chapter 4: consumer buying behaviour chapter 4 learning

Chapter 4: Consumer Buying Behaviour

Chapter 4 Learning Objectives

•Explain the role and importance of Consumer Behavior to marketing strategies

•Describe the steps in the Consumer Purchase decision process

•Describe the Influences that affect consumer behavior & lifestyle choices

•Outline the various Behavioral Influences that affect consumer purchase decisions

Copyright © 2010 Pearson Education Canada 1


Consumer Behaviour

• What is Consumer Behaviour?

• It is defined as “The behaviour of individuals in obtaining goods and services, including the decision processes that precede and determine the purchase.”

• The study of consumer behaviour helps marketers understand “why” people buy the products they do. This helps explain why marketers react to trends in the marketplace!

• The price of gasoline is a prime example when gas guzzling cars were no longer in fashion the marketing of economical cars suddenly appealed to consumers

• Healthier lifestyles affected consumer purchases also. Suddenly low carbohydrate products are in and high fat high sodium products were seen as unhealthy. Companies like Campbell's ED Smith & Kraft reacted to adjust their products to the “new consumer” trends



Copyright © 2010 Pearson Education Canada

The 5 step Purchase Decision Process

3

Problem Recognition

Information Search

Evaluation of Alternatives

Purchase Decision

Post-purchase Evaluation

consumers process a lot of

information before purchasing.

Past research indicates that

brand recognition or experience

is a factor in 83 % of adults

Other factors are

quality, price,

recommendations &

manufacturers

reputation as key to

making the purchase


Problem Recognition

• The process begins when a need is discovered and the need leads to a motivation to fulfill it

• The Muffler on your car goes or you have to replace your shoes that is a “need”

• You decide that you “want” to have the new I-Pad so you go out and buy it. In this case the purchase process is based more on an impulse or a want




Information Search

5

Time and money determine the nature of the purchase decision. The extent of the search depends on the nature of the purchase. Stats Canada reports that 70% of adults used the internet for information on goods and services the 2nd most popular search?

Routine

Limited

Complex

Does not involve much time or money. for example?

More expensive and time consuming. for example?

Capital investment; much time and effort. for example?


Evaluation of Alternatives• With alternatives identified an assessment is made based on

factors like price, quality & style or any attribute judged to be important(I-PAD). Such criteria place brands in the consumers evoked set of products(products the consumer judges as acceptabled set

• The concept of evaluation follows some kind of criteria. The young couple buying a car(pg91) have established good gas mileage, comfortable, practical and somewhat sporty. The “evoked set” is a group of brands that they would consider acceptable so in this case Honda Civic, Nissan Sentra or Kia Spectra would be on the list.

• Criteria is used in many purchases like electronics and even houses.



The Purchase Decision• Once the decision to purchase has been made we now face

another decision! How to pay for it??. On the example of the car consumers generally make the decision to purchase then shop for the best price & options. No money down, no interest, no payments for 3 months are a variety of options in this market. Car consumers do have a sense of loyalty to the brand & the dealership/salesman

• In the case of high end electronics and particularly house hold goods like washing machines, stoves, fridges, freezers there is generally more leeway for the consumers to choose from so they may purchase these items from numerous retailers like Wal Mart, Sears, The Brick & Leons who also offer great incentives




Post-Purchase Evaluation

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All purchases involve some element of risk! If the dollar value is high the risk is perceived to be high "Second thoughts” often follow a complex buying decision. Did I make the right decision?

Consequently consumers often experience “cognitive dissonance”.

The unsettled state of mind experienced by an individual after a decision has been made? Today good marketing organizations with “CRM” policies initiate follow up programs to reassure the consumer



Influences on Consumer Behaviour

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Psychological

Personal

Social

Cultural

Consumer

Marketing Mix• Product• Price• Marketing Communications

• Distribution

Company• Image• Reputation

3

figure 4.3


Influences on Consumer Behaviour• The purchasing decisions of Canadian Consumers are

primarily influenced by Psychological, personal, social and cultural factors which represents a dynamic consumer!

• Psychological: needs & motives: personality and self concept, attitudes & perception

• Personal: Lifestyle, age, technology & economic situation

• Social: Reference groups, Family and social classes

• Cultural Factors: Culture, Subculture & regional differences

• Maslow’s theory of needs & motivation is based on 2 principals: when lower level needs are satisfied you move to the next level & satisfied needs do not motivate instead behaviour is influenced by needs yet to be satisfied




Needs and Motivation Theory

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Need

Motive

The term “needs” suggests a state of deprivation or the Absence of something useful

Condition prompting action to satisfy a need. Individuals pass through 5 levels of needs!


Needs & Motives• The relationship between needs & motives is direct in terms

of marketing activities, needs are developed or brought to the forefront of consumers minds.

• Understanding these needs is essential for marketing purposes: safety needs are used to motivate people to purchase automobiles(crash safety ratings) & life insurance!

• The desire to be accepted by peers and the need for social satisfaction is the driving force for personal care products and clothing. Brands like Nike, Tommy Hilfiger, GAP, Guess & Apple have an impact on the style conscious 20+ market

• Esteem needs are addressed in messages that show people in successful roles or occupations and are symbols of success(status)




Hierarchy of Needs

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Self-Actualization: fulfillment & realizing your potential

Esteem Needs: Recognition, achievement status & the need to excel

Social Needs: a sense of belonging love from family and friend

Safety Needs: security protection & comfort

Physiological Needs: food water sex and air basic survival need

Page 94

figure 4.4



Personality and Self-Concept

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Personality refers to a person’s distinguishing psychological characteristics that lead to relatively consistent responses to the environment in which a person lives.

The self concept theory has four components.(94)

Real Self Self-Image

Looking-GlassSelf

Ideal Self

Marketing organizations know that goods & services that help to fulfill the looking glass self and ideal self are appealing to consumers. Popular brands like Nike, Adidas & Apple devise campaigns to influence self conscious 20+. Males pursuing the body image(ideal self) are influenced by skin care products from Nivea for men or Neutrogena Men. What an opportunity for companies marketing personal care stuff

Read page 95 and 96



Attitudes

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An individual’s feelings, favourable or unfavourable, toward an idea or object. Marketers find it to their advantage to present products in a way that fit the attitudes and beliefs of the target market

Gaining acceptance is easier if the product idea fits with the attitudes of the target market. Pepsi-Cola’s Mountain Dew brand has used its understanding of youth attitudes to its Advantage. The “Do the Dew” was closely aligned to extreme sports and exhilarating situations

A hearty Angus burger at Harvey’s appeals to a 20-something male with a big appetite! A salad on the side does not!

**Refer also to healthy

lifestyles and Apple’s I

pod on page 96 &97



Perception**

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Perception refers to how Individuals receive and interpret messages. Different individuals perceive the same product differently. Perceptions differ because Consumers are selective about the messages they receive.

Selective Exposure: noticing information

of interest

Selective Perception: screening out messages & information that are in conflict with beliefs

Selective Retention: remembering only what we want to remember

The P.T.Cruiser had to be redesigned

by chrysler because initial

perceptions indicated the car was too

toy like! And people wanted sporty

Page 98 perceptions



Personal Influences!

17

Lifestyle refers to A person’s pattern of living as expressed in his or hers terms of activities, interests, opinions and values. Brands such as Nike, The Gap and Old Navy deliver compelling messages to reach the generation Y market. Marketing organizations try to determine who buys their product on the basis of demographic variables(age,income,gender)

Independent research companies conduct surveys and place people in lifestyle segments.(page 99 figure 4.8) what group are you in?

• Protective Providers• Up an Comers• Les “Petite Vie”• Mavericks• Contented

Traditionalists• Joiner Activists• Passive Malcontents• Tie-Dyed Greys

Each segment is motivated by a unique set of attitudes and beliefs.

Source: Millward Brown Goldfarb


Age and Life Cycle Changes• People grow through various stages and as you grow older

tastes & preferences also change. Marketers define their target markets on the basis of age but they must also consider other factors and look at the buying motivations of un married couples, childless married couples, same sex couples and older married couples with no kids as they are all different.

• Toyota is introducing cars to attract young singles aiming right at th 20+ market because its current customers tend to be older!

• Technology also plays a huge role in marketing strategies, Canadians are “connected” so how do companies “connect” to the consumer, offer C.R.M and collect valuable data




Technology

19

Technology has changed buying behaviour. Time-pressed “connected” consumers are conducting research online and buying online. 73% of the population uses the Internet. I Phones and Blackberry’s lead the charge

1. Technology makes the transaction process more convenient for consumers. Smart cards that are reloadable from Wal Mart(who else) Starbucks, Timmy's are examples plus for the “on line” shoppers we now have pay pal an e commerce business allowing payments and money transfers.

2. Companies are re-evaluating media alternatives in order to follow their customers; more digital media and less traditional media is the trend.



Social Influences & Reference Groups

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“A group of people with a common interest that influences its members’ attitudes and behaviour.”

The influence of Reference groups (peers) is very strong among younger people. They share the same desire to have the latest technology( I phones I pads), shop at the trendiest stores, have body piercing & tattoos its all part of their social scene. The hip hop generation wear baggy clothes, caps tilted to the side, listen to rap music and want sporty trendy cars.(see Cadillac & Reebok and read marketing in action)

The hip hop community (hip hop musicians) is one of the biggest brand building communities in the world.



Family

21

The changing roles of adults means marketers can no longer make assumptions about who the primary buyer is. It used to be Fathers were in charge of cars and house hold repairs and mothers were in charge of shopping, cooking and looking after the house and kids

1. Major decisions are shared decisions. 2. Major retailers are reconfiguring to appeal more to women.

Stores like Home Depot, Canadian Tire & Best Buy 3. Wal-Mart Supercentres are specifically designed for women

30 to 45 with 2 or 3 children, a husband and a career. They even gave it a name

4. Children influence $20 billion in family spending each year in Canada.

5. The role of children has to be considered as they influence almost $20 billion in spending every year on themselves and what the family spends items for the home and where to eat



Social Class

22

The division of people in ordered groups based on similar values, lifestyles and behaviours.

Social class is determined by income, occupation, education, and inherited wealth

Upper-UpperLower-UpperUpper-MiddleLower-MiddleUpper-LowerLower-Lower

As a person moves through life he/she can move in and out various social classes.



Cultural Influences

23

Culture refers to “behaviour learned from external sources such as family, the workplace, and education—that help form the value systems an individual lives by.

Gen X, Gen Y, Boomers: Current values were shaped by the

boomers but that generation is aging and the “new kids” are shaping our value system Ethnic Groups: RBC financial knows that 15% of its customers have ethnic backgrounds and have reacted accordingly as these customers are the future growth of the bank French Quebec: a unique market & culture(page 111)

Marketing strategies must be tailored to the unique needs of different groups.



Regional Influence

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Location and culture have an influence on attitudes and values. Canada is a diverse country.

AtlanticQuebecOntarioPrairies

B.C.

1. Identify common and unique characteristics in each region (within regions there are urban and rural considerations).

2. National strategies don’t always work.

3. Implement regional strategies if profitable (costs versus benefits).

See instructors notes on

illustrations of key concepts ch 4Pepsi market share in Quebec? Page 111


Today’s Group Activity?


chapter 4: consumer buying behaviour chapter 4 learning

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