3/8/2018 Analyzing Consumer Markets Sources: Text book: Marketing Management Kotler & Keller 14th edition (Global version) Internet Kotler 14th edition ppt Kotler 13th edition ppt Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-2 Roadmap: What influences consumer behavior? Key Psychological processes Cultural, Social, Personal Motivation (Freud, Maslow, Herzberg), Perception, learning, Emotions, Memory The buying decision process The five-stage model Behavioral decision theory and behavioral economics Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 5-3 3/8/2018 Chapter Questions How consumer characteristics influence buying behavior? What major psychological processes influence consumer responses to the marketing program? How consumers make purchasing decisions? In what ways consumers stray from a deliberate rational decision process? Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-4 Consumer Behavior : 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 Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-5 What Influences Consumer Behavior? Cultural Factors: broadest and deepest Social Factors Personal Factors Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-6 3/8/2018 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 Cultures differ across the world (Arabian, American, European, Asian,…) Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-7 Subcultures Each culture consists of smaller subcultures that provide more specific identification and socialization for their members Nationalities (Arabian culture: Jordanian, Libyan, Iraqi,…subcultures) Religions (Muslims, Christians, Jews,…) Racial groups (Arabs, Kurds, Turkish origin,…) Geographic regions (North, South, Sea, Desert,….) Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-8 Fast Facts About American Culture The average American: chews 300 sticks of gum a year goes to the movies times a year takes trips per year attends a sporting event times each year Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-9 3/8/2018 Social Classes: appears as a result of social stratification, homogeneous divisions, hierarchically ordered, share same values, interests, and behaviors Upper uppers Lower uppers Upper middles Middle Working Upper lowers Lower lowers Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-10 Social Factors Reference groups Family Social roles Statuses Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-11 Reference Groups: All the groups that have a direct (face to face) or indirect influence on their attitudes of behavior Membership groups: Direct influence A- Primary groups :continuous and informal communication (family, friends, coworkers,…) B- Secondary groups: More formal and less frequent communication (religious, professional, trade-union groups) Aspirational groups: hope to join Dissociative groups: individual rejection Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-12 3/8/2018 Family Distinctions affecting Buying Decisions: Family is the most important consumer buying organization in the society Family of Orientation: parents and siblings (Insurance example) Family of procreation: spouse and children (traditional purchasing roles are changing and marketers tend now to focus more on different targets separately or collectively) Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-13 Roles and Status What degree of status is associated with various occupational roles? Copyright © 2009 Pearson Education, Inc Publishing as Prentice Hall 6-14 Personal Factors Age Life cycle stage Occupation Wealth Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall Personality Values Lifestyle Self-concept 6-15 3/8/2018 Age and Stage of Lifecycle: Newly weds spend 70 Billion $ in the 1st year after marriage Also they buy more in the 1st months than what a family does in years (P&G, Clorox, Palmolive-Colgate : newly wed kits) Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-16 Occupation and Economic Circumstances : Snap fitness showed a success story during recession times (Fast, convenient, affordable) Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-17 Personality and Self concept: Joie de vivre chain of hotels, restaurants and resorts has an online personality matchmaker to help the guest select the most fitting hotel Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-18 3/8/2018 Brand Personality: consumers tend to choose brands whose personalities match their own Sincerity: Campbell Excitement: MTV Competence: CNN Sophistication: Rolex Ruggedness: Levi’s Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-19 Lifestyle and values : Time-Famine: Multitasking Money-constrained: Low Cost products (Walmart) Core values Copyright © 2009 Pearson Education, Inc Publishing as Prentice Hall 6-20 Table 6.2 LOHAS Market Segments (Lifestyles of Health and Sustainability) 41 Million people, 209 Billion $ market.The market for LOHAS products encompasses organic foods, energy-efficient appliances, alternative medicine, yoga tapes Sustainable Economy Healthy Lifestyles Ecological Lifestyles Alternative Health Care Personal Development Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-21 3/8/2018 Consumer behavior The starting point for understanding consumer behavior is the stimulus-response model shown in next slide.Marketing and environmental stimuli enter the consumer’s consciousness, and a set of psychological processes combine with certain consumer characteristics to result in decision processes and purchase decisions 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 Four key psychological processes—motivation, perception, learning, and memory—fundamentally influence consumer responses Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-22 Figure 6.1 Model of Consumer Behavior Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-23 Motivation Freud’s Theory Maslow’s Hierarchy of Needs Herzberg’s Two-Factor Theory Behavior is guided by subconscious motivations Behavior is driven by lowest, unmet need Behavior is guided by motivating and hygiene factors Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-24 3/8/2018 Three of the best-known theories of human motivation—those of Sigmund Freud, Abraham Maslow, and Frederick Herzberg— carry quite different implications for consumer analysis and marketing strategy Sigmund Freud assumed the psychological forces shaping people’s behavior are largely unconscious, and that a person cannot fully understand his or her own motivations Someone who examines specific brands 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 Abraham Maslow sought to explain why people are driven by particular needs at particular times His answer is that human needs are arranged in a hierarchy from most to least pressing—physiological needs, safety needs, social needs, esteem needs, and self-actualization We discuss Maslow’s theory on the next slide 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 to motivate a purchase; satisfiers must be present Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-25 Maslow’s Hierarchy Need 5: Art world Need 3&4: Self image and how he’s viewed by others Need 2: Clean air for breathing Need 1: Food, water, basics Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-26 Perception : is the process by which we select, organize, and interpret information inputs to create a meaningful picture of the world Selective attention: marketers must work hard to attract consumers’ notice Selective retention: Likelihood to remember good points about a product we like and forget good points about competing products Selective distortion: the tendency to interpret information in a way that fits our preconceptions Subliminal perception: marketers aim to embed subliminal, covert messages in ads or packaging Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-27 3/8/2018 Learning: induces changes in our behavior arising from experience Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-28 Learning Learning theorists believe learning is produced through the interplay of drives, stimuli, cues, responses, and reinforcement A drive is a strong internal stimulus impelling action Cues are minor stimuli that determine when, where, and how a person responds Suppose you buy an HP computer If your experience is rewarding, your response to computers and HP will be positively reinforced Later, when you want to buy a printer, you may assume that because it makes good computers, HP also makes good printers In other words, you generalize your response to similar stimuli A countertendency to generalization is discrimination Discrimination means we have learned to recognize differences in sets of similar stimuli and can adjust our responses accordingly Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-29 Emotions Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-30 10 3/8/2018 Memory: Short and Long term Brand associations consist of all brand-related thoughts, feelings, perceptions, images, experiences, beliefs, attitudes, and so on that become linked to the brand node.(Associative model) Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-31 Figure 6.3 State Farm Mental Map Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-32 Figure 6.4 Consumer Buying Process Problem Recognition Information Search Evaluation of alternatives Purchase Decision Postpurchase Behavior Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-33 11 3/8/2018 Sources of Information Personal Family, friends Public Mass Media Commercial Advertising Salesman Experiential Personal Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-34 Figure 6.5 Successive Sets in Decision Making Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-35 Table 6.4 A Consumer’s Brand Beliefs about Laptop Computers Expectancy-value model of attitude formation in decision making To find the consumer’s perceived value for each laptop according to the expectancy-value model, we multiply his/her weights by his/her beliefs about each computer’s attributes Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-36 12 3/8/2018 Figure 6.6 Steps Between Alternative Evaluation and Purchase Attitudes depend on: intensity of negative attitude, and the motivation to comply with other’s wish Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-37 Non-Compensatory Models of Choice Conjunctive: the consumer sets a minimum acceptable cutoff level for each attribute and chooses the first alternative that meets the minimum standard for all attributes Lexicographic: Elimination-by-aspects: the consumer chooses the best brand on the basis of its perceived most important attribute the consumer compares brands on an attribute selected probabilistically—where the probability of choosing an attribute is positively related to its importance—and eliminates brands that not meet minimum acceptable cutoffs Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-38 Perceived Risk Functional: Not up to expectations Physical: Threatens health Financial: Not worth the price Social: Embarrassment Psychological: affects the mental well-being of the user Time: The failure of the product results in an opportunity cost of finding another satisfactory product Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-39 13 3/8/2018 Figure 6.7 How Customers Use or Dispose of Products A key driver of sales frequency is product consumption rate Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-40 Low-Involvement Decision Making Savers takes clothes consumers no longer want and sell them to other consumers who want them at the right price Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-41 The elaboration likelihood model, an influential model of attitude formation and change, describes how consumers make evaluations in both low- and high-involvement circumstances There are two means of persuasion in their model: the central route, in which attitude formation or change stimulates much thought and is based on the consumer’s diligent, rational consideration of the most important product information; and the peripheral route, in which attitude formation or change provokes much less thought and results from the consumer’s association of a brand with either positive or negative peripheral cues Peripheral cues for consumers include a celebrity endorsement, a credible source, or any object that generates positive feelings Consumers follow the central route only if they possess sufficient motivation, ability, and opportunity We buy many products under conditions of low involvement and without significant brand differences Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-42 14 3/8/2018 Decision Heuristics Availability: Consumers base their predictions on the quickness and ease with which a particular example of an outcome comes to mind If an example comes to mind too easily, consumers might overestimate the likelihood of its happening Representativeness: Consumers base their predictions on how representative or similar the outcome is to other examples Anchoring and adjustment: Consumers arrive at an initial judgment and then adjust it based on additional information Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-43 Framing: the manner in which choices are presented to and seen by a decision maker Mental accounting used by marketers can help predict whether consumers will or will not go to concert after having lost a ticket or money Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-44 Mental Accounting Consumers tend to… Segregate gains: When a seller has a product with more than one positive dimension, it’s desirable to have the consumer evaluate each dimension separately Listing multiple benefits of a large industrial product, for example, can make the sum of the parts seem greater than the whole Integrate losses: Marketers have a distinct advantage in selling something if its cost can be added to another large purchase House buyers are more inclined to view additional expenditures favorably given the high price of buying a house Integrate smaller losses with larger gains Segregate small gains from large losses Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-45 15 3/8/2018 Thank You ! Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6-46 16 ...3/8/2018 Chapter Questions How consumer characteristics influence buying behavior? What major psychological processes influence consumer responses to the marketing program? How consumers... 3/8/2018 Consumer behavior The starting point for understanding consumer behavior is the stimulus-response model shown in next slide .Marketing and environmental stimuli enter the consumer? ??s... Publishing as Prentice Hall 6-34 Figure 6 .5 Successive Sets in Decision Making Copyright © 2011 Pearson Education, Inc Publishing as Prentice Hall 6- 35 Table 6.4 A Consumer? ??s Brand Beliefs about Laptop