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6Analyzing Consumer Markets

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Copyright © 2012 Pearson Education 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?

In what ways do consumers stray from a deliberate rational decision process?

Consumer Behavior



What Influences Consumer Behavior?

Cultural Factors

Social Factors

Personal 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.


Subcultures

Definition: Specific identification and socialization for their members.

Nationalities Religions Racial groups Geographic regions When subcultures grow large and affluent enough,

design specialized marketing programs to serve them (eg. Otaku)


Fast Facts About American Culture

The average American: chews 300 sticks of gum a year goes to the movies 9 times a year takes 4 trips per year attends a sporting event 7 times each

year


Social ClassesUpper uppers

Lower uppers

Upper middles

Middle

Working

Upper lowers

Lower lowers


Social Factors

Reference groups: Groups that have direct (face-to-face) or indirect influence on their attitudes or behavior

Family: Constitute the most influential primary reference group

Social roles: Consists of the activities a person is expected to perform

Statuses: Each role in turn connotes a status


Social Factors-Reference Groups

Membership groups: Direct influence Primary groups: with whom the person

interacts fairly continuously and informally (family, friends, coworkers)

Secondary groups: More formal and less continuous interaction (religion, professionals)

Aspirational groups: a person hopes to join Dissociative groups: whose value or behavior

an individual rejects

Reference groups influence members in three ways: 1. Expose an individual to new behaviors and lifestyles2. Attitude and self-concept3. Create pressures for conformity Results: They may affect product and brand choices Opinion leaders: offer informal advice or information

about a specific product or product category. They are often highly confident, socially active and

frequent users of the category

Social Factors-Reference Groups


Family Distinctions Affecting Buying Decisions

From parents a person acquires an orientation toward religion, politics, and economics and a sense of personal ambition, self-worth, and love

Roles and StatusPeople choose products that reflect and communicate their role and their actual or desired status in society

Social Factors


Personal Factors

Age Life cycle stage Occupation Wealth

Personality Values Lifestyle Self-concept

Consumption is shaped by the following factors

Age and Stage of Lifecycle


Occupation and Economic Circumstances


Spendable incomeSavings and assetsDebt and borrowing power

Attitudes toward saving and spending

Personality


Personality


• Definition: A set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli (eg. Buying behavior)

• Brand personality: Consumers are likely to choose brands whose personalities match their own

• Jennifer Aaker identified five brand personalities traits:1. Sincerity (down-to-earth, honest, & cheerful)2. Excitement (daring, spirited, imaginative, & up-to-

date)3. Competence (reliable, intelligent, & successful)4. Sophistication (upper-class & charming)5. Ruggedness (outdoorsy & tough)


Table 6.2 LOHAS Market Segments(Lifestyles of Health and Sustainability)

Lifestyle is a person’s pattern of living in the world as expressed in activities, interests, and opinions

Sustainable Economy Healthy Lifestyles Ecological Lifestyles Alternative Health Care Personal Development

Set up different market segments accordingly

Harley-Davidson Case

Questions:1. What kinds of things has Harley-Davidson

done well with its H.O.G program to create an extraordinary customer experience that is unique and valuable to its members?

2. To enlarge its customer base, what kinds of things would you recommend Harley-Davidson do to cultivate long-term relationships with a younger audience, aged between 18-34?

Figure 6.1 Model of Consumer Behavior


Biogenic needs: Arise from physiological states of tension such as hunger or thirst

Psychogenic needs: Arise from psychological states of tension such as recognition, esteem, or belonging

A need becomes a motive when it is aroused to a sufficient level of intensity to drive us to act

Key Psychological Processes


Key Psychological Processes - Motivation

Freud’sTheory

Behavioris guided by subconsciousMotivations – Cannot be fully

understand

Maslow’sHierarchyof Needs

Behavioris driven by

lowest, unmet need

Herzberg’sTwo-Factor

Theory

Behavior isguided by motivating

and hygieneFactors

DissatisfiersSatisfiers

Maslow’s Hierarchy



Perception

Perception: The process by which we select, organize, and interpret information inputs to create a meaningful picture of the world

People emerge with different perceptions of the same object because of three perceptual processes

1. Selective attention2. Selective distortion3. Selective retention It’s estimated that the average person may be

exposed to over 1,500 ads or brand communications a day


Perception

Selective attention Attention is the allocation of processing capacity

to some stimulus We cannot possibly attend to all stimuli, we screen

most stimuli out Selective retention: The tendency to interpret

information in a way that fits our preconceptionsSelective distortion: We retain information that

supports our attitudes and beliefs

Learning


Learning


Learning induces changes in our behavior arising from experience

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 Discrimination: We learn to recognize differences in

sets of similar stimuli and can adjust our responses accordingly

Emotions


Consumer response is not all cognitive and rational; much may beemotional and invoke different kinds of feelings

Emotions

Woolite’s style guide focuses on the emotionalbenefits of choosing and preserving the right lookin clothes for women

Memory


Cognitive psychologists distinguish between: Short-term memory (STM) – a temporary and limited repository of

information Long-term memory (LTM) – a more permanent, essentially unlimited

repository of information All information and experiences we encounter as we go through life

can end up in LTM Associative network memory model views LTM as a set of nodes and

links Nodes are stored information connected by links that vary in strength Brand associations consist of all brand-related thoughts, feelings,

perceptions, images, experiences, beliefs, attitudes, and so on that become linked to the brand node.

Figure 6.3 State Farm Mental Map



Figure 6.4 Consumer Buying ProcessThe Five-Stage Model

1. Problem Recognition

2. Information Search

3. Evaluation of alternatives

4. Purchase Decision

5. Postpurchase Behavior

Consumers don’t always pass through all five stages

It captures the full range of consideration when consumer faces a highly involving new purchase


2. Information Search

CommercialPersonal

Public Experiential

Sources of Information

Figure 6.5 Successive Sets in Decision Making


3. Evaluation of Alternatives

1. Consumer is trying to satisfy a need2. Consumer is looking for certain benefits from

product solution3. Consumer sees each product as a bundle of

attributes with varying abilities to deliver the benefits

Belief is a descriptive thought that a person holds about something

Attitudes, a person’s enduring favorable or unfavorable evaluations, emotional feelings, and action tendencies toward some object or idea

3. Evaluation of Alternatives

Consumers arrive at attitudes toward various brands through an attribute evaluation procedure, developing a set of beliefs about where each brand stands on each attributes

Expectancy-value model- attitude formation posits that consumers evaluate products and services by combining their brand beliefs – positive & negative – according to importance (see Table 6.4)

Table 6.4 A Consumer’s Brand Beliefs about Laptop Computers


Belief is a descriptive thought that a person holds about something

Attitudes, a person’s enduring favorable or unfavorable evaluations, emotional feelings, and action tendencies toward some object or idea

Marketing strategies: 1. Redesign the product – Real repositioning2. Alter beliefs about the brand –

psychological repositioning3. Alter beliefs about competitors’ brands –

competitive depositioning4. Alter the importance weights5. Call attention to neglected attributes6. Shift the buyer’s ideal levels for attributes

Table 6.4 A Consumer’s Brand Beliefs about Laptop Computers

Figure 6.6 Steps Between Alternative Evaluation and Purchase


Highly involving

New purchases


Non-Compensatory Models of Choice Expectancy-value model is a compensatory model,

perceived goods to overcome bad things However, consumers often take “mental shortcut” called

heuristics or rules of thumb in the decision process With noncompensatory models of consumer choice,

positive & negative attribute considerations don’t necessary net out. Three choice heuristics:

1. Conjunctive heuristic: set a minimum acceptable cutoff level for each attributes and chooses the first alternative that meets the cutoff level

2. Lexicographic heuristic: Consumers chooses the best brand on the basis of its perceived most important attribute

3. Elimination-by-aspects heuristic: Consumers compare brands on an attribute selected and eliminates brands that do not meet minimum acceptable cutoffs



Intervening Factors:1. Attitudes of others2. Perceived Risk

Functional Physical (safety) Financial (not worth) Social (embarrassment) Psychological (mental- health) Time (failure of products, resulted in finding a new)


5. Postpurchase Behavior Experience dissonance: Noticing certain

disquieting features or hearing favorable things about other brand

Marketers must monitor:1. Postpurchase satisfaction: A function of the

closeness between expectations and the product’s perceived performance

2. Postpurchase actions: Private actions include deciding to stop buying the product (exit option) or warning friends (voice option)

3. Postpurchase uses and disposal: Tie the act of replacing the product to a certain holiday, event, or time of year

Figure 6.7 How Customers Use or Dispose of Products


1. Low-Involvement Decision Making2. Variety-Seeking Buying Behavior


Moderating Effects on Consumer Decision Making

Consumer involvement, engagement and active processing the consumer undertakes in responding to a marketing stimulus

Evidence suggests we have low involvement with most low-cost, frequently purchased products

4 techniques to convert a low-involvement into one of higher involvement:

1. Link the product to an engaging issue (toothpaste to cavities)

2. Link the product to a personal situation (fruit juice to include vitamins)

3. Design advertising to trigger strong emotions4. Add an important feature (lightbulbs-soft white) Marketers must give one or more positive cues to justify

their brand choice, a beloved celebrity endorser, attractive packaging, and an appealing promotion


Consumers often do a lot of brand switching (e.g. cookies)

Brand switching occurs for the sake of variety, rather than dissatisfaction

Market leader will try to encourage habitual buying behavior by dominating the shelf space with a variety of related but different product versions and sponsoring frequent reminder advertising

Challenger firms will encourage variety seeking by offering lower prices, deals, coupons, free samples, and advertising that tries to break the consumer’s purchase and presents reasons for trying something new


Behavioral Decision Theory and Behavioral Economics Behavioral decision theorists have

identified many situations in which consumers make seemingly irrational choices

Consumer behavior is very constructive and the context of decisions really matters

1. Decision heuristics2. Framing3. Other contextual effects

Decision Heuristics Availability heuristic: Consumers base their predictions on

the quickness and ease with a particular example of an outcome comes to mind (recent experience with product failure is likely to purchase product warranty)

Representativeness heuristic: Consumers base their predictions on how representative or similar the outcome is to other examples (similar package appearances for different brands in the same product category)

Anchoring and adjustment heuristic: Consumers arrive at an initial judgment and then adjust it based on additional information (a strong first impression establishes a favorable anchor so subsequent experiences are likely to be interpret in the same way


Framing


Prospect theory maintains that consumers frame their decision alternatives in terms of gains and losses according to a value function

Consider the following two scenarios: 1. Assume you spend $50 to buy a ticket for a

concert. When you arrive at the show, you realize you’ve lost your ticket. You decide to buy another one.

2. Assume you decided to buy a ticket to a concert. When you arrive at the show, you realize somehow you lost $50 along the way. You decide to buy the ticket anyway.

Framing


Mental Accounting

Consumers tend to… Segregate gains: make the sum of the parts seem

greater than the whole (list benefits) Integrate losses: House buyers (big amount) are

more likely to view additional expenditures favorably (smaller amount)

Integrate smaller losses with larger gains: The ‘cancellation” principle might explain why withholding taxes from monthly paychecks is less aversive than large, lump-sum tax payments

Segregate small gains from large losses: Rebates on big-ticket purchases such as cars

For Review

How do consumer characteristics influence buying behavior?

What major psychological processes influence consumer responses to the marketing program?

How do consumers make purchasing decisions?

In what ways do consumers stray from a deliberate rational decision process?


Case Discussion: Disney

Questions: 1. What does Disney do best to connect

with its core consumers?2. What are the risks and benefits of

expanding the Disney brand in new ways?