Chapter 6: Analyzing Consumer Markets

Influencers of Consumer Behaviour

1. Cultural Factors (Culture, Subculture, social class)
2. Social Factors (Reference groups-family, friends, peers, aspirational group- one wants to join, dissociative group- one want to keep away, Roles and Statuses)
3. Personal Factors Age and stage in life cycle, occupational and economic circumstances, personality and self concept, life-style and values

Key Psychological Processes

Motivation

1. Freud -Unconscious Mind contains associations with Subtle cues that can ifluence a persons's preferences. Can be understood with laddering techniques, projection techniques -word association, role playing, picture interpretation etc.
2. Maslow's Theory: Need Hierarchy in the order of- Physiological Needs (food, water, shelter), Safety (security, protection), Social Needs (sense of belongingness, love), Esteem Needs (self esteem, recognition, status) and Self Actualization Needs (self-developent and realization)
3. Herzberg's Theory: A two factor theory- Dissatisfiers (which cause dissatisfaction-confilict, clash, physical discomfort, distrust, lack of faith etc) and Satisfiers (which cause satisfaction). Lack of dissatisfiers is not enough, there need to be satisfiers as well for motivating people.

Perception

• Selective Attention
• Selective Distortion
• Selective Retention
• Sublimal Perception

Learning (Drive, Cues and Discrimination)

Memory (Short Term and Long Term)

Buying Decion Process-A Five Stage Model

• Problem Recognition (need triggered by external or internal stimuli)
• Information Search (In a state of heightened attention, information gathered from personal-family, friends relatives, commercial,-ads, websites, displays, public-mass media consumer ratings and experienced sources-handling, examining, using the product)
• Evaluation of Alternatives (with the help of beliefs and attitudes, expectancy-value model)
• Purchase Decision (non compensatory model- conjunctive heuristic: a minimum cutoff limit for each attribute, lexicographic heuristic: customer chooses best brand on the basis of perceived most important attribute, elimination-by-aspects heuristic: customer compares brand on an atribute selected heuristically, Interveneing factors-attitude of others, intermediaries like consumer reports)
• Postpurchase Behaviour (Satisfaction, Actions, Use and Disposal)

Level of Customer Involvement

1. Elaboration Likelihood Model (Consumers follow Central Route of persuation by trying the product only when they have 3 factors: Motivation, ability and opportunity)
2. Low involvement marketing strategies :

• try to convert a commoditized low involvement product into high involvement by linking product to something very important (toothpaste to cavity reduction),
• Linking product to some involving personal situation (fruit juices linked with Vitamins),
• designing advertising to trigger strong emotions related to personal ego or values ,
• by adding an important feature.

3. Variety Seeking buying behaviour: For the products that are low involvement but high brand value (like cookies) where the customer tries while consuming and tries another brand next time.

Decision Heuristics and Biases

• Availability Heuristic: If one product of company was of poor quality, next one would also be.
• reprentative Heuristic: Similar looking packaging for different products of same brand
• Anchoring and Adjustment Heuristic: Customer reach an initial judgement with the first impression of roduct and keep adjusting it laer on. THus first impression is extremely important.

Mental Accounting

• Customer tend to segregate gains
• They tend to integrate losses
• They tend to integrate smaller losses with larger gains
• They tend to segregate small gains from large losses