Analyzing Consumer Markets

What is 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

• Explain why marketing managers should understand consumer behavior

• Influenced by cultural, social, and personal factors

Source; Kotler and Keller

Model of Consumer behavior

Source; Kotler and Keller

 Point to ponder on consumer markets
• Based on your experience of comparison websites. How does the site assist
consumers in the evaluation stage of choosing a vehicle? How you narrow down the
number of brands? Please share your experience.

• Suppose you are the new marketing manager for a firm that produces a line of
athletic shoes to be targeted to the college student subculture. For your boss, write
a memo in which you list some product attributes that might appeal to this
subculture, list the steps in customers’ purchase process. Is there a role of marketing
and recommend appropriate advertising that can influence their decision.

• Family members play many different roles in the buying process. How your family
decisions vary. Please indicate the family member on whom you attach importance
for a particular decision.

• Assume you are involved in the following consumer decision situations: a) choosing
a fast-food restaurant to go to with a new friend, b) buying ear phone and c) buying
jeans to wear. Share your experience
Situational Influences
• Purchase tasks
• Social surroundings
• Physical surroundings
• Temporal effects
• Antecedent states

Source: Grewal
Personal Influences
• Opinion leadership
• Learning
• Beliefs and attitudes
• Lifestyle
• Life cycle and changes

Source: Grewal
Motivation theory

Herzberg’s
Freud’s Two-Factor
Maslow Theory Theory
Theory
Behavior Behavior is
Hierarchy is guided by guided by
of needs subconscious dissatisfiers
motivations and
satisfiers

Source; Kotler and Keller

Learning
• Classical conditioning
• Operant conditioning

Source; Kotler and Keller

Beliefs and Attitudes
• Self-concept
• Attitude formation
• Attitude change

Source; Kotler and Keller

Lifestyle
• Identified by how people spend their time and resources
• Recognized by what people consider important in their environment
• Identified by:
• Self-perception
• World image

Source; Kotler and Keller

Perception

Selective attention

Selective distortion Selective retention

Subliminal perception

Source; Kotler and Keller

Key Psychological Processes

• Memory
– Short-term vs. long-term memory
– Associative network memory model
– Brand associations
– Memory encoding
– Memory retrieval

Source; Kotler and Keller

Modern Family Life Cycle Stages and Flows

Source: Grewal
Psychological Processes
• Motivation
• Personality

Source; Kotler and Keller

Motives
• Strong needs or wants
• Directs an individual towards need satisfaction
• Maslow’s hierarchy of needs
• Paradigm for explanation of motives
Buying Decision Process

Source; Kotler and Keller

Problem/Need recognition
• Result of an imbalance between actual and desired states
Stimulus

Any unit of input affecting

one or more of the five
Present Preferred
Status State senses:
Marketing helps consumers •sight
recognize •smell
Recognition of functional needs
an imbalance
Pertains between
to product/service performance •taste
present
Recognition status and
of psychological preferred
needs
•touch
state.to personal gratification associated with
Relates
products/services •hearing Source: Lamb et al.
 Information search
Internal Information Search

• Internal
RecallInformation
informationSearch
in memory

• Recall information in memory

External Information search

• Seek information in outside environment

• Nonmarketing controlled
• Marketing controlled
Factors Affecting Information Search
• Perceived benefits versus perceived costs
• Internal locus of control
• External locus of control
• Actual versus perceived risk
Sets involved in decision making

Source; Kotler and Keller

Evaluation of alternatives

Evoked Set Analyze product

attributes

Use cutoff criteria

Rank attributes by
importance
Purchase!
Source: Lamb et al.
Confirmatory v/s Non-confirmatory model

Conjunctive heuristic

Lexicographic heuristic

Elimination-by-aspects heuristic
Cognitive Dissonance

Consumers can reduce dissonance

Cognitive Inner tension that by:
Dissonance a consumer
experiences after ❑ Seeking information that reinforces
recognizing an positive ideas about the purchase
inconsistency
❑ Avoiding information that contradicts the
between behavior purchase decision
and values or
❑ Revoking the original decision by
opinions.
returning the product

Source: Lamb et al.

Intervening factor

Source; Kotler and Keller

Types of risk
• Physical risk
• Financial risk
• Functional risk
• Social risk
• Psychological risk
• Time risk

Source; Kotler and Keller

Post-Purchase Outcomes

Build realistic expectations

Demonstrate correct product use
Encourage customer feedback
Make periodic customer contacts

• Leads to buyer’s remorse

– Inconsistency between beliefs and
behaviours
• Feelings of:
– Regret
– Uneasiness

• Develops over a long period of

time
• Result of multiple repeat
purchases from a single firm

Source: Lamb et al.

Customer Product Use/Disposal

Source; Kotler and Keller

Consumer Buying Decisions
and Consumer Involvement

Routine Limited Extensive

Response Decision Decision
Behavior Making Making

Less High
Involvement Involvement

Source: Lamb et al.

Moderating effects and
Behavioural economics
• Low-involvement Consumer Decision Making
• Variety-Seeking Buying Behavior
• Decision Heuristics
• Availability heuristic
• Representativeness heuristic
• Anchoring and adjustment heuristic
• Framing
• Mental accounting

Source: Lamb et al.

Factors Determining the Level of Consumer
Involvement
Previous Experience

Interest

Perceived Risk of
Negative Consequences

Situation

Social Visibility

Source: Lamb et al.