sociability, etc.). Personality can
be useful for analyzing consumer behavior for
certain brand or product choices.

• 1). A brand personality is the specific mix of
human traits that may be attributed to a
particular brand.
• 2). Five brand personalities might be:
a). Sincerity. Down to earth. cheerful.
wholesome
b). Excitement. Daring ,spirited,up-
to-date, imaginative.
c). Competence. Reliable , intelligent and
successful
d). Sophistication. Upper class- charming
e). Ruggedness. tough
Brand Personality
Sincerity
Excitement
Competence
Sophistication
Ruggedness
• r. The self-concept describes the self-
image. The basic idea is that people’s
possessions contribute to and reflect their
identities. (how one views oneself)

Key Psychological Processes
Motivation Perception
Learning Memory

Motivation
Maslow’s Herzberg’s
Freud’s Hierarchy Two-Factor
Theory of Needs Theory
Behavior Behavior Behavior is

is guided by is driven by guided by
subconscious lowest, motivating
motivations unmet need and hygiene
factors
Maslow’s Hierarchy of Needs

Herzberg’s Two-Factor Theory

KEY PSYCHOLOGICAL PROCESSES
• The starting point for understanding

consumer behavior is the stimulus-
respons
• The marketer’s task is to understand
what happens in the consumer’s
consciousness between the arrival of
the outside marketing stimuli and the
ultimate purchase decisions.

Motivation: Freud, Maslow, Herzberg
A person has many needs at any given time. Some needs are:
• Biogenic (arise from physiological states

of tension such as hunger).
• Others are psychogenic and arise from a
need for recognition, esteem, or
belonging.
• A motive is a need that is sufficiently
pressing to drive the person to act.
•
Freud’s Theory
Sigmund Freud assumed that the psychological forces

shaping people’s behavior are largely unconscious, and
that a person cannot fully understand his or her own
motivations.

• A technique called laddering can be used to
trace a person’s motivations from the stated
instrumental ones to the more terminal
ones.
• Motivation researchers often collect “in-
depth interviews” to uncover deeper
motives triggered by a product.
• Projective techniques such as word association,
sentence completion, and role-playing are used.
Customer 2 is mixed profitability.

Maslow’s Theory
• Abraham Maslow sought to explain why people are driven by
particular needs at particular times.
• Maslow’s answer is that human needs are arranged in a
hierarchy, from the most pressing to the least pressing.
• In order of importance, they are:
•
• Physiological needs.
• Safety needs.
• Social needs.
• Esteem needs.
• Self-actualization needs

Herzberg’s Theory
• Frederick Herzberg developed a two-factor theory that
distinguishes dissatisfiers (factors that cause dissatisfaction)
from satisfiers (factors that cause satisfaction). The absence of
dissatisfiers is not enough; satisfiers must be present to
motivate a purchase.
• Herzberg’s theory has two implications:
• Sellers should do their best to avoid dissatisfiers.
• Sellers should identify the major satisfiers or

motivators of purchase in the market and supply
them. These satisfiers will make the major difference
as to which brand the customer buys.
•

Perception
Selective Attention
Selective Retention
Selective Distortion
Subliminal Perception

Perception
• How the motivated person actually
acts is influenced by his or her view or
perception of the situation.
• Perception is the process by which

an individual selects, organizes, and
interprets information inputs to create a
meaningful picture of the world.

• Perception depends not only on the
physical stimuli, but also on the
stimuli’s relation to the surrounding
field and on conditions within the
individual.
• The key point is that perceptions vary
widely among individuals exposed to the
same reality.
• In marketing, perceptions are more
important than the reality, as it is
perceptions will affect consumers’ actual
behavior.
- It has been estimated that a person is exposed to over 1,500 ads or
brand communications a day. Because a person cannot possibly
attend to all of these, most stimuli will be screened out—a
process called selective attention.
• Selective attention means that marketers have to work hard
to attract consumers’ notice.
• People are more likely to notice stimuli that relates to a
current need.
• Selective distortion is the tendency to interpret information in
a way that will fit our preconceptions. Consumers will often
distort information to be consistent with prior brands and
product beliefs.
• Selective Retention: People will fail to register much information
to which they are exposed in memory, but will tend to retain
information that supports their attitudes and beliefs.

Subliminal perception means that you see or hear
messages without being aware of them. The presence
and effect of subliminal perception on behavior is a
hotly debated issue, with more popular appeal than
scientific support.
Evidence suggests that subliminal messages have some

effect on behavior. If so, is their use an ethical
practice? See the accompanying Ethics and
Responsibility Alert.
Because of selective retention, we are likely to remember good

points about a product we like and forget good points about
competing products.

Learning
• Learning involves changes in an
individual’s behavior arising from
experience.

Memory
• All information and experiences

individuals encounter as they go through
life can end up in their long-term
memory.
• Long term memory
• Short term memory

Figure 6.4 Consumer Buying Process
Problem Recognition
Information Search
Evaluation
Purchase Decision
Postpurchase
Behavior
THE BUYING DECISION PROCESS: THE FIVE-
STAGE MODEL
• These basic psychological processes
play an important role in understanding
how consumers actually make their
buying decisions. Marketers must
understand every facet of consumer
behavior.

Problem Recognition
• The buying process starts when the buyer
recognizes a problem or need.
• The need can be triggered by internal or

external stimuli.
• Marketers need to identify the

circumstances that trigger a particular need
so that they can develop marketing
strategies that trigger consumer interest.
•
Information Search:
An aroused consumer will be inclined to search for more information.
We can distinguish between two types of arousal.
• The milder state is called heightened attention where a person

simply becomes more receptive to information about a product.
• The second level is active information search where a person

looks for reading material, going online, etc. to learn about the
product.
• sources to which the consumer will turn and the relative influence
each will have on the subsequent purchase decision. These
information sources fall into four groups:
• Of key interest to the marketer are the major information.

Four groups:
• Personal (family, friends).
• Commercial (advertising, Web sites,

salespeople).
• Public (mass media, consumer

organizations).
• Experiential (handling, examining, using

the product).

• Generally speaking the consumer receives the most
information about a product from commercial sources.
• The most effective information often comes from personal

sources or public sources that are independent authorities.
• The Internet has changed information search. Most

consumers are hybrid consumers.
• The consumer will come to know only a subset of these
brands (awareness set).
• Some brands will meet initial buying criteria (consideration

set).

Evaluation of Alternatives
• No single process is used by all

consumers or by one consumer in all
buying situations. The most current
models see the process as cognitively
orientated.

• First, the consumer is trying to satisfy
a need.
• Second, the consumer is looking for

certain benefits from the product
solution.
• Third, the consumer sees each

product as a bundle of attributes with
varying abilities for delivering the
benefits sought to satisfy this need.
• Evaluations often reflect beliefs and attitudes. Through
experience and learning, people acquire beliefs and
attitudes. These in turn influence buying behavior.
• Belief —a descriptive thought that a person holds
about something.
• Attitude—a person’s enduring favorable or
unfavorable evaluation, emotional feeling, and action
tendencies toward some object or idea.
• Attitudes put people into a frame of mind.
• Attitudes lead people to behave in a fairly consistent

way toward similar objects.
• Attitudes can be very difficult to change.

Purchase Decisions
• In the evaluation stage, the consumer forms

preferences among the brands in the choice set. The
consumer may also form an intention to buy the most
preferred brand. In executing a purchase intention,
the consumer may make up to five sub decisions:
• Brand.
• Dealer.
• Quantity.
• Timing.
• Payment-method.
• A consumer’s decision to modify, postpone, or
avoid a purchase decision is heavily influenced by
perceived risk. There are many types of risks that
consumers may perceive in buying and consuming
a product:
• Functional risk.
• Physical risk.
• Financial risk.
• Social risk.
• Psychological risk.
• Time risk.

Types of Buying decision/Buying
behaviour
• Four types of Buying behaviour:
1. Complex Buying Behaviour:
2. Dissonance Buying Behaviour
3. Variety-Seeking Behaviour
4. Habitual Buying Behaviour

behaviour
• Four types of Buying behaviour: classified based on the degree of buyer
involvement and the degree of differences among brands.
1. Complex Buying Behaviour: When the buyer is involved in
complex buying, they are aware of significant differences in brands and
highly involved in the buying procss. This is the case when products are
of expensive, bought frequently risky, and higly self impressive. Ex: a
peron buying personal computer or a laptop.
2. Dissonance Buying Behaviour: ie Reducing buyer behaviour:
Sometimes the consumer is highly involved in a purchase but sees little
differences in brands. The purchase inexpensive, infrequent, and risky,
therefore the consumer is higly involved. Ex: floor tiles, Cement etc.

behaviour
3. Variety-Seeking Behaviour: There has some buying situation that an
charaterised by low involvement but significant brand differences. In
such cases the consmuer often goes into a lot of brand switching.
Ex: chocolates, clothes and accessories etc.
4. Habitual Buying Behaviour: there are many products whioch are bought
under conditions of low involvement and the absence of significant
brand differences. Take a simple example of Salt. Consumer have little
involvement in this product category.

Business organizations
Business organizations do not only

sell. They also buy vast quantities of
raw materials manufactured ,
components, plant and equipment,
supplies , and business services .

Organisational Buying
Definition: Organizational buying as the decision making process by
which formal organisations establish the need for purchased
products and services and identify, evaluate and choose among
alternative brands and suppliers.
Buying Situations: the business buyer faces many dcisions in making
a purchase . There are Three types:
1. Straight Re-buy: the purchasing dept reorders supplies such
as office supplies and bulk chemicals on a routine basis and
chooses from suppliers on an approved list. The suppliers maintain
good quality in products and service quality and often propose
automatic reordering to save time.
2. Modified rebuy: the buyer in a modified rebuy wants to change
product specifications, prices, delivery requirements or other terms.
3. New Task: a new- task purchaser buys a product or service for
the first time( an office building, a new security system) the greater
the task the higher the no. of participants involved, the longer the
time to decision
Figure 8.1: Major Influences on
Industrial Buying Behavior

The business market versus the consumer
market-

Participants in the Business
Buying Process

Major Influences on Buying
Decisions
• 1- Environmental Factors
2-Organizational Factors
-Purchasing-Department Upgrading
-Centralized Purchasing
-Decentralized Purchasing of Small Ticket Items
-Internet Purchasing
Stages in the Business Buying
Process/decision
• Stages:
1. Problem recognition
2. General need description and Product
specification.
3. Supplier search
4. Proposal solicitation
5. Suppler selection
6. Order-routine specification
7. Performance review
Managing B to B Customer
Relationships
• To improve effectiveness and
efficiency, business suppliers and
customers are exploring different ways
to manage their relationships.

Analyzing Consumer Markets: Marketing Management, 13 Ed

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Module-2

Marketing Management, 13th ed

• How do consumer characteristics

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-4

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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

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• A consumer’s behavior is influenced by

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-15

• Membership groups are groups that have a

• Reference groups are groups that that have a

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-16

• An aspirational group is a group to which an individual wishes to

• Reference groups expose a person to new behaviors and lifestyles.

• Influence the person’s attitudes and self-concept.

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-17

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-18

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-19

1. Bachelor stage: Few financial burdens. Fashion opinion leaders.

See text for complete table

• j. Marketers are interested in the roles

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-22

• The economic situation of the buyer is very important in purchase consideration.

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-24

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-25

1]. Principle-oriented consumers who

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Behavior Behavior Behavior is

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• The starting point for understanding

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• Biogenic (arise from physiological states

Sigmund Freud assumed that the psychological forces

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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-39

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• Sellers should do their best to avoid dissatisfiers.

• Sellers should identify the major satisfiers or

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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-42

• Perception is the process by which

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Evidence suggests that subliminal messages have some

Because of selective retention, we are likely to remember good

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-46

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-47

• All information and experiences

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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-50

• The need can be triggered by internal or

• Marketers need to identify the