Consumer behavior

• Consumer markets are individuals and households purchasing items for personal consumption.
• Consumer buyer behavior involves the buying actions of final consumers, specifically individuals and households, for their consumption.

Model of Consumer Behavior

• You can measure what, where, and when consumer buying behavior occurs.
• 'Seeing' inside a consumer's head to understand their buying behavior is challenging because it's a "black box".
• Certain responses are produced in consumers after they are subjected to marketing and other stimuli in the consumer’s "black box."
• Marketers need to understand the inner workings of the "black box".
• When environmental forces enter the black box, a set of buyer responses occur.

Characteristics Affecting Consumer Behaviour

• Cultural, social, personal, and psychological factors all influence consumer buying decisions with both external and internal influences.
• Targeting specific subcultures with tailored marketing campaigns appeals to their specific preferences.

Cultural Factors - Culture

• Culture includes basic values, perceptions, and behaviors learned from family and institutions.
• Culture is the most fundamental determinant of wants and behaviors.
• Spotting cultural shifts helps marketers find new, desired products.
• Example: Growing concern about health and fitness.

Cultural Factors - Subculture

• Subculture is a group with shared value systems based on life experiences and situations.
• Religion, race, and geographical location form subcultures.
• Example: Cosplay.

Cultural Factors - Social Class

• Social classes are permanent divisions in society where members share similar values, interests, and behaviors.
• A combination of occupation, income, education, and wealth measures social class.
• Product and brand preferences reflect different classes:
• Clothing
• Travel
• Leisure activity
• Financial services
• Automobiles.
• The upper Class consists of top-level executives, celebrities, heirs, and politicians and make up 14% of the population
• The upper middle class consists of highly educated middle management professionals. and also make up 14% of the population
• The lower middle class consists of semi-professionals and some college educated people making up 32% of the population.
• The working class consists of blue collar workers with low job security and high risk of poverty and make up 32% of the population
• The lower class relies on government transfers and occupy poorly paid jobs making up only 8% of the population

Social Factors – Groups & Social Networks

• A group is two+ people interacting for individual or mutual goals.
• Individual behavior is heavily influenced by small groups.
• Groups are:
• Membership Groups: Direct influence on a person to which they belong.
• Aspirational Groups: Individuals aspire to join.
• Reference Groups: Comparison points forming attitudes or behavior.

Social Factors – Groups & Social Networks

• Online social networks are online communities for socializing and exchanging information and opinions
• Social media sites are a key example.
• Consumer buying behavior is powerfully swayed by word-of-mouth (WOM) or e-WOM.
• Opinion Leaders are reference group influencers with special skills, knowledge, personality.
• Marketers are now using opinion leaders and influencer marketing.

Social Factors – Family, Role and Status

• Family members influence buyer behavior a lot.
• Marketers are interested in the roles and influence of family members on the purchase of products and services.
• Buying roles have been changed, with children acting as:
• Initiators who request purchases.
• Influencers who impact the purchase decision.
• Users of the product.
• Role and status can be defined by a person's position in a group.
• People often choose products aligning with their roles and status.
• Example: A working lady who is a wife, mother and also works as a brand manager.

Personal Factors - Age and Stage

• Over their lifetimes you will change the good and services you buy.
• Age is an impact, with tastes in:
• Food
• Furniture
• Recreation being age-related.
• Major life-cycle stages include:
• Marriage
• Having children
• Purchasing a home
• Divorce
• Changes in personal income
• Retirement.
• Lifestyles can also have an impact, you may spend money on luxury items as a single person and medicine and health products when retired.

Personal Factors – Occupation

• Occupation affects the goods and services purchased.
• Example: More rugged clothes for construction workers, business suits for executives.

Personal Factors - Economic

• Economic situations include spending trends, personal income, savings, and interest rates.
• A buying inclination directly relates to a person's income/earnings.
• To enhance customer value, companies may:
• Redesign products
• Reposition products
• Re-price products
• Introduce lower-priced models.
• Example: Apple.

Personal Factors – Lifestyle

• Lifestyle is a person's pattern of living, expressed in psychographics,
• It describes how consumers live and spend time/money.
• Consumers buy products and the values/lifestyles represented.
• Marketers use the AIO model to measure lifestyles.
• AIO is
• Activities.
• Interests.
• Opinions.

Personal Factors – Personality and Self-Concept

• Personality/Self-concept refers to unique psych characteristics distinguishing a person/group.
• Buying behavior mirrors a person's personality traits.
• Example: Fitness enthusiasts buy fitness equipment, music lovers spend on CDs/concerts.

Personal Factors – Personality and Self-Concept

• Brand personality: Brands also have personalities.
• Self-concept is a person's self-image
• Actual Self: View of oneself.
• Ideal Self: How you wish to be seen.
• Social Self: How you think others perceive yo
• Ideal Social Self: Idealized societal view.
• Consumers buy brands matching personalities.

Psychological Factors – Motivation

• There are many needs at any given time.
• A need becomes a motive.
• Example: Hunger leads to food need leads to buying pizza.
• A drive is a pressing need directing a person to seek satisfaction.

Psychological Factors – Motivation

• Maslow's Hierarchy of Needs describes how needs drive individuals at certain times.
• People pursue needs in order of importance: Physiological, safety, social, esteem, and self-actualization.
• A satisfied need no longer motivates; you then pursue the next important need.

Psychological Factors – Perception

• Perception is selecting, organizing, interpreting information to create a meaningful world view.
• Selective attention happens when people avoid most information they are exposed to.
• Selective distortion happens when people interpret information to support existing beliefs.
• Selective retention happens when individuals recall positive aspects of a favored brand and forget the positives of competing brands.

Psychological Factors – Learning

• Changes in behavior due to experience lead to learning, which occurs through the interplay of:
• Drive: Internal incentive for action.
• Stimulus: Turns drives into motives when directed at an object.
• Cues: Minor stimuli determining the where, when, and how a person responds.
• Response: The action.
• Reinforcement: Happens when an experience is positive.

Psychological Factors – Learning

• Example: Windows shopping for smartphones where an individual discusses a special deal with this friend.
• Cues such as these prompts a consumers response to their interest.
• If a customer buys a Huawei smartphone and has a good experience they will respond in kind.
• Then next time they are going shopping they are more likely to buy a Huawei product.

Psychological Factors – Belief and Attitude

• A belief is a descriptive thought about something based on:
• Knowledge
• Opinion
• Faith
• Attitude describes consistent feelings and tendencies toward an object.

Types of Buying Decision Behaviour

• Buying behavior varies based on product types.
• Complex buying behavior: Significant brand differences and high involvement.
• Variety-seeking buying: Significant brand differences and low involvement.
• Dissonance-reducing: Few brand differences and high involvement.
• Habitual buying: Few brand differences and low involvement.

Complex Buying Behaviour

• Complex Buying Behaviour happens when purchases require high consumer involvement, perceived brand differences.
• Such products are:
• Expensive
• Risky
• Infrequent
• Highly self-expressive
• Example: A house or car.
• Marketing efforts focus on information gathering and evaluation in order to:
• Learn the product class attributes that is important to consumers.
• Differentiate the brand to the consumers
• Provide promotional material with in-depth information.

Dissonance-Reducing Buying Behaviour

• This requires the purchase to have high consumer involvement because there is little difference among the brands
• Buyers may prioritize good prices or purchase convenience to buy a product.
• Post-purchase dissonance is possible.
• Example: Wireless Earbuds.
• Focus on countering dissonance.
• Offer after-sales communication.
• Provide evidence and support.

Habitual Buying Behaviour

• The purchase requires low involvement with little difference between brands.
• Frequently purchased products such as tissue paper.
• Limited search for information.
• Marketers will want to add differentiate products by adding features or focusing on price and sales promotions.

Variety Seeking Buying Behaviour

• Purchase requires low consumer involvement and significant difference between the brands
• Customers evaluate the brand during consumption and may switch between brands.
  • Example: Soft drinks or snacks.
• Market leaders want to get customer to encourage habitual buying behaviour by dominating shelf space and reminding customers.
• Challenger firms want to entice new products and advertisements and special offers.

The Buyer Decision Process

• Buyer's journey starts before the purchase and continues after.
• Buyer decision includes:
• Need recognition.
• Information search.
• Evaluation of alternatives.
• Purchase decision.
• Post-purchase behavior.

The Buyer Decision Process

• "Need recognition" is the process of recognizing a trigger by internal stimuli such as thirst or external stimuli such as promotional material.

The Buyer Decision Process

• "Information search" involves actively seeking information to determine what to buy.
• Personal sources such as family.
• Commercial source such as promotions.
• Public sources such as online reviews.
• Experiential sources such as examining the product.

The Buyer Decision Process

• Alternative evaluation is the comparing of previously sourced information to determine which brands to consider.
• Marketers need to know how the consumer process their information to decide alternative brands.

The Buyer Decision Process

• "Purchase decision" is the buyers intention of what brand to buy.
• The purchase intentions may not be the decisions due to "Attitudes of others" or "Unexpected Situational Factors".
• The final purchase of the is not always the same as the intended purchase.

The Buyer Decision Process

• "Post-purchase behavior" is the outcome/reaction after a purchase
• In this stage, buyers experience one of these:
• Delight: Performance exceeds expectations.
• Satisfaction: Performance matches expectations.
• Dissatisfaction: Performance falls short.
• Cognitive Dissonance: Doubt about performance.

The Customer Journey

• The customer journey is the culmination of ongoing brand experiences and brand advocacy over time.
• By understanding this, marketers can create customer experiences to result in a positive buying behavior.

The Buyer Decision Process for New Products

• "Adoption process" is innovating products through a mental process.
• Consumers progress through five stages:
• Awareness: Lack adequate information.
• Interest: Seeks information.
• Evaluation: Considering trying it make sense.
• Trial: Tries it on a smaller scale.
• Adoption: Full, regular use.

The Buyer Decision Process for New Products

• Adopter Categories:
• Innovators: 2.5% early adopters.
• Early Adopters: 13.5% adoption of innovation.
• Early Mainstream: 34% of general public.
• Late Mainstream: 34% of the average.
• Lagging Adopters: Final 16%.
• New product marketers target early folk since they affect others.

The Buyer Decision Process for New Products

• Innovations are willing to take some risks.
• Early Adopters respect and adopt early.
• Early Mainstream is deliberate, adopting ideas before the average person.
• Late Mainstream is skeptical, trying it only after the majority have.
• Lagging Adopters are tradition bound, adopting when it's a tradition itself.

The Buyer Decision Process for New Products

• Innovators will be first to adopt a product.
• Early adopters are the first to try a new product and share info about each other.
• Early majority will emerge after early adopters approve the product
• Late majority will emerge after a significant population tests the product.
• Laggards are the last to adopt the new product.
• The product requires to have long and short cycle for product.

The Buyer Decision Process for New Products

• Characteristics That Influence Rate of Adoption:
• Relative Advantage is if its better than other products.
• Compatibility is when the innovation is compatible with its customer's life.
• Complexity is if the adoption is difficult to understand.
• Divisibility/Trialability is if the adoption can be tried.
• Communicability is if the innovation can be easily described or demonstrated.