Consumer Markets and Consumer Buying Behavior

Consumer Markets and Consumer Buying Behavior Foreword: To be bullfighter, you must first learn to be a bull. - Anonymous-

OBJECTIVES After reading this chapter, you should be able to: • Explain the model of buyer behavior. • Outline the major characteristics affecting consumer behavior, and list some of the specific cultural, social, personal, and psychological factors that influence consumers. • Explain the buyer decision process and discuss need recognition, information search, evaluation of alternatives, the purchase decision, and post-purchase behavior.

Consumer Markets and Consumer Buying Behavior Woman as Business Travelers • A look at how the hotel industry reacted to a growing number of women business travelers shows why understanding consumer behavior is important • Less than 1% of business travelers in 1970, women now account for about half of all business travelers. • When hotel managers started to realize the importance of this new group of consumers, they were not sure how to attract them. • early programs aimed at the woman business travelerwere unsuccessful, as male hotel management did not understand the behavior of this new segment tab

Consumer Markets and Consumer Buying Behavior Woman as Business Travelers • some women prefer rooms near the elevator, rather than having to wander down hallways • some hotels have programs that provide women with rides to areas around the hotel so they do not have to walk alone • another security feature is key-controlled floor access, commonly found on concierge floors or upscale hotels • the concierge floor lounge provides a place for women to relax without having to go down to the lobby or a bar • Security is a more of a concern for women. • Hotels spent a great deal of effort & resources to please female business travelers, a segment where they projected rapid growth, but did not understand. tab

Consumer Markets and Consumer Buying Behavior Woman as Business Travelers • Women travelers are an important consumer market, and companies that have gained an understanding of this segment have attracted a larger market share. • 81 % of women interviewed said they would be moreloyal to companies that address their needs • Consumers vary tremendously in age, income, education level, and tastes, and they buy an incredible variety of goods and services. • Buying behavior is affected by many different factors, yet understanding it is the essential taskof marketing management. tab

A Model of Buying Behavior Introduction • During recent years, hospitality & travel have undergone globalization, resulting in a fiercely competitive international market. • To win this battle, companies invest in research to reveal what customers want to buy, locations they prefer, amenities important to them • how they buy and why they buy • The company that understands how consumers will respond to product features, prices & advertising appeals has a great advantage over its competitors. • the starting point is the buyer behavior model in Fig 6–1 tab

Figure 6-1 Model of Consumer Behavior A Model of Buying Behavior The Model • Marketing and other stimuli enter the consumer’s “black box” and produce certain responses. • Marketing stimuli consist of the four Ps, and major forces and events in the buyer’s environment. • The stimuli enter the buyer’s black box, where they are turned into the set of observable buyer responses. tab

Figure 6-2 Factors Influencing Behavior Characteristics Affecting Consumer Behavior Cultural Factors • Consumer purchases are strongly influenced by cultural, social, personal, and psychological characteristics. tab

Characteristics Affecting Consumer Behavior Cultural Factors • Culture is the most basic determinant of a person’s wants and behavior and exerts the broadest and deepest influence on consumer behavior. • It comprises basic values, perceptions, wants, and behaviors a person learns continuously in a society. • Culture is an integral part of the hospitality & travel business and determines what we eat, how we travel, where we travel, and where we stay • Marketers try continuously to identify cultural shifts in order to devise new products and services that might find a receptive market. tab

Cultural Factors Subculture • Each culture contains smaller subcultures, or groups of people with shared value systems based on common life experiences and situations. • nationalities, religions, racial groups & geographic regions • Subcultures make up important market segments, and marketers often design products & programs tailored to their needs. • Three such important subculture groups include Hispanic, African American, and Asian consumers. • each major subculture is made of many smaller subcultures, each with its own preferences and behavior tab

Cultural Factors Hispanic Consumers • The US Hispanic market consists of Americans of Cuban, Mexican, Central American, South American, and Puerto Rican descent. • The Hispanic population is over 45 million & growth rate at 13% is almost four times the total population. • Many Hispanics may be reached through the growing selection of Spanish-language broadcast and print media that cater to them. • Hispanics are very brand loyal, and they favor companies who show special interest in them. tab

Cultural Factors African-American Consumers • African-American consumers attract much marketing attention with annual buying power of $799 billion. • The US black population is growing in affluence and sophistication. • More price conscious than other segments, blacks are also strongly motivated by quality and selection. • blacks are the most fashion conscious ethnic group • Brands are important. So is shopping. • black consumers seem to enjoy shopping more than other groups, even for mundane things such as groceries tab

Cultural Factors Asian-American Consumers • The most affluent US demographic segment are Asian-Americans, numbering more than 14.4 million with over $400 billion in annual spending power. • The second-fastest-growing subsegment after Hispanics, Asian-American population is expected to make up over 9 % of the US population by 2050. • Over 85% go online regularly & are comfortable with Internet technologies. • As a group, Asian consumers shop frequently & are the most brand conscious of all the ethnic groups. • they can be fiercely brand loyal tab

Cultural Factors Consumer Behavior Across International Cultures • For companies operating in many countries, serving & understanding the needs of consumers is daunting. • While consumers in different countries may have some things in common, their values, attitudes, and behaviors often vary dramatically. • international marketers must understand such differences and adjust products & marketing programs accordingly • Failing to understand differences in customs and behaviors from one country to another can spell disaster for a company’s products and programs. • however, those companies who adapt can be winners tab

Cultural Factors Social Class • upper uppers (1 %), lower uppers (2 %) • upper middles (12 %), middle (32 %) • working (38 %) • upper lowers (9 %), and lower lowers (7 %) • Social classes are relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors. • almost every society has a form of social class structure • Social scientists have identified the seven American social classes: tab

Cultural Factors Social Class • In many older nations, social class is something into which one is born and bloodlines often mean more than income or education in such societies. • In newer nations such as the US, Canada, Australia, and New Zealand it is not indicated by a singlefactor such as income. • but measured as a combination of occupation, source of income, education, wealth, and other variables • Marketers are interested in social class because people within a given class tend to exhibit similar behavior, including buying behavior. tab

Cultural Factors Social Class • Social classes show distinct preferences in suchareas as food, travel & leisure activity. • Some marketers focus on only one social class. • Four Seasons restaurant in upper Manhattan targets upper-class patrons • Joe’s Coffee Shop in lower Manhattan serves lower-classes • Social classes differ in media preferences with upper-class consumers preferring magazines and books and lower-class consumers preferring television. • Language differences between social classes means advertisers must compose copy & dialogue carefully. tab

Social Factors Groups and Online Social Networks • Consumer behavior is also influenced by social factors, including the consumers’ groups, family, social roles, and status. • Individual attitudes & behavior are influenced by many small groups. • those which have direct influence and to which aperson belongs are called membership groups • They include primary groups, such as family, friends, neighbors, and coworkers—specifically, those with whom there is regular but informal interaction. tab

Social Factors Groups and Online Social Networks • Secondary groups are more formal and have less regular interaction; they include religious groups, professional associations, and trade unions. • secondary groups may be membership groups • The importance of group influence varies across products and brands. • it tends to be strongest when the product is visible toothers whom the buyer respects • Reference groups serve as direct (face-to-face) or indirect points of comparison or reference in forming a person’s attitudes or behavior. tab

Social Factors Groups and Online Social Networks • People can also be influenced by aspirational groups to which they do not belong but would like to. • as when a young basketball player hopes to someday emulate a basketball star and play professionally • Groups commonly have opinion leaders, people who, because of special skills, knowledge, personality, or other characteristics, exert influences over others. • a person may be an opinion leader in one product areaand a follower in another • A business should identify opinion leaders in their community and invite them to important events. tab

Social Factors Groups and Online Social Networks • NOP, a marketing research firm, has developed a profile of opinion leaders, which it calls influencers. • people are about four times as likely to contact an influencer as they are an average person • They also found that baby boomers are seeking information on restaurants and vacations from influentials at an increasingly higher rate. • Companies try to influence scores of customers by influencing opinion leaders. tab

Social Factors Family • The family remains the most important consumer buying organization in American society and has been researched extensively. • family members have strong influence on buyer behavior • Marketers are interested in the roles and influence of the husband, wife, and children on the purchase of different products and services. • buying roles change with evolving consumer lifestyles • Women now make or influence up to 80% of car-buying decisions and men account for about 40%of food-shopping dollars. tab

Social Factors Family - Children • Children all over the world are having an influence on where the family dines when they go out to eat. • the US food industry spends $14 billion advertising to children • A study by Mintel found that before age 12, eating habits are influenced primarily by parents, but after twelve there is a shift to peer influence. tab

Social Factors Roles and Status • A role consists of activities a person is expected to perform according to the persons around him/her. • son or daughter, wife or husband, manager or worker • A person’s role at time of purchase significantly affects his/her behavior. • a person purchasing a banquet for his church men’s club may be more price conscious than usual if he believes church activities call for frugality • Our roles are also influenced by our surroundings. • people dining at an elegant restaurant behave differently than when they dine at a fast-food restaurant tab

Social Factors Roles and Status • People have expectations about roles that employees in different establishments should play. • failure to meet these expectations creates dissatisfaction • Each role carries a status reflecting the general esteem given to it by society, and people often choose products that show their status in society. • role & status are not constant social variables • Marketing & sales professionals have made serious judgmental errors relative to the role & status of prospective customers. tab

Social Factors Online Social Networks • Recently, a new type of social interaction has exploded onto the scene: online social networking. • people socialize or exchange information & opinions • Social networking media range from blogs to web sites, such as myspace.comand youtube.com, to entire virtual worlds, such as Second Life. • Marketers are working to harness the power of these new social networks to promote their products and build closer customer relationships. • they hope to interact with consumers and become a partof their conversations and lives tab

Personal Factors Age and Life-Cycle Stage • Buyer decisions are influenced by characteristics such as age & life-cycle stage, occupation, economic situation, lifestyle, personality, and self-concept. • the types of goods & services people buy change during their lifetimes • Preferences for leisure activities, travel destinations, food, and entertainment are often age related, factors are often overlooked by marketers. • probably due to age differences between those determining marketing strategies & those purchasing the products and services tab

Personal Factors Age and Life-Cycle Stage • Successful marketing to various age segments may require specialized and targeted strategies and will likely require segmented target publications and database marketing. • It may also require a marketing staff and ad agency with people of varying ages & cultural backgrounds. • Buying behavior is also shaped by the family life-cycle stages, and marketers often define their target markets in life-cycle terms and develop appropriate products and marketing plans. tab

Personal Factors Occupation • construction workers often buy their lunches from industrial catering trucks that come out to the job site • business executives purchase meals from a full-service restaurant • clerical employees may bring their lunch or purchase lunch from a nearby quick-service restaurant • A person’s occupation affects the goods & services bought. • Marketers try to identify occupational groups that have an above-average interest in their products. tab

Personal Factors Economic Situation • A person’s economic situation greatly affects product choice & decision to purchase a particular product. • Consumers cut back on restaurant meals, entertainment, and vacations during recessions. • restaurants may need to add lower-priced menu itemsthat will still appeal to their target markets • Marketers need to watch trends in personal income, savings, and interest rates. • if economic indicators point to a recession, they can redesign, reposition, and reprice their products tab

Personal Factors Economic Situation • Periods of economic prosperity create opportunities. • consumers buy more expensive wines and imported beers, menus can upgrade, air travel & leisure spending increase • Managers sometimes react too slowly to changing economic conditions. It pays to remain continuously aware of the macroenvironment facing customers. • Companies must take advantage of opportunities in an upturn & take defensive steps in a downturn. • Publications such as the Wall Street Journal, the business section of the local press, and regional economic reports help to keep managers informed. tab

Table 6-1LifestyleDimensions. Personal Factors Lifestyle • People from the same subculture, social class, and occupation may have quite different lifestyles. • a person’s pattern of living as expressed in activities, interests & opinions tab

Personal Factors Lifestyle • Marketers search for relationships between their products and people who are achievement oriented. • a chef may target his restaurants more clearly at the achiever lifestyle • A study of tourists who purchase all-inclusive travel packages versus those who make travel arrangements independently showed varied lifestyle characteristics. • inclusive purchasers were “more socially interactive, solicitous, and take their vacations mainly to relax.” • independent travelers were more self-confident and often sought solitude tab

Personal Factors Lifestyle - VALS • One of the most popular classifications based on psychographic measurements is SRI International’s Values and Lifestyles VALS 2 framework. • VALS 2 classifies all U.S. adults into eight groups based on psychological attributes • The segmentation system is based on responses to a questionnaire featuring five demographics and forty-two attitudinal questions, as well as questions about use of online services and Web sites. tab

Personal Factors Lifestyle - Prizm • Prizm, developed by Jonathan Robbin, is a geodemographic system that allows researchers to know the mix or density of lifestyle groups in eachof the nation’s 36,000 zip code areas. • A criticisms of geodemographic systems is they assume everyone is like their neighbors. • while certain neighborhoods may contain more of acertain profile of person, not everyone in the neighborhood is the same tab

Personal Factors Lifestyle - Cohorts • Jock Bickert developed a classification called Cohorts, built from a wealth of actual self-reported household-level data. • rather than inferred or geographic-level data used inother segmentation systems • The Cohorts are identified by twenty-seven highly cohesive groups of households, and results in a classification that is unique to the household. • Marketing Highlight 6–1 on page 160 provides an example of a successful application of Cohorts. tab

See this feature on page 160 of your textbook. tab

Personal Factors Personality and Self-Concept • Personality means distinguishing psychological characteristics that lead to relatively consistent and enduring responses to the environment. • A person’s personality influences buying behavior and can be useful in analyzing consumer behaviorfor some product or brand choices • Marketers use a concept related to personality: a person’s self-concept (also called self-image). • each of us has a complex mental self-picture, and our behavior tends to be consistent with that self-image tab

Psychological Factors Motivation • most are not strong enough to motivate a person to act • need becomes motive when aroused to sufficient intensity • creating a tension state causes the person to act to release the tension • Buying choices are also influenced by four major psychological factors… • motivation, perception, learning,andbeliefs & attitudes • A person has many needs at any given time. • Theories by Maslow & by Herzberg have different meanings for consumer analysis and marketing. tab

Psychological Factors Motivation - Maslow’s Theory • Abraham Maslow sought to explain why people are driven by particular needs at particular times. • his answer is that human needs are arranged in a hierarchy, from most pressing to least pressing • Maslow’s hierarchy of needs in order of importance: • physiological, safety, social, esteem & self-actualization • A person tries to satisfy the most important need first. When that is satisfied, it will stop being a motivator. • As each important need is satisfied, the next most important need will come into play. tab

Psychological Factors Motivation - Herzberg’s Theory • sellers should do their best to avoid dissatisfiers, things that will not sell a product and might easily unsell it • manufacturers should identify major satisfiers/motivators of purchase in the market and then supply them • Frederick Herzberg developed a two-factor theory that distinguishes dissatisfiers (factors that cause dissatisfaction) and satisfiers (causing satisfaction). • absence of dissatisfiers is not enough • satisfiers must be actively present to motivate a purchase • The theory has two implications. tab

Psychological Factors Perception • A motivated person is ready to act, how a person acts is influenced by his/her perception of the situation. • two people with the same motivation may act quite differently based on how they perceive conditions. • All of us experience a stimulus by the flow of information through our five senses. • each of us receives, organizes, and interprets thissensory information in an individual way • Perception is the process by which an individual selects, organizes, and interprets information to create a meaningful picture of the world. tab

Psychological Factors Selective Attention • People are exposed tremendous amounts of stimuli • an average person may be exposed to over 1,500 ads a day • Because a person cannot possibly attend to all of these, most stimuli is screened out. • a process called selective attention • The real challenge is explaining which stimuli people will notice… • people are more likely to notice stimuli that relate to a current need, or stimuli that they anticipate • people are more likely to notice stimuli whose deviations are large in relation to the normal size of the stimuli tab

Psychological Factors Selective Distortion • Selective distortion is the tendency to twist information into personal meanings & interpret itin a way that will fit our preconceptions. • even notice stimuli do not always come across in the way the senders intended • marketers can’t do much about selective distortion tab

Psychological Factors Selective Retention • People forget much of what they learn but tend to retain information that supports their attitudes and beliefs. • Selective retention explains why marketers use drama and repetition in sending messages to their target market. • we are likely to remember good points mentioned about competing products tab

Psychological Factors Learning • Learning describes changes in an individual’s behavior arising from experience. • when consumers experience a product, they learn about it • Theorists say learning occurs through the interplay of drives, stimuli, cues, responses, and reinforcement. • Hotels should help guests to learn about the quality of their facilities and services. • luxury hotels give tours to first-time guests and inform them of the services offered • repeat guests should be updated on the hotel’s servicesby employees and by letters and literature tab

Psychological Factors Beliefs and Attitudes • Through acting and learning, people acquire beliefs and attitudes which influence their buying behavior. • a belief is a descriptive thought that a person holds about something • Marketers are interested in the beliefs that people have about specific products and services. • Beliefs may be based on real knowledge, opinion, or faith, and may or may not carry an emotional charge. • People act on beliefs. • if unfounded consumer beliefs deter purchases, marketers will want to launch a campaign to change them tab

Psychological Factors Unfounded beliefs • a particular hamburger chain served ground kangaroo meat • a particular hotel served as Mafia headquarters. • a particular airline has poor maintenance. • a particular country has unhealthy food-handling standards • Unfounded consumer beliefs can severely affect the revenue and even the life of hospitality & travel companies: tab

Psychological Factors Attitudes • Attitude describes relatively consistent evaluations, feelings, and tendencies toward an object or an idea. • attitudes put people into a frame of mind for liking or disliking things and moving toward or away from them • People have attitudes about almost everything… • religion, politics, clothes, music, and food • Understanding attitudes and beliefs is the first step toward changing or reinforcing them. • attitudes are very difficult to change • A person’s attitudes fit into a pattern & changing one attitude may require many difficult adjustments. tab

Consumer Markets and Consumer Buying Behavior