6

Analyzing Consumer Markets

Marketing Management
A South Asian Perspective, 13th ed
 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?
Tata Steel used steel
junction® retail store
in Calcutta to
encourage
consumers to go
steel shopping and
to develop deeper
understanding of
individual and
household
customers.
4 depts. namely Home construction &Solution ,
Furniture dept ,Kitchenware & lifestyle
 What is 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 .
 What Influences
Consumer Behavior?

Cultural
Cultural Factors
Factors

Social
Social Factors
Factors

Personal
Personal Factors
Factors
 1) Cultural Factors
What is Culture?
Culture is the fundamental determinant of a
person’s wants and behaviors acquired
through socialization processes with family
and other key institutions.

The growing child acquires a set of values ,

perceptions, preferences and behaviors
through his or her family and other key
institutions .(e.g. child in US & India)
Culture consists of subcultures
Subcultures include

Nationalities
Nationalities

Religions
Religions

Racial
Racial groups
groups

Geographic
Geographic regions
regions
• E.g. Population Services International ,
Bangladesh, --Raja brand condoms for men and
Maya brand contraceptive pill for ladies.
• Raja was considered as OTC pdct but Maya was
perceived as a strong drug .

• All human societies exhibit social stratification .

• Stratification sometimes takes the form of caste
system
• Most often it takes the form of social classes.
• In India we have SEC(socioeconomic
classification) based on education & occupation
of chief wage earner of the home
 Social Classes
In INDIA
Social class
in USA Upper uppers A1,A2,B1,
B2,C,D,
depicts Lower uppers E1and E2 .
seven Upper middles
ascending A1 –
Middle class highest
levels purchase
Working class potential
Upper lowers and

Lower lowers E2 – Lowest

purchase
potential
 Characteristics of Social Classes

• Within a class, people tend to behave alike

• Persons are perceived as occupying inferior or
superior positions according to social class
• Class may be indicated by a cluster of variables
(occupation, income, wealth)
• Class designation is mobile over time i.e.
individuals move up & down the social class
ladder .
• Social class show distinct pdct & brand
preferences (e.g. clothing, media preference , TV
shows
 2) Social Factors

Reference
Family
groups

Social
Statuses
roles
 Reference Groups
(have direct or indirect influence on attitude
& behavior )
Membership
Membership groups
groups
(direct
(direct influence)
influence)

Primary
Primary groups(interact
groups(interact always&informally)
always&informally)
(family,friend,neighbours,coworkers)
(family,friend,neighbours,coworkers)

Secondary
Secondary group
group
(( interact
interact sometimes& formally
sometimes& formally ))
(religious,professional,trade
(religious,professional,trade unions
unions ))

Aspirational
Aspirational groups
groups
(a
(a person
person hopes
hopes to
to join)
join)

Dissociative
Dissociative group
group
(( whose
whose values,
values, behavior
behavior aa person
person rejects
rejects ))
 Reference Groups
• Influence members in 3 ways :

• 1) They expose an individual to new

behaviors & lifestyles .
• 2)They influence attitudes & self concept
• 3) They create pressures for conformity
that may affect product & brand choices
• ( where reference group influence is strong it
gives rise to opinion leaders who give
informal advice about products )
Provogue uses teenage icons as brand
ambassadors and a youth targeted
website to connect to its customers
Radio Shack Targets Women with
Female Store Managers
 FAMILY

• Family members constitute the most

influential primary reference group.

• In traditional joint families ,

grandparents influence purchase
decisions and the lifestyle of younger
generations .
 Roles and Status
Role is the activity one performs
Each role carries a status

What degree of status is

associated with various
occupational roles?
E.g. Senior VP marketing ,
Sales manager ,office clerk

People choose products that reflect & communicate

their role and actual or desired status in society
 3) Personal Factors

Age
Self- Life cycle
concept stage

Lifestyle Occupation

Values Wealth
Personality
The Family Life Cycle
 Occupation & Economic
circumstances
• Blue collar will buy work clothes, work shoes & lunch
box
• Co president will buy dress suits, air travel ,& country
club memberships .
• Computer software companies , design different
pdcts for brand managers ,engineers ,lawyers &
physicians (Co.'s tailor products for customers)
• Pdct choice is affected by economic circumstances ,
spendable income, savings & assets, debts,
borrowing power, attitude towards spending & saving
 Brand Personality:
Is the specific mix of human traits that we
can attribute to a particular brand

Sincerity
Sincerity

Excitement
Excitement

Competence
Competence

Sophistication
Sophistication

Ruggedness
Ruggedness
 Brand Personality
• Sincerity (honest , cheerful)
• Excitement (daring , spirited)
• Competence ( intelligent , reliable )
• Sophistication (upper-class)
• Ruggedness (tough )

• Brands have personality

• Levi's :Ruggedness
• MTV :Excitement
• CNN : Competence
• Brands also have personalities & Customers
choose brands which suit their personality
 Lifestyle Influences
Lifestyles are shaped partly by whether consumers are
money constrained or time constrained

Multi-tasking

Time-starved
(will do multi tasking )

Money-constrained
(will go for economic pdcts )
 Faysal Bank of
Pakistan has
extended
banking hours
for time-pressed
executives.
 LOHAS (Lifestyles of Health and
Sustainability) Market Segments
• Sustainable Economy
• Healthy Lifestyles
• Ecological Lifestyles
• Alternative Health Care
• Personal Development
• (Products for LOHAS include organic
foods, energy efficient appliances &
solar panels, alternative medicine
,yoga tapes, ecotourism)
 Model of Consumer Behavior
Stimulus Response Model

Marketers task is to understand what happens in the consumers mind

between the arrival of marketing & environmental stimuli and the actual
purchase decision .
Key Psychological Processes

Motivation Perception

Learning Memory
 Motivation

Abraham Maslow’s Fredrick Herzberg’s

Sigmund Freud’s Hierarchy Two-Factor
Theory of Needs Theory

Behavior Behavior Behavior is

is guided by is driven by guided by
subconscious the lowest, motivating
motivations unmet need and hygiene
factors
 Sigmund Freud's Theory
• When a person examines specific brands , she will
react not only to their stated capabilities , but also to
other , less conscious cues such as shape , size,
weight , material ,color and brand name .

• Eg The Freudian Motivation Theory explains the

sales process in terms of a consumer fulfilling a
functional need, such as blinds to cover a
window, as well as unconscious needs, such as
the fear of being seen naked by those outside. ,
whisky satisfies fun,status,social relaxation
Maslow’s Hierarchy of Needs
 Fredrick Herzberg’s Two-Factor
Theory

Dissatisfiers
Satisfiers

For eg , a computer that does not come with a warranty would be a

dissatisfier. Yet the presence of a product warranty would not act as
a satisfier or motivator of a purchase , because it is not a source of
intrinsic motivation .Ease of use would be a satisfier
 Perception
(Is the process by which we select & interpret information inputs to create a
meaningful picture of the world )
3 perceptual processes are

Selective Attention

Selective Distortion

Selective Retention

Subliminal Perception
(consumers cannot be controlled at this level)
 Perception
• Selective attention :- A person is exposed to many ads
per day but we cannot possibly attend to and remember all
these , we screen most stimuli out –-a process called
selective attention .( Marketers must work hard to attract
consumers notice )

• Selective Distortion : - Is the tendency to interpret

information in a way that fits our perception Eg car may
seem to drive more smoothly, beer may seem to taste better
( Works to the advantage of marketers with strong
brands)

• Selective Retention :- Because of selective retention we

are likely to remember good points about a product we like
and forget good points about competing products.
(Marketers need to use repetition for brand recall )
 Learning
• Learning is produced through interplay of
Drives, Stimuli, Cues, Responses &
Reinforcement .
• Drive: A strong internal stimulus impelling
action
• Cues: Minor Stimuli that determines when,
where and how a person responds
• E.g. You buy a HP computer. Your experience is
rewarding .Hence your response to HP will be
positively reinforced .Later on if you want to buy a
printer , you will buy an HP printer
 Memory
• STM (temporary & limited repository of
information)
• LTM( all information & experience we
encounter through life end up in LTM. LTM
is viewed as a set of nodes and links )
• Memory Encoding : Describes how &
where information gets into memory
• Memory Retrieval :Is the way information
gets out of memory
• The figure displays a mental map
highlighting brand beliefs for a
hypothetical consumer for State Farm
Insurance .
 State Farm Mental Map
Map highlights brand beliefs for a hypothetical
consumer for State Farm Insurance
Consumer Buying Process

Problem Recognition

Information Search

Evaluation

Purchase Decision

Postpurchase
Behavior
1) Problem Recognition
2) Sources of Information

Personal Commercial

Public Experiential
 Information Search
• Personal – family , friends , neighbors
• Commercial – Ads, websites, dealers, displays
• Public- Mass media, Consumer rating org.
• Experiential –Handling, examining the pdct

• First people choose Co & then model –General

motors – Pontiac (Brand dominant hierarchy )
• Now people choose nation , Japanese – Toyota,
Corolla ( Nation dominant hierarchy)
Successive Sets Involved in
Consumer Decision Making
(Search Dynamics )
 3) Evaluation of Alternatives
• Consumer tries to satisfy a need
• Consumer looks for benefits from pdct
solution
• Consumer sees attributes

Attributes of interest to buyer vary with pdcts

• E.g. Hotels- cleanliness, price
• Mouthwash – color, taste, flavors, price
• Tyres – Safety, quality, price
• Beliefs & attitudes
• Two successful Ads to remind consumers of
their attitudes , with handsome results .
• “Sunday ya Monday .Roz khao Ande “–
national Egg Co-ordination Committee

• “Got Milk “ campaign in California. To

make sure that any point of time the
consumer had milk in the refrigerator
Sales and Product Life Cycle
 4) Purchase Decision

• A consumers decision to modify,

postpone or avoid a purchase decision
is heavily influenced by “perceived risk”
 Perceived Risk
consumers decision to modify, postpone or avoid a purchase
decision is heavily influenced by perceived risk

Functional(does
Functional(does not
not perform)
perform)

Physical(threat
Physical(threat to
to health
health of
of user)
user)

Financial
Financial (not
(not worth
worth the
the price
price ))

Social
Social (pdct
(pdct results
results in
in embarrassment
embarrassment from
from others
others

Psychological
Psychological (affects
(affects mental
mental health
health

Time(in
Time(in finding
finding another
another pdct)
pdct)
 5) Post purchase Behavior

• Cognitive Dissonance
How Customers Use and Dispose of
Products
 Rural Consumer Behaviour

• Rural consumers are more brand loyal

• Restrictions on consumption
• Collective consumption behaviour: for
family rather than individual
• Seasonality of consumption based on
seasonality of agricultural
production/income
• Specific patterns in the five-stage
buying decision process
 Marketing Debate

 Is target marketing ever bad?

Take a position:
1. Targeting minorities is exploitive.
or
2. Targeting minorities is a sound
business practice.
 Marketing Discussion

 Do you have rules you employ in

spending money?
 Do you follow Thaler’s four principles
in reacting to gains and losses?