Consumer Behaviour 4

Consumer Behaviour Jalaj Mathur

WHAT INFLUENCES CONSUMER BEHAVIOR Metrosexual – Straight urban man who enjoys shopping and using grooming products

The aim of marketing is to meet and satisfy target customers’ needs and wants better than competitors. Consumer behavior is 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. Gaining a thorough indepth consumer understanding helps to make sure that the right products are marketed to the right consumers in the right way. WHAT INFLUENCES CONSUMER BEHAVIOR?

Model of Buying Behavior Marketing stimuli

Other stimuli

Buyer’s characteristics

Buyer’s decision process

Product Price Place Promotion

Economic Technological Political Cultural

Cultural Social Personal Psychological

Problem recognition Information search Evaluation Decision Postpurchase behavior

Buyer’s decisions

Product choice Brand choice Dealer choice Purchase timing Purchase amount

Characteristics Affecting Consumer Behaviour CULTURAL Culture Subculture Social Class

SOCIAL Reference Groups Family Roles & Status

PERSONAL Age

PSYCHOLOGICAL

Occupation

Motivation

Economic Situation

Perception

Lifestyle Personality

Learning Beliefs & Attitude

Cultural Factors Culture Subculture Social Class

Buyer

Culture •

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Culture is the basic values, perceptions, wants & behaviours learned by a member of society from family &other important institutions . E.g. An American bride wears a white dress on her wedding while a white dress is worn on occasion of mourning in India. The cultural shift toward greater concern towards health & fitness has created a huge industry for health & fitness services, exercise equipment &clothing And lower fat and more natural foods. Subculture : A group of people with shared value systems based on common life experiences & situations. Subcultures include nationalities, religions, racial groups &geographic regions. E.g. Punjabi, Bengali, Marathi. Social Class: Relatively permanent &ordered divisions in a society whose members share similar values, interests & behaviour. Determined by income, occupation, education, wealth & other variables. Social classes show distinct product & brand preferences in areas such as clothing, home furnishing, leisure activities & automobiles. E.g. upper Class, Middle class

WHAT INFLUENCES CONSUMER BEHAVIOR? Social classes, relatively homogeneous and enduring divisions in a society that are hierarchically ordered and whose members share similar values, interests, and behavior Social classes have several characteristics: •Those within a class tend to behave more alike than persons from two different social classes. •Persons are perceived as occupying inferior or superior positions according to social class. •Social class is indicated by a cluster of variables (occupation, income, etc.) rather than by any single variable. •Individuals can move up or down the social-class ladder.

Social Factors Reference Groups Family

Roles & Statuses

WHAT INFLUENCES CONSUMER BEHAVIOR? Social Factors In addition to cultural factors, a consumer’s behavior is influenced by such social factors as reference groups, family, and social roles and statuses. A person’s reference groups consists of all the groups that have a direct (face-toface) or indirect influence on his/her attitudes or behavior. Groups having a direct influence on a person are called membership groups. •Some memberships groups are primary groups such as family, friends, neighbors, and co-workers with whom the person interacts fairly continuously and informally. •Some membership groups are secondary groups such as religious, professional groups that tend to be more formal.

WHAT INFLUENCES CONSUMER BEHAVIOR? People are significantly influenced by their reference groups in at least three ways: •Reference groups expose an individual to new behaviors and lifestyles, influencing attitudes and self-concept. •They create pressures for conformity that may affect actual product and brand choices. •People are also influenced by groups to which they do no belong: Aspirational groups are those a person hopes to join. Dissociative groups are those whose values or behavior an individual rejects. The buyer evaluates these elements together with the monetary cost to form a total customer cost.

WHAT INFLUENCES CONSUMER BEHAVIOR?

Manufacturers of products and brands where group influence is strong must determine how to reach and influence opinion leaders in these reference groups. An opinion leader is the person in informal, product-related communications who offers advice or information about a specific product or product category. Marketers try to reach opinion leaders by identifying demographic and psychographic characteristics associated with opinion leadership, identifying the media read by opinion leaders, and directing messages at opinion leaders.

WHAT INFLUENCES CONSUMER BEHAVIOR? Family The family is the most important consumer-buying organization in society, and family members constitute the most influential primary reference group. We can distinguish between two families in the buyer’s life. The family of orientation consists of parents and siblings. A more direct influence on everyday buying behavior is the family of procreation –namely, one’s spouse and children.

Social Factors • Groups: Two or more people who interact to accomplish individual or mutual goals. • Groups to which a person belongs are called membership groups . • Reference groups serve as direct or indirect points of comparison or reference in forming a persons attitude or behavior. • Aspirational group is one to which a individual wishes to belong. • Opinion Leaders- people within a reference group who because of special skills, knowledge, personality exert influence on others.

Family • Family members can strongly influence buying behaviour. Husband Wife involvement varies widely by product category and by stage in buying process. Wife is the main purchasing agent in the family in areas of food, household products & clothing. • Children also have a strong influence on buying decisions e.g. Whirlpool ad, Surf excel ad.

Role & Status • A role consists of the activities people are expected to perform according to persons around them e.g. you are somebody’s daughter/son at home, student in an institution, friend in an informal setting with friends. Tomorrow you will play the role of a husband/ wife • Each role carries a status reflecting the general esteem given to it by society. People choose products to show their status in society. E.g. Scorpio for a CEO and ESTEEM for a VP.

Influences on Consumer Behavior Personal Influences Age and Family Life Cycle Stage Occupation & Economic Circumstances

Lifestyle Personality & Self-Concept

PERSONAL FACTORS • Age & Life Cycle Stage: tastes in food, clothing, furniture & recreation are age related. Buying is also shaped by stage of the family life cycle. E.g. Gen Y ( under 25), Young Professionals, DINKS (25 to 34), Families (35 to 54).

Personal factors

• Occupation: A Person’s occupation effects the goods & services bought. • Economic Situation: Income, savings & Borrowing power determine what kind of products a person buys. • Lifestyle: A person’s pattern of living as expressed in his or her activities, interests and opinions. – Activities :-work, hobbies, shopping, sports, social events – Interests:-food, fashion, family, recreation – Opinions:- About themselves, social issues, business, products

WHAT INFLUENCES CONSUMER BEHAVIOR? Personality and Self-Concept Each person has personality characteristics that influence his or her buying behavior. Personality: A set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli. •The idea is that brands have personalities and consumers are likely to choose brands whose personalities match their own.

WHAT INFLUENCES CONSUMER BEHAVIOR? Simplified Model

We define brand personality as the specific mix of human traits that may be attributed to a particular brand. Jennifer Aaker identified the following five traits: •Sincerity (down-to-earth). •Excitement (daring). •Competence (reliable). •Sophistication (upper-class). •Ruggedness (outdoorsy).

•Consumers also choose and use brand that have a brand personality consistent with their own actual self-concept (how one views themselves). •Although in some cases, the match may be based on the consumer’s ideal self-concept (how we would like to view ourselves). •Others self-concept (how we think others see us).

WHAT INFLUENCES CONSUMER BEHAVIOR? Lifestyles and Value People from the same subculture, social class, and occupation may lead quite different lifestyles. A lifestyle is a person’s pattern of living in the world as expressed in activities, interests, and opinions. Lifestyle portrays the “whole person” interacting with his or her environment. Marketers search for relationships between their products and lifestyle groups. Lifestyles are shaped partly by whether consumers are money-constrained or timeconstrained.

Psychological Factors Motivation Beliefs & Attitudes Perception Learning

KEY PSYCHOLOGICAL PROCESSES KEY PSYCHOLOGICAL PROCESSES The starting point for understanding consumer behavior is the stimulusresponse model. Model of Consumer Behavior

•The marketer’s task is to understand what happens in the consumer’s consciousness between the arrival of the outside marketing stimuli and the ultimate purchase decisions.

KEY PSYCHOLOGICAL PROCESSES Motivation: Freud, Maslow, Herzberg A person has many needs at any given time. Some needs are: •Biogenic (arise from physiological states of tension such as hunger). •Others are psychogenic and arise from a need for recognition, esteem, or belonging. Sigmund Freud's

Abraham Maslow

•A motive is a need that is sufficiently pressing to drive the person to act.

KEY PSYCHOLOGICAL PROCESSES Freud’s Theory Sigmund Freud assumed that the psychological forces shaping people’s behavior are largely unconscious, and that a person cannot fully understand his or her own motivations. A technique called laddering can be used to trace a person’s motivations from the stated instrumental ones to the more terminal ones. Motivation researchers often collect “indepth interviews” to uncover deeper motives triggered by a product. •Projective techniques such as word association, sentence completion, and role-playing are used. Customer 2 is mixed profitability.

KEY PSYCHOLOGICAL PROCESSES Maslow’s Hierarchy of Needs.

Maslow’s Theory Abraham Maslow sought to explain why people are driven by particular needs at particular times. Maslow’s answer is that human needs are arranged in a hierarchy, from the most pressing to the least pressing. In order of importance, they are: •Physiological needs. •Safety needs. •Social needs. •Esteem needs. •Self-actualization needs.

KEY PSYCHOLOGICAL PROCESSES Motivational Hygiene

Herzberg’s Theory

A similar point (with Maslow’s) is made in Herzberg's “motivational hygiene” theory, according to which demotivators (or "hygiene factors") have to be reduced as well as motivators (or incentives) increased, to develop positive motivation (Herzberg 1966):

Frederick Herzberg developed a twofactor theory that distinguishes dissatisfiers (factors that cause dissatisfaction) from satisfiers (factors that cause satisfaction). The absence of dissatisfiers is not enough; satisfiers must be present to motivate a purchase. Herzberg’s theory has two implications: •Sellers should do their best to avoid dissatisfiers. •Sellers should identify the major satisfiers or motivators of purchase in the market and supply them. These satisfiers will make the major difference as to which brand the customer buys.

KEY PSYCHOLOGICAL PROCESSES Perception How the motivated person actually acts is influenced by his or her view or perception of the situation. •Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world. •Perception depends not only on the physical stimuli, but also on the stimuli’s relation to the surrounding field and on conditions within the individual. •The key point is that perceptions vary widely among individuals exposed to the same reality. •In marketing, perceptions are more important than the reality, as it is perceptions will affect consumers’ actual behavior.

KEY PSYCHOLOGICAL PROCESSES Selective Attention It has been estimated that a person is exposed to over 1,500 ads or brand communications a day. Because a person cannot possibly attend to all of these, most stimuli will be screened out—a process called selective attention. Selective attention means that marketers have to work hard to attract consumers’ notice. People are more likely to notice stimuli that relates 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.

KEY PSYCHOLOGICAL PROCESSES

Selective Distortion Selective distortion is the tendency to interpret information in a way that will fit our preconceptions. Consumers will often distort information to be consistent with prior brands and product beliefs. Examples of branded differences can be found with virtually every type of product. •Selective distortion can work to the advantage of marketers with strong brands when consumers distort neutral or ambiguous brand information to make it more positive.

Selective Retention •People will fail to register much

KEY PSYCHOLOGICAL PROCESSES information to which they are exposed in

memory, but will tend to retain information that supports their attitudes and beliefs. •Because of selective retention, we are likely to remember good points about a product we like and forget good points about competing products.

Memory Processes: Encoding Memory encoding refers to how and where

KEY PSYCHOLOGICAL PROCESSES information gets into memory.

Memory encoding can be characterized according to the amount or quantity of processing that information receives at encoding and the nature or quality of processing that information receives at encoding. The quantity and quality of processing will be an important determinant of the strength of an association. •In general, the more attention placed on the meaning of information during encoding, the stronger the resulting associations in memory will be.

PSYCHOLOGICAL FACTORS

• Motivation: A person has many needs, biological needs such as hunger, thirst or discomfort, psychological needs such as recognition, esteem or belonging. A need becomes a motive when it is aroused to sufficient level of intensity and the person is directed to seek satisfaction. Two of most popular theories on human motivation are by : Sigmund Freud & Abraham Maslow.

Perception

• All of us learn by the flow of information through our five senses: sight, hearing, smell, touch & taste. However each of us receives, organizes, interprets this sensory information in an individual way. • Perception is the process by which people select, organize & interpret information – Selective Attention- the tendency of people to screen out most of the information to which they are exposed. – Selective Distortion- interpret info. That supports their set beliefs. – Selective Retention- retain info. That supports their attitudes & beliefs.

Learning

• Learning describes changes in an individual’s behavior arising from experience. • Most human behavior is learned. Learning occurs through the interplay of drives, stimuli, cues, responses & reinforcement. • A person has a drive for esteem. His drive becomes a motive when it is directed toward a stimulus object , which can be a big car. When Hyundai announces its Gold coin offer it is giving a cue to buy now. If the person goes ahead a buys a Hyundai, it is a response. If he enjoys the experience of the car, his response is reinforced

Beliefs & Attitude

• Through doing & learning, people acquire beliefs & attitudes, which in turn effect his buying behaviour. • A belief is a descriptive thought that a person holds about something. • Beliefs may be based on real knowledge, opinion or faith and may or may not carry an emotional charge. • Beliefs make up a product or brand image which effects buying behaviour. • People have attitudes regarding religion, politics, clothes, music, food & almost everything else. • Attitude describes a person’s relatively consistent evaluations, feeling & tendencies toward an object or idea. • Attitude put people in a frame of mind of liking or disliking things. E.g. Chinese goods

Four Types of Buying Behavior High Involvement

Low Involvement

Significant differences between brands

Complex Buying Behavior

VarietySeeking Behavior

Few differences between brands

DissonanceReducing Buying Behavior

Habitual Buying Behavior

Types of Buying Decision Behaviour High involvement Signif icant diff. b/w brand s Few Diff. b/w brand s

Complex Buying Behaviour Dissonance reducing Buying Behaviour

Low Involvement

Variety Seeking buying Behaviour Habitual buying behaviour

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Complex buying Behaviour: Consumer buying behaviour in situations characterized by high consumer involvement in a purchase and significant perceived differences among brands. E.g. Car, House, TV Dissonance Reducing buying Behaviour: CBB in situations characterized by high involvement but few perceived differences among brands e.g. Paints, Cement, Habitual Buying behaviour: CBB in situations characterized by low consumer involvement & few significant brand differences. E.g. Detergents, Toothpaste Variety Seeking Buying Behaviour: CBB in situations characterized by low consumer involvement but significant perceived brand differences. E.g. Biscuits, Snacks

Selectivity Selective attention – Marketers have to work hard to get consumer’s notice – consumers are more likely to notice stimuli of current need, stimuli they anticipate, stimuli whose deviations are large e.g. $25 off $100 rather than $5 Selective distortion – tendency to twist information into personal meanings that will fit our preconceptions e.g. A customer of LG may interpret an advertisement saying that they are No. 1 company in Microelectronics to be No.1 company in all of consumer durables Selective Retention – consumers likely to remember good points of products they like and forget good points of competing products e.g. a user may remember that Pears soap is the only soap good for dry skin though in the market Dove and Mysore Sandal Gold is also good for dry skin

Maslow’s Hierarchy of Needs 5 Selfactualization

(self-development and realization)

4

Esteem needs

(self-esteem, recognition)

3 2 1

Social needs (sense of belonging, love) Safety needs (security, protection) Psychological needs (food, water, shelter)

Consumer Buying Process Problem

recognition

Information search Evaluation of alternatives Purchase decision Postpurchase behavior

Decision Making Sets Total Set

Awareness Set

Consideration Set

Choice Set

Decision

Successive Sets Involved in Customer Decision Making

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Indian Demographic Trends • Nuclear Families: In Urban areas, the no. of nuclear families is on the rise. • Working Women • Smaller Families: one child or two • Educated Women • Delayed marriages • Dispersion of Population: Metros, Bangalore, Hyderabad, Chennai Pune, Gurgaon, Noida • Uneven Economic Growth Rate: south India, Maharashtra, Gujarat, Punjab • Diverging Consumer Markets: Rich getting richer & on shopping spree. Poor getting Poorer • Ageing Population