Retail Buyer Behavior

Vandana Sharad | sharadvandana@gmail.com

New products introductions - Statistics

 Out of 11,000 new products introduced by 77 companies, only 56% are

present 5 years later.

 Only 8% of new product concepts offered by 112 leading companies

reached the market. Out of that 83% failed to meet marketing
objectives.
Why do we need to study
Consumer Behavior?
Can Marketing be
standardised?

No.
Because cross - cultural styles, habits, tastes, prevents such
standardisation.
What is Consumer Behavior?

Behavior consumers display in searching for, purchasing, using,

evaluating, and disposing of products and services that they expect
will satisfy their needs.
Consumer Research

The process and tools used to study

consumer behavior.
Individual Consumer
 Buys goods and services for his or her own personal use, for the use of
the household, or as a gift for a friend. The products are bought for the
final use by the individuals referred to as the end users or ultimate
consumers.
Market Segmentation

 The understanding that all consumers are not

alike and that it is important to segment the
market.
Consumer Problems and Recognition

 Consumer problem: Discrepancy between

ideal and actual state--e.g., consumer:
 has insufficient hair
 is hungry
 has run out of ink in his or her inkjet cartridge

 Problems can be solved in several ways --

e.g., stress reduction <----- vacation, movie, hot bath,
medication
Application Areas of Consumer
Behavior

 Environmental Analysis
 Market Research
 Segmentation of the Marketplace
 Product Positioning and Product
Differentiation
 Marketing-Mix Development
Product Positioning . . .

. . . is influencing how consumers perceive a brand’s

characteristics relative to those of competitive offerings

 Goal is to influence demand by creating a product with

specific characteristics (i.e. brand attributes) and a clear
image that differentiate it from competitors
Product Positioning . . .

 Specific Positioning
 positioning a brand based creating linkages between brand and key
attributes and benefits. E.g., acceleration of auto, reliability of auto

 Competitive Positioning
 positioning a brand in relation to competitors.
 E.g., Suburban is larger than an Expedition

 Psychological Positioning
 positioning a brand based upon dominant personality characteristic
of target market.
 E.g., We build excitement.
Product Differentiation . . .

. . . is the process of manipulating marketing mix so as to position a

product in a manner that allows consumers to perceive meaningful
differences between a brand and its competitors
Environmental Analysis . . .

. . . is the assessment of the external forces that act

upon the firm and its customers, and that create
threats and opportunities
The Natural Environment . . .

. . . includes the types of raw materials available, pollution,

consumer fear of contracting deadly diseases, the expansion of
desert regions around the globe, and various weather
phenomena, such as hurricanes or drought.
 Components of the External Environment

 Demographic  Technological

 Economic  Political

 Natural  Cultural
MARKET RESEARCH . . .

. . . is applied consumer research designed to provide management

with information on factors that impact consumers’ acquisition,
consumption, and disposition of goods, services, and ideas.
Marketing Mix

. . . involves the development and coordination of activities

involving the:

 Product  Pricing

 Promotion  Distribution
Promotional Strategy

 Advertising

 Personal Selling

 Sales Promotion Applications

 Public Relations
Price Changes

 Predicting the likely impact of price changes on consumers is

an important consumer behavior area.

 How will consumers react when companies raise or lower the price of
a product?

 Principles of perception can be applied to analyze if consumers will

notice a difference in price and if so, what effect it has
Product Distribution . . .

. . . Gets impacted by understanding how consumers make their

purchasing decisions.

**Example: low involvement decision (e.g., purchase soft

drink), must use extensive distribution.
Market Segmentation . . .

. . . involves subdividing the market place into

distinct subsets of customers having similar needs
and wants, each of which can be reached with a
different marketing mix.
 Four Classifications of Segmentation Variables:

 Characteristics of the Person

 Nature of the Situation in Which the Product or Service May Be

Purchased

 Geography

 Culture and Subculture Adopted by the Consumer

Buyer characteristics

 Cultural
 Social
 Personal
 Psychological
Cultural factors

 Culture
 Sub - culture
 Social Class
Social factors

 Reference Groups
 Family
 Roles and Status
Personal Factors

 Family Life Cycle

 Occupation and Economic circumstances
 Lifestyle
 Personality and self - concept
Psychological Factors

 Motivation
 Perception
 Learning
 Beliefs and Attitudes
Influences on Consumer Behavior

P sy
chol
ogic
P er s al
ona
l
Soc
ia l
Cultu
re
Buyer
Factors Affecting Consumer Behavior:
Culture

Most
Most basic
basic cause
cause of
of aaperson's
person's wants
wants and
and behavior.
behavior.
 Values
Values
 Perceptions
Perceptions

Culture
Culture––Fundamental
Fundamentaldeterminant
determinantof
ofwants
wants&&behavior
behavior

**Growing
Growingchild
childacquires
acquiresset
setof
ofvalues,
values,perceptions,
perceptions,preferences,
preferences,etc
etcfrom
from
family
family
**IsIsexposed
exposedto
toset
setof
ofvalues
valueslike
likeachievement,
achievement,freedom,
freedom,external
externalcomfort,
comfort,etc
etc
Factors Affecting Consumer Behavior:
Culture

Sub-Cultures
Sub-Cultures Social
SocialClass
Class
**Provides
Providesmore
morespecific
specific ••People
Peoplewithin
withinaasocial
socialclass
classtend
tendtoto
identification
identification & socializationfor
& socialization for exhibit
exhibit
members
members similar
similarbuying
buyingbehavior.
behavior.
**Includes
Includesnationalities,
nationalities,religions,
religions, ••Occupation
Occupation
racial
racialgroups
groups&&geographic
geographic ••Income
regions Income
regions ••Education
**Groups Education
Groupsofofpeople
peoplewith
withshared
shared ••Wealth
value
valuesystems
systemsbased
basedononcommon
common Wealth
life experiences.
life experiences.
**Matured
MaturedConsumers
Consumers

-- DIVERSITY
DIVERSITYMARKETING
MARKETING––
Marketing
MarketingPrograms
Programstotoserve
serve
subcultures
subcultures
 Roles and Status
Family
Social
SocialFactors
Factors • Husband, wife, kids
• Influencer, buyer, user
Reference Groups
• Membership
• Reference
Social
Factors Affecting Consumer Behavior:
 Interests
Interests
Opinions
Opinions Activities
Activities
Lifestyle
Lifestyle Identification
Identification
Personality
Personality&&Self-Concept
Self-Concept Economic
EconomicSituation
Situation
Age
Ageand
andFamily
FamilyLife
LifeCycle
Cycle
Occupation
Occupation Stage
Stage
Personal
Personal Influences
Influences
Personal
Factors Affecting Consumer Behavior:
Factors Affecting Consumer Behavior:
Psychological

Motivation
Motivation

Beliefs
Beliefs and
and Psychological PPerception
erception
Attitudes
Attitudes Factors

Learning
Learning
Maslow’s Hierarchy of Needs

Self
Actualization
(Self-development)

Esteem Needs
(self-esteem, status)

Social Needs
(sense of belonging, love)

Safety Needs
(security, protection)

Physiological Needs
(hunger, thirst)
Types of Buying Decisions

High Low
Involvement Involvement
Significant
Behavior Behavior
differences
Buying Seeking
between
Complex Variety-
brands
Few Behavior Behavior
differences Reducing Buying Buying
between Dissonance- Habitual
brands
 Postpurchase
PostpurchaseBehavior
Behavior
Purchase
PurchaseDecision
Decision
Evaluation
Evaluationof
ofAlternatives
Alternatives
Information
InformationSearch
Search
Need
NeedRecognition
Recognition
Five Stages
The Buyer Decision Process
Stage I
Need Recognition
Difference between an actual state and a desired state

Internal
InternalStimuli
Stimuli External
ExternalStimuli
Stimuli
•• Hunger
Hunger •• TV
TVadvertising
advertising
•• Thirst
Thirst •• Magazine
Magazinead
ad
•• AAperson’s
person’snormal
normal
needs •• Radio
Radioslogan
slogan
needs
•• Stimuli
Stimuliininthe
the
environment
environment
Stage II
Information Search

Personal Sources
Personal Sources •Family, friends, neighbors
•Most influential source of
information
Commercial Sources
Commercial Sources •Advertising, salespeople
•Receives most information
from these sources

Public Sources
Public Sources •Mass Media
•Consumer-rating groups

Sources
Experiential Sources
Experiential •Handling the product
•Examining the product
•Using the product
Stage III
Evaluation of Alternatives

Product
ProductAttributes
Attributes
Evaluation
Evaluationof
ofQuality,
Quality,Price,
Price,&&Features
Features

Degree
Degreeof
ofImportance
Importance
Which
Whichattributes
attributesmatter
mattermost
mostto
tome?
me?

Brand
BrandBeliefs
Beliefs
What
Whatdo
doI Ibelieve
believeabout
abouteach
eachavailable
availablebrand?
brand?

Total
TotalProduct
ProductSatisfaction
Satisfaction
Based
Basedon
onwhat
whatI’m
I’mlooking
lookingfor,
for,how
howsatisfied
satisfied
would I be with each product?
would I be with each product?

Evaluation
EvaluationProcedures
Procedures
Choosing
Choosingaaproduct
product(and
(andbrand)
brand)based
basedon
onone
one
or
ormore
moreattributes.
attributes.
Stage IV
Purchase Decision

Purchase
Purchase Intention
Intention
Desire
Desire to
to buy
buy the
the most
most preferred
preferred brand
brand

Attitudes Unexpected
of others situational
factors

Purchase
Purchase Decision
Decision
Stage V
Post-Purcahse Behavior

Consumer’s
Consumer’sExpectations
Expectationsofof
Product’s
Product’sPerformance
Performance

Product’s Perceived
Performance

Satisfied
Satisfied Dissatisfied
DissatisfiedCustomer
Customer
Customer!
Customer!

Cognitive Dissonance
Thanks