Consumer Markets and Consumer

Buyer Behavior
 What is Consumer Behavior?

• Consumer behavior is the thoughts (logic and

knowledge) and feelings people experience and
the actions they perform in the consumption
process.
• In this chapter we are going to focus on
consumer markets.
• Consumer markets are all the individuals and
households who buy or acquire goods/services
for personal consumption.

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Black Box: Marketers must find out what is in
consumer’s “Black Box”. Stimuli enter the buyer’s black
box where they are turned into a set of observable
buyer responses: product choice, brand choice,
dealer choice, purchase timing and purchase
amount.

 Buyer’s Characteristics influence how he or she

perceives and reacts to the stimuli.

Decision process itself affects the buyer’s behavior.

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Characteristics affecting consumer
behavior.

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 Factors Influencing Consumer Behavior

• Consumer purchases are influenced strongly by

cultural, social, personal and psychological factors.
• These factors are uncontrollable but must be taken
into perspective.

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Cultural Factors affecting consumer
behavior.

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 Cultural Factors Influencing Consumer Behavior

• Culture is the most basic cause of a person’s

wants and behavior.
• Culture is a collection of shared values that are
reflected as “acceptable” behavior by a specific
group of people.
• “The collective programming of the mind that
distinguishes one category of peoples from
those of another.”
Hofstede, G. & Bond, M. (1988), "The Confucius connection," Organizational Dynamics,
Spring, 5-21.
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 values shape cultures

• Values are enduring beliefs that a specific

mode of conduct or end-state of existence is
personally or socially preferable (Rokeach,
1968).
– Values are general principles.
– Form the core principles of every culture
• Example: honesty, friendliness, respect towards
elders, hard work, material comfort, fitness and
health. Etc. *Video: HSBC

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 Understanding cultures

• A common culture enables individuals to

predict what others will do in a particular
situation
– formal occasions
– greeting people
– funerals
– weddings
– graduations
– birthdays

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 How is culture learnt?

• Formal learning
– Parents, older siblings
• Informal learning
– Friends, peers, reference groups
• Technical learning
– teachers etc

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 Culture and Marketing

• Culture and marketing are inter-linked so that:

– products and services should resonate with
priorities of a culture.
– culture is reflected in marketing communications.
• Spotting cultural shifts is important for the
launch of new products/services.

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Culture is reflected in marketing communications:
AXE advertisement in Arabic countries

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 Sub-cultures

• Subcultures are groups of people within a

culture with shared value systems based on
common life experiences and situations.
– Nationalities, religions, race, geographic regions.
– Careful understanding subcultures will further enhance the
effectiveness of marketing mix programs.

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 Social Class

Social classes are society’s relatively permanent and ordered

divisions.
• Measured by a combination of occupation, income, education,
wealth, and other variables.

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 SEC of Bangladesh: By Nielsen
SEC A SEC B

2.42 % of total Population 13.28% of Total population

•He/she is businessman/businesswomen
or a service holder (mid/senior) • He/She is a house owner or
•His/Her income level is 40,000 BDT or officer/executive (mid/senior)
more per month. • His/Her income level is minimum
•Has a bachelors degree or more. 10,000 BDT to maximum 30,000 BDT.
•He/She works late till night, sometimes • Has a Bachelors degree.
surfs internet, likes to hang-out with
friends and family. • Usually very much concerned about
family.
•Watches television after returning home
from work. • Reads mainly Bengali newspapers and
•Reads the newspaper regularly. watches TV on a regular basis.

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 SEC of Bangladesh
SEC D
SEC C

15.67% of Total population

30.29% of Total population
• income level generally lies between BDT
6,000 to BDT 20,000. • He might be a shop owner, salesman,
• SSC/HSC graduate, Diploma degree. skilled worker or supervisor
• Mostly family oriented, tries to keep in • Income level generally lies between
touch with his family in his village. BDT 5,000 to BDT 15,000
• Desires to celebrate Eid in his village with • Spends major portion of his income
his family. for his family.
• Saves money for his marriage
• Likes to watch Bangali films.

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 SEC of Bangladesh
SEC E

38.33% of Total population

•skilled/unskilled labor.

•income level : BDT 3,000 to BDT 10,000

•Struggles a lot in life. But makes the

best out of what they have.

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 Brands targeting SEC groups

Magic targets consumers from: SEC D and E.

Kool targets consumers from: SEC B and C.
Spring targets consumers from: SEC A.
Surf Excel targets consumers from: SEC A.
AXE targets consumers from: SEC A.
Rin targets consumers from SEC: B and C.
Wheel targets consumers from SEC: D and E.

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Social Factors affecting consumer
behavior.

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 Reference Groups: All the groups that have a direct (face – to – face) or indirect
influence on his or her attitudes or behavior.
 Opinion leader: Person within the reference group who, because of special skills,
knowledge, personality, or other characteristics, exerts influence on others.
 Membership: Groups that have a direct influence and to which a person
belongs.
 Primary: Those membership groups with whom the person interacts fairly
continuously and informally. Ex: Family, Friends.
 Secondary: Those membership groups those requires more formal and less
continuous interaction. Ex: Religious, Professional.
 Aspirational: a sub-category of a reference group, consisting of individuals (not
necessarily known personally) with whom a person desires to be associated.
 Dissociative: groups with whom an individual does not wish to be associated,
groups whose use of a product will deter other buyers. For Example; the store
literally named The Gap came about because many younger people wanted to
actively dissociate from parents and other older and "uncool" people.
 Family

• Family members can strongly influence buyer

behavior.
• Family is the most important consumer-buying
organization in society.
• Understanding what roles husbands, wives,
children play in buyer decision making.
• In Bangladesh, the wife plays a vital role which
is why most brands are focused on the wife to
boost sales in the “family” organization.
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Personal Factors

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 Occupation

• Occupation affects the goods and services

bought by consumers.
• White collar executives will purchase business
suits.
• Blue collar workers will buy rugged clothes.

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 Economic Situation

• A person’s economic situation will affect

purchase behavior.

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 Lifestyle

• People coming from the same subculture,

social class, and occupation may have quite
different lifestyles.
• Lifestyle is a person’s pattern of living and how
they interact in the world. Example: healthy
lifestyle, trendy lifestyle, adventurous lifestyle

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 Personality

• Each person’s distinct personality influences

his/her buyer behavior.
• Personality refers to the unique psychological
characteristics.
• Some parameters of personality: self
confidence, dominance, sociability, autonomy,
adaptable, aggressive. Etc.

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 Brand Personality

• Brand Personality : may be based on consumer’s

desired self and not actual.
– Sincerity (down to earth, honest) – Nestle, Dove.
– Competence (reliable, intelligent, successful) – GrameenPhone,
Toshiba.
– Excitement (daring, spirited, imaginative) – Apple, Mountain Dew.
– Ruggedness (tough and outdoorsy) – Ecstasy, Levis, Bajaj Pulsar, Jeep.
– Sophistication (upper class and charming) – Luis Vuitton, Mercedes
Benz.

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Psychological Factors

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 Motivation

• A person has many needs at any given time.

• Needs provide motives for consumer behavior.

needs motives wants Demand Purchase

• Maslow’s Hierarchy of needs.

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Maslow’s Hierarchy of Needs

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 Maslow’s Hierarchy of Needs

• Physiological needs: Basic survival needs such as the need for food, water.
• Safety needs: The need to feel secure at home or at work.
• Social needs: The need to feel loved, accepted, and part of the group.
• Esteem needs: The need for recognition and acknowledgement from
others, as well as self-respect and a sense of status or importance (e.g. of
blackberry smart phones selling the status parameter for corporate
executives). BMWs, Mercedes, Iphones.
• Self Actualization needs: The need to develop to one’s fullest potential
(when a person has found out the meaning of time which has produced
profound happiness; connection with a man’s vision in life). E.g. of
Mahatma gandhi..e.g. social business

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 Perception

• Perception is the process by which people

select, organize, and interpret information to
form a meaningful picture of the world.
• Perceptions from the same stimulus can be
formed because of 3 reasons:
• Selective attention
• Selective distortion
• Selective retention.
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 Types of Perception

• Selective attention is the tendency for people to

screen out most of the information to which they
are exposed – marketers need to work really hard
to get their attention.
• Selective distortion is the tendency for people to
interpret information in a way that will support
what they already believe (e.g. of a brand with a –
ve experience).
• Selective retention is the tendency to remember
good points made about a brand they favor and
forget good points about competing brands.
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• Learning: Changing in an individual’s behavior
arising from experience. Ex: You saw a Sony cyber
shot Camera in a shop window; you heard about a
price cut; your Friend told you about the fine
features of Cybershot; you bought it; it served well;
so you used it over and over again; So next time you
go for shopping (Mobile, TV, Walkman); you ask for
Sony.

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• Belief: A descriptive thought that a person holds
about something.

• Attitude: A person’s consistently favorable or

unfavorable evaluations, feelings, and tendencies
toward an object or idea. (Attitude regarding:
religions, politics, clothes, music, foods and almost
everything).

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Factors Influencing Consumer Behavior

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Types of Buying Decision Behavior

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Types of Buying decision behavior

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 Complex Buyer Behavior

• Consumers are highly involved when the

product is expensive, risky, purchased
infrequently, and highly self-expressive.

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 What should Marketers do then?
 Marketers of High Involvement products must:

› Understand the information gathering system of consumers.

› Know how to evaluate consumer behavior,
› Need to help buyers to learn about product class attributes and
their relative importance.
› Differentiate brand features perhaps by describing brand’s
benefit in the print/internet media with long copy.
› Motivate store salespeople and the buyer’s acquaintance
(associate/Friend) to influence the final brand choice.

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 Dissonance reducing Buyer Behavior

• Consumer buying behavior in situations

characterized by high involvement but few
perceived differences amongst brands.

• Marketers should focus on post sale

communications; so that consumers feel cared
and feel good about their brand.

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 Habitual Buyer Behavior

• Consumer buying behavior in situations characterized by

low-consumer involvement and few significantly perceived
brand differences.
• Marketers should use price and sales promotions to
stimulate trial.

• Advertising should stress only a few key points.

• Visual symbols and imagery are important.

• Advertisements should be highly repetitive with short

messages.

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 Variety-seeking Buyer Behavior

• Consumers undertake variety seeking buyer behavior in

situations characterized by low consumer involvement but
significant perceived brand differences.
• In such cases, consumers switch brands quiet often for the
sake of variety.
• The strategy for the market leader will be to dominate shelf
space, keeping them fully stocked, running frequent
reminder advertising to encourage Habitual buying behavior.

• Challenger firms will focus on low price, special deals,

coupons, free samples and advertising explaining the need
to try something new

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The Buyer Decision Process

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The Buyer Decision Process

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 Need Recognition

• Need Recognition occurs when the buyer

recognizes a problem or need:
– Hunger.
– Transportation.
– Thirst.

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 Information Search
• Example: once you have decided to buy a car you will pay more
attention to car ads, cars owned by friends, and have car related
conversations or search the web.

• Sometimes if it is a low involvement product, consumers might not

do in in-depth informational search.

• Personal sources – family, friends, neighbors, colleagues.

• Commercial sources - advertising, dealer websites, salespeople,
packaging, displays.
• Experiential sources - handling, examining, using the product.

• Conclusion: these informational sources has an influence on buying

decision process.

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 Evaluation of Alternatives

• Evaluation of alternatives is how the consumer

processes information to arrive at brand choices.
• Say you have finally chosen 3 brands of cars to choose
from: BMW, Mercedes, Volvo.
• Prestige, styling, operating economy.
• Evaluation of alternatives are based on the information
search.
• Marketers need to understand what factors consumer
take into consideration when they are evaluating
alternatives. So that they can influence consumer
decision making process for THEIR brands.
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 Purchase Decision.

• The act by the consumer to buy the most

preferred brand.
• The purchase decision can be affected by:
– Attitudes of others: e.g. The wife’s attitude that the
husband should buy the lowest priced car.
– Unexpected situational factors: Sudden economic
problem, a close competitor might drop its price, a
friend might report dissatisfaction in the car.

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 Post Purchase Behavior

• The marketer’s job does not end after the product is bought.

• Post Purchase behavior is the stage of the buyer decision process in

which consumers take further action after purchase, based on their
satisfaction/dissatisfaction.

• Concept of CRM is important at this stage.

• Customer satisfaction is the person’s feeling of pleasure or

dissatisfaction resulting from comparing a product’s perceived
performance in relation to his/her expectations.

• Customer satisfaction leads customer loyalty with leads greater

customer lifetime value and customer equity.

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