consumer behavior - oman college of management &...

CONSUMER BEHAVIOR

UNIT I

INTRODUCTION TO CONSUMER BEHAVIOR

1

BABY THOMAS 2014

1.1. Consumer

• A consumer is a person or group of people, such as a household, who are the final users of products or services.

1.2. Behavior

• Behavior is the range of actions and mannerisms made by organisms, systems, or artificial entities in conjunction with their environment, which includes the other systems or organisms around as well as the physical environment.

2 BABY THOMAS 2014

1.3. Consumer Behavior

• Consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.

BABY THOMAS 2014 3

1.4. Scope of Consumer Behavior

1. Consumer behavior is studied because success in the marketplace requires knowing, attracting, satisfying, and retaining customers.

2. Firms must segment the market into groups with relatively

homogeneous preferences and target one group.

3. Firms must position their offerings in the hearts and minds of these individuals in a favorable way.

4. Firms must examine all of the touch points that shape how a consumer will respond to their offering.

5. Consumer Behavior Determines the Economic Health of a Nation.

6. Consumer behavior determines the success of marketing programs.

7. Organisations that are customer-centric use a total marketing approach to focus their resources on satisfying customers.

8. Marketing is the process of transforming or changing an organization to have what people will buy.

9. Consumer behavior determines everyone’s economic health by making more effective consumption decisions while avoiding deceptive practices harmful to them.

10. Public policy leaders and social commentators study consumer

behavior to alleviate over-consumption and under-consumption by educating consumers about problems and providing assistance.

4 BABY THOMAS 2014

1.5. Applications of Consumer Behavior

1.5.1. Marketing Strategy

1.5.2. Regulatory Policy

1.5.3. Social Marketing

1.5.4. Informed Individuals

1-5

5 BABY THOMAS 2014

1.5.1. Consumer behavior and marketing strategy

• Marketing strategies and tactics are based on explicit or implicit beliefs about consumer behavior. Knowledge of consumer behavior can be an important competitive advantage and can greatly reduce the odds of bad decisions and market failures.

BABY THOMAS 2014 6

1.5.2. Consumer behavior and regulatory policy

• Various regulatory bodies exist to develop, interpret, and/or implement policies designed to protect and aid consumer. Effective regulation of many marketing practices requires an extensive knowledge of consumer behavior.

BABY THOMAS 2014 7

1.5.3. Consumer behavior and social marketing

• Social marketing is the application of marketing strategies and tactics to alter or create behaviors that have a positive effect on the targeted individuals or society as a whole. As is true for commercial marketing strategy, successful social marketing strategy requires a sound understanding of consumer behavior.

BABY THOMAS 2014 8

1.5.4. Consumer behavior and informed individuals

• Most economically developed societies are referred to as consumption societies. Most individuals in these societies spend more time engaged in consumption than any other activity, including work or sleep. Knowledge of consumer behavior can enhance our understanding of our environment and ourselves. Such an understanding is essential for sound citizenship, effective purchasing behavior, and reasoned business ethics.

BABY THOMAS 2014 9

Principles of Consumer Behavior

1. The Consumer Is Sovereign.

2. The Consumer Is Global.

3. Consumers Are Different; Consumers Are Alike.

4. The Consumer Has Rights

10 BABY THOMAS 2014

Evolution of consumer behavior

Manufacturer Wholesaler Retailer Consumer

Manufacturing Orientation

Consumer Orientation

Selling Orientation

Marketing Orientation

1750-1850 1850-1970 1970-2000 2000+ 1750-1850 1760-1970 1970-2000 2000+

Consumers’ increasing influence

11 BABY THOMAS 2014

Factors influencing Consumer Behavior

12 BABY THOMAS 2014

Organizational factors influencing consumer behavior

• Brand

• Product features

• Advertising

• Word of mouth

• Promotions

• Retail displays

• Price

• Quality

• Service

• Store ambiance

• Convenience

• Loyalty programs

• Packaging

• Product availability

BABY THOMAS 2014 13

Culture is a shared set of beliefs, values and

patterns of behaviour common to a group of

people.

Factors Affecting Consumer Behavior

Subcultures are groups of people within a

culture with shared value systems based on

common life experiences and situations. For

example: Chinese, Indians, Malays, Eurasians

Social classes are society’s relatively

permanent and ordered divisions whose

members share similar values, interests, and

behaviors. Social classes are measured by a

combination of occupation, income, education,

wealth, and other variables. The major social

classes are upper upper class, upper middle

class, middle class, upper lower class, lower

lower class.

Membership groups have a direct influence and to which a person belongs. Aspirational groups are groups to which an individual

wishes to belong. Reference groups are groups that form a comparison or reference in forming attitudes or behavior. Opinion leaders are people within

a reference group with special skills, knowledge, personality, or other characteristics that can exert social influence on others. Family is the most important consumer-buying organization in

society. Social roles and status are the groups, family, clubs, and organizations to which a person belongs that can define role and social status.

14 BABY THOMAS 2014

Personality refers to the unique psychological characteristics that

lead to consistent and lasting responses to the consumer’s environment. Brand personality refers to the specific mix of human

traits that may be attributed to a particular brand. Self-concept

refers to people’s possessions that contribute to and reflect their identities.

15


Psychological Factors

Motivation: A motive is a need that is sufficiently pressing to direct the

person to seek satisfaction.

Abraham Maslo ’s Hierar h of Needs

• People are driven by particular needs at particular times.

• Human needs are arranged in a hierarchy from most

pressing to least pressing.

• Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world.

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

5-16


Beliefs and Attitudes

• Belief is a descriptive thought that a person has about something based on knowledge, opinion and faith.

• Attitude des ri es a perso ’s relati el o siste t e aluatio s, feeli gs, a d tendencies toward an object or idea.

BABY THOMAS 2014

BUYING ROLES

BABY THOMAS 2014 17

Initiator

Influencer

Decider

Buyer

User

Five roles people might play in a buying decision

A person who first suggests the idea of buying the product

A person whose view or advice influences the decision

A person who decides on any component of a buying decision: whether to buy, what to buy, how to buy, or where to buy

The person who makes the actual purchase

A person who consumes or uses the product or service

1

2

3

4

5

5-18

Buying Decision Process

Five stages in the buyer decision process

1. Need recognition

2. Information search

3. Evaluation of alternatives

4. Purchase decision

5. Post-purchase behavior

BABY THOMAS 2014

5-19

The Buyer Decision Process

Need Recognition

• Need recognition occurs when the buyer recognizes

a problem or need triggered by:

• Internal stimuli

• External stimuli

BABY THOMAS 2014

5-20


Information Search

Information search is the amount of information needed

in the buying process and depends on:

• The strength of the drive,

• The amount of information you start with,

• The ease of obtaining the information,

• The value placed on the additional information, and

• The satisfaction from searching.

BABY THOMAS 2014

5-21


Information Search

Sources of information:

• Personal sources—family and friends

• Commercial sources—advertising, Internet

• Public sources—mass media, consumer

organizations

• Experiential sources—handling, examining, using

the product

BABY THOMAS 2014

5-22

Sources and Role of Information

BABY THOMAS 2014

5-23


Evaluation of Alternatives

Evaluation of alternatives is how the consumer

processes information to arrive at brand choices.

BABY THOMAS 2014

5-24


Purchase Decision

• The purchase decision is the act by the consumer to

buy the most preferred brand.

• The purchase decision can be affected by:

• Attitudes of others

• Unexpected situational factors

BABY THOMAS 2014

5-25


Post-Purchase Decision

• The post-purchase decision is the satisfaction or

dissatisfaction the consumer feels about the

purchase.

• Relationship between:

• Co su er’s e pe tatio s

• Produ t’s per ei ed perfor a e

BABY THOMAS 2014

5-26



• The larger the gap between expectation and

perfor a e, the greater the o su er’s dissatisfaction.

• Cognitive dissonance is the discomfort caused by a

post-purchase conflict

BABY THOMAS 2014

5-27



• Customer satisfaction is a key to building profitable

relationships with consumers—to keeping and

growing consumers and reaping their customer

lifetime value.

BABY THOMAS 2014

Complete model of consumer behavior

Search

Need recognition

Alternative evaluation

Purchase

Stimuli (marketer dominated, other)

External search

Memory

Internal search

Exposure

Attention

Comprehension

Acceptance

Retention Outcomes

Dissatisfaction Satisfaction

Individual differences • resources • motivation & involvement • knowledge • attitudes • personality, values, lifestyle

Influences • culture • social class • family • situation

Start

28 BABY THOMAS 2014

Need Recognition (& reminding)

Preferred State

Marketing helps consumers recognize

(or create) an imbalance between present status

and preferred state

• When a current product isn’t performing properly

• When the consumer is running out of an product

• When another product seems

superior to the one currently used

29 BABY THOMAS 2014

The information search stage

An internal search involves the

scanning of one's memory to recall previous

experiences or knowledge concerning solutions to the problem-- often sufficient for frequently purchased products.

An external search may be necessary

when past experience or knowledge is insufficient, the risk of making a wrong purchase decision is high, and/or the cost of gathering information is low.

Personal sources (friends and family)

Public sources (rating

services like Consumer Reports)

Marketer-dominated sources (advertising

or sales people)

The evoked set: a group of

brands from which the buyer can choose 30 BABY THOMAS 2014

Buyer Behavior: The Decision Making Unit

• Initiator: the person who first suggests or thinks of the idea of

buying a particular product or service.

• Influencer: a person whose views or advice carry weight in making

the final buying decision

• Decider: the person who ultimately makes the final buying decision

or any part of it

• Buyer: the person who makes the actual purchase

• User: the person who consumes the product or service

Other people often influence a consumers purchase decision. The marketer needs to know which people are involved in the buying decision and what role each person plays, so that marketing strategies can also be aimed at these people. (Kotler et al, 1994).

Note: teens are increasingly assuming more of these roles

Think about your past purchase– who was in which role? 31 BABY THOMAS 2014

Wife Dominant

Husband Dominant

Joint

100 50 0 75 25

Women’s clothing

Pots & pans

Child clothing

groceries

vacations

TV sets

Family car Sport equipment

Lawn mower

Paint wallpaper

lamps

Men’s leisure clothing

Men’s business clothing

camera

Financial planning

furniture

refrigerator

luggage

carpet

NonRx

Toys/games

stereo

hardware

Extent of role specialization

Relative influence of husbands & wives

Information search

Final decision

Davis & Rigaux, 1974 32 BABY THOMAS 2014

Decision Processing

33 BABY THOMAS 2014

CONSUMER BEHAVIOR

UNIT I

INTRODUCTION TO CONSUMER BEHAVIOR

34

BABY THOMAS 2014

consumer behavior - oman college of management &...

Documents