ENTREP 4 – MARKET RESEARCH AND CONSUMER BEHAVIOR

Instructor: Rolf Nico N. Codilla, CPA

GRADING SYSTEM

Prelim – 15%

Midterm – 20%

Pre-final – 15%

Finals – 25%

Quizzes – 15%

Recitation – 10%

What an Entrepreneur should know about consumers?

∙ Who buys?
∙ Why do they buy?
∙ When do they buy?
∙ Where do they buy?
∙ How do they buy?
∙ How often do they buy?

Consumer Behavior

∙ the study of how individuals make decisions to spend their available resources ∙ what they buy,
why they buy it, when they buy it, how often they buy it, how often they use it

Factors Affecting Consumer Behavior

I. Cultural II. Social III. Personal IV. Psychological
Factor Factors Factors Factors

Culture Reference Groups Age and way of life Motivation

Sub-culture Family Purchasing power Perception

& revenue

Social Class Role and Status Lifestyle Learning

Personality and Beliefs and Attitudes

Self Concept
I. Cultural Factors

1. Culture

– traditional ideas and values attached to these ideas

– a set of learned beliefs, values, attitudes, habits, and forms of behavior that are shared by
society and transmitted from generation to generation.

∙ Features of Culture

✔ It is a learned response.
✔ It includes inculcated values.
✔ Culture is a social phenomenon.

2. Sub-Culture

– a set of learned beliefs, values, attitudes, habits, and forms of behavior that are shared
by subsets of a society and transmitted from generation to generation.

∙ Religion – Hinduism, Christianity, Islam, Buddhism, etc.

∙ Location – North, South, East, West
∙ Gender – Male, Female
∙ Occupation – Business, Service, Professional
∙ Social Class – Upper, Middle, Lower
∙ Age – Old, Young, Middle Age, Children

3. Social Class

– division of society into hierarchical levels of distinct status so that members of a class
have relatively the same status and members of the other classes have either more or
less

II. Social Factors

1. Reference Groups

∙ groups with which individuals interact continuously

 ∙ defined as those that provide to the individual some of points of comparison about
their behavior, lifestyle, desires, consumer habits
∙ influence the image that the individual has of themselves as well as their behavior 2.

Family

∙ maybe the most influencing factor for an individual

∙ an environment of socialization in which an individual will evolve, shape their
personality, acquire values, develop attitudes and opinions on various subjects ∙
We all continue using some products which were used by the family.

3. Social roles and status

∙ position of an individual within a particular social group

∙ social role – set of attitudes and activities that an individual is supposed to have and
do according to his profession, status, and expectations of the people around him

III. Personal Factors

∙ Individual characteristics of each consumer

1. Age and way of life

2. Purchasing power and revenue
3. Lifestyle
4. Personality and Self-Concept

▪ Personality – a set of traits and specific characteristics of each individual

(confidence, sociability, autonomy, charisma, ambition, shyness, curiosity,
adaptability, etc.)
▪ Self-Concept – the image an individual has or would like to have of him

IV. Psychological Factors

1. Motivation

✔ what drives consumer to develop a purchasing behavior

✔ usually works at a subconscious level and is often difficult to measure

2. Perception

✔ is the process through which an individual selects, organizes, and interprets

information they receive in order to do something that makes sense
 ✔ three processes of perception mechanism:

i. Selective Attention

o individual focuses only on a few details or stimulus to which

they are subjected
o the type of stimuli to which an individual is more sensitive
depends on the person

ii. Selective Distortion

o each individual interprets situation in a way consistent to their

established beliefs and values

iii. Selective Retention – storing and retaining information

3. Learning

✔ Learning through action. When we act, we learn.

✔ Learning changes behavior resulting out of experience.

4. Beliefs and Attitudes

✔ Belief – a conviction that an individual has on something

✔ Attitude – the predisposition to act in a certain way toward an object based on
established belief around that object

Models of Consumer Behavior

a. Economic Model

∙ consumer behavior is based on getting the most benefits while minimizing costs ∙
consumer’s purchasing power vs. product’s competitive price

b. Learning Model

∙ consumer behavior is based on the need to satisfy basic and learned needs ∙
basic needs: food, clothing, shelter
∙ learned needs: achievement, fear, guilt

c. Psychoanalytical Model

∙ consumer behavior is influenced by both conscious and subconscious mind ∙

 Three Main Interdependent Systems of Human Personality (Sigmund Freud)
i. Id – instinct, needs, desires, and impulse that demands immediate
fulfillment
ii. Superego – internal representative of traditional values and customs of society.
It is moralistic and learned. Moral science and conscience of human
personality.
iii. Ego – the planner, the thinker, and the executer of personality based on
acceptance or non-acceptance. It balances Id and Superego.

d. Sociological Model

∙ Consumer behavior is based on:

o an individual’s role and influence in the society.

o the people an individual associate with and the culture that
society exhibits