Module B: Customer Behavior and Market Segmentation

Q: Introduction Consumer behavior.

Consumer buyer behavior refers to the buying behavior of final consumers individual and households that buy goods and services for personal consumption.

Consumer behavior is influenced by the buyer’s characteristics and by the buyer’s decision process. Buyer characteristics include four major factors: cultural, social, personal and psychological.

Cultural Factors

Consumer behavior is deeply influenced by cultural factors such as: buyer culture, subculture, and social class.

  • Culture

Basically, culture is the part of every society and is the important cause of person wants and behavior. The influence of culture on buying behavior varies from country to country therefore marketers have to be very careful in analyzing the culture of different groups, regions or even countries.

  • Subculture

Each culture contains different subcultures such as religions, nationalities, geographic regions, racial groups etc. For example marketers can design products according to the needs of a particular geographic group.

  • Social Class

Every society possesses some form of social class, which is important to the marketers because the buying behavior of people in a given social class is similar. In this way marketing activities could be tailored according to different social classes.

  1. Social Factors

Social factors also impact the buying behavior of consumers. The important social factors are: reference groups, family, role and status.

  • Reference Groups

Reference groups have potential in forming a person attitude or behavior. The impact of reference groups varies across products and brands. For example if the product is visible such as dress, shoes, car etc then the influence of reference groups will be high.

  • Family

Buyer behavior is strongly influenced by the member of a family. Therefore marketers are trying to find the roles and influence of the husband, wife and children.

  • Roles and Status

Each person possesses different roles and status in the society depending upon the groups, clubs, family, organization etc. to which he belongs. For example a woman is working in an organization as finance manager. Now she is playing two roles, one of finance manager and other of mother. Therefore her buying decisions will be influenced by her role and status.

  1. Personal Factors

Personal factors can also affect the consumer behavior. Some of the important personal factors that influence the buying behavior are: lifestyle, economic situation, occupation, age, personality and self-concept.

  • Age

Age and life cycle have potential impact on the consumer buying behavior. It is obvious that the consumers change the purchase of goods and services with the passage of time. Family life-cycle consists of different stages such young singles, married couples, unmarried couples etc which help marketers to develop appropriate products for each stage.

  • Occupation

The occupation of a person has significant impact on his buying behavior. For example a marketing manager of an organization will try to purchase business suits, whereas a low level worker in the same organization will purchase rugged work clothes.

  • Economic Situation

Consumer economic situation has great influence on his buying behavior. If the income and savings of a customer is high then he will purchase more expensive products.

  • Lifestyle

Lifestyle of customers is another import factor affecting the consumer buying behavior. Lifestyle refers to the way a person lives in a society and is expressed by the things in his/her surroundings.

  • Personality

Personality changes from person to person, time to time and place to place. Actually, Personality is not what one wears; rather it is the totality of behavior of a man in different circumstances. It has different characteristics such as: dominance, aggressiveness, self-confidence etc

  1. Psychological Factors

There are four important psychological factors affecting the consumer buying behavior. These are: perception, motivation, learning, beliefs and attitudes.

  • Motivation

The level of motivation also affects the buying behavior of customers. Every person has different needs such as physiological needs, biological needs, social needs etc. The nature of the needs is that, some of them are most pressing while others are least pressing. Therefore a need becomes a motive when it is more pressing to direct the person to seek satisfaction.

  • Perception

Selecting, organizing and interpreting information in a way to produce a meaningful experience of the world is called perception. There are three different perceptual processes which are selective attention, selective distortion and selective retention. In case of selective attention, marketers try to attract the customer attention. Whereas, in case of selective distortion, customers try to interpret the information in a way that will support what the customers already believe. Similarly, in case of selective retention, marketers try to retain information that supports their beliefs.

  • Beliefs and Attitudes

Customer possesses specific belief and attitude towards various products. Since such beliefs and attitudes make up brand image and affect consumer buying behavior therefore marketers are interested in them.

Q:  Define consumer behavior. Explain the Models of Consumer behavior

Ans: Consumer Behavior is the study of how individuals make decisions to spend their available resources (time, money, effort) on consumption related items.

Philip Kotler & Gray Armstrong: Consumer buyer behavior refers to the buying behavior of final consumers-individuals and households that buy goods and services for personal consumption.

Engel, Blackwell & Kollat, Consumer buyer is the acts of individuals in obtaining and using goods and services including the decision processes that precede and determine these acts.

“All marketing decisions are based on assumptions and knowledge of consumer behavior,” (Hawkins and Mothersbaugh, 2007).

Brekman & Gilson: Consumer behavior may be defined as activities of people engaged in actual or potential use of market items-whether products services, retail environments or idea,

Steven J. Skinner: Consumer behavior is the action and decision processes of people who purchase goods and services for personal consumption.

Loudon & Bitta: Consumer behavior may be defined as the decision process and physical activity individuals engage in when evaluation acquiring, using or disposing of goods, or services.

 

Q:  Model of Consumer Behavior

Consumer Behavior models are essential tools that marketers can use to help understand why consumers do or do not buy a product. The different types of models are the black box model, the personal variable model, and the comprehensive model, and each model has a specific focus. The black box model concentrates on external stimuli, the personal variable model focuses on internal stimuli within the consumer, and the comprehensive model studies a combination of external and internal stimuli.

The black box model, also called the stimulus-response model, is one of the most simple types of consumer behavior models. The black box can be thought of as the region of the consumer’s brain that is responsible for purchasing decisions. Environmental stimuli, such as economics, technology, and culture, combine with marketing stimuli, like the product, price, and promotion, inside the black box, where decisions are made. This model ignores variables within the consumer and focuses on marketing and environmental variables that produce the desired response.

The personal variable model is another one of the major types of consumer behavior models. Unlike the black box model, where external stimuli is the main focus, the personal variable model studies what internal factors affect consumer behavior and purchasing decisions. This model specifically ignores external stimuli, such as marketing techniques, and concentrates on internal psychological variables. These variables include lifestyle, motivations, and personality. It also looks at individual decision-making processes, such as problem recognition, alternative evaluation, as well as post-purchase behavior.

The final major types of consumer behavior models are the comprehensive models. As the name might suggest, this type of model takes into account both environmental and internal stimuli when studying purchasing behavior. This type of model is one of the most complex studies because of how many variables are in play. It is beneficial because it is the only model that can be used to study how different external stimuli react in different types of personalities and demographics. It is, however, difficult to determine the accuracy of the conclusions drawn from these studies because of the amount of variables

 

Q: Define Attitude. Explain its Functions. Discuss the attitude changes. Explain relationship between Attitude and behaviour.

An attitude is an expression of favor or disfavor toward a person, place, thing, or event (the attitude object). Prominent psychologist Gordon Allport once described attitudes “the most distinctive and indispensable concept in contemporary social psychology.”Attitude can be formed from a person’s past and present. Attitude is also measurable and changeable as well as influencing the person’s emotion and behavior.

                An attitude can be defined as a positive or negative evaluation of people, objects, event, activities, ideas, or just about anything in your environment, but there is debate about precise definitions. Eagly and Chaiken, for example, define an attitude “a psychological tendency that is expressed by evaluating a particular entity with some degree of favor or disfavor.

Q:  Explain the Function of Attitude

Daniel Katz classified attitudes into four different groups based on their functions

  • Utilitarian: provides us with general approach or avoidance tendencies
  • Knowledge: help people organize and interpret new information
  • Ego-defensive: attitudes can help people protect their self-esteem
  • Value-expressive: used to express central values or beliefs
  1. Utilitarian People adopt attitudes that are rewarding and that help them avoid punishment. In other words any attitude that is adopted in a person’s own self-interest is considered to serve a utilitarian function. Consider you have a condo, people with condos pay property taxes, and as a result you don’t want to pay more taxes. If those factors lead to your attitude that ” Increases in property taxes are bad” you attitude is serving a utilitarian function.
  2. Knowledge People need to maintain an organized, meaningful, and stable view of the world. That being said important values and general principles can provide a framework for our knowledge. Attitudes achieve this goal by making things fit together and make sense. Example:
  • I believe that I am a good person.
  • I believe that good things happen to good people.
  1. Ego-Defensive This function involves psychoanalytic principles where people use defense mechanisms to protect themselves from psychological harm. Mechanisms include:

1) Denial, 2) Repression, 3) Projection, 4) Rationalization

The ego-defensive notion correlates nicely with Downward Comparison Theory which holds the view that derogating a less fortunate other increases our own subjective well-being.

  1. Value-Expressive
  • Serves to express one’s central values and self-concept.
  • Central values tend to establish our identity and gain us social approval thereby showing us who we are, and what we stand for.

An example would concern attitudes toward a controversial political issue.

Q: Discuss the Attitude Change

Attitudes can be changed through persuasion and an important domain of research on attitude change focuses on responses to communication. Experimental research into the factors that can affect the persuasiveness of a message include:

  1. Target Characteristics: These are characteristics that refer to the person who receives and processes a message. One such trait is intelligence – it seems that more intelligent people are less easily persuaded by one-sided messages. Another variable that has been studied in this category is self-esteem.
  2. Source Characteristics: The major source characteristics are expertise, trustworthiness and interpersonal attraction or attractiveness. The credibility of a perceived message has been found to be a key variable here; if one reads a report about health and believes it came from a professional medical journal, one may be more easily persuaded than if one believes it is from a popular newspaper.
  3. Message Characteristics: The nature of the message plays a role in persuasion. Sometimes presenting both sides of a story is useful to help change attitudes. When people are not motivated to process the message, simply the number of arguments presented in a persuasive message will influence attitude change, such that a greater number of arguments will produce greater attitude change.
  4. Cognitive Routes: A message can appeal to an individual’s cognitive evaluation to help change an attitude. In the central route to persuasion the individual is presented with the data and motivated to evaluate the data and arrive at an attitude changing conclusion. In the peripheral route to attitude change, the individual is encouraged to not look at the content but at the source.

Q:  Explain relationship between Attitude and behavior.

The effects of attitudes on behaviors represent a significant research enterprise within psychology. Two theoretical approaches have dominated this research: the theory of reasoned action[23] and, its theoretical descendant, the theory of planned behavior, both of which are associated with Icek Ajzen. Both of these theories describe the link between attitude and behavior as a deliberative process, with an individual actively choosing to engage in an attitude-related behavior.

The theory of reasoned action (TRA) is a model for the prediction of behavioral intention, spanning predictions of attitude and predictions of behavior. The subsequent separation of behavioral intention from behavior allows for explanation of limiting factors on attitudinal influence (Ajzen, 1980). The Theory of Reasoned Action was developed by Martin Fishbein and Icek Ajzen (1975, 1980), derived from previous research that started out as the theory of attitude, which led to the study of attitude and behavior. The theory was “born largely out of frustration with traditional attitude–behavior research, much of which found weak correlations between attitude measures and performance of volitional behaviors” (Hale, Householder & Greene, 2003, p. 259).

The theory of planned behavior was proposed by Icek Ajzen in 1985 through his article “From intentions to actions: A theory of planned behavior.” The theory was developed from the theory of reasoned action, which was proposed by Martin Fishbein together with Icek Ajzen in 1975. The theory of reasoned action was in turn grounded in various theories of attitude such as learning theories, expectancy-value theories, consistency theories, and attribution theory. According to the theory of reasoned action, if people evaluate the suggested behavior as positive (attitude), and if they think their significant others want them to perform the behavior (subjective norm), this results in a higher intention (motivation) and they are more likely to do so.

A counter-argument against the high relationship between behavioral intention and actual behavior has also been proposed, as the results of some studies show that, because of circumstantial limitations, behavioral intention does not always lead to actual behavior.

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Q:  Maslow’s Needs Hierarchy?

Ans: Psychologist Abraham Maslows Needs Hierarchy is the popular theory of human needs that helps us understand motivation. Maslow believed that people’s behavior was motivated by their desire to fulfill needs. These needs were arranged in a hierarchy from the most basic several needs at the bottom to self-fulfilling needs at the top.

Maslow identify five basic needs that explain the internal motivation process: a) Physiological need, b) Safety need, c) Social need, d) Esteem need, e) Self-actualization need.

  1. Physiological need: The starting point for understanding motivation is physiological need. Physiological need is biological need such as for food, air, water etc. But once physiological needs are fulfilled they lose their power to motivate.
  2. Safety need: After fulfill their physiological need they want safety need. It is very important needs for an employee or workers. Safety need is security need such as the need to be financially secure and protected against job loss. Safety needs can be satisfied by the creation of seniority systems, pensions and insurance plans.
  3. Social need: Social need is the need to belong and to interact with other people, i.e. friendship, group membership,. Once social needs have been largely satisfied, they also begin to lose their power to motivate.
  4. Esteem need: Esteem need is the need for self-respect and for respect from others. When the need for esteem is strong the individual will often set difficult goals, work hard to achieve the goals, and expect to receive recognition for these efforts. Goal accomplishment and the resulting recognition lead to feelings of self-esteem and self-confidence.
  5. Self-actualization need: The top of the need hierarchy is self-actualization. Self-actualization is the need to use and display one’s full range of skills and competence. Maslow noted that self-actualizing people display certain characteristics:
    • They tend to be serious and thoughtful.
    • They focus on problems outside themselves
    • They are strongly ethical
    • Their behavior is unaffected and natural.

 

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