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Chapter objectives (1) 1. Name the elements in the stimulus-response model of consumer behaviour. 2. Outline the major characteristics affecting consumer behaviour, and list some of the specific psychological, personal, cultural and social factors that influence consumers. 3. Explain the buyer decision process and discuss need recognition, information search, evaluation of alternatives, the purchase decision and post-purchase behaviour. Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 3

Chapter objectives (2) 4. Identify and define the consumer buying roles of initiator, influencer, decider, buyer and user. 5. Illustrate different types of buying decision behaviour, including complex, dissonancereducing, habitual and variety seeking buying behaviour. 6. Express the basics of the buyer decision process for new products and identify stages in the adoption process, individual differences in the adoption of innovation, and the influence of product characteristics on the rate of diffusion of innovation. Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 4

What is a Consumer Market? The consumer market consists of all the individuals and households who buy or acquire goods and services for personal consumption. Australian consumers vary tremendously in age, income, education level, and tastes. And they buy an incredible variety of goods and services. How consumers make their choices among these products takes us into a fascinating field comprised of personal, cultural, and social influences. Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 5

A Model of Consumer Behaviour Consumers make buying decisions every day. And they make many different types of purchases. Most marketers undertake consumer research to try to learn more about: what consumers buy, who buys, how they buy, when they buy, where they buy and, most importantly, why they buy. The central question is: How do consumers respond to the various marketing stimuli the marketing organisation might use? Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 6

Characteristics Influencing Consumer Behaviour 1. Consumer purchases are strongly influenced by two groups of factors. 2. On one hand there are internal characteristics that determine our behaviour: psychological personal 3. And then there are external influences that represent the environment in which the individual behaviour takes place: cultural and social Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 8

Figure 5. 2: Factors Influencing Consumer Behaviour Psychological • Motivation • Perception • Learning (memory) • Beliefs & attitudes • Personality & self-concept Marketing programs • Marketing objectives • Marketing strategy • Marketing mix Personal • Age & lifecycle stage • Occupation • Education • Economic situation Social • Household type • Reference groups • Roles & status Consumer Buyers’ responses • Product service & category selection BUYER DECISION • Brand selection PROCESS • Reseller selection Experiences • Purchase timing & Lifestyle repurchase intervals • Purchase amount Environmental influences • Economic • Technological • Political Cultural • Culture • Subculture • Social Class Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 9

Psychological Factors: Motivation When consumers express interest in buying a product there a number of questions we might ask. Why? What is the person really seeking? What needs is he or she trying to satisfy? A person has many needs at any given time. Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 11

Psychological Factors Motivation Theories Sigmund Freud assumes that people are largely unconscious about the real psychological forces shaping their behaviour. He sees the person as growing up and repressing many urges. Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 12

Psychological Factors Motivation Theories Abraham Maslow sought to explain why people are driven by particular needs at particular times. Why does one person spend much time and energy on personal safety and another on gaining the esteem of others? Maslow's answer is that human needs are arranged in a hierarchy, from the most pressing to the least pressing Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 13

Figure 5. 3: Maslow’s Hierarchy of Needs Self Actualisation Self-Esteem Belongingness Safety Physiological Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 14

Psychological Factors: Perception A motivated person is ready to act. How the person acts is influenced by his or her perception of the situation. Two people with similar motivation and in the same situation might act quite differently because they perceive the situation differently. Perceptual Processes Selective Exposure Selective Distortion Selective Retention Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 15

Psychological Factors: Learning When people act, they learn. Learning describes changes in an individual's behaviour arising from experience. The significance of learning theory to marketers is that they can build demand for a product by associating it with strong drives, using motivating cues and providing positive reinforcement. Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 16

Psychological Factors: Beliefs and Attitudes Through acting and learning, people acquire their beliefs and attitudes A belief is a descriptive thought or conviction that a person holds about something, and involves holding an opinion. Incorrect beliefs about product features or brand image can block sales. Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 17

Psychological Factors: Beliefs and Attitudes An attitude describes a person’s relatively consistent evaluations, feelings and tendencies towards an object or idea People have attitudes towards political parties, music and food types as well as companies and brands Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 18

Tricomponent attitude model Cognitive-thought driven, rational influences on attitudes Affective- emotionally driven attitudes Conative- behavioural Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 19

Personal Influences A buyer's decisions are also influenced by personal characteristics such as: Age and life-cycle stage Occupation Education Economic situation Personality & Self Concept Consumer lifestyle Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 20

Lifestyles and Psychographics Activities, Interests and Opinions (AIO) SRI Values and Lifestyles (VALS) Inner-directed and Outer-directed Roy Morgan Lifestyles groups (10 groups that describe ‘typical’ Australian lifestyles) Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 21

Cultural Factors Cultural factors exert the broadest and deepest influence on consumer behaviour. Marketers need to understand the role played by: culture, subculture social class http: //www. corona-extra. net/n_gallery/gcoro 015. jpg Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 22

Social influences A consumer's behaviour is also influenced by social factors, such as the consumer's household type and reference groups, as well as social roles and status. These social factors can strongly affect consumer responses, companies must take them into account when designing their marketing strategies. Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 24

Social influences Household types: changing lifestyles and buying roles affect marketing decisions Groups Membership groups Reference groups Opinion leaders Roles and Status Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 25

Figure 5. 4: Extent of group influence on product and brand choice Group Influence on Product Choice Group Influence on Brand Choice Strong Weak Strong Public Luxuries Private Luxuries Weak Public Necessities Private Necessities Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 26

Family and Lifestyle Influences Family Influences Occupation Age and Life Cycle Stage Economic Situation Lifestyle Identification Activities Opinions Interests Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 27

Types of Buying Decisions 1. Complex Buying Behaviour 2. Dissonance-Reducing Buying Behaviour 3. Habitual Buying Behaviour 4. Variety-Seeking Buying Behaviour Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 30

Figure 5. 6: Types of Buying Decisions High Involvement Significant differences between brands Few differences between brands Low Involvement Complex Buying Behaviour Variety. Seeking Behaviour Dissonance. Reducing Buying Behaviour Habitual Buying Behaviour Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 31

Figure 5. 7: The Buyer Decision Process Need Recognition Information Search Evaluation of Alternatives Purchase Decision Post-purchase Behaviour Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 32

Early Majority Innovators Percentage of Adopters Figure 5. 8: Adoption of Innovations Early Adopters 34% Late Majority Laggards 34% 16% 13. 5% 2. 5% Early Time of Adoption Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia Late 35

Influences on Rate of Adoption Communicability Relative Advantage Influences Divisibility Compatibility Complexity Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 36

Influence of Product Characteristics on Rate of Adoption The characteristics of the new product affect its rate of adoption. Some products are adopted almost overnight (Internet-50 million users in 4 years), some are fast (mobile telephones), others take longer to gain acceptance (personal computers-50 million users in 16 years). Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 37

Influence of Product Characteristics on Rate of Adoption Relative Advantage: the degree to which an innovation appears superior to existing products Compatibility: the degree to which the innovation fits the values and experiences of potential consumers Complexity: the degree to which the innovation is difficult to understand or use Divisibility: the degree to which the innovation may be tried on a limited basis Communicability: the degree to which the results of using the innovation can be observed or described to others Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 38

Consumer behaviour across international borders Consumers in different countries may have some things in common but their values, attitudes and behaviours may vary a lot Marketers often adjust their products and communications to reflect the differences Differences are often subtle and may result from physical differences in consumers and their environment Other differences may include gestures, body posture and manners Kotler, Adam, Brown & Armstrong: International Marketing 3 e © 2006 Pearson Education Australia 39