CONSUMER MARKETS AND BUYER BEHAVIOR

IM1019 Principles of Marketing

Sem 2, 2023-2024

Adapted from Kotler P. T. & Amstrong G. 2018, Principles of Marketing (17th Global Edition), Pearson.
Learning objectives
1. Define the consumer market and construct a simple model of consumer buyer
behavior.

2. Name the four major factors that influence consumer buyer behavior.

3. List and define the major types of buying decision behavior and the stages in the
buyer decision process.

4. Describe the adoption and diffusion process for new products.

Consumer markets and buyer behavior

 Consumer buyer behavior is the buying behavior of final consumers -

individuals and households that buy goods and services for personal
consumption.
 Consumer behaviour: is the study of how individuals, groups, and
organizations select, buy, use, and dispose of goods, services, ideas, or
experiences to fulfil their needs and wants.
 Consumer markets are made up of all the individuals and households that
buy or acquire goods and services for personal consumption.
Consumer markets and buyer behavior

The buyer’s characteristics influence how he/she perceives and reacts to the stimuli.
The buyer’s decision process itself affects the buyer’s behavior.
The ‘Why’ of consumer behavior

Stimulus Black box Consumer decision

A knowledge of consumer behaviour can help managers understand why people

behave as they do and that this understanding can help managers predict behavior.
Consumer markets and buyer behavior

Model of consumer behavior

(Kotler & Keller, 2015)
Characteristics affecting consumer behavior
• Consumer purchases are strongly influenced by cultural, social, personal, and
psychological characteristics.

Figure 6-2 Factors Influencing Behavior

Characteristics affecting consumer behavior
 Cultural factors
 Culture is the set of basic values, perceptions, wants, and behaviors learned
by a member of society from family and other important institutions.
 Subcultures are groups of people within a culture with shared value systems
based on common life experiences and situations (e.g. nationalities,
religions, racial groups, and geographic regions).
 Social classes are society’s relatively permanent and ordered divisions whose
members share similar values, interests, and behaviors. Measured as a
combination of occupation, income, education, wealth, and other variables.
 9

Characteristics affecting consumer behavior

Cultural factors

Culture: A culture is a way of life among a group of people—the behaviors, beliefs, values,
and symbols that they accept, generally without thinking about them, and that are passed
along by communication and imitation from one generation to the next

 fundamental determinant of a person’s wants and behavior

https://www.youtube.com/watch?v=GOHvMz7dl2A
Cross-cultural marketing strategy
 There is controversy about the extent to which cross-cultural
marketing strategies, particularly advertising, should be standardized.

 The same advertisement can be interpreted differently in different countries

 Consumers' interpretations of the brand personality may be different in different

countries

 Some companies acknowledge national differences and make suitable

adaptations in their marketing mix.
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Characteristics affecting consumer behavior

Cultural factors

Subculture: include nationalities, religions, racial groups, and geographic regions.

 When subcultures grow sufficiently large and affluent, companies often design
specialized marketing programs to serve them
 12

Characteristics affecting consumer behavior

Cultural factors

Social class: relatively homogeneous, enduring, and hierarchically ordered divisions in a

society whose members share similar values, interests, and behaviour

Ex: In America: upper uppers (1%), lower uppers (2%), upper middles (12%), middle (32
%), working (38%), upper lowers (9 %), and lower lowers (7%)

 Social class members show distinct product and brand preferences in many areas
Characteristics affecting consumer behavior

 Social factors
 Groups and social networks
• Membership groups: Groups with direct influence and to which a person
belongs.
• Reference groups: Groups that form a comparison or reference in
forming attitudes or behavior.
• Aspirational groups: Groups an individual wishes to belong to.
 Characteristics affecting consumer behavior
 Reference groups
… expose a person to new behaviors and lifestyles

… influence the person’s attitudes and self-concept

… create pressures to conform that may affect the

person’s product and brand choices.
Characteristics affecting consumer behavior

 Groups and social networks

• Online social networks
• Buzz marketing
• Social media sites
• Virtual worlds
• Word of mouth
• Opinion leaders
Key opinion leaders
 Consumers crave authenticity,
something a KOL can effectively
communicate for your brand.

 KOLs can help brands target their

ideal audience or niche.

 A KOL is similar to an influencer in

regards to follower size, but a KOL
has a more targeted audience.

 A KOL can help you generate sales.

Characteristics affecting consumer behavior
 Social factors
 Family is the most important consumer-buying organization in society.
 Role and status can be defined by a person’s position in a group.
 People often choose products that show their status in society
Characteristics affecting consumer behavior
 Personal factors
 Age and life-cycle stage
 Occupation
 Economic situations include trends in: spending, personal income, savings,
interest rates.
 Lifestyle - a person’s pattern of living as expressed in his or her
psychographics (e.g. activities, interests, opinions)
 Personality - the unique psychological characteristics that distinguish a
person or group.
Characteristics affecting consumer behavior

 Psychological factors
 Motivation
 Perception
 Learning
 Beliefs and attitudes
Characteristics affecting consumer behavior

 A motive (or drive) is a need that is sufficiently pressing to direct the person
to seek satisfaction of the need.
 Motivation research refers to qualitative research designed to probe
consumers’ hidden, subconscious motivations.
Characteristics affecting consumer behavior
 Perception is the process by which people select, organize, and interpret information
to form a meaningful picture of the world.
 A belief is a descriptive thought that a person has about something based on:
 knowledge
 opinion
 faith
 An attitude describes a person’s relatively consistent evaluations, feelings, and
tendencies toward an object or idea.
Characteristics affecting consumer behavior

 Learning is the change in an individual’s behavior arising from experience and

occurs through the interplay of:
 Drives
 Stimuli
 Cues
 Responses
 Reinforcement
In summary …
Motivation is the action taken by a person to satisfy an unmet need. Consumers do not
always know the emotions and attitudes they carry about products. Motivation
theories help marketers understand motivation and need satisfaction. Perception is
the process by which people select, organize, and interpret information to form a
meaningful picture of the world. Marketers have challenges in attracting the
consumer’s attention and communicating a clear message. People receive, organize,
and interpret messages through their own lenses. Learning describes changes in an
individual’s behavior arising from experience. Marketers can use motivating cues and
positive reinforcement to build demand for a product. Beliefs are descriptive thoughts
about something. Marketers want consumers to have true and accurate beliefs about
products. Attitudes are a person’s consistently favorable or unfavorable evaluations,
feelings, and tendencies toward an object or idea. Beliefs and attitudes are acquired
through doing and learning, and they influence consumer buying behavior.
Types of buying decision behavior
 Continuum of consumer buying decision
Extended decision making
• A lot of information needed
• Must establish a set of criteria for evaluation
Limited decision making
• Criteria for evaluation established
• Fine tuning with additional information
Habitual decision making
• Usually make decisions based on what they
already know
• Frequent, low risk purchases
Quester P., Pettigrew S., Rao Hill S., Kopanidis F., Hawkins D.
I. 2014, Consumer Behaviour - Implications for Marketing
Strategy, McGraw-Hill Education.
The buyer decision process
Consumers typically pass through 5 stages:

1 2 3 4 5

Problem Information Evaluation of Purchase Postpurchase

recognition search alternatives decision behavior

Prepurchase During Postpurchase

Engel, Blackwell and Kollat ​(1968)

The buyer decision process
 Need recognition is the first stage of the buyer decision process, in which the
consumer recognizes a problem or need triggered by:
 Internal stimuli Problem recognition
 External stimuli Ideal state > Actual state
• Ideal state: Where individuals
want to be

• Actual state: Where individuals

are now
Discussion question

What should marketers do to stimulate problem recognition?

 Stimulating problem recognition
 Creating a new ideal state
• A firm can change a consumer's desired state by offering features not previously
offered. These additional attributes are often highlighted as unique features.
 Encouraging dissatisfaction with the actual state
• Marketers can activate problem recognition by emphasizing the importance of
addressing an existing discrepancy between consumers' desired and existing states

 Consumers may not always recognize problems.

 Advertising may activate problem recognition and position a good or service as a
solution.
The buyer decision process
 Information search is the stage of the buyer decision process in which the
consumer is motivated to search for more information.
 Sources of information:
 Personal sources
 Commercial sources
 Public sources
 Experiential sources

- What types of information that consumers seek?

- How social media changes the way consumer search information?
The buyer decision process
 Evaluation of alternatives is the stage of the buyer decision process in which the
consumer uses information to evaluate alternative brands in the choice set.

Example of consumer’s brand evaluations

Attribute and Importance (weight)

Laptop Brand Memory Graphics Size and

Price
Capacity Capacity Weight
(0.25)
(0.20) (0.15) (0.30)
A 8 9 6 9
B 7 7 7 7
C 10 4 3 2
D 5 3 8 5
Cognitive choice
 Compensatory models
 Mental cost-benefit analysis model Simple additive
Compensator
 Negative features can be y
compensated for by positive ones Weighted additive
Decision
 Noncompensatory models model
Lexicographic
 Simple decision model
Non-
 Negative information leads to Eliminatory by
compensator
aspects
rejection of option y

Conjunctive
The buyer decision process
 Purchase decision is the buyer’s decision about which brand to
purchase.
 The purchase intention may not be the purchase decision due to:
 Attitudes of others
 Unexpected situational factors
The buyer decision process
 Postpurchase behavior is the stage of the buyer decision process in which
consumers take further action after purchase, based on their satisfaction or
dissatisfaction.
•Postpurchase satisfaction

•Postpurchase actions

•Postpurchase uses and disposal

 The buyer decision process
 Postpurchase behavior: customer satisfaction outcomes

Mothersbaugh D., Hawkins D., Kleiser S.D. (2019), Consumer Behavior - Building Marketing Strategy 14th, McGraw Hill
Responses to dissatisfaction
 Complaining

 Responding to service recovery

 Engaging in negative word-of-mouth

communication

 Switching

What was the last negative e-WOM you left

for a business and what motivated that?
The buyer decision process
Key takeaways:
1 2 3 4 5

Problem Information Evaluation of Purchase Postpurchase

recognition search alternatives decision behavior

38
The buyer decision process for new products
 The adoption process is the mental process an individual goes through from
first learning about an innovation to final regular use.
 Stages in the adoption process include:

Awareness Interest Evaluation Trial Adoption

The buyer decision process for new products
 Individual differences in innovativeness:  Innovators
 Early adopters
 Early mainstream
 Late mainstream
 Lagging adopters
THANK YOU!!!!