Consumer markets and consumer behavior

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Questions to be addressed
How do consumer characteristics influence buying behavior?

What are the processes and the parameters which influence consumer responses towards marketing programs?

How do consumers make purchasing decisions?

How are marketers effected by consumer decision making

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Consumer Buying Behavior

Aim of marketing is to meet and satisfy customers need. Consumer Buying Behavior refers to the buying behavior of final consumers -individuals & households who buy goods and services for personal consumption. The process and activities people engage in when searching for, selecting, purchasing, using, evaluating and disposing off products and services so as to satisfy their needs and desires. It is the study of how individuals select, buy and use goods and services and focuses on the how and why of the total experience consumers have with the product. What factors and variables influence the buying decision? Provides clues to marketers for introducing products or services, setting prices, devising channels, crafting messages and developing other marketing activities. The holistic marketing orientation focuses on value. Fully connect with customers, understanding their daily lives and the changes that occur during their lifetime so that right products are marketed to the right customer in the right way. Eg- Wal marts design of Latin American stores
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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Tata Steel used steeljunction to encourage consumers to go steel shopping and to develop deeper understanding of individual and household customers.
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458 5

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Stimulus-response model
Marketing and Other Stimuli

Buyers Decision Process

Buyers Black Box

Characteristics Affecting Consumer Behavior

Buyers Response
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458 9

A Model of Consumer Behavior

2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 3e Upper Saddle River, NJ 07458 Bowen, James Makens Philip Kotler, John

Marketing for Hospitality Pearson Education, Inc. 2003 and Tourism, 4th edition 10 Kotler, Bowen, and Makens Upper Saddle River, NJ 07458

Model of Consumer Behavior

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Buyers Black Box

Known as Black box because marketer cannot know precisely for every customer exactly what process goes on in his mind But is important because the process ultimately leads to the purchasing or no purchasing decision. What is going on in the minds of customers before, during and after the purchase? Marketing and environmental stimuli enter the buyers consciousness. As a marketer one needs to understand what happens in the buyers consciousness which leads to the purchase decision. Buyers characteristics influence how they perceive the stimuli. Buyers characteristics includes cultural, social, personal and psychological factors

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Five premises of consumer behavior

Consumer behavior is purposeful and goal oriented. Consumer has free choice Consumer behavior is a process Consumer behavior can be influenced There is a need for consumer education.

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Factors Influencing Consumer Behavior

Cultural Social
Culture Subculture Social class Reference groups Family Roles and status

Personal
Age and life-cycle Personality and self-concept Lifestyle

Psychological
Motivation Perception Learning Beliefs and attitudes

Buyer

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Culture
Culture is the fundamental determinant of a persons wants and behaviors and has a great impact on the values, perceptions, preferences and behaviors through the key institutions. Culture includes knowledge, belief, art, morals, custom, gestures and any other system received as a member of the society and transferred from one generation to other. These factors are outside the control of the customers and marketers but must be taken into account by the them. Marketers need to customize products according to the culture and tradition. As a part of their efforts to convince customers to purchase their products marketers use cultural representations especially in promotional appeals. EgCoca Cola Open happiness campaign Eg- Color meanings for choosing color pallette Numbers Eating habits

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Factors Affecting Consumer Behavior: Sub Culture

Each culture consists of smaller sub cultures that provide more specific identification and socialization for its members. Subculture Include religion, races and geographic regions Group of people with shared value systems based on common life experiences. American Indians African Americans Asian Americans
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458 18

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Factors Affecting Consumer Behavior: Social classes

All societies exhibit social stratification. Mostly takes the form of caste system where members of different castes are reared for certain roles. They reflect income, occupation, dress and speech patterns.

Social Class
Society s relatively permanent & ordered divisions whose members share similar values, interests, and behaviors. Measured by: Occupation Income, Education, Wealth and Other Variables. People within a social class tend to exhibit similar buying behavior. for Hospitality and Tourism, 3e Marketing
Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

22

Characteristics of Social classes

People within the same social class behave alike and different from the people of the other social class. Indicated by a cluster of variables- occupation, income, wealth and education. Social classes show distinct product and brand preferences in clothing, leisure activities and lifestyle Marketers are interested in social classes because people within a given social class tend to exhibit similar buying behavior.

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

23

Social stratification of US society

Upper uppers- These are the less than 1% social elite. Mostly live on inherited wealth. Are a huge market for costliest jewellery, antiques, homes, vacations and luxury cars. Lower uppers- About 2% of the population. Includes people who have earned huge income or wealth through exceptional ability in their profession or business. Build a symbol of status for themselves and their children. Upper middles- Include mainly professional people like small business men and corporate managers who are concerned with their career, believe in their education and possess professional and administrative skills. They provide good market for good homes, clothes, furnitures and appliance. Middle class- Average pay white collar workers. Buy popular products and try to keep up with the trends. Spend on worthwhile things and steer children towards college education. Working class- Includes the average pay blue collar workers. Depends heavily on friends and relatives for economic and emotional support Upper lowers- Includes workers who are just above poverty line. Unskilled workers and daily wage earners. Lower lowers- Below the poverty line. Depend totally on public aid and charity

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

24

Factors Affecting Consumer Behavior: Social

Reference Groups Membership

Family (most important) Husband, wife, kids

Social Factors

Roles and Status

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

25

Social Factors: groups

Group can be defined as two or more people who interact to accomplish individual or mutual goals A persons reference group consists of all those groups that have a direct or indirect influence on the attitude, lifestyle and behavior of individuals. Groups that have a direct influence on the attitude and behavior of an individuals are the membership groups. Consists of primary and secondary groups. Eg- Friends, neighbours,co-workers and religious, spiritual groups, trade union groups People are also influenced by groups to which they aspire to join. These are the aspirational groups. Dissociative groups are the ones whose belief system and values are rejected Opinion leaders also act as important groups influencing individuals. Marketers try to identify target customers reference groups The factor that effects the influence exerted by a reference group are the information and experience that the group carries(as perceived by the consumers) its credibility and attractiveness. Reference groups create pressures for confirmity that directly effects the consumers brand and product choice.

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Family
The most important primary reference group which effects a buyers behavior Consists of parents- family of orientation and later on the family of procreation- spouse and children. From parents a person acquires an orientation toward religion, politics, and economics and a sense of personal ambition, self-worth, values, morals and love. In countries like India family of orientation plays a significant role in buying pattern. With changing lifestyles women and children have come to influence the purchase decisions to great extent. Teenagers exert a great influence in purchasing decisions particularly in technology based products. More and more children are being targeted as they also influence the buying decision to a great extent.

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Roles and status

The position and the responsibility that a person holds in the groups that he is a part of defines his role and status Each role carries a status. Needs, wants and demands of an individual are highly influenced by his/her status People choose products that communicate their role and status in society Marketers offer products according to the status symbol communicated by the product. Also people choose products that reflect and communicate their role and status in the society. Marketers are aware about the status symbol potential of products and brands.
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458 32

Factors Affecting Consumer Behavior: Personal

Personal Influences
Age and Family Life Cycle Stage Personality and self concept

Lifestyle Identification
Activities Opinions

Interests
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458 33

Age and stage in life cycle

People buy a variety of different goods over their lifetime. Tastes and preferences in foods, clothes, vehicles, vacations is to a great extent related directly to age. Consumption is influenced by stages in life cycle which is divided into 8 stages. Bachelor stage, Newly married couple, Full nest I, Full nest II, Empty nest I, Empty nest II, Solitary survivor. In bachelor stage one is fashion and recreation oriented, fewer responsibilities, purchase basic home equipment, newly married have the highest purchase rate- good market for consumer durables, appliances, vehicles and furniture Full nest I and II- financial position is better, bigger size packages, children related purchases Empty nest I- Older married couples, children not living with them, more savings, travel and recreation, luxuries and home improvements. Solitary survivor- Income is still good, but likely to sell home or rent out. Marketers mould their products according to the life cycle stage of customers.

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Brand Personality
Is a comprehensive concept which includes all the tangible and intangible traits of a brand like beliefs, values, features and interests. Brand personality describes a brand in terms of human characteristics. A brand with a personality becomes a compelling value proposition for the customers hence marketers are constantly trying to give their brands a personality by conveying it through promotional appeals Manufacturers use brand ambassadors to create the perception and image. It is the attribution of human personality traits to a brand and is done as a method to achieve differenciation. Brand personality helps marketers to position their products in minds of customers.

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Personality and self concept

Personality refers to a set of distinguishing physical and psychological set of traits that lead to a consistent and an enduring response to environmental stimuli. Every person has certain personality traits which reflect on his/her buying behavior. People try to relate their own personalities with the products that they use Brands also have personalities and consumers choose those brands and products which they feel relates to their personality. Research in brand personality identified the following 5 traits: Sincerity- (Down to earth, Honest) Excitement- ( Daring, Spirited and adventure) Competence- (Reliable, intelligent, successful) Sophistication- (Elite and charming) Ruggedness- (Outdoor and rough)

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Lifestyle
Lifestyle is a persons pattern of living in the world and is determined by his activities, opinions and interests. Though people may belong to the same sub culture they may lead absolutely different lifestyles. Lifestyle portrays the person interacting with his environment As marketers the job is to relate their products with different lifestyles. Marketers who target consumers on the basis of their lifestyles believe that by appealing to the peoples inner selves it is possible to influence their outer selves- their purchase behavior.

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

44

Lifestyle Influences
Multi-tasking Time-starved Money-constrained

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

45

Factors Affecting Consumer Behavior: Psychological

Motivation

Beliefs and Attitudes

Psychological Factors Affecting Buyers Choices

Perception

Learning
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458 46

Psychological - Motive
A motive is a need that has a sufficient level of intensity. Creating a tension state that drives the person to act. Satisfying the need reduces the felt tension. Motivation begins with the presence of a stimulus that spurs the recognition of a need The theories are by Sigmund Freud, Abraham Maslow and Frederick Herzberg Psychological forces shaping peoples behavior are largely unconscious. Methods like Laddering, In depth interviews and Projective techniques have been used by motivation researchers to trace a persons terminal motives which are largely implicit. Accordingly marketers can decide at which level to develop the message and appeal and position the product.
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458 47

Maslows Hierarchy of Needs

Self Actualization

Esteem Needs (self-esteem) Social Needs

(sense of belonging, love)

Safety Needs
(security, protection)

Physiological Needs
(hunger, thirst)
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458 48

Motivation
Maslow sought to explain why consumers are driven by different needs at different times. Maslow said that human needs are arranged in a hierarchy from the most pressing to the least pressing. People will try to satisfy their most important needs first. Marketers need to understand how their products and services fit psychologically into the lives, goals and aspirations of their potential customers. If the marketer knows which need is to be appealed to, it will be much easier to market its products.
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458 49

Herzbergs two factor theory

According to the two factor theory the factors which cause satisfaction are different from the factors which cause dissatisfaction. The opposite of dissatisfaction is not satisfaction. Implications of the two factor theory are two: Marketers should do their best to avoid dissatisfiers. Though absence of dissatisfiers may not sell a product but their presence will surely unsell the product. Eg- Any product that comes without a warranty would be a dissatisfier. Marketers should identify the major satisfiers and incorporate them in their products.

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

50

Psychological - Perception
The process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world.

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Perception in marketing
Perceptions are often more important in marketing than the absolute reality since it is the perception of the customer which effects their behavior and purchase decisions Its important for marketers to to make sure that the product is same in terms of quality, features and benefits that the consumers perceive it to be. Perception directly influences the psychology of customers as to how they think, feel, reason and select among different alternatives. Also conditions and situations play a very important role. Eg- Timing of the stimulus. Brand personality and positioning is also related to perceptions of consumers. Selective attention, selective distortion and selective retention

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

52

Psychological - Learning

Changes in an individuals behavior arising from experience. Change is relatively permanent Arises out of certain past experiences and events

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

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Learning in Marketing
Repititive purchases of a product by customers is directly related to their learning experiences and generalisations Most human behavior is learned hence consumer behavior is also learnt. A drive is a strong stimulus impelling action and marketers have to provide those positive stimulus by associating their brands with them Marketers can create demand for their products by associating them with strong drives, using motivating cues and providing positive reinforcements. New marketers can enter the market by using similar drives as used by their already existing competitors.

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

54

Psychological - Attitude

An attitude describes a persons favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea. Attitude gives customers a frame of mind of liking or disliking an object

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

55

Attitude
Consumer attitude is a composite of their belief, feelings and behavioral intentions towards an object A customer may hold a positive or negative belief towards a product. EgCoffee available at Barista is black Belief gives rise to a feeling. Eg- Drinking black coffee spoils taste. Feelings result in behavioral intentions.
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458 56

Buyer Decision Process Purchase Decision Evaluation of Alternatives Information Search Need Recognition
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458 57

Post purchase Behavior