Analyzing Consumer Markets

Analysing Consumer Markets

Marketing Environment

• Consists of all internal and external factors influencing an organization's marketing activities
• Includes elements affecting the ability to connect with customers

Marketing Environment Components

• Micro Environment: Includes the organization itself
• Macro Environment: Includes economic, political, cultural, and demographic factors
• Suppliers, intermediaries, customers, competitors, and the public are also components of the Marketing Environment

Environment of Marketing Strategy

• Environmental scanning identifies economic, technological, social, competitive, and regulatory factors
• Trends are assessed, and the impact on the target market is determined
• Marketing mix strategies are adjusted accordingly

Influences on Consumer Behavior

• Consumer behavior involves how individuals, groups, or organizations select, buy, use, and dispose of goods, services, ideas, or experiences
• Satisfies needs and wants
• Buying behavior is influenced by cultural, social, and personal factors

Consumer Behavior: Cultural Factors

• Culture is a fundamental determinant of a person's wants and behavior
• Subculture provides more specific identification and socialization for members
• Social class constitutes relatively homogeneous and enduring societal divisions with shared values, interests, and behaviors
• Marketers should understand cultural values to market existing products and identify new opportunities

Consumer Behavior: Social Factors

• Reference groups, family, social roles, and statuses all impact buying behavior
• Reference groups have direct or indirect influence on attitudes or behavior
• Reference groups influence members by exposing them to new behaviors and lifestyles
• Affects attitudes and self-concept, and creates pressures for conformity
• Membership groups have a direct influence
• Primary groups involve continuous, informal interaction (family, friends, neighbors, coworkers)
• Secondary groups (religious, professional, trade unions) are more formal and require less interaction
• Aspirational groups are those someone hopes to join
• Dissociative groups are those whose values or behaviors an individual rejects
• Opinion leaders offer informal advice or information about specific product categories

Consumer Behavior: Family Influence

• Family is the most important consumer buying organization in society
• Family members are the most influential primary reference group
• The family of orientation shapes views on religion, politics, economics, personal ambition, self-worth, and love
• The family of procreation directly influences everyday buying behavior.

Consumer Behavior: Roles and Status

• A role consists of activities a person is expected to perform
• Each role connotes status
• People choose products reflecting and communicating their role and perceived status
• Marketers should recognize the status-symbol potential of products and brands

Consumer Behavior: Personal Factors

• Personal factors include:
  • Age and life-cycle stage
  • Occupation and economic circumstances
  • Personality and self-concept
  • Lifestyles and values

Model of Consumer Behavior

• Marketing and other stimuli influence the consumer's psychology and characteristics
• Psychology includes motivation, perception, learning, and memory
• Characteristics include cultural, social, and personal aspects
• This leads to a buying decision process and subsequent purchase decisions

Psychological Processes

• Motivation: A need becomes a motive when aroused to a sufficient level
• Key theories include Freud's, Maslow's, Herzberg's, and Prochaska and DiClemente's Change Model
• Perception: How we select, organize, and interpret information to create a meaningful world picture
  • Selective attention focuses on certain stimuli
  • Selective distortion interprets information to fit preconceptions
  • Selective retention remembers favorable information
  • Subliminal perception is when stimuli influence us involuntarily with our awareness

Health Belief Model

• General health values, specific health beliefs, and beliefs about the consequences of health problems shape behavior

Consumer Behavior: Learning

• Learning induces behavioral changes from experience
• Interplay of drives, stimuli, cues, responses, and reinforcement
• Emotions invoke feelings (proud, excited, confident, etc.)

Consumer Behavior: Memory

• Memory is categorized as short-term (STM) and long-term (LTM)
• Memory Processes include:
  • Memory encoding (how information enters memory)
  • Memory retrieval (how information is pulled out of memory)

Buying Decision Process: Five-Stage Model

• The stages are:
  • Problem recognition
  • Information search
  • Evaluation of alternatives
  • Purchase decision
  • Post-purchase behavior

Buying Decision: Problem Recognition

• The buying process starts when a buyer recognizes a problem or need
• Triggered by internal stimuli (hunger, thirst) or external cues (ads, articles, email)

Buying Decision: Information Search

• Major information sources when consumers turn to include:
  • Personal sources (family, friends, neighbors)
  • Commercial sources (advertising, websites, salespeople, displays)
  • Public sources (mass media, social media, consumer ratings)
  • Experiential sources (handling, examining, using a product)

Buying Decision: Search Dynamics

• Consumers gather information to learn about competing brands and features
• Consumers consider total set, awareness set, consideration set, and choice set to make a decision

Buying Decision: Evaluation of Alternatives

• Alternatives are evaluated based on:
  • Beliefs and attitudes
  • Expectancy-value models

Buying Decision: Purchase Decision

• Consumers often use mental shortcuts, or "heuristics", to make decisions
• Use the conjunctive heuristic when setting minimum acceptable cutoffs for each attribute

Buying Decision: Non-Compensatory Models

• Lexicographic heuristic: consumer chooses the best brand based on the most important attribute
• Elimination-by-aspects heuristic: consumer compares brands and eliminates those not meeting acceptable cutoffs
• Intervening factors, such as attitudes from others and unanticipated situation, impact purchase decisions

Buying Decision: Perceived Risk

• Types of perceived risk include:
  • Functional Risk
  • Physical Risk
  • Time Risk
  • Financial Risk
  • Psychological Risk
  • Social Risk

Buying Decision: Post-Purchase Behavior

• Involves post-purchase satisfaction, actions (reviews, recommendations), and product usage/disposal
• Stages of service consumption include Pre-Purchase, Service Encounter, and Post-Encounter

Organizational Buying

• Organizational buying is the decision-making process where organizations establish purchasing needs
• Involves identifying, evaluating, and choosing among alternative brands and suppliers

Business vs. Consumer Market

• Key differences include:
  • Fewer, larger buyers
  • Close supplier-customer relationships
  • Professional purchasing
  • Multiple buying influences and sales calls
  • Derived and inelastic demand
  • Direct purchasing

Types of Markets

• The business market consists of organizations that acquire goods and services to produce other products or services

Types of Markets: The Institutional Market

• Consists of hospitals, nursing homes, prisons, and other institutions providing health care goods and services
• The government market involves government buying for goods and services

Business Market Buying Situations:

• Straight rebuy
• Modified rebuy
• New task
• Systems Buying and Selling: many buyers prefer a total solution from one seller

Decision-Making Units (DMU)

• Buying Center, the decision-making unit (DMU) of a buying organization

Buying Center: Key Roles

• Key roles in the purchase decision process include initiators, users, influencers, deciders, approvers, buyers, and gatekeepers

Types of Business Customers

• Price-oriented (transactional selling)
• Solution-oriented (consultative selling)
• Gold-standard Customers (quality selling)
• Strategic-value Customers (enterprise selling)

Stages in the Buying Process

• Problem recognition
• General need description and product specification
• Supplier search
• Proposal solicitation
• Supplier selection
• Order-routine specification
• Performance review