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this marketing lecture with current situation.
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CONSUMER MARKETS
& CONSUMER
BUYERBEHAVIOR
Newport institute communication & economics Karachi
Consumer
• The end buyer of a product
• In general buys for his ownself or for his family’s benefit
• For organizational purchases the word customer is used
Consumer Markets & Consumer Buyer Behavior - 5
Consumer behavior
• The action that a person takes in:- Purchasing & using products & services- The mental & social processes that proceed
and follow these actions
Consumer Markets & Consumer Buyer Behavior - 5
We are concerned with…
• Why consumers make the purchases that they make
• What factors influence consumer purchases?
• Who buys?• What are their choice criteria?• When do they buy?• How do they buy?• Where do they buy?• Likely buyers reaction to a marketing
strategy
Consumer Markets & Consumer Buyer Behavior - 5
Model of buyer behavior
Consumer Markets & Consumer Buyer Behavior - 5
Marketing & other stimuli
Marketing Others
Product Economic
Price Technolo-
gical
Place Political
Promotion Cultural
Buyers blackbox
Buyer Buyer
Charac- decision
teristics process
Buyer responses
Product choice
Brand choice
Dealer choice
Purchase timing
Purchase amount
Characteristics affecting consumer behavior
Cultural
Culture
Subculture
Social class
Social
Reference groups
Family
Roles & status
Personal
Age & life cycle stage
Occupation
Economic situation
Lifestyle
Personality & self concept
Psychological
Motivation
Perception
Learning
Beliefs & attitudes
B
U
Y
E
R
Consumer Markets & Consumer Buyer Behavior - 5
Characteristics affecting consumer behavior
• Culture: Set of basic values, perceptions, wants & behaviors learned by a member of society from family & other institutions
- Cultural shift.
• Subculture: Group of people with shared value systems based on common life experiences & situations
• Social class: Measured by occupation, income, education & wealth
Consumer Markets & Consumer Buyer Behavior - 5
Social factors:
• Reference groups – Aspiration groups / influencers
• Family – e.g. purchase of a car
• Roles & Status – e.g. Director Marketing
Characteristics affecting consumer behavior
Consumer Markets & Consumer Buyer Behavior - 5
Social influences
Culture Behavior is learned so the traditions, values, attitudes of society all influence it
Social class Has a major influence on consumer’s behavior
Reference groups
Formal or informal groups to which we belong.
Family Key group in terms of attitudes, beliefs & learned behavior
Personal influences
Personal characteristics such as age, occupation, family lifestyle, lifestyle
Consumer Markets & Consumer Buyer Behavior - 5
Personal factors:• Age & life cycle stage – Tastes in food,
clothes, furniture, recreation change with age• Occupation – e.g. purchase of rugged clothes
by a laborer• Economic situation• Life style – Lifestyle of a celebrity• Personality & self-concept
Characteristics affecting consumer behavior
Consumer Markets & Consumer Buyer Behavior - 5
Brand personality traits
• Sincerity (down – earth, honest, cheerful)
• Excitement (daring, spirited, imaginative)
• Competence (reliable, intelligent & successful)
• Sophistication (upper class & charming)
• Ruggednes (outdoorsy & tough)
Psychological models
• Four key psychological influences:- Motivation- Perception- Learning, attitudes and beliefs- The buying situation
Consumer Markets & Consumer Buyer Behavior - 5
Motives in buying• There are complex motives behind
purchasing decisions:• Often the underlying motive is different
from the stated motive.• Why do people buy Rolex waches?- For accurate time keeping?- OR as a status symbol?• Motives can be analyzed using Maslow’s
hierarchy
Consumer Markets & Consumer Buyer Behavior - 5
Maslow’s hierarchy of needs
• Maslow’s theory applies to all aspects of human motivation
• The needs change with different levels i.e. a person moves up once his need at the bottom level is satisfied
Consumer Markets & Consumer Buyer Behavior - 5
Maslow’s hierarchy of needsConsumer Markets & Consumer Buyer Behavior - 5
Perception
• The way an individual perceives an external stimuli will influence his reaction
• Causes of differences in reaction- Selective attention: we screen out the majority of stimulants- Selective distortion: the tendency to adjust to perceptions to conform to the current mindset
- Selective retention: We do not retain everything. Information that reinforces our attitudes & beliefs
Consumer Markets & Consumer Buyer Behavior - 5
Learning attitudes & beliefs
• Learning relates to any changes in the long term & is associated with how the information is processed
- Conditional learning: reinforcement is
necessary to develop attitudes & beliefs
- Social learning: learning from others behavior
- Cognitive learning: use of positive powers of reasoning to develop attitudes & beliefs about a product (Particularly important for high involvement products)
Consumer Markets & Consumer Buyer Behavior - 5
Consumer buying decision process
• Need recognition
• Information search
• Emergence of a range of alternatives
• Evaluation of alternatives
• Purchase decision
• Purchase
• Post purchase evaluation
Consumer Markets & Consumer Buyer Behavior - 5
Types of buying behavior
• Routine or programmed: Habitual purchase – low involvement of buyer e.g. milk
• Limited decision making – some consideration & evaluation e.g. clothes
• Extensive decision making – High involvement buying, requires detailed consideration e.g. car
• Impulse buying – e.g. pack of crisps
Consumer Markets & Consumer Buyer Behavior - 5
Types of buyers
• Opportunist – a switcher
• Dealer – seeks the best deal
• Creative – asks for a customized product
• Trader – asks for extras
• Negotiator – seeks discounts
Consumer Markets & Consumer Buyer Behavior - 5
Roles in the buying process
• A no. of different individuals might contribute in the consumer market in the buying decision. Marketers need to be aware of the order inorder to exert influence:
- Initiator – suggests the purchase- Influencer – has knowledge & personal
authority influences the outcome- Decider – decides what, where & how to buy.- Buyer – makes the purchase- End user
Consumer Markets & Consumer Buyer Behavior - 5
The economist’s perspective
• Demand is a function of:- Price- Income- Preference- Price of other goods- Expectations about the future
Consumer Markets & Consumer Buyer Behavior - 5
Economic factors influencing demand
• Price:- Price of the product- Price of substitute
products- Price of
complimentary goods
• Disposable income:- State of the economy- Inflation- Employment/
unemployment- Wage rates
Consumer Markets & Consumer Buyer Behavior - 5
Economic factors influencing demand
• Use of credit:- Availability- Interest rates- Credit terms
• Willingness to spend:
- Consumer’s confidence
- Future standard of living
- Competition for purchases
Consumer Markets & Consumer Buyer Behavior - 5
Demand
• As price rises quantity demanded falls & viceversa
• Sensitivity to price changes varies
• Incase of:- Inelastic demand – Consumers are not
sensitive to price changes- Elastic demand – Consumers are highly
sensitive to price changes
Consumer Markets & Consumer Buyer Behavior - 5
Consumer Income
• Money or nominal income: money received• Real income – purchasing power of money• Disposable income – money left after
compulsory deductions• Discretionary income – income which can be
used as we please after allowing for regular commitments such as utility bills etc.
Consumer Markets & Consumer Buyer Behavior - 5
Income elasticity of demand
• As income rises so does the demand for goods & services
• Incase of some products a rise in income leads to a disproportionately small rise in demand whereas in others it leads to a disproportionately large rise in demand
• Refers to the responsiveness of demand to change in income
Consumer Markets & Consumer Buyer Behavior - 5
Income elasticity of demand
• Luxury products – very elastic with respect to income
• Basic necessities – inelastic with respect to income
Consumer Markets & Consumer Buyer Behavior - 5