1. Consumer Markets and Consumer Buyer Behavior Chapter 6

2. 6 - 1 Objectives Be able to define the consumer market and construct a simple model of consumer buyer behavior. Be able to define the consumer market and construct a simple model of consumer buyer behavior. Know the four major factors that influence consumer buyer behavior. Know the four major factors that influence consumer buyer behavior.

3. 6 - 2 Objectives Understand the major types of buying decision behavior and the stages in the buyer decision process. Understand the major types of buying decision behavior and the stages in the buyer decision process. Be able to describe the adoption and diffusion process for new products. Be able to describe the adoption and diffusion process for new products.

4. 6 - 3 Harley “Hogs” account for 1/5 of U.S. cycle sales Harley “Hogs” account for 1/5 of U.S. cycle sales Sales have exceeded supply for years Sales have exceeded supply for years 1986-2000: Four stock splits, increase of 7,100% 1986-2000: Four stock splits, increase of 7,100% Fiercely loyal clientele revolves around 7 core customer types Harley owners use their bikes to express their lifestyle and attitudes Advertising reflects the Harley mystique Harley-Davidson Case Study

5. 6 - 4 Definitions Consumer Buying Behavior Consumer Buying Behavior  Buying behavior of individuals and households that buy products for personal consumption. Consumer Market Consumer Market  All individuals/households who buy products for personal consumption.

6. 6 - 5 Stimulus Response Model Stimulus Response Model  Marketing and other stimuli enter the buyer’s “black box” and produce certain choice/purchase responses.  Marketers must figure out what is inside of the buyer’s “black box” and how stimuli are changed to responses. Model of Consumer Behavior

7. 6 - 6 Characteristics Affecting Consumer Behavior Cultural Cultural Social Social Personal Personal Psychological Psychological Culture Subculture  Hispanic consumers  African Americans  Asian Americans  Mature consumers Social Class Key Factors

8. 6 - 7 Hispanics Hispanics  35 million consumers purchase $425 billion worth of goods and services.  Expected to grow 64% in 20 years.  Spanish media makes group easy to reach.  Brand loyal group. Characteristics Affecting Consumer Behavior

9. 6 - 8 African Americans African Americans  35 million consumers purchase $527 billion worth of goods and services.  Growing more affluent / sophisticated.  Price and brand name conscious; quality and selection are important.  Certain media target this group. Characteristics Affecting Consumer Behavior

10. 6 - 9 Asian Americans Asian Americans  10 million consumers purchase $229 billion worth of goods and services.  Fastest growing, most affluent subculture.  Many nationalities comprise this group.  Consumer packaged goods companies now target this group more heavily. Characteristics Affecting Consumer Behavior

11. 6 - 10 Mature Consumers Mature Consumers  75 million consumers aged 50+ will grow to 115 million within 25 years.  Mature consumers control 50% of all discretionary income.  Attractive market for travel, restaurant, and cosmetics products, among others. Characteristics Affecting Consumer Behavior

12. 6 - 11 Characteristics Affecting Consumer Behavior Cultural Cultural Social Social Personal Personal Psychological Psychological Groups  Membership  Reference  Aspirational groups  Opinion leaders  Buzz marketing Family  Children can influence Roles and Status Key Factors

13. 6 - 12 Characteristics Affecting Consumer Behavior Cultural Cultural Social Social Personal Personal Psychological Psychological Age and life cycle Occupation Economic situation Lifestyle  Activities, interests, and opinions  Lifestyle segmentation Personality and self- concept  Brand personality Key Factors

14. 6 - 13 Brand Personality Dimensions Characteristics Affecting Consumer Behavior Sincerity Sincerity Ruggedness Ruggedness Excitement Competence Sophistication Sophistication

15. 6 - 14 Characteristics Affecting Consumer Behavior Cultural Cultural Social Social Personal Personal Psychological Psychological Motivation  Needs provide motives for consumer behavior  Motivation research  Maslow’s hierarchy of needs Perception  Selective attention, selective distortion, selective retention Learning  Drives, stimuli, cues, responses and reinforcement Beliefs and attitudes Key Factors

16. 6 - 15 Maslow’s Hierarchy of Needs Characteristics Affecting Consumer Behavior Self-actualization Esteem Needs Social Needs Safety Needs Physiological Needs

17. 6 - 16 Types of Buying- Decision Behavior Difference between brands SignificantDifferences Complex buying behavior Low Few Differences Dissonance- reducing buying behavior Habitual buying behavior Variety-seeking buying behavior High Involvement Level

18. 6 - 17 Five Stages: Five Stages:  Need recognition  Information search  Evaluation of alternatives  Purchase decision  Postpurchase behavior The Buyer Decision Process

19. 6 - 18 The Buyer Decision Process Need recognition Need recognition Information search Information search Evaluation of alternatives Evaluation of alternatives Purchase decision Purchase decision Postpurchase behavior Postpurchase behavior Needs can be triggered by:  Internal stimuli  Normal needs become strong enough to drive behavior  External stimuli  Advertisements  Friends of friends Process Stages

20. 6 - 19 The Buyer Decision Process Need recognition Need recognition Information search Information search Evaluation of alternatives Evaluation of alternatives Purchase decision Purchase decision Postpurchase behavior Postpurchase behavior Consumers exhibit heightened attention or actively search for information. Sources of information:  Personal  Commercial  Public  Experiential Word-of-mouth Process Stages

21. 6 - 20 The Buyer Decision Process Need recognition Need recognition Information search Information search Evaluation of alternatives Evaluation of alternatives Purchase decision Purchase decision Postpurchase behavior Postpurchase behavior Evaluation procedure depends on the consumer and the buying situation. Most buyers evaluate multiple attributes, each of which is weighted differently. At the end of the evaluation stage, purchase intentions are formed. Process Stages

22. 6 - 21 The Buyer Decision Process Need recognition Need recognition Information search Information search Evaluation of alternatives Evaluation of alternatives Purchase decision Purchase decision Postpurchase behavior Postpurchase behavior Two factors intercede between purchase intentions and the actual decision:  Attitudes of others  Unexpected situational factors Process Stages

23. 6 - 22 The Buyer Decision Process Need recognition Need recognition Information search Information search Evaluation of alternatives Evaluation of alternatives Purchase decision Purchase decision Postpurchase behavior Postpurchase behavior Satisfaction is important:  Delighted consumers engage in positive word-of- mouth.  Unhappy customers tell on average 11 other people.  It costs more to attract a new customer than it does to retain an existing customer. Cognitive dissonance is common Process Stages

24. 6 - 23 Buyer Decision Process for New Products New Products New Products  Good, service or idea that is perceived by customers as new. Stages in the Adoption Process Stages in the Adoption Process  Marketers should help consumers move through these stages.

25. 6 - 24 Stages in the Adoption Process Buyer Decision Process for New Products Awareness Awareness Evaluation Evaluation Interest Trial Adoption Adoption

26. 6 - 25 Buyer Decision Process for New Products Individual Differences in Innovativeness Individual Differences in Innovativeness  Consumers can be classified into five adopter categories, each of which behaves differently toward new products. Product Characteristics and Adoption Product Characteristics and Adoption  Five product characteristics influence the adoption rate.

27. 6 - 26 Adopter Categories Buyer Decision Process for New Products Innovators Innovators Early Majority Early Majority Early Adopters Late Majority Laggards Laggards

28. 6 - 27 Product Characteristics Buyer Decision Process for New Products Relative Advantage Relative Advantage Compatibility Compatibility Complexity Divisibility Communicability Communicability

29. 6 - 28 Buyer Decision Process for New Products International Consumer Behavior International Consumer Behavior  Values, attitudes and behaviors differ greatly in other countries.  Physical differences exist which require changes in the marketing mix.  Customs vary from country to country.  Marketers must decide the degree to which they will adapt their marketing efforts.