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Consumer Behavior

By Prof. Dr. Majed Rashid


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Case Study
Harley-Davidson Devoted Consumers
Building Success
Offers good bikes, upgraded showrooms and sales tactics. Research has helped to understand customers emotions and motivation. Consumer emotions, motivations, and lifestyle have been translated into effective advertising.

Measuring Success
Currently has 23% of all U.S. bike sales and 50% of heavyweight segment. Demand above supply with waiting lists up to 2 years. Sales doubled in the past six years while earnings have tripled. 2008: 19th straight year of record sales and income.
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Consumer Buying Behavior


Refers to the buying behavior of people who buy goods and services for personal use. These people make up the consumer market. The central question for marketers is:
How do consumers respond to various marketing efforts the company might use?
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How We Will View Consumer Behavior

Model of Buying Behavior


Marketing factors and other stimuli are inputs into the buyers black box. Here, stimuli are evaluated in light of the buyer decision process and the buyers characteristics. Buyer responses influence choice of the product, brand, vendor, as well as the timing and amount of purchase.
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Consumer Buying Behavior


Factors influencing consumer behavior:
Cultural factors: Culture, subculture, social class Social factors: Reference groups, family, roles and status Personal factors: Age/life-cycle, occupation, economic situation, lifestyle, personality and self-concept Psychological factors: Motivation, perception, learning, beliefs, and attitudes

Culture
Culture is the most basic cause of a person's wants and behavior.
Culture is learned from family, masque, school, peers, colleagues. Culture reflects basic values, perceptions, wants, and behaviors. Cultural shifts create opportunities for new products or may otherwise influence consumer behavior.
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Culture
Subculture
Groups of people with shared value systems based on common life experiences.

Major Groups
Muslim Consumers Punjabi Consumers Afghani Consumers Mature Consumers
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Social Class
Societys relatively permanent and ordered divisions whose members share similar values, interests, and behaviors.
Measured by a combination of: occupation, income, education, wealth, and other variables.

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Social Factors
Groups:
Membership, Reference (Opinion Leaders), Aspirational

Family:
Most important consumer buying organization

Roles and Status:


Role = Expected activities Status = Esteem given to role by society
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Personal Factors
Age and Life-Cycle Stage
People change the goods they buy over their lifetimes.

Occupation
Occupation influences the purchase of clothing and other goods.

Economic Situation
Some goods and services are especially income-sensitive.
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Personal Factors
Lifestyle:
Pattern of living as expressed in psychographics Activities Interests Opinions

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Personality & Self-Concept


Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to ones own environment. Generally defined in terms of traits/charactor. Self-concept suggests that peoples possessions contribute to and reflect their identities.
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Motives and Needs


A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction. Maslows hierarchy of needs explains why people are driven by needs at particular times. Maslows hierarchy of needs implies that lower level needs must be satisfied prior to higher level needs.
Physiological needs Safety needs Social needs Esteem needs Self-Actualization
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Perception
Process by which people select, organize, and interpret information to form a meaningful picture of the world.
Selective attention Selective distortion Selective retention

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Perception Determines What Consumers See and Feel


Consumers seek out and notice only the information that interests them.

Selective Exposure
People screen out or modify ideas, messages, and information that conflict with previously learned attitudes and beliefs

Consumers remember only what they really want to remember

Selective Retention

Selective Perception
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Learning
A relatively permanent change in behavior due to experience. Interplay of drives, stimuli, cues, responses, and reinforcement. Strongly influenced by the consequences of an individuals behavior
Behaviors with satisfying results tend to be repeated. Behaviors with unsatisfying results tend not to be repeated.
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Beliefs & Attitudes


A belief is a descriptive thought that a person holds about something. An attitude is a persons consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea.

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Buying Decision Process


Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior

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Buying Decision Process


Factors that influence purchase decision:
Attitudes of others Unexpected situational factors

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(A buyers doubts shortly after a purchase about whether it was the right decision.)
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Buying Decision Process


Consumer satisfaction is a function of consumer expectations and perceived product performance.
Performance < Expectations ----- Disappointment Performance = Expectations ----- Satisfaction Performance > Expectations ----- Delight

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Stages in the Adoption Process


1. Awareness: Consumer becomes aware of the
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new product, but lacks information about it. Interest: Consumer seeks information about new product. the new product makes sense. Trial: Consumer tries new product on a small scale to improve his or her estimate of its value. regular use of the new product.

3. Evaluation: Consumer considers whether trying


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5. Adoption: Consumer decides to make full and

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Product Characteristics That Influence the Rate of Adoption


Relative Advantage: Is the innovation superior to existing products? Compatibility: Does the innovation fit the values and experience of the target market? Complexity: Is the innovation difficult to understand or use? Divisibility: Can the innovation be used on a limited basis? Communicability: Can results be easily observed or described to others?
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Business Markets & Business Buyer Behavior


The business market is vast and involves far more rupees and items than do consumer markets. Business buyer behavior refers to the buying behavior of the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.
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Business Markets
Market Structure and Demand:
Contains far fewer but larger buyers. Buyers are more geographically concentrated. Business demand is derived from consumer demand.

Nature of the Buying Unit:


Business purchases involve more decision participants. Business buying involves a more professional purchasing effort.

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Types of Decisions and the Decision Process


Business buyers usually face more complex buying decisions. Business buying process tends to be more formalized. Buyers and sellers are much more dependent on each other.

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Types of Buying Situations


Straight rebuy:
Fairly routine purchase decision.

Modified rebuy:
Requires some research and modified product specifications, prices, terms, or suppliers.

New task:
Requires extensive research and evaluation of products, suppliers, etc.
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The Business Buying Process


1. Problem recognition 2. General need description 3. Product specification 4. Supplier search 5. Proposal solicitation 6. Supplier selection 7. Order-routine specification 8. Performance review

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e-Procurement
Advantages for buyers:
Access to new suppliers Lowers purchasing costs Hastens order processing and delivery

Advantages for vendors:


Share information with customers Sell products and services Provide customer support services Maintain ongoing customer relationships
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e-Procurement
Key benefits:
Reduces costs to buyers and sellers, and makes for more efficient purchasing. Reduces the time between order and delivery. Frees purchasing staff to focus on more strategic issues.

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