1. Copyright © 2005 Pearson Education Canada Inc. Consumer Markets and Consumer Buyer Behaviour Chapter 7 Powerpoint slides Extendit! version Instructor name Course name School name Date Principles of Marketing: 6th Canadian Edition

2. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.2 Learning Objectives After studying this chapter, you should be able to: –Define the consumer market and construct a simple model of consumer buyer behaviour –Name the four major factors that influence consumer buyer behaviour –List and understand the major types of buying- decision behaviour and the stages in the buyer decision process –Describe the adoption and diffusion process for new products

3. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.3 Opening Vignette: Harley-Davidson One of the great American brands Market share: 1/5 of all North American motorbike sales, 1/2 of all heavyweight segment Demand has exceeded supply since IPO in 1986; 17 years of record sales/income No longer just for stereotypical bike “gangs” Harley’s core clientele: older, affluent, and better educated; “rubbies” Used focus groups and surveys to determine core values and attitudes of customers Identified seven customer types Buying a bike, lifestyle, and an attitude Independence, freedom, and power

4. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.4 Why Study Consumer Behaviour? Have a better knowledge of the following Consumer buying behaviour: –Buying behaviour of final consumers –Purchase goods and services for personal consumption Consumer market: –All individuals and households –Buy or acquire goods and services for consumption Why are marketers interested in this? Need to be able to understand consumer behaviour before we can (hope) to influence it

5. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.5 Model of Buyer Behaviour Buyer behaviour model: –Consumers are exposed to many stimuli including the marketing mix and other external factors –Buyer characteristics influence how these stimuli are perceived and processed –Buyer decision process results in behaviour Figure 7.1

6. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.6 Cultural Factors Culture: –Set of basic values, perceptions, wants and behaviours –Learned from family and important institutions –Core values remain stable, while secondary values change slowly –Growing sense of wanting to be distinct from the U.S., despite media spillover –Differences between cultures are important to international trade Subculture: –Group of people with shared value systems –Based on common life experiences and situations Figure 7.2

7. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.7 Cultural Factors (continued) Canadian subcultures: –2001 census: english language roots 59%, french 23%, remainder a mixture of many cultures of immigration –Multilingual society: more than 100 languages reported in 2001 census, Chinese being the third most spoken language Groups of interest: –Native Canadians: 1 million –Ethnic groups: fastest growing markets in Canada; share values of both cultures –French Canadian: values and behaviour are different Figure 7.2

8. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.8 Cultural Factors (continued) Social classes: –Relatively permanent and ordered divisions in a society –Whose members share similar values, interests, and behaviours –Measured by a combination of income, occupation, education, wealth, and other variables –Consumption behaviour may be to show membership in a class –Marketers are interested because consumption behaviour tends to be consistent within a given social class Figure 7.2

9. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.9 Social Factors Social factors: –Consumers belong to membership groups (parts of) –Compare themselves to reference groups (outside) - may aspire to becoming a member of a group Opinion leader: –Person within a reference group who has kills, knowledge, personality that exert influence on others Figure 7.2

10. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.10 Social Factors (continued) Family: –First and strongest influence on behavior –Roles and influences within the family have been extensively researched –Past assumptions about gender influence are less valid today (men versus women) –Children learn consumption behavior early on (influencer) Roles and status: –Consumers play many roles, each requiring some type of consumption behaviour –Products can be used to show status Figure 7.2

11. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.11 Personal Factors Personal factors: Consumer needs change over their lifetimes in (somewhat) predictable ways Family life cycle: combines age with marital status and presence of children to classify consumers into groups –Young families make different housing, food, and transportation choices than mature couples with grown children gone (or back!) –Marketers need to consider current social trends such an non- traditional living arrangements, delayed marriage, divorce rates, single parents Figure 7.2

12. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.12 Personal Factors (continued) Occupation: –The type of work performed may necessitate different consumption patterns, such as blue collar versus white collar –Will also indirectly affect how much income is available Economic situation: –How much income (or ability to borrow) is available for consumption –Economic indicators such as employment, inflation, interest rates, and consumer debt levels are used to predict changes in buying power Figure 7.2

13. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.13 Personal Factors (continued) Lifestyle: –A person’s pattern of living as expressed by their activities (work, hobbies, sports, social events), interests (food, fashion, family, events), and opinions (themselves, social issues, business)(AIO’s) –Number of different lifestyle or psychographic classification systems (reference only) –SRI’s VALS2 uses self- orientation and access to resources to produce eight different groups Figure 7.3

14. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.14 Personal Factors (continued) Personality and self-concept: –A person’s distinguishing psychological characteristics that lead to relatively consistent and lasting responses to his/her own environment (self-confidence, dominance, sociability, autonomy) – example – sports, Second cup Brand personality: –The specific mix of human traits that may be attributed to a particular brand ( beer) –Match brand personality to the consumer’s personality –Also known as positioning; see Chapter 9 Figure 7.2

15. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.15 Psychological Factors Motivation: –Humans are characterized by goal-directed behaviour –Different needs/wants produces different behaviour Motive: –A need that is sufficiently pressing to direct the person to seek satisfaction Freud’s work focused on unconscious urges directing our behaviour Maslow’s hierarchy of needs focuses on how needs can be classified and ordered in terms of importance Individuals are motivated to satisfy needs at a particular level before moving on Figure 7.4

16. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.16 Psychological Factors (continued) Perception: –The process by which people select, organize, and interpret information –To form a meaningful picture of the world –All perception is selective, subject to distortion, and retained only when it has meaning or importance to the perceiver –To the consumer, perception is reality –Age-old controversy over subliminal advertising (communication needs to be louder to get noticed, not quieter) Figure 7.2

17. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.17 Psychological Factors (continued) Learning: –Changes in an individual’s behavior arising from experience –Consumers learn what satisfies their needs and what does not Beliefs: –A descriptive thought about something (perception) Attitudes: –A person’s consistently favourable or unfavourable evaluations, feelings, and tendencies towards something (politicians) Figure 7.2

18. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.18 Types of Buying Decision Behaviour Degree of involvement: –How much the consumer cares about the purchase decision –Higher levels for products that are expensive, risky, purchased infrequently, and highly self-expressive Degree of perceived differences between brands The type of decision will influence the promotional strategy most likely to be effective Figure 7.5

19. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.19 Types of Buying Decision Behaviour Complex buying behavior – computers (educate, explain) Dissonance-reducing buying behavior – refrigerator (feel to have bought the best product) Habitual buying behavior – mayonnaise (brand belonging) Variety seeking behavior – cookies (can change brands for variety sake) Figure 7.5

20. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.20 The Buyer Decision Process Need recognition: –Triggered by internal or external stimuli –Must reach an intensity high enough to become a drive –Needs are basic, wants are learned behaviour to satisfy them Information search: –Influenced by level of involvement (interest) in the decision –Memory (internal) search –External search: personal, commercial, public, experiential sources of information –Word-of-mouth sources are most influential (credibility) Figure 7.6

21. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.21 The Buyer Decision Process (continued) Evaluation of alternatives: –The process of evaluating information to make a decision –Attributes and importance weights are chosen as criteria –Alternatives compared against the criteria –Marketers can influence this stage; personal selling Purchase decision: –Attitudes of others and unexpected situational factors –May come between purchase intention and decision to buy –Making a decision commits the buyer Figure 7.6

22. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.22 The Buyer Decision Process (continued) Postpurchase behaviour: –What the consumer thinks and does after purchasing and using the product or service –Relationship between consumer expectation and perceived performance Cognitive dissonance: –Buyer discomfort caused by postpurchase conflict –Customers want to believe that they make good decisions; will look for proof and discount information to the contrary –A good reason for customer follow-up programs Figure 7.6

23. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.23 Adoption of New Product Innovations Not all consumers like to try new things; due to risk Stages in the adoption process: –Awareness (know about product, but no information), interest (looks for information), evaluation (makes sense?), trial (tries for estimation), and adoption What can influence the rate of adoption –Individual differences (see figure) –Product characteristics Influence of product characteristics on rate of adoption: –Relative advantage (superior to existing products) –Compatibility (fits values and lifestyles) –Complexity ( Difficult to understand) –Divisibility (can be tried on limited basis) –Communicability( observed or well described advantages) Figure 7.7

24. Copyright © 2005 Pearson Education Canada Inc. Principles of Marketing: 6th Canadian Edition 7.24 In Conclusion… The learning objectives for this chapter were: –Define the consumer market and construct a simple model of consumer buyer behaviour –Name the four major factors that influence consumer buyer behaviour –List and understand the major types of buying-decision behaviour and the stages in the buyer decision process –Describe the adoption and diffusion process for new products