Topic 5 Analyzing Consumer Markets and Buyers

Kotler on Marketing: “The more important thing is to forecast where customers are moving and to be in front of them.”

In topic 5 we will look at the following factors and that is how do the buyer’s characteristics in term of cultural, social, personal, and psychological-influence buying behavior, How does the buyer make purchasing decisions, and what is the aim of marketing when it comes to meeting and satisfying target customers’ needs and wants. We would also look at how to satisfy consumer behaviour and how organization select, buy, use and dispose of goods, services, ideas or experiences to satisfy their needs and desires.

The aim of marketing is to meet and satisfy target customers’ needs and wants and also to satisfy consumer behaviour.

Influencing Buyer Behavior

A consumer’s buying behaviour is influenced by cultural, social, personal, and psychological factors. Cultural factors exert the broadest and deepest influence.

A growing child acquires a set of values, perceptions, preferences and behaviour through his or her family or through other key institutions and these set of values does have an impact on what his/her wants or needs.

Cultural Factors

Culture is the fundamental determinant of a person’s want and behaviour. Each culture consists of smaller subcultures that provide most specific identification and socialization for their members. Examples of subcultures: Nationalities, Religion, racial groups and geographical region.          (Beliefs, Languages, custom, dressing etc.)

Subcultures –When subcultures grow large and affluent enough, companies often design specialized marketing programs to serve them.

Such programs designed to serve large sub cultures are known as diversity marketing a practice which was pioneered during the 1980’s by large companies such as Coca-Cola, Sears Roebuck and others. Diversity marketing grew out of careful marketing research, which revealed that different ethnic and demographic niches did not always respond favorably to mass-market advertising.

Social Classes: Virtually all human societies exhibit social stratification. Stratification sometimes takes the form of caste system where the members of different castes are reared for certain roles and cannot change their caste membership.    Most frequently, such caste system takes the form of social classes. Social classes reflect not only income, but other indications such as occupation, education, and areas of residence.

Social Classes have several characters.

1.      Those within each class tend to behave more alike than persons from two different social classes.

2.      Persons are perceived as occupying inferior or superior positions according to social class

3.      Social class is indicated by a cluster of variables – for example, occupation, and income, wealth, and education and value orientation – rather than by any single variable.

4.      Individuals can move up and down the social class during their lifetime

Social Classes show distinct product and brand preferences in many areas, including clothing, home furnishing, leisure activities, and automobiles. There are also language differences so advertising and dialogue must ring true to the targeted social class

Characteristics of Major US Social Classes:

·         Upper Uppers (Less than 1%) – Social elite who live on inherited wealth

·         Lower Uppers (about 2%) – Earning high income & wealth through profession

·         Upper Middles (12%) – Professionals, independent businessperson & corporate managers

·         Middle Class (32%) – Average white & Blue collar workers

·         Working Class (38%) – Average pay blue collar workers

·         Upper lowers (9%) – Unskilled workers, poorly paid

·         Lower lowers (7%) – On welfare and poverty stricken.

Social Factors

Consumer behaviour is influenced by such social factors as reference groups, family, and social roles and statuses. Reference Groups – consist of all the groups that have a direct (face to face) or indirect influence on a person’s attitude or behaviour. Examples: Membership groups (direct influence), Primary groups (family, friends etc.), Secondary groups (religious, professional).

Family – The family is the most important consumer-buying organization in society and family constitute the most influential primary reference group. From parents, a person acquires an orientation toward religion, politics, and economics, a sense of personal ambition, self-worth and love. Personal characteristic also influences a buyer’s decision. (Age, lifestyle, occupation and economic circumstances).

Social Roles & Statues – A person standing in a community, e.g. family, clubs, organization. The person’s position in each group can be defined in terms of roles and statues. Roles consist of activities that the person is expected to perform and each role carries a status. Example: A Supreme Court judge has more status then a sales manager.   

Personal Factors       

 Age and Stages in the Life Cycle:  Personal characteristic also influences a buyer’s decision;

Stages In Family life Cycle:

·         Bachelor Stage – Young, single, not living at home.

·         Newly married couples – Young married, no children, purchase high

·         Full Nest 1- Youngest child under 6. Buy many home goods

·         Full Nest 2 – Youngest child over 6. Better financial position

·         Full nest 3 – Older couples with dependent children. Financially better

·         Empty Nest 1 – Older couple. No children living with them

·         Empty Nest 2 – Older couple. No children living at home

·         Solitary Survivor – Income still good but likely to sell home

·         Solitary Survivor – Retired. Special need for attention.

Occupation and Economic Circumstance – People buy different goods and services over a lifetime. A blue collar worker will buy work clothes, work shoes and lunch box. A company president will buy expensive suits, air travel and club membership. Product choice is greatly affected by economic circumstances (spendable income, savings and assets).

Lifestyle - People from the same subculture, social class, and occupation may lead quite different lifestyles. Person’s pattern of living in the world as expressed in activities, interests, and opinions. Marketers search for relationships between their products and lifestyle groups.

Psychographics – Is the science of using psychology and demographics to better understand consumers. Each person has personality characteristics that influence his or her buying behavior. By personality, we mean a set of distinguishing human psychological traits that lead to a relatively consistent and enduring response to environment stimuli.

·         Self confidence

·         Dominance

·         Autonomy, deference, sociability, defensiveness,

·         Adaptability

Personality and self-concept

Personality can be a useful variable in analyzing consumer brand choices. Marketers attempts to develop brand personality that will attract consumers with the same self-concept.

Psychological factors

A person buying choices are influenced by four major psychological factors;

Motivation – A need becomes a motive when it is aroused to a sufficient level of intensity. A motive is a need that is sufficiently pressing to drive the person to act.

Perception – Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world.

Learning – Most human behaviour is learned. Learning involves changes in an individual behaviour arising from experiences.

Belief & Attitudes – Through doing and learning, people acquire beliefs and attitudes. These in turn influence buying behavior.

Abraham Maslow sought to explain why people are driven by particular needs at particular times. Why does one person spend considerable time and energy on personal safety and another on pursuing the high opinion of others? Maslow’s answer is that human needs are arranged in a hierarchy, from the most pressing needs, esteem needs, and self-actualization needs.

The Buying Decision Process

Marketers are interested in the beliefs people carry in their heads about their products and brands. Marketers have to go beyond the various influences on buyers and develop an understanding of how consumers actually make their buying decision. Marketers must identify the following factors:

1.      Who makes the buying decision?

2.      The type of buying decision

3.      Steps in the buying process    

Marketers must also understand the buying roles of consumers. Example; identifying buyers for many products, Women buying cosmetics and a carpenter buying nails/timber etc.)

Buying Behaviour

1.      Complex Buying Behaviour - (Beliefs & Attitudes about the products e.g. Toyota brand MV).

2.      Dissonance-Reducing Buyer Behaviour - (Shop around & check quality & price).

3.      Habitual Buying Behaviour – (Out of habit they go for a certain brand of product.

4.      Variety-Seeking Buying Behaviour – (Consumer do a lot of brand switching).

There are two (2) Other Models of Buying Decision Process

Health Model – Social marketers in the health field are interested in how patients adopt healthful behavior. (Stages of changes)

1.      Pre-contemplation – Not recognizing the problem or the need to change

2.      Contemplation – Seriously thinking about the problem and the possibility of change

3.      Preparation – Making a commitment to change and taking steps to prepare for that change

4.      Action – Successful modification of behavior for a period of time

5.      Maintenance – Continuation of change.

Customer Activity Cycle Model – Professor Sandra Vandermerwe focuses on mapping the pre, during, and post phases of a consumer’s behavior toward a particular task.

·         Pre phase is deciding what to do,

·         During phase is doing it

·         Post phase is keeping it going

Summary and Conclusion

To understand how consumers actually make buying decisions, marketers must identify who makes and has the input into the buying decision. People can be initiators, influencers, deciders, buyers or users. Once marketers understand the consumers buying decisions, he can target his/her marketing campaigns to specific groups.

The typical buying process consists of the following sequences of events;

1.      Problem recognition

2.      Information search

3.      Evaluation of alternatives

4.      Purchase decision

5.      Post purchase behaviour

The marketer’s job is to understand the buyer’s behaviour at each stage. Attitudes, perceived risks, post purchase actions. Other models of the buying decision process include the health model and the customer activity cycle model.

Students are encouraged to read Chapter Kotler’s Marketing Management 9^th Edition.

Source: Marketing Management 11^th Edition, Philip Kotler, (2003) Prentice Hall