Consumer Behavior: Key Concepts and Applications
Consumer Behavior
Consumer behavior is the behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of the products and services that they expect will satisfy their needs.
Segmentation
- Identifiable: Able to identify and measure the common characteristics.
- Sizeable: Segment is stable in terms of needs, demographics, and psychological factors.
- Stable: In terms of lifestyles and consumption patterns.
- Accessible: Able to access and reach the segment in an economical way.
- Congruent: With company objectives and resources.
Bases for Segmentation
- Consumer-rooted/Facts: (Empirical personal features) – Demographics (age, age cohorts, gender, marital status, family life cycle, income, education, occupation, social class).
- Consumer-rooted/Cognitions: (Personality, lifestyles, and sociocultural values) – Personality traits, lifestyles, psychographics (basic needs, look at me, socially aware, family life), and VALS, sociocultural values, and beliefs.
- Consumption-specific/Facts: (Usage and purchase behavior) – Usage rate, usage situation/occasion, brand loyalty (behavior component), psychographics-factual behaviors (hobbies).
- Consumption-specific/Cognitions: (Attitudes & preferences regarding the product) – Benefits wanted (social-acceptance, long-lasting, prestige, economy), level of involvement, awareness of product alternatives, brand loyalty – perceived commitment and level of relationship.
Sociocultural Segmentation
Family life cycle, social class (income, education, occupation), core cultural values, subcultural memberships (Italian Australian), cross-cultural affiliation.
User-Related Segmentation
Categorizes consumers in terms of product, brand, or service-usage. Characteristics: raising awareness, rate of usage (heavy, medium, light, non), degree of brand loyalty (highly brand loyal to brand switchers).
Benefit Segmentation
Needs-based segmentation examines major benefits consumers look for in the product class. Changing lifestyles play a major role in product benefits. Effective for niche markets. Hybrid: marketer combines several segmentation variables, rather than a single segmentation method.
VALS:
Consumer Learning and Involvement (BMW)
The elements of consumer learning:
Learning: the process by which individuals acquire purchase and consumption knowledge, and the experience they apply to future related behavior. Consumer learning is a process. As such, it constantly evolves and changes as a result of acquired information. Incidental learning means that consumers don’t always learn about brand, product, or service in the way they’re supposed to. Elements of consumer learning:
- Motivation: Consumers are more motivated to learn if the information is relevant to their needs and goals. (Personal fitness goal)
- Cues: Serve to direct consumer drives when they are consistent with consumer expectations. (Home fitness for potential fitness enthusiasts)
- Response: How consumers react or behave to a drive or a cue.
- Reinforcement: Increases the likelihood a response will occur in the future as a result of a cue or stimuli. (Reaction from people)
Behavioral Learning Theories (Stimulus-Response Theories)
- Classical Conditioning: Assigning meaning from one stimulus (celebrity) – which has meaning – to another stimulus (brand name/logo) which does not have meaning to elicit a response.
- Instrumental (Operant) Conditioning: Learning based on trial and error, how the customer learns which brands they prefer (and avoid).
Marketing Applications of Classical Conditioning
- Repetition: Increases the strength of association between an unconditioned stimulus (brand logos/symbols) and the unconditioned stimulus (celebrity endorser; imagery) that lead to a response (purchase behavior). Over-learning will aid retention, however, greater numbers of repetition and retention may decline.
- Stimulus Generalization: Stimulus generalization: responding the same way to slightly different stimuli (Family branding – practice of marketing a whole line of products under the single brand name – General Electric, Ford, Apple, Samsung)
- Stimulus Discrimination: The selection of one stimulus from among similar stimuli
Information Processing and Cognitive Learning
Much of consumer learning takes place as a result of thinking and problem-solving. Cognitive learning theory holds that learning involves complex mental processing of information. Cognitive theory emphasizes the role of motivation and mental processes in producing desired behaviors. Is related to the consumer’s cognitive ability and the complexity of information. Consumers differ in terms of imagery – their ability to form mental images – and these differences influence their ability to recall information. Of central importance to the processing of information is human memory.
Involvement Theory
Consumers engage in a range of information processing activity from extensive to limited problem-solving, depending on the relevance of the purchase. Being a central part of their lives, meaningful, engaging, and important to them.
Central Route to Persuasion
Consumer more likely to evaluate information and products carefully when the product is more relevant to them (high involvement).
Peripheral Route to Persuasion
Consumer more likely to engage in limited information search and evaluation when purchase is less important to them (low involvement).
Consumer Attitudes
The Family
Two or more people related by blood, marriage, or adoption who reside together in the same household. (Doesn’t require the presence of children). The most basic social group, satisfy personal and mutual needs (emotional support, economic well-being). Subset of the more general classification, the household.
Functions of Family
Socialization
Socialization Skills: Include manners, goals, morals, and general values that are passed through direct instruction or via observation.
Consumer Socialization: The passing on of marketplace skills and knowledge.
Child Consumer Socialization: Where the children learn about consumption and purchase behavior from their family members.
Model of Socialization Process
Young Person:
- Other family members: Influence more basic values/behavior: (Moral/religious behavior, interpersonal skills, dress/grooming standards, manners and speech, educational motivation, occupational/career goals, consumer behavior norms).
- Friends: Influence more expressive attitudes/behavior: (Style, fashion, fads, ‘in/out’, acceptable consumer behavior).
Family Life Cycle Stages
- Young Singles: Established households away from parents. Mostly employed, students. Income spent on rent, cars, travel, entertainment. Easy to reach through specialist magazines and certain TV shows.
- Young Marrieds: High combined disposable income, but considerable start-up home expenses. Career-orientated, seeking to start a family.
- Parenthood: Full-nest, family structure, and needs change over 20 year stage, (preschool, primary, high school, university)
- Post-Parenthood: Empty nest, highest disposable income, retirement provides travel opportunities.
- Dissolution: Tend to follow a more frugal lifestyle. Occurs when a spouse has died.
Consumption in Non-Traditional Families
Divorcees: May need new products such as home, phone, furniture, etc. May need new services such as real estate, banking.
Dual-Income Families: ‘Crowded nester’-dual income coupled with adult child at home=more disposable income. Working wives – more convenience meals, greater demand for services.
Same-Sex Relationships: May have higher discretionary income due to the absence of children, different spending patterns to traditional families.
Family Decision Making
Families interact and influence each other when making purchasing decisions. The family is considered a decision-making unit. Individuals will perform different roles and tasks in the decision-making process. Eight Roles in the Family Decision Making Process: (Family members)
- Influencers: Provide information to other members about a product or service
- Gatekeepers: Control the flow of information about a product or service into the family.
- Deciders: The power to determine unilaterally or jointly whether to shop for, purchase, use, consume, or dispose of a specific product or service.
- Buyers: Make the actual purchase of a particular product or service.
- Preparers: Transform the product into a form suitable for consumption by other family members.
- Users: Use or consume a particular product or service.
- Maintainers: Service or repair product so that it will provide continued satisfaction.
- Disposers: Initiate or carry out the disposal or discontinuation of a particular product or service.
Social Class
Influence of Culture
Cross-Cultural Consumer Behavior
Decision Making
Diffusion of Innovation
Public Policy and Consumer Behavior
***Consumer Decision Making Model, Maslow hierarchy of needs, VALS, Personality Theories, ***