Consumer Behavior and Market Segmentation

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Questions and Answers

What is market segmentation?

Dividing a broad market into smaller, more defined sub-markets of consumers with similar needs and wants.

What are the four main factors used for market segmentation?

Needs, Wants, Desires, Expectations

Demographics, Psychographics, Behavioural Factors, Geography (correct)

Social, Cultural, Economic, Political

Price, Product, Promotion, Place

What is a customer persona?

A detailed profile that represents a company's ideal customer, including their demographics, shopping habits, lifestyle choices, and even fears or pain points.

What are the five key stages of the consumer decision-making process?

Need Recognition, Information Search, Evaluation of Alternatives, Purchase Decision, Post-purchase Evaluation Signup and view all the answers

Post-purchase dissonance is the feeling of regret or discomfort after buying a product.

True Signup and view all the answers

What are the two main types of thinking involved in decision-making?

Fast and Slow Signup and view all the answers

What is the difference between fast and slow thinking?

Fast thinking is unconscious, automatic, and used for everyday decisions, while slow thinking is deliberate and effortful, used for complex choices where consumers need to weigh options carefully. Signup and view all the answers

What are the three types of buying situations based on involvement levels?

Routine, Limited, Extended Signup and view all the answers

Which of the following techniques is NOT a strategy for increasing consumer involvement?

Offer discounts and promotional offers Signup and view all the answers

What is the social customer journey?

The process of how consumers are influenced by social factors in their decision-making Signup and view all the answers

What is the significance of cultural factors in the consumer journey?

Cultural factors significantly shape consumer behaviour, impacting how consumers perceive products and make decisions, especially in international markets where cultural norms and values influence decision-making. Signup and view all the answers

Which of the following is NOT a need that drives consumer behavior?

Need for Recognition Signup and view all the answers

Market segmentation, customer personas, and analysis of decision-making processes help companies align their products and services with the needs and desires of their target audience.

True Signup and view all the answers

Study Notes

Decision-Making, Involvement, and the Customer Journey

Decision-making is a complex process, influenced by personal involvement and the customer journey.
Different levels of involvement affect decision-making.
Understanding the stages of the decision-making process is important.
Consumer motivations and shopping behaviors shape the way people buy and engage with products.

Market Segmentation and Consumer Behavior

Market segmentation is dividing a broad market into smaller sub-markets with shared needs. This aims to predict consumer needs and improve profitability.
Segmentation factors include:
- Demographics (age, gender, income, education)
- Psychographics (lifestyles, attitudes, personalities)
- Behavioral factors (usage frequency, benefits sought, user status)
- Geography (where consumers live)
Example: A company might target health-conscious individuals with Diet Coke while offering energy drinks to athletes.
Multi-dimensional segmentation is more effective than single-variable segmentation.

Understanding Consumer Personas

Customer personas are detailed profiles representing ideal customers (demographics, shopping habits, lifestyle choices, pain points).
Example A travel company might create a persona for a budget-conscious family.
Personas help tailor marketing strategies.

Advantages of Market Segmentation

Better understanding of customer needs.
Effective marketing strategies.
Tailoring the marketing mix (product, price, promotion, placement).
Identifying new opportunities.
More efficient use of resources.

The Consumer Decision-Making Process

It is not a straightforward process, involving several stages.
- Problem recognition: Consumers realize a need or problem.
- Information search: Internal or external, online or offline.
- Evaluation of alternatives: Consumers compare options, using shortcuts/heuristics, or relying on product signals.
- Purchase decision: Based on evaluation, a purchase decision is made.
- Post-purchase evaluation: Satisfaction or dissatisfaction judged based on expectations matching performance.

Challenges in Consumer Decision-Making

Paradox of choice: Too many options can overwhelm consumers.
Satisficing: Choosing a "good enough" option.
Maximising: Trying to make the best possible choice, but can be difficult with many alternatives.

Decision-Influencing Factors

Amount of available alternatives: The more options, the more complex the decision.
Amount of information available: Too much information can cause confusion.
Uncertainty about product performance.

Post-Purchase Dissonance

Discomfort or regret after a purchase.
Common in high-involvement purchases (e.g., cars).
Marketers aim to reduce dissonance.

Disposal of Goods

Consumers make decisions about what to do with products after use.
Includes various methods like recycling, reselling, donations, and disposal.

Fast vs. Slow Thinking in Decision-Making

Fast thinking: Unconscious, automatic (used for everyday decisions).
Slow thinking: Deliberate, effortful (used for complex decisions).

Different Types of Buying Situations

Routine problem solving: Habitual purchases, minimal effort (e.g., toothpaste).
Limited problem solving: Consumers are somewhat familiar with a product.
Extended problem solving: High-involvement purchases, significant research and evaluation (e.g., cars, houses).

Techniques to Increase Involvement

Link the product to a larger issue (like sustainability.)
Create a problem and solve it.
Link the product to personal situations/activities.
Use engaging advertising (emotional appeal, strong visuals).
Change the importance of product attributes.
Add a new attribute (new feature).

Decision-making influenced by social factors (social media, recommendations, friends).
Consumer journey shaped by social interactions and external influences.

The Twelve Shopper Journey Archetypes

Groups to describe different shopper behaviors.
- Classic, Entertainment, Impulsive, Retail therapy, Required, Routinised habit, Learning, Social network, Opportunistic, Joint, Gifting, Outsourced.

The Role of Culture in the Consumer Journey

Cultural factors significantly shape consumer behaviors.
Importance of understanding the cultural norms and values.

Summary

Decision-making is a process that involves various stages, with multiple influences.
Marketers need to understand consumer behavior to create effective strategies.

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Description

Explore the intricate world of consumer decision-making and the significance of market segmentation. This quiz delves into how personal involvement and the customer journey influence purchasing behaviors, alongside various segmentation factors that help businesses better understand and cater to their target markets.