Analyzing Consumer Markets

Tata Steel used steeljunction to encourage consumers to go steel shopping and to develop deeper understanding of individual and household customers.

What Influences Consumer Behavior?

Cultural factors Social factors Personal factors

What is Culture?
Culture is the fundamental determinant of a persons wants and behaviors acquired through socialization processes with family and other key institutions.

Subcultures

Nationalities Religions Racial(national) groups Geographic regions

Social Classes

Upper uppers Lower uppers Upper middles Middle class Working class Upper lowers Lower lowers

SEC Classification (Indian Markets)

Urban

A1 A2 B1 B2 C D E1 E2
R1 R2 R3 R4

Rural

Characteristics of Social Classes

Within a class, people tend to behave alike Social class conveys perceptions of inferior or superior position Class may be indicated by a cluster of variables (occupation, income, wealth) Class designation is mobile over time

Social Factors
Reference groups Family

Social roles

Statuses

Reference Groups

Membership groups

Primary groups family, friends, neighbours, coworkers Secondary groups religious, professional, trade-union

Aspiration groups Dissociative groups

Opinion leader: A person who offers informal advice or information about a specific product or product category.

Roles and Status

What degree of status is associated with various occupational roles?

Personal Factors
Age Selfconcept Life cycle stage

Lifestyle
Values

Occupation
Wealth

Personality

The Family Life Cycle

Brand Personality

Sincerity down to earth, honest, wholesome & cheerful Excitement daring, spirited, imaginative & up-todate Competence reliable, intelligent, & successful Sophistication upper class & charming Ruggedness outdoorsy & tough

Lifestyle Influences

Multi-tasking Time-starved Money-constrained

LOHAS (Lifestyles of Health and Sustainability) Market Segments

Sustainable Economy Healthy Lifestyles Ecological Lifestyles Alternative Health Care Personal Development

Model of Consumer Behavior

Key Psychological Processes

Motivation Perception

Learning

Memory

Motivation
Freuds Theory Behavior is guided by subconscious motivations Maslows Hierarchy of Needs Behavior is driven by the lowest, unmet need Herzbergs Two-Factor Theory Behavior is guided by motivating and hygiene factors

Maslows Hierarchy of Needs

Herzbergs Two-Factor Theory

Perception

Selective perception

Likely to notice stimuli that relate to current need Likely to notice stimuli they anticipate Likely to notice stimuli whose deviation is large in relationship to the normal size of stimuli

Selective distortion Selective retention Subliminal perception

Learning

Learning induces changes in behaviour arising from experience.

Drive Cues Discrimination Hedonic bias

Memory

Short-term memory (STM) Long-term memory (LTM)

Associative network memory model Brand associations Memory encoding Memory retrieval

Memory processes

State Farm Mental Map

Consumer Buying Process

Problem Recognition Information Search Evaluation Purchase Decision Postpurchase Behavior

Problem Recognition

Buying process starts when the buyer recognizes a problem or need triggered by internal or external stimuli.

Sources of Information

Personal

Commercial

Public

Experiential

Successive Sets Involved in Consumer Decision Making

Evaluation of Alternatives

Beliefs & attitudes Expectancy value model

Consumers evaluate the products & services by combining their brand beliefs the positives & negatives according to importance.

Sales and Product Life Cycle

Purchase Decision

Non-compensatory models of choice

Conjunctive Lexicographic Elimination-by-aspects

Stages between Evaluation of Alternatives and Purchase

Perceived risk

Functional risk Physical risk Financial risk Social risk Psychological risk Time risk

Postpurchase Behaviour

Postpurchase satisfaction Postpurchase actions Postpurchase use and disposal

How Customers Use and Dispose of Products

Rural Consumer Behaviour

Rural consumers are more brand loyal Restrictions on consumption Collective consumption behaviour: for family rather than individual Seasonality of consumption based on seasonality of agricultural production/income Specific patterns in the five-stage buying decision process

Other Theories of Consumer Decision Making

Involvement Elaboration Likelihood Model Low-involvement marketing strategies Variety-seeking buying behavior Decision Heuristics Availability Representativeness Anchoring and adjustment

Mental Accounting

Consumers tend to Segregate gains Integrate losses Integrate smaller losses with larger gains Segregate small gains from large losses