6-1 CONNECTING WITH CUSTOMERS PART 3. 6-2 ANALYZING Consumer Markets Chapter 6.

6-1

CONNECTING

WITH CUSTOMERS

PART

3

6-2

ANALYZING

Consumer Markets

Chapter

6

6-3

1. How do consumer characteristics influence buying behavior?

2. What major psychological processes influence consumer responses to the marketing program?

3. How do consumers make purchasing decisions?

4. How do marketers analyze consumer decision making?

In this chapter, weaddress the

followingquestions:

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What Influences Consumer Behavior?

3 factors influence consumer behavior

Cultural

Social

Personal

Research provide clues to reach & serve consumers more effectively

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What Influences Consumer Behavior?Cultural Factors

CULTURE

Main determinant of wants & behavior– Eg Asian child exposed to filial piety,

hard work

SUBCULTURE

Subset of each culture - more specific identity for members– Eg religions, nationalities

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Table 6.1 Chinese Consumption

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What Influences Consumer Behavior?Cultural Factors

SOCIAL CLASS Caste system - similar behavior > 1

variable, perceived inferior/superior positions Up/down class ladder in lifetime Distinct product, brand, media preferences

Multicultural marketing Ethnic & demographic niches Don’t respond favorably to mass marketing

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What Influences Consumer Behavior?Social Factors

REFERENCE GROUPS Influence attitudes or behavior

TYPES:

Primary

Secondary

Membership

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REFERENCE GROUPS

1. Expose new behaviors & lifestyles

2. Influence attitudes & self-concept

3. Pressures to conform - Affect

product choices

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REFERENCE GROUPS

Opinion leader– Gives informal advice on products

Reach opinion leaders – right media & direct messages

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Family of orientation Parents & siblings

Family of procreation Spouse & children

Family roles in product purchase vary widely

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China’s Young ConsumersChina’s Young Consumers

Trends that have contributed to the cultural

transformation of China’s youth:

1) The rise of individuality

2) New media habits

3) Brand & status consciousness.

4) Capitalism & credit cards

5) Consumer power

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Asia, women earning income increases ‘Male’ product - women possible buyer

– For eg: Korea

– Women - 30 % of domestic car sales

– Hyundai - Sonata Elegance Special – female version of Sedan

Increase influence by children & teens

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ROLES & STATUSES Activities one has to perform carries

a status Product choice - reflect role & status

in society Marketers - status symbol potential

of product

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ROLES & STATUSES Asia roles & statuses - gradual

changes– Eg: Ads feature men in formerly

traditional women’s roles Asia emphasizes position of

individual in group– Eg: Mianzi concept– One to abide by social norms– Vital among the Chinese

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Face Saving & theFace Saving & theChinese ConsumerChinese Consumer

Implications on consumer Implications on consumer

behavior:behavior:

1) Influence of referent others

2) Ostentatious living

3) Fewer complaints

4) Comparative advertising

5) Negotiation

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Personal FactorsAGE & STAGE IN THE LIFE-CYCLE Taste in food, things & recreation -

age related Consumption shaped by family life-

cycle & number, age & gender of people in household

Asia - traditional family- smaller % of household

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Personal FactorsAGE & STAGE IN THE LIFE-CYCLE Psychological life-cycle stages

matter Critical life events/transitions:

– Marriage– Relocation etc

Give rise to new needs Alert service providers – ways they

can help

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Personal FactorsOCCUPATION & ECONOMIC CIRCUMSTANCES

Identify occupational groups

with above-average interest in

products

Tailor products for some of

them

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Personal FactorsOCCUPATION & ECONOMIC

CIRCUMSTANCES

Product choice affected by economic

circumstances: income, savings

Asia - buying discretionary items on

credit has risen

Recession, reprice products or

emphasize discount brands

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Personal Factors

PERSONALITY & SELF-CONCEPT

Personality

– Psychological traits - consistent & enduring responses to stimuli

Brand personality

– Mix of human traits attributed to brand

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Personal FactorsPERSONALITY & SELF-CONCEPT

Choice of brand consistent with

– Actual self-concept

– Ideal self-concept or

– Others’ self-concept

High “self-monitors” choose brands with personalities that fit consumption

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Personal FactorsPERSONALITY & SELF-

CONCEPT77 brand personalities:brand personalities:

1. Sincerity

2. Excitement

3. Competence

4. Sophistication

5. Ruggedness

6. Passion

7. Peacefulness

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Personal Factors Lifestyle

– living pattern through activity, opinion

Link between products & lifestyle– Eg: computer seller find computer buyers

achievement-oriented

– Aim brand clearly at achiever lifestyle

Reveal new trends in consumer lifestyle

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Personal Factors

LIFESTYLE & VALUES

Lifestyles shaped partly by being:

Money-constrained - lower cost

products

Time-constrained - multitasking,

convenient products

– Multitasking trend - wireless revolution

– Japan - ‘convenient’ virtual pet Tamagotchi

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Personal Factors

LIFESTYLE & VALUES Consumer decisions - core values Core values - choices in long-term Values:

– Appeal to inner selves– Influence outer selves– Lead to purchase behavior

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Key Psychological Processes

A need becomes a motive when

aroused to a sufficient level of

intensity

Motive - need sufficiently pressing

to drive person to act

3 theories of human motivation

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Figure 6.1 Model of Consumer Behavior

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Key Psychological ProcessesMotivation

FREUD’S THEORY

Psychological forces shape behavior

Laddering - trace motivations from instrumental to terminal ones

Decide message & appeal

“In-depth interviews” - deeper motives

Use projective techniques

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MASLOW’S THEORY Human needs - importance

– Physiological, safety, social, esteem & self-actualization

How products fit in plans & lives If self-actualization apply to Asians Social needs important for Asians:

– Affiliation, Admiration, Status

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Figure 6.2 Maslow’s Hierarchy of Needs

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HERZBERG’S THEORY

2-factor theory - dissatisfiers & satisfiers

Absence of dissatisfiers not enough

Satisfiers required to motivate purchase– Eg computer without warranty – dissatisfier

– Warranty not a satisfier of purchase

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HERZBERG’S THEORY

Sellers should try to avoid

dissatisfiers

Seller to identify major

satisfiers & supply them

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Key Psychological ProcessesPerception

Perception - select, organize &

interpret information to create

meaning

Depends on physical stimuli,

surrounding & internal conditions

Same reality – perception varies

Perceptions affect’ actual behavior

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Individuals exposed to same reality

– Eg: fast-talking salesperson

– Seem aggressive & insincere or

– Intelligent & helpful

Respond differently to salesperson

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SELECTIVE ATTENTION Many ads, brand communications Most stimuli screened out

Which stimuli people notice?1. Relate to a current need

2. Anticipated3. Deviations are large

Bypass selective attention - promote offers intrusively

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SELECTIVE DISTORTION

Interpret to fit preconception

Distort– consistent with prior brand & product beliefs

Advantage to marketers - neutral or ambiguous brand information

– Make it positive

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SELECTIVE DISTORTION

Eg: “Blind” taste tests

Only 1 group knows brand

Opinions different but same product

Earlier brand beliefs changed product

perceptions

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SELECTIVE RETENTION

Retain information - supports attitudes & beliefs

Remember good points about liked product, not competing products

Advantage of strong brands Repeat messages to target market

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SUBLIMINAL PERCEPTION

Covert, subliminal messages in ads or packages

Unconscious of them but affect behavior

No evidence consumers can be controlled at that level

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Key Psychological ProcessesLearning

Learning - behavior change with experience

Drive - strong internal stimulus impel action

Cues - minor stimuli- when, where, how person responds

Discrimination - recognize differences in similar stimuli & adjust responses

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Key Psychological ProcessesLearning

Learning theory - build demand - strong drives, motivating cues & positive reinforcement

New company:– Same drives as competitors - transfer

loyalty to similar brands (generalization)

– Different drives & offer strong cue inducements to switch (discrimination)

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Key Psychological ProcessesMemory

Memory

– Information & experiences in life

Short-term memory (STM)

– Temporary repository of information

Long-term memory (LTM)

– More permanent repository

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Associative network memory model – LTM consists of nodes & links

Nodes– Stored information connected by

links– Node activated - external

information encoded or internal information taken from LTM

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Brand knowledge– Linked associations determine

information recalled on brand Brand associations

– Brand-related thoughts, feelings, perceptions linked to brand node

Right product experience - right brand data created & maintained in memory

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Figure 6.3 Hypothetical Haier Mental Map

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MEMORY PROCESSES: ENCODING

How & where information enters memory

Determinant of strength of association1. Quantity & quality of processing2. Organization & strength in memory3. Its nature: simple, vivid, concrete

4. Repeat exposures -- stronger associations

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MEMORY PROCESSES: RETRIEVAL

How information gets out of memory Brand association strength - easy access,

recall

Successful brand information recall, 3 Successful brand information recall, 3 factors:factors:

1.Other information in memory - interference

2.Time since exposure affects strength

3. Information “available” but not “accessible”

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The Buying Decision-Process:The Five-Stage Model

Basic psychological processes - important - how consumers make buying decisions

“Stage model” of buying decision process – 5 stages

Buying process starts long before actual purchase and consequences long after

May skip or reverse stages

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Table 6.2 Understanding Consumer Behavior

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Figure 6.4

Five-Stage

Model of the

Consumer

Buying Process

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The Buying Decision-Process:The Five-Stage Model – Problem

Recognition

Buying starts - recognize problem/need

Need triggered by stimuli

– Internal stimulus: normal needs, hunger

– External stimulus: love new car- triggers

buying one

Identify situation that trigger need

Develop strategies that trigger interest

Important with discretionary purchase

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The Buying Decision-Process:The Five-Stage Model – Information

Search

Information Search

Aroused consumer

search for more

Heightened attention:

receptive to information

Active information

search: find ways to

learn about product

4 sources:4 sources:1.Personal

2.Commercial

3.Public

4.Experiential

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Search

Total brands available total set

Know only subset of total awareness set

Meet initial criteria consideration set

More information, few remain choice set

Makes final choice from this set

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Search

Marketers need to know:

Consumer’s other brands in choice set - competition

Identify sources & importance

Prepare effective communications for target market

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Figure 6.5 Successive Sets Involved in Consumer Decision Making

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The Buying Decision-Process: The Five-Stage Model – Evaluation of Alternatives

Evaluation of Alternatives Value judgment process - conscious &

rational

Consumer evaluation process:

1.Try to satisfy a need

2.Look for certain benefits in solution

3.Each with attributes, benefits sought

4.Attributes of interest to buyers vary

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BELIEFS & ATTITUDES

Influence buying behavior

Belief - descriptive thought on

something

Attitude – enduring evaluation, feeling

& action tendencies toward something

To fit product into existing attitudes

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EXPECTANCY-VALUE MODEL Consumer evaluates product Combine brand beliefs - importance Weights attached to each attribute

Total perceived valueTotal perceived value

= (weights x beliefs) of all = (weights x beliefs) of all attributesattributes


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Table 6.3Table 6.3 A Consumer’s Brand Beliefs about Computers

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Applying Customer Value AnalysisApplying Customer Value Analysis

Customer value analysis assumes customers choose between competitive brand offerings with most customer value

Customer Value = Customer Benefits – Costs

Customer benefits = product, service, personnel & image benefits

Costs = purchase price, acquisition costs, usage costs, maintenance costs, ownership costs, and disposal costs

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Applying Customer Value AnalysisApplying Customer Value Analysis

Major steps:1. Identify major attributes customers value2. Assess quantitative importance of

attributes3. Assess company’s & competitors’

performances on customer values against rated importance

4. How customers in segment rate company’s performance against major competitor on attribute-by-attribute basis

5. Monitor customer values over time

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The Buying Decision-Process:The Five-Stage Model – Purchase

Decisions

In purchase intention, 55 sub-

decisions:

1. Brand2. Dealer

3. Quantity4. Timing

5. Payment method

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Decisions

NON-COMPENSATORY MODELS OF CONSUMER

CHOICE

Positive & negative attributes may not

net out

Attributes evaluated in isolation

– Easier decision but choice may be

different if deliberated

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Decisions

3 choice heuristics1.Conjunctive heuristic: minimum for

each attribute - choose 1st meets minimum for all

2.Lexicographic heuristic: best brand on perceived most important attribute

3.Elimination-by-aspects heuristic: compare brands on attribute – remove those < minimum

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Decisions

If & how heuristics used depends on:

1. Characteristics of person

2. Purchase decision & setting

3. Social context

May adopt > 1 decision rules

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Decisions

INTERVENING FACTORS

Between purchase intention & decision

1. Attitudes of others:

Intensity of other’s attitude

Motivation to comply with other’s wishes

2. Unanticipated situational factors

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Decisions

Decision influenced by perceived risk:Decision influenced by perceived risk:

1. Functional risk – not up to expectations

2. Physical risk – threat to well-being/health

3. Financial risk – not worth price

4. Social risk – embarrassment from others

5. Psychological risk – mental well-being

6. Time risk – opportunity cost to find another

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Figure 6.6

Steps

Between

Evaluation

of

Alternatives

& a

Purchase

Decision

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POSTPURCHASE SATISFACTION

Satisfaction = performance -

expectations

((––) ) disappointed (0)(0) satisfied ((++)) delighted

Expectations - from sellers, friends etc Larger gap - greater dissatisfaction Product claims must truthfully represent

likely performance

The Buying Decision-Process:The Five-Stage Model – Postpurchase

Behavior

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POSTPURCHASE ACTIONS1. Abandon/return product2. Seek to confirm high value3. Public action - complain, go to

lawyer4. Private actions - stop buying or

warn friends Postpurchase communications - fewer

product returns & cancellations


Behavior

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Behavior

POSTPURCHASE USE & DISPOSAL

Sales frequency - consumption rate

Perceptions of usage ≠ reality

Speed up replacement

Ensure disposal – environment-friendly

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BehaviorPOSTPURCHASE USE & DISPOSAL

Speed up replacement HOW?1. Tie replacement to holiday2. Give better information:

Date first used/be replaced Current level Eg toothbrush - color indicator

3. Actual usage < recommended – regular use merits

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Figure 6.7 How Customers Use & Dispose of Products

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Other Theories of Consumer Decision Making – Level of Consumer Involvement

ELABORATION LIKELIHOOD MODEL Evaluate in low & high-involvement

circumstances

1.Central route - much thought & diligent, rational consideration of important points– Used if sufficient motivationmotivation, , abilityability & &

opportunityopportunity

2.Peripheral route – less thought – Used if any 3 factors is lacking

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LOW-INVOLVEMENT MARKETING STRATEGIES

Convert low to high involvement:1. Link to involving issue2. Link to personal situation 3. Advertise - trigger emotion –

values/ego4. Add important feature

Peripheral route - positive cues to justify brand choice

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VARIETY-SEEKING BUYING BEHAVIOR Brand switch - variety not dissatisfaction

Market leader - habitual buys - fill shelf different versions, avoid being out-of-stock & advertise

Challenger firms - variety seeking - lower prices, deals, coupons, free samples

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Other Theories of Consumer Decision Making – Decision Heuristics & Biases

Heuristics Heuristics Mental short cuts in decision Forecast future outcomes

1. Availability heuristic– Quickness & ease outcome comes to mind

2. Representativeness heuristic– How similar outcome is to others

3. Anchoring & adjustment heuristic– Initial judgment adjusted with information

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Decision TrapsDecision Traps

Common mistakes managers make:1) Plunging 2) Frame Blindness 3) Lack of Frame Control4) Overconfidence in Judgment 5) Shortsighted Shortcuts6) Shooting From the Hip7) Group Failure8) Fooling Yourself About Feedback 9) Not Keeping Track10)Failure to Audit Decision Process

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Other Theories of Consumer Decision Making – Mental Accounting

Mental accounting Categorize funds/valued items - no logical

basis

Core principles:1. Segregate gains2. Integrate losses3. Integrate smaller losses with larger gains4. Segregate small gains from large losses

Prospect theory - alternatives - gains & losses based on value function

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Other Theories of Consumer Decision Making– Profiling the Customer Buying Decision

Process

How to learn stages in buying process?

1. Introspective - How they would act

2. Retrospective - Interview recent purchasers

3. Prospective - Locate those who plan to buy

4. Prescriptive - Ask them ideal way to buy

Understand behavior - consumption system,

customer activity cycle or customer scenario

6-1 CONNECTING WITH CUSTOMERS PART 3. 6-2 ANALYZING Consumer Markets Chapter 6.

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Transcript of 6-1 CONNECTING WITH CUSTOMERS PART 3. 6-2 ANALYZING Consumer Markets Chapter 6.