Sunday, March 18, 2012

Chapter 5 - Analyzing Consumer Markets


Marketers must fully understand the customer from their personal behavior to what is going on in daily lives and during their lifetime.  Consumer behavior is defined as the study of how individuals, group, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants.  A consumer’s behavior is influenced by three factors:  cultural, social, and personal.

Cultural factors exercise the broadest and deepest influence.  They consist of things such as a person’s values, behavior, and wants.  Subcultures make up cultures and consist of nationalities, religions, racial groups, and geographic regions.  Social classes are part of one’s culture and include members who share similar values, interests, and behavior.

Social factors consist of reference groups, family, and social roles and statuses.  This also affects consumer buying behavior.  Reference groups are groups that have a direct or indirect influence on a customer’s attitudes or behavior.  They expose customers to new behaviors and lifestyles, influence attitudes and self-concept, and create pressures for conformity that may affect product and brand choices.  Family groups are the most important consumer buying organization in society, and family members constitute the most influential primary reference group.  A person also has a role or status in each group they are in.  A role is the activities a person is expected to perform and this connotes a status.

Personal factors also influence consumer behavior.  These can include age and stage in the life cycle, occupation and economic circumstances, personality and self-concept, and lifestyle and values.  Research shows that over two-thirds of teens ages 13 to 21 make or influence family purchase decisions on audio/video equipment, software, and vacation destinations. 

Marketers must understand what influences the psychological process of the consumers’ behavior.  Five key psychological processes include motivation, perception, learning, emotions, and memory.  People have different needs, which turn into a motive when it is stimulated to a sufficient level of intensity to drive an action.  Motivation has both direction and intensity.  When a motivated person is ready to act it is influenced by his or her perception of the situation.  This is the process by which information is selected, organized, and interpreted to create a meaningful picture.  The learning process brought on when one acts.  It brings changes in behavior as a result from experience.  Emotions are a brought on as a response to the consumer’s action.  Memory can be either short-term or long-term.  Memory encoding is how and where information gets into the memory.  Memory retrieval is how information gets out of the memory.  Information may be available in memory but not be accessible for recall with out retrieval cues or reminders. 

Businesses pay attention to how consumers make purchasing decisions.  They use a five-stage model to help in understanding this process.  Costumers do not always pass through all five stages and they may skip or reverse some.  Using the model provides a good reference because it captures the full range of considerations that arise when a consumer faces a highly involving new purchase.

Problem recognition is the first stage.  It is when the buying process starts because the consumer recognizes a problem or need and it is triggered by internal or external stimuli.  The marketer needs to identify the circumstances that trigger a particular need so they can develop strategies that spark consumer interest and lead to the next stage in the buying process.

The second stage is information search.  Consumers learn about competing brands and their features as they search.  The most effective information about their search comes from personal or experiential sources, or public sources that are independent authorities. 

The next is the evaluation of alternatives.  During this stage the consumer is trying to satisfy a need, looking for certain benefits from the product solution, and seeing each product as a bundle of attributes with varying abilities to deliver the benefits.  Companies can segment their markets according to attributes and benefits important to different consumer groups. 

Once the alternatives are evaluated, a decision to purchase is made.  However, two general factors can intervene between the purchase intention and the purchase decision:  the attitudes of others and the unanticipated situational factors that may erupt to change the purchase intention. 

The final stage in the purchase decision process is the postpurchase behavior.  Once the purchase is made, marketers must then monitor postpurchase satisfaction, postpurchase actions, and postpurchase product uses and disposal.  A satisfied customer will most likely purchase the product again and will tend to say positive things about it to others.  A dissatisfied customer may return the product or take public or private actions. 

At times consumers may make hasty, irrational buying decisions.  They often take “mental shortcuts” known as heuristics or rules of thumb in the decision process.  Consumers often base their decision on how quickly and easily a particular example of an outcome comes to mind; how representative or similar the outcome is to other examples; and/or they arrive at an initial judgment and then adjust it based on additional information.  Consumers also use decision framing which is the manner that choices are presented to and seen by a decision maker. 

Example:
I have two teenagers who live with me and a 22 year old who lives out on her own.  Since they use technology much more than I do, any time I want to make a purchase or have a question about an electronic device I go to them first.  They are up on the latest and greatest.  I also ask them where they want to go on vacation.  Their input is usually the decision I make.  This shows how family is a big influence on consumer behavior.  I talk to others in my generation and it is the same with them.  Teens have the biggest influence on the electronics, vacations, and even styles that are around today.

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