UNDERSTANDING MARKET

Consumer

Behavior

Session 3
Chapter 5&6

The Gaps Model

Word-of-mouth

Personal Needs

Past Experience

Expected Product

Consumer

Gap 5
Perceived Product

Product Delivery

Marketer

Gap 3
Gap 1

Translation of
perceptions
into product-quality
specifications

Gap 2
Management
perceptions
of consumer
expectations

Gap 4

External
communications
to consumers

The Gaps
o Customers Gap
Customers expectation not matching with
customers perception (Gap 5)
o Providers Gaps
Not Knowing what Customers Expect (Gap 1)
Not Selecting Right Product Designs &
Standards (Gap 2)
Not Delivering to Product Standards (Gap 3)
Not Matching Performance to Promises (Gap
4)

Consumer Behavior
Role of Marketing is:
To Understand the INTERVENING PROCESS
that Influences Buying Decision.
Think on:
Who buys?

How do they buy?

When do they buy?

Where do they buy?

Why do they buy?

Consumer Behavior Model

o Consumer Buying Behavior

Buying behavior of individuals and households that buy products for

personal consumption.

o Stimulus Response Model

Marketing and other stimuli enter the buyers black box and produce
certain choice/purchase responses.

Marketers must figure out what is inside of the buyers black box and
how stimuli are changed to responses.

Marketing & Other Stimuli

Marketing
Product
Price
Place
Promotion

Other
Economic
Technological
Political
Cultural

Buyers Black box

Buyer
Characteristics

Buyer
Decision
Process

Figure: Model of Buyer Behavior

Buyer Responses

Product Choice
Brand Choice
Dealer Choice
Purchase Timing
Purchase Amount

Characteristics Affecting Consumer Behavior

Key Factors
o Cultural
o Social
o Personal
o Psychological

o Culture
o Subculture
o Social Class

Upper class
Middle Class
Working Class
Lower Class

Characteristics Affecting Consumer Behavior

Key Factors

o Groups

Membership
Reference
o

o Cultural
o Social
o Personal
o Psychological

Aspirational groups

Opinion leaders
o

Buzz marketing

o Family

Children can influence

o Roles and Status

Characteristics Affecting Consumer Behavior

Key Factors
o Cultural
o Social
o Personal
o Psychological

o Age and life cycle

o Occupation
o Economic situation
o Lifestyle

Lifestyle segmentation

o Personality and self-concept

Brand personality

An Example

Family Life Cycle & Banking Needs

Stage

Financial Situation

Banking Needs

Young
Single People

Few Financial Burdens;

recreation oriented

Low-cost checking;
auto loan; credit card

Full Nest I:
Youngest child
under 6

Home purchasing peak;

Liquid assets low;
Many working mothers

Mortgage; Credit card;

Revolving Credit Line;
Bill Consolidation Loan

Full Nest II:

Older couples
with Dependent
Children

Good Financial Position;

Many Working Mothers

Empty Nest:
Older Couples;
No child at home;
One/ both Retired

Significantly
reduced Income

Home Improvement Loans;

Equity Credit Lines;
Money Mkt Deposit accounts
Investment services
Monthly Income Checks on CDs;
Direct Deposit of Social Security

Characteristics Affecting Consumer Behavior

Key Factors
o Cultural
o Social
o Personal
o Psychological

o Motivation
Needs provide motives for
consumer behavior
Motivation research
o

Maslows hierarchy of needs

o Perception
Selective attention, selective
distortion, selective retention
o Learning
Drives, stimuli, cues,
responses and reinforcement
o Beliefs and attitudes

Maslows Hierarchy of Needs

Once a Lower-level need is Satisfied,
Self
actualization

a Higher-level need Emerges,

and Demands Satisfaction

Needs
Esteem Needs
Self-esteem
Belongingness & Love Needs
Friendship

Security & Safety Needs

Protection from physical harm
Physiological Needs
Hunger, thirst

Types of Buying Decision Behavior

Difference
between
brands
Significan
t

Few

Involvement Level
High

Complex
buying
behavior
Dissonancereducing
buying
behavior

Low

Variety-seeking
buying
behavior
Habitual
buying
behavior

Five Stages Buyer Decision Process

Process
Stages
o Need recognition
o Information search
o Evaluation of
alternatives
o Purchase decision
o Postpurchase behavior

o Needs can be
triggered by:

Internal stimuli
o

Normal needs become

strong enough to drive
behavior

External stimuli
o
o

Advertisements
Friends of friends

Five Stages Buyer Decision Process

Process
Stages
o
o
o
o
o

Need recognition
Information search
Evaluation of
alternatives
Purchase decision
Postpurchase
behavior

o Consumers exhibit
heightened attention or
actively search for
information.

o Sources of information:

Personal
Commercial
Public
Experiential

o Word-of-mouth

Five Stages Buyer Decision Process

Process
Stages
o
o
o
o
o

Need recognition
Information search
Evaluation of
alternatives
Purchase decision
Postpurchase
behavior

o Evaluation procedure
depends on the consumer
and the buying situation.
o Most buyers evaluate
multiple attributes, each of
which is weighted differently.
o At the end of the evaluation
stage, purchase intentions
are formed.

Five Stages Buyer Decision Process

Process
Stages
Need recognition

o
o Information search
o Evaluation of
alternatives
o Purchase decision
o Postpurchase behavior

o Two factors intercede

between purchase
intentions and the
actual decision:

1. Attitudes of others
2. Unexpected situational
factors

Five Stages Buyer Decision Process

o Satisfaction is important:

Process
Stages
Need recognition

o
o Information search
o Evaluation of
alternatives
o Purchase decision
o Post-purchase behavior

Delighted consumers

engage in positive word-ofmouth.

Unhappy customers tell on

average 11 other people.

It costs more to attract a

new customer than it does

to retain an existing
customer.

o Cognitive dissonance is
common!

Marketing Research
The process of planning, collecting and analyzing data
relevant to a marketing decision.

Much can be learned about consumers through marketing

research by

Collecting, recording, and analyzing data important in marketing products

o Communicating results to management
o

Must be done prior and after the sale

Marketing Research Process
Define the Marketing Problem
Choose a Method of Research
Collect the Data
Analyze the Data
Make Recommendations to Management

Buyer Decision Process for New Products

o New Products are goods, services or ideas that are
perceived by customers as new.
o Marketers should help consumers move through these
stages:
o Awareness
o Interest
o Evaluation
o Trial
o Adoption

Buyer Decision Process for New Products

o Individual Differences in
Innovativeness

Consumers can be
classified into five adopter
categories
o

Innovators

Early Adopters

Early Majority

Late Majority

Laggards

o Product Characteristics
and Adoption

Five product

characteristics influence
the adoption rate
o Relative

Advantage

o Compatibility
o Complexity
o Divisibility
o Communicability

Business Markets: Buyer Behavior

The buying behavior of organizations that buy goods/services for
use in the production of other products and services or for the
purpose of reselling or renting them to others at a profit.

Characteristic
s

o Marketing Structure and

Demand
o Nature of the
Buying Unit
o Types of Decisions and
the Decision Process

o Compared to consumer market

Business markets
o

Business customers
o

have fewer but larger customers

are more geographically
concentrated

Demand is different
o
o
o

Demand is derived
Demand is price inelastic
Demand fluctuates more, and
changes more quickly

Business Markets: Buyer Behavior

Characteristics
o Marketing Structure
and Demand
o Nature of the
Buying Unit
o Types of Decisions
and the Decision
Process

o Compared to
consumer purchases

Business purchases
involve more buyers in
the decision process.

Purchasing efforts are

undertaken by
professional buyers.

Business Markets: Buyer Behavior

o Compared to consumer purchases

Characteristics
o Marketing Structure
and Demand
o Nature of the
Buying Unit
o Types of Decisions
and the Decision
Process

Business buyers face more

complex buying decisions.

Buying process is more

formalized, more participants in

the process:
o
o
o
o
o

Users
Influencers
Deciders
Buyers
Gatekeepers

Buyers and sellers work more

closely together and build longterm relationships.

Eight Stages Business Buying Process

o Stage 1: Problem Recognition
o Stage 2: General Need Description
o Stage 3: Product Specification

Value analysis helps to reduce costs

o Stage 4: Supplier Search

Supplier development

o Stage 5: Proposal Solicitation

o Stage 6: Supplier Selection
o Stage 7: Order-Routine Specification

Blanket contracts are often used for

maintenance, repair and operating items.

o Stage 8: Performance Review

Major Influences on Business Buyers

Key Factors
o Environmental
o Organizational
o Interpersonal
o Individual

o
o
o
o

Economic trends
Supply conditions
Technological change
Regulatory and political
environments
o Competitive
developments
o Culture and customs

Major Influences on Business Buyers

Key Factors
o Environmental
o Organizational
o Interpersonal
o Individual

o
o
o
o

Objectives
Policies
Procedures
Organizational
structure
o Systems

Major Influences on Business Buyers

Key Factors
o Environmental
o Organizational
o Interpersonal
o Individual

o Authority
o Status
o Empathy
o Persuasiveness

Major Influences on Business Buyers

Key Factors
o Environmental
o Organizational
o Interpersonal
o Individual

o Authority
o Age
o Education
o Job position
o Personality
o Risk attitudes

Business Buying on the Internet

o E-procurement is growing rapidly.
o E-procurement offers many benefits:
o
o
o

Access to new suppliers

Lower purchasing costs
Quicker order processing and delivery

Strategies Influencing Customer Perception

o
o
o
o
o
o

Measure & manage Customer Satisfaction and Service Quality

Aim for Service Quality & Satisfaction in every encounter
Facilitate Adaptability & Flexibility
Encourage Spontaneity
Help Employees cope with problem customer
Manage Dimensions of Quality at encounters

Tips for Marketers

Know your Organization
Know your Product
Know your Customers
Know your Competitors
Know your Process of Selling
Know Yourself
Have Satisfied People
who have (PAI)
P = (right) Personality
A = (right) Attitude
I = Interest / Initiative

Simplified Procedure
Proper Show-off
Keep good Relationship
Ensure cross-sell &
repeat sell

o Ensure the Quality of

Service
o Sound Distribution to the
End Customer
o Ensure a Composite
Promotional Effort

Advertising
Sales Promotion
Personal Sales
Public Relation

o Make Right Prices