Analyzing Consumer Behaviour

8/7/2019 Analyzing Consumer Behaviour

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Analyzing Consumer Markets

Marketing Management(Philip Kotler & Kevin Lane Keller)

- Nadeem Jafri


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Consumer behaviour is the study of how individuals, groups,and organizations select, buy, use and dispose of goods,

services, ideas, or experiences to satisfy their needs andwants.


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E ffective marketing requires insights into

consumers minds. It ensures that the right productsare conceived, produced and offered to the rightconsumers in the right way.


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W hat Influences Consumer Behaviour?

Cultural Factors: Culture, subculture and social class areparticularly important influencers on consumer buyingbehaviour.

Culture: It is the fundamental determinant of a persons wantsand behaviour. A growing child acquires a set of values,perceptions, preferences and behaviours through his or her family and other key institutions.

Subculture: Nationalities, Religions, Racial Groups andGeographic regions. W hen these subcultures become large andaffluent enough, companies design specialized marketingprograms to serve them.


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Social Class : Relatively homogenous and enduring divisions, which arehierarchically ordered and whose members share similar values,interests and behaviour.

Indian marketers use a term called socioeconomic classification(S E C), which uses a combination of the education and occupation

of the chief wage earner of the household to classify the buyers inthe urban areas. This classifies the urban household into broad 8 categories A1, A2,B1, B2, C, D, E 1, E 2

For the rural areas, the system uses the occupation of the chief wage earner and the type of the house to classify households intofour broad category R1 to R4 in the descending order of purchasepotential

These social classes differ in their brand preferences and mediahabits.

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Social Factors:

Reference GroupsMembership groups (Primary): Family, Friends, Neighbours, Co-workersMembership groups (Secondary): Religious, Professional, trade-unions etcAspirational groups: A person hopes to joinDissociative groups: Are those whose value or behaviour an individualrejects.

Family : The family is the most important consumer buying organisation in society,and family members constitute the most influential primary reference group

Family of orientation : Parents and siblings Family of procreation : Spouse and children

Roles and Status: A role consists of the activities a person is expected toperform. E ach role carries a status.


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Personal Factors: Age and stage in the lifestyle: People buy different goods and

services over a lifetime. Taste in food, clothes, furniture and recreationis often age related.

Occupation and Economic Circumstances: A blue-collar worker willbuy products according to his needs while a company president will buysuits, air-travel and country club memberships. Product choice is greatlyaffected by economic circumstances: Spendable income, savings andassets, debts, borrowing power and attitudes toward spending and

saving.

Personality and Self-Concept: E ach person has personalitycharacteristics that influence buying behaviour. This can be a usefulvariable analysing consumer brand preferences.


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Personality and Self-Concept (Continued): A specific mix of human traits that may be attributed to a particular brand is BrandPersonality.

According to Stanfords Jennifer Aaker brand personalitieshave following five traits:

Sincerity (down-to-earth, honest, wholesome, andcheerful)

E xcitement (daring, spirited, imaginative and up-to-date)

Competence (reliable, intelligent and successful) Sophistication (upper-class and charming) Ruggedness (outdoorsy and tough)


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L ifestyle and values: Lifestyle are shaped partly by whether theconsumers are money-constrained or time-constrained.

The study on Indian males has classified them into four groups:

Traditional : Conservative, driven by values, cherishesfamily Pleasure Seeker : Self-oriented, driven by status and

status symbol. A risk-taker, pleasure seeker, young andunmarried.

Social Chameleon: Hypocrite of sorts who wants to

project the right image. Tech-savvy and individualistic. Intrinsic Progressive : The futuristic person. Believes in

family values and equality of sexes. Consumer decisions are also influenced by core values, thebelief systems that underlie consumer attitudes andbehaviours.


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Model for Consumer Behaviour

MarketingStimuli

Product & ServicesPriceDistributionCommunications

Other Stimuli

EconomicTechnologicalPoliticalCultural

Consumer Psychology

MotivationPerceptionL earningMemory

Consumer Characteristics

CulturalSocialPersonal

BuyingDecision

ProcessProblem RecognitionInformation searchEvaluation of alternativesPurchase decisionPost purchasebehaviour

PurchaseDecision

Product ChoiceBrand ChoicePurchase amountPurchase timingPayment method


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Key Psychological Processes

Motivation Perception Learning

Memory


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Motivation

A need becomes a motive when it is aroused to a sufficient level of intensity. A motive is a need that is sufficiently pressing to drive the personto act.

Freuds Theory: Sigmund Freud assumed that the psychological forces shapingpeoples behaviour largely unconscious, and that a person cannot fullyunderstand his own motivations.

Motivation researchers often collect in-depth interviews with a few dozenconsumers to uncover deeper motives triggered by a product. They usevarious projective techniques such as word association, sentencecompletion, picture interpretation, and role playing.

Herzbergs Theory: Frederick Herzberg developed a two-factor theory thatdistinguishes dissatisfiers (factors that cause dissatisfaction) and satisfiers(factors that cause satisfaction). Absence of dissatisfiers is not enough; satisfiersmust be present to motivate a purchase.

Thus this theory has two implications. First the sellers should do their best toavoid dissatisfier and second the seller should identify the major satisfiersand motivators. (For example in case of computer the ease of usage issatisfiers while absence of warranty is dissatisfier)


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Motivation

Maslows Hierarchy of Needs: Human needs are arranged in ahierarchy from the most pressing to the least pressing needs.

Physiological Needs(food, water, shelter)

Safety Needs(Security, Protection)

Social Needs(Sense of belonging, love)

E steem Needs(self-esteem, recognition, status)

Self-Actualisation

(Self development& realisation)


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Perception

It is the process by which an individual selects, organises and interprets informationinputs to create a meaningful picture of words.

Perceptions can widely vary among individuals exposed to same reality, for some afast talking salesperson is aggressive and insincere; for another he is intelligent andhelpful.

Selective Attention: People are more likely to notice stimuli that relate to a current need. People are more likely to notice stimuli that they anticipate. People are more likely to notice stimuli whose deviations are large in relation to the

normal size of the stimuli (For eg. Rs. 100 off than Rs. 5 off) Selective Distortion:

Tendency to interpret the information in a way that will fit our preconceptions.

Selective Retention: People will tend to retain the information which supports their belief and attitudes.

Subliminal Perception: Marketers embed covert, subliminal messages in ads or packages. This subtle

messages affect the consumer behaviour


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Learning

L earning involves changes in an individuals behaviour arising fromexperience.

A drive is a strong internal stimulus impelling action

Cues are minor stimuli that determine when, where and how a personresponds.

Discrimination means that the person has learned to recognizedifferences in sets of similar stimuli and can adjust responsesaccordingly.


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Memory

All the information and experiences that we encounter as we gothrough life can end up in our long-term memory.

Cognitive psychologists distinguish between short-term memory(STM)- a temporary repository of information and Long-termmemory (LTM) a more permanent repository.


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The Buying Decision Process: The Fivestage Model

ProblemRecognition

InformationSearch

E valuation of alternatives

Purchase

decision

Post-purchaseBehaviour

The milder searchState is heigtenedattention,here a person simplybecomes more receptivefor informationNext stage is activeinformation search , herehe looks for reading

material, calling friendsetc.Key influences onpurchase decision:

Personal; family &friends

Commercial; salesperson, dealers

Public. Mass mediaE xperiential. Handling,

examining

Here, first the consumer is trying to satisfy a need.Second the consumer is looking for certain

benefits.Third the consumer seesE ach product as a bundleof attributes with varying abilitiesFor delivering the benefits soughtTo satisfy this need.Attributes of interest vary to buyers:

Cameras. Pictures, sharpness, speedHotels. Location, cleanliness, PriceMouthwash. Color, taste, flavour Tires. Safety, durability, ride


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Beliefs and Attitudes

E valuations often reflects beliefs and attitudes. Throughexperience and learning, people acquire beliefs andattitudes. These in turn influence buying behaviour. A belief is a descriptive thought that a person holds about

something. An attitude is a persons enduring favourable and unfavourable

evaluation, emotional feeling and action tendencies toward someobject or idea.


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Purchase Decisions

The expectancy-value model is a compensatory in that perceived goodthings for a product can help overcome perceived bad things. Butconsumers may not want to invest so much of time and they take mentalshort cuts.W hile with non-compensatory models of consumer choice , positive andnegative attribute considerations do not necessarily net out. E valuatingattributes more in isolation makes decision making easier.

Conjunctive heuristic: Minimum acceptable cutoff level for eachattribute and chooses the first alternative that meets this minimumstandards.

L

exicographic heuristic: The consumer chooses the best brand on thebasis of its perceived most important attribute. Elimination by aspects heuristic: The consumer compares brands on

an attribute selected probabilistically where the probability of choosingan attribute is positively related to its importance and brands areeliminated if they do not meet minimum acceptance cutoff levels.


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Purchase Decision

PurchaseDecision

Attitudes of Others

UnanticipatedSituational

factors

Purchase

Intention

E valuation of alternatives

Steps between evaluation andPurchase decision

There are many different types of risk that consumer May perceive in buying and consuming a product:

1) Functional risk: Does not perform as expected2) Physical risk: threat to physical well-being3) Financial risk: Not worth the price4) Social risk: It can be an embarrassment to use5) Psychological risk: affects the mental well being6) Time risk: The failure of the product results in the

opportunity cost of finding another product

Intervening Factors that influence

purchase decision:

1) Attitude of Others1) The intensity of the other

persons negative attitude towardsthe preferred brand

2) The consumers motivation tocomply with the other person

2) Unanticipated Situational factors


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Postpurchase Behaviour

Post purchase satisfaction : If performance falls short of expectations theconsumer is disappointed . If it meets expectations the consumer is satisfied .If it exceeds expectations the consumer is delighted .

Post purchase Actions : A satisfied consumer is normally a repeat buyer while a dissatisfied consumer may abandon or return the product.Dissatisfied customer may take private action of warning friends against theproduct usage and quitting the usage of the product himself, he may takepublic actions like complaining to the company, going to lawyer, or complaining to other groups.

Post Purchase Use and Disposal : Marketers should know how theconsumers use and dispose the product. A key driver of sales frequency isproduct consumption rate the more quickly buyer consumer a product, thesooner they may be back in the market to repurchase it. (For eg. Certainantiseptic cream are also shown as beauty cream this is to enhance productconsumption. Concept of bringing old product and get discount on the newone is also to help consumer dispose the old product and lure him to

purchase the new one.)


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E LM model of attitude change

Motivation toProcess Information

Ability toProcess Information

Central Route toAttitude Change

Peripheral Cue Present

Peripheral Routeto Attitude Change

Yes

Yes

No

NoYes

Petty and CacioppoHave proposed the frameworkWhich predicts when the audienceMember will cognitively elaborateAnd Follow the central route. TwoFactors in ELM are significant; anAudience members motivation toProcess information and ability toProcess information. When both theMotivation and ability is high consumer

Would process centrally if either of themIs low they would process peripheraly.

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Other theories of Consumer DecisionMaking

Low-involvement marketing strategies: Many products are bought under conditions of low involvement; products that are relatively cheap, frequently purchased and areperceived as low risk.

Marketers use four techniques to convert it into one with high-involvement: They link the product to some involving issue (Colgate is suraksha chakra ) They link the product to some personal situation (Coke: Aao jashan manale

and Cadbury ad: Mooh mitha karo ) They design advertising to trigger personal values like ego defense (Surf ads

on samajhdari ) They might introduce some important feature to the product (Kya aapke tooth

paste main namak hai?

Variety-Seeking Buying Behaviour (low involvement): Brand switching occurs for thesake of variety rather than dissatisfaction for eg. Cookies, chocolates, soft drinks etc. The market leader will try to encourage habitual buying behaviour by dominating

the shelf space with a variety of related but different product versions, avoiding outof stock situation and sponsoring frequent reminder advertising

Challenger firms will encourage variety seeking by offering lower prices, deals,coupons, free samples and advertising that tries to break the consumers purchaseand consumption cycle and presents reasons for trying something new.

Analyzing Consumer Behaviour

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