QUIZ: Graded

Q.1. EXPLAIN CUSTOMER PERCEIVED VALUE

(CPV).
Q2.HOW IS ‘NET PROMOTER SCORE’
CALCULATED?
ANALYZING CONSUMER
MARKETS
MARKETING MANAGEMENT
Material Source:
Chapter 06 (Marketing Management – Global Edition 15e by
Phillip Kotler; Kevin Keller
ANALYZING CONSUMER MARKETS

A saying from the past:

“Build a better
mousetrap, and the
world will beat a path
to your door.” The idea
worked in the past!!

Will it work today? WHY?/WHY NOT?

 ANALYZING CONSUMER MARKETS

“ Marketers [today] must have a thorough

understanding of how consumers think, feel,
and act [consumer behavior] , and offer clear
“
value to each and every target consumer.
Philip Kotler
What FACTORS influence consumer
behavior?
 THREE MAJOR SETS OF FACTORS:
 CULTURAL  SOCIAL  PERSONAL
FACTORS: FACTORS: FACTORS:
 Culture  Reference  Age
 Sub-culture Groups  Stage of
 Social Class  Family Life-cycle
1. CULTURAL FACTORS: WHAT IS CULTURE?

 CULTURE refers to Values & Beliefs. It is a fundamental

determinant of a person’s wants & behavior.
 CULTURE can be divided into SUB-CULTURES.
SUBCULTURES are groups of people who follow norms &
behaviors of a culture, yet differ in some distinct ways
e.g. nationality, religion, or racial group.
SUBCULTURAL INFLUENCE ON MARKETING
 Large Subcultures, can open up opportunities for
companies to design specific products & marketing
programs for them.

Pepsi Limón
MID 1970s MARCH 2017 2022: Hispanics =18%
‘PUNKS’ NIKE HIJAB OF US POPULATION
 WHAT ARE SOCIAL CLASSES?
3. Homogeneous divisions in society, arranged in a
hierarchy based on income, education, memberships.
Assumption: People of a social class display similar values & interests.
 2. SOCIAL FACTORS: REFERENCE
GROUPS
 People/ Groups that have a direct (face-to-face) or
indirect influence on their attitudes or behavior.
 Two types:
 Primary groups: family, friends,
neighbors.
 Secondary groups: religious,
professional affiliations.
 3 TYPES OF REFERENCE GROUPS…

1.Aspirational Groups: Groups someone wishes to join.

2. Dissociative Groups: Groups whose values a person
rejects & will not be part of.
3. Opinion Leaders: who one looks up to for advice or
information.
 CLIQUES: Small groups of people/ subset of a network,
holding common interests, views, or purposes.
 FAMILY: A PRIMARY REFERENCE GROUP
 Family is considered as most important/most influential.
 TWO TYPES:
 Family of orientation: Parents & siblings.
Influence on: religion, politics, personal ambition.
 Family of procreation: Spouses & children.
Traditional roles & status: Wives influence choice of
food & household items; Husbands decide on purchase
of cars, air-conditioners for the house.
3. PERSONAL FACTORS:
THAT INFLUENCE BUYING DECISION
a) Age and Stage of Life-cycle:
 Family Life Cycle: infancy, childhood, adolescence,
adulthood affect consumption behavior.
 Psychological Life-cycle: moving from phase of
dependence (Childhood) to phase of independence
(Adulthood).
 Critical Life Events: marriage, divorce, career
change.
3. PERSONAL FACTORS:
THAT INFLUENCE BUYING DECISION
b) Occupation:
 Different occupational groups (Engineers, Lawyers,
Doctors, Marketing Managers) have above-average
interest in products and services they relate to.
c) Economic Circumstances:
 Personal: Disposable income, savings & assets etc.
 External: Recession, inflation etc.
3. PERSONAL FACTORS:
THAT INFLUENCE BUYING DECISION
d) Personality & Self-concept:
 Personality: a set of distinguishing human psychological
traits (self-confident, dominant, adaptable…)
 Self-Concept: what we think others see us as.
e) Lifestyle & Values:
 Lifestyle: pattern of living - activities, interests, and
opinions. Goods on sale appeal to some shoppers.
 Values: relate to “beliefs”.
ROLE OF PSYCHOLOGY IN UNDERSTANDING
CONSUMER BEHAVIOR

“ Consumer psychology provides enough evidence

that consumer behavior is not just one side of
our existence, but… a central dimension of our
everyday lives… changing and defining our “
identity, beliefs, attitudes and practices.

Cătălina BUTNARU, Stanford Uni Grad

UNDERSTANDING CONSUMER BEHAVIOR:
THE STIMULUS-RESPONSE MODEL…

…suggests that Marketing and Environmental stimuli

enter the consumer’s consciousness, and pass through
a set of psychological processes, that combine with
consumer characteristics to result in a purchasing
decision.
UNDERSTANDING CONSUMER BEHAVIOR:
THE STIMULUS-RESPONSE MODEL…

Consumer
Psychology
STIMULUS RESPONSE

Marketing Other Buying Decision Purchase

Stimuli
+ Stimuli Decision
Process

Consumer
Characteristics
UNDERSTANDING CONSUMER BEHAVIOR:
THE STIMULUS-RESPONSE MODEL…
Q.WHAT DOES THE STIMULUS-RESPONSE MODEL
SUGGEST?

…that Marketing and Environmental stimuli enter the

consumer’s consciousness, and pass through a set of
psychological processes, that combine with consumer
characteristics, to result in a purchasing decision.
KEY PSYCHOLOGICAL PROCESSES

“ The starting point for understanding consumer

behavior is the stimulus-response model.
In the overall context, understanding of
Consumer Behavior falls within the domain of “
psychology - essentially regarded as a science.
Philip Kotler
4 MOST WELL KNOWN PSYCHOLOGICAL
PROCESSES
1. Motivation: helps set goals; Laddering technique
helps determine level at which to focus message.
2. Perception: process by which we select, organize,
and interpret information inputs.
3. Learning: what induces changes in our behavior
arising from or based on experience.
4. Memory: a repository of information, long-term or
short-term. Works on an “associative model”.
CONSUMER PSYCHOLOGY:
3 Best Theories OF Motivation

THEORY # 1: Sigmund Freud: “Psychological forces

shaping people’s behaviors are largely unconscious.”
 Psychologists use in-depth interviews & techniques
like ‘word association’ & ‘picture interpretation’ to
reveal what motivates people.
 Once the type of motivation required is determined,
the right ‘stimulus’ can be used to trigger a response.
CONSUMER PSYCHOLOGY:
3 Best Theories OF Motivation

THEORY #2: Abraham Maslow:

Human needs are arranged in a
hierarchical order, from the
most pressing (Physiological
needs”) to the least pressing
(Self-actualization needs)”.
CONSUMER PSYCHOLOGY:
3 Best Theories OF Motivation

THEORY #3: Frederick Herzberg’s two-factor theory

consisting of:
1. DISSATISFIERS (factors that cause dissatisfaction)
2. SATISFIERS (factors that cause satisfaction).

The theory: “The absence of dissatisfiers is not

enough to motivate a purchase; satisfiers must also
be present” to generate satisfaction.
Frederick Herzberg’s two-factor theory
applied to a company situation….
WHAT COULD LEAD TO WHAT COULD LEAD TO
DISSATISFACTION SATISFACTION?
Company Policy Achievement
Supervision Recognition
Relationship with Boss Work staff
Work conditions Responsibility
Salary Advancement
Relationship with Peers Growth
CONSUMER PSYCHOLOGY:
PERCEPTION
“ “
Perception is the process by which we select, organize,
and interpret information inputs…
THREE cognitive tendencies affect perception:
1. Selective attention: noticing/responding to some stimuli
& not others;
2. Selective distortion: interpreting information in a way
that fits our biases;
3. Selective retention: remembering or retaining some
information & not others.
EXAMPLE: SELECTIVE DISTORTION-
WHAT DO YOU SEE?
CONSUMER PSYCHOLOGY:
LEARNING
1. Learning induces behavioral change arising from
experience.
2. Most human behavior is learned, though much learning
is incidental.
3. Learning is produced through interplay of Drives,
Stimuli, Cues, Responses, and Reinforcement
CONSUMER PSYCHOLOGY:
FOUR LEARNING INFLUENCERS

1. Drive: how strong is the ‘internal’ desire.

2. Cues: minor external stimuli.
3. Responses: a) Cognitive/rational or Emotional.
4. Memory: short-term or long-term.
[Long-term memory is linked with remembering &
reinforcement.]
Consumer Buying Decision:
THE OLD 5-STAGE MODEL
1. PROBLEM RECOGNITION: HOW?
 Understanding ‘need’ and ‘expectation’ or
recognizing the ‘problem’
 Identifying what triggers the particular
need
Consumer Buying Decision:
THE OLD 5-STAGE MODEL

2. INFORMATION SEARCH: HOW?

 Active information search
 Information sources:
 Personal
 Commercial
 Public
 Experiential
Consumer Buying Decision:
THE OLD 5-STAGE MODEL

3. EVALUATION OF ALTERNATIVES: HOW?

 Matching needs/ expectations with benefits
or attributes. HOW?
 Applying “Expectancy-Value” model
 Setting minimum acceptable level
Consumer Buying Decision:
THE OLD 5-STAGE MODEL
4. PURCHASE DECISION:
 Choosing ‘brand’ based on BENEFITS.
 Selecting by process of elimination.
 Likely obstacles/ ‘intervening factors’:
 Attitudes of others.
 Unanticipated situational factors.
Consumer Buying Decision:
THE OLD 5-STAGE MODEL
 POST-PURCHASE BEHAVIOR:
1. Post-purchase satisfaction: a function of
the closeness between expectations and the
product’s perceived performance
2. Cognitive dissonance: when a consumer
makes a decision to purchase an item and,
shortly after, experiences guilt/remorse
over the choice....
CONSUMER PSYCHOLOGY:
THE POWER OF EMOTIONS

“ Consumer response is not all cognitive and rational.

Many responses may be emotional and evoke different
kinds of feelings.
Marketers increasingly recognize the power of
“
emotional appeals, especially if they are rooted in
some functional or rational aspects of the brand.
CUSTOMERS BUYING DECISION…

…may also be different on account of two other reasons:

1. LOW INVOLVEMENT DECISION-MAKING: where the

product requires low level of customer involvement
e.g. Common Salt.
2. VARIETY-SEEKING BEHAVIOR: where involvement is low
but difference may be high. E.g. Cookies or Crisps.
WHAT HAVE WE DISCUSSED TODAY?
1.FACTORS INFLUENCING CONSUMER BEHAVIOR (p. 179)
2.MAJOR PSYCHOLOGICAL PROCESSES THAT INFLUENCE
CONSUMER RESPONSES (p.187)*
3.HOW CONSUMERS MAKE PURCHASING DECISIONS. (p. 194)*
4.HOW CONSUMERS ARE MOVING AWAY FROM A RATIONAL
DECISION MAKING PROCESS? (p. 202)*
* KOTLER KELLER GLOBAL EDITION
TOPICS FOR MIDTERM

1.HOLISTIC MARKETING
2.DEVELOPING MARKETING STRATEGY
3.BUILDING CUSTOMER VALUE
4.ANALYZING CONSUMER MARKETS

* KOTLER KELLER GLOBAL EDITION

ASSIGNMENT QUESTIONS
Q.1. Three major sets of factors are said to influence
consumer buying behavior. Briefly discuss how are they
different from one another.

Q.2. Frederick Herzberg’s two-factor theory states that

“the absence of dissatisfiers is not enough to motivate a
purchase; satisfiers must also be present”. Explain.