CONSUMER MARKETS & BUYING BEHAVIOR

1. Kotler, P. & Armstrong, G., 2006, Principles of Marketing, New Jersey: Pearson Education, Inc., Ch.5 CONSUMER MARKETS & BUYING BEHAVIOR Session 2

2. DEFINITIONS • Consumer buying behavior refers to the buying behavior of final consumers. • Final consumers are individuals and households who buy goods and services for personal consumption. • Consumer markets are all the individuals and households who buy or acquire goods and services for personal consumption. • Business markets are businesses, government bodies, and institutions who buy or acquire goods and services for incorporation (e.g. ingredient materials or components), consumption (e.g. office supplies, consulting services), use (installations or equipment), or resale. Session 2

3. BUYER BEHAVIOR MODEL Session 2

4. Culture Sub- culture Social class Cultural Factors Influencing Consumer Behavior Social Reference groups Family Roles and status Personal Age and life-cycle Occupation Economic situation Lifestyle Personality and self-concept Psycho- logical Motivation Perception Learning Beliefs and attitudes Buyer Session 2

5. CULTURAL FACTORS • Cultureis the set of basic values, perceptions, wants and behaviors learned by a member of society from family & other important institutions. • Subculture is group of people with shared value systems based on common life experiences. • Social Class is society’s relatively permanent & ordered divisions whose members share similar values, interests, and behaviors as measured by: occupation, income, education, wealth and other variables. Session 2

6. SOCIAL FACTORS • Groups • Membership • Reference • Family (most important) • Husband, wife, kids • Influencer, buyer, user Social Factors Roles and Status Session 2

7. SOCIAL FACTORS • Group consists of two or more people who interest to accomplish individual or mutual goals. • Opinion leader is person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts influence on others. • Role consists of the activities people are expected to perform according to the persons around them. • Each role carries a status reflecting the general esteem given to it by society. Session 2

8. PERSONAL FACTORS • Age and Life-cycle Stage • Occupation • Economic situation • Lifestyle is a person’s pattern of living as expressed in his or her activities, interests, and opinions. • Personality & self-concept • Personality is the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment. • The basic self-concept premise is that people’s possessions contribute to and reflect their identities – “we are what we have.” Session 2

9. Actualizers High innovation Principle Oriented Status Oriented Action Oriented Achievers Fulfillers Experiencers Believers Strivers Makers Low Resources Low innovation Struggles VALS – Life Style Classifications High Resources Session 2

10. VALUE & LIFE-STYLES (VALS) • SURVIVORS – elderly, passive people who are concerned about change. Loyal to their favorite brands. • INNOVATORS – successful, sophisticated, active people with high self-esteem. Purchases often reflect cultivated tastes for relatively upscale, niche-oriented products and services. • EXPERIENCERS – young, enthusiastic, impulsive people who seek variety and excitement. Spend a comparatively high proportion of income on fashion, entertainment, and socializing. • MAKERS – practical, down-to-earth, self-sufficient people who like to work with their hands. Favor product with a practical or functional purpose.

11. VALUE & LIFE-STYLES (VALS) • ACHIEVERS – successful goal-oriented people who focus on career and family. Favor premium products that demonstrate success to their peers. • STRIVERS – trendy and fun-loving people who are resource-constrained. Favor stylish products that emulate the purchase of those with greater material wealth. • THINKERS – mature, satisfied, and reflective people who are motivated by ideals and value order, knowledge, and responsibility. Favor durability, functionality, and value in products. • BELIEVERS – conservative, conventional, and traditional people with concrete beliefs. Favor familiar products and are loyal to established brands.

12. INDONESIAN CONSUMER MARKET SEGMENTS: • ESTABLISHED CONFIDENT (“ORANG ALIM”) • THE OPTIMISTIC FAMILY PERSON (IBU “PKK”) • THE CHANGE-EXPECTING LAD (‘ANAK NONGKRONG”) • CHEERFUL HUMANIST (“LEMBUT HATI”) • INTROVERT WALLFLOWER (“PASRAH”) • THE SAVVY CONQUEROR/CITY SLICKERS (“MAIN UNTUK MENANG”) • THE NETWORKING PLEASURE SEEKER (“GAUL-GLAM”) • THE SPONTANEOUS FUN-LOVING (“BINTANG PANGGUNG”) (SUMBER: LOWE INDONESIA)

13. FAMILY LIFE CYCLE TRADITIONAL FAMILY FLOW • BACHELORHOOD- YOUNG SINGLE • HONEYMOONERS- YOUNG MARRIED WITHOUT CHILDREN • PARENTHOOD- YOUNG MARRIED WITH CHILDREN • POSTPARENTHOOD- MIDDLE-AGED WITHOUT DEPENDENT CHILDREN • DISSOLUTION- OLDER MARRIED (one surviving spouse) & UNMARRIED (Schiffman, L.G. & Kanuk, L.L., 2007, Consumer Behavior, New Jersey: Pearson Education, Inc., pp.334 & 338) Session 2

14. PSYCHOLOGICAL FACTORS • Motivation.A psychological process resulting in goal-directed behavior that satisfies human needs. * • Perception. The process by which people select, organize, and interpret information to form a meaningful picture of the world. • Learning. Changes in an individual’s behavior arising from experience. • Belief. A descriptive thought that a person holds about something. • Attitude. A person’s consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea. * Cullen, J.B. & Parboteeah, K.P., 2005, Multinational Management: A Strategic Approach, United States: South-Western (International Student Edition), p.537. Session 2

15. Maslow’s Hierarchy of needs Self- actualization needs (self-development and realization) Esteen needs (self-esteen, recognition, status) Social needs (sense of belonging, love) Safety needs (security, protection) Physiological Needs (hunger, thirst) Session 2

16. Buyer Decision Process Purchase Decision Postpurchase Behavior Evaluation of Alternatives Information Search Need Recognition Session 2

17. Buyer Decision ProcessStep 1. Need Recognition Buyer Recognizes a problem or a Need Actual State Desired State Needs Arising From: Internal Stimuli – Hunger External Stimuli- Friends State Where the Buyer’s Needs are Fulfilled and the Buyer is Satisfied. Session 2

18. Personal Sources Commercial Sources • Family, friends, neighbors • Most effective source of • information Public Sources • Advertising, salespeople • Receives most • information from these • sources Experiential Sources • Mass Media • Consumer-rating groups • Handling the product • Examining the product • Using the product The Buyer Decision ProcessStep 2. Information Search Session 2

19. The Buyer Decision ProcessStep 4. Evaluation of Alternatives Consumer May Use Careful Calculations & Logical Thinking Consumers May Buy on Impulse and Rely on Intuition Consumers May Make Buying Decisions on Their Own. Consumers May Make Buying Decisions Only After Consulting Others. Marketers Must Study Buyers to Find Out How They Evaluate Brand Alternatives Session 2

20. Unexpected Situational Factors Attitudes of Others The Buyer Decision ProcessStep 5. Purchase Decision • Purchase Intention • Desire to buy the most preferred brand • Purchase Decision Session 2

21. Cognitive Dissonance The Buyer Decision ProcessStep 6. Postpurchase Behavior Satisfied Customer! • Consumer’s • Expectations of Product’s Performance. • Product’s Perceived • Performance. Dissatisfied Customer Session 2

22. High Involvement Low Involvement Significant differences between brands Few differences between brands Types of Buying Decision Behavior Complex Buying Behavior Variety- Seeking Behavior Dissonance- Reducing Buying Behavior Habitual Buying Behavior Session 2