Understanding
Customers and
Competitors
Chapter 4 - Marketing for Entrepreneurs
Frederick G. Crane
Derrick Ofori Donkor
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Learning
Objectives
•
•
•
•
Understand customer behavior and
influences
Identify and analyze customer segments
Examine key differences between
business and individual customers
Conduct competitor analysis and
positioning
Develop strategic marketing decisions
The customer
• Customer behavior involves both the
physical and mental behavior of
individuals in the marketplace.
• It includes prepurchase behavior,
purchase behavior, and postpurchase
behavior.
Understanding
the Customer
• Customers are influenced by:
- Psychological Factors:
Perception, Motivation,
Attitude
- Sociocultural Factors: Family,
Social Class, Culture
- Situational and Marketing
Mix Factors
• Businesses must identify and
adapt to these influences.
Customer
Behavior
Model
Psychological
Influences on
Consumers
• Psychological influences
affect why and how the
customer behaves in terms
of his or her purchase
behavior.
• Psychological influences
that the entrepreneur must
be aware of include
personality/lifestyle,
motivation, learning,
perception, attitudes, and
involvement.
(Psyco…)Personality/Lifestyle
Personality refers to a person’s consistent behaviors or responses to
recurring situations
Five Factor Model - traits of openness, conscientiousness, extraversion,
agreeableness, and neuroticism.
As an entrepreneur you have to realize that people have both a selfconcept (who they think they are) and an ideal self—how they would like
to be.
Lifestyle is a mode of living that is identified by how people spend their
time and resources, what they consider important in their environment,
and what they think of themselves and the world around them
… Motivation
Motivation is the force that causes us to act,
including satisfying a need.
Customer needs are the focus of the marketing,
entrepreneurs must understand customer
motivation (e.g., why they are buying).
What to do when there is a motivational conflict
by a customer
… Learning
Learning is the process in which behavior capabilities are changed as a
result of experience.
For example, customers learn which sources to use for information
about products and services, which criteria to use when assessing
alternatives, and, more generally, how to make purchase decisions.
Behavioral learning is the process of developing automatic responses
to a situation built up through repeated exposure to it.
…Perception
The process of making sense of the world around
you (external stimuli) is called perception.
It is the process by which we select, organize, and
interpret stimuli
Shaped by interest and beliefs
…Attitudes
First, if attitudes are learned responses, it is possible to
change them over time by providing new information.
Second, since attitudes are mental views, attitudes are not
directly observable by the entrepreneur. Thus, attitudes are
inferred by measuring what can be observed.
Third, attitudes are related to behavior.
Involvement
Involvement is the degree to which something is central to your sense of self as well as
the personal, social, and economic significance of the purchase to the customer.
Extended Problem solving
Limited Problem solving
Routine Problem solving
Sociocultural
Influences on
Consumers
•
•
Sociocultural influences
involve the customer’s
formal and informal
relationships with others,
which can affect the
customer’s purchase
behavior.
Sociocultural influences
include demographics,
culture/subculture, social
class, reference groups,
and personal influences.
…Demographics
• Demographics describe a
population according to
several characteristics such
as age, gender, income,
education, occupation,
marital status, population
size, and population growth
rate.
• Demographics affect
consumption, and as an
entrepreneur, you must
understand the
demographics of the market
in which you intend to
operate.
…Culture/Subculture
• Culture incorporates the
set of values, customs,
traditions, ideas, and
attitudes that a society
possesses and transmits
from one generation to the
next.
• Subgroups within the
larger, or national, culture
with unique values, ideas,
and attitudes are referred
to as subcultures
…Cultural Rituals
Entrepreneurs must
understand the notion of
ritualistic behavior.
Individuals in all societies
across time and space have
engaged in universal patterns
of behavior—rituals—that
you need to recognize.
Some rituals are highly
expressive, symbolic, and
episodic, such as celebrating
a marriage, death services, or
special observances such as a
birthday or Christmas.
Other rituals are common,
daily, seemingly habitual
behavior such as brushing
one’s teeth, taking a shower,
getting or making a meal, or
walking the dog.
… five rituals that are common
Preparing
Preparing for battle: transforming us from the cocoon to “ready to face the day.”
Feasting
Feasting: the pleasure of eating that “reunites us with our tribes,”
Sexing
Sexing up: a highly pleasurable and indulgent ritual,
Returning
Returning to camp: that moment when we unwind and exhale
Protecting
Protecting yourself for the future: that last ritual of the day
Social Class
Social class is defined as the relatively permanent,
homogeneous divisions in a society into which people sharing
similar values, interests, and behavior can be grouped.
A person’s occupation, source of income (not level of income),
and education determine his or her social class.
… Reference Groups
Reference groups are people to whom an individual looks as a basis for
selfappraisal or as a source of personal standards.
Reference groups affect customer purchases because they influence the
information, attitudes, and aspiration levels that help set a customer’s
standards. For example, one of the first questions one asks others when
planning to attend a social occasion is, “What are you going to wear?”
Reference groups have an important influence on the purchase of luxury
products but not of necessities.
A customer’s purchases are often influenced by the
views, opinions, or behaviors of others.
Two aspects of personal influence are important to
entrepreneurial marketing: opinion leadership and
word-of-mouth activity.
Buzz marketing vrs Viral marketing
…Personal Influences
Situational Influences
• Situational influences
include the purchase task,
social surroundings,
physical surroundings,
temporal affects, and
antecedent states.
- For example,
research shows that when
women shop together, they
spend more money than when
a woman shops by herself.
marketing mix
influences
• In the hands of the
entrepreneur
• Based on the 5Ps and the 8ps
• It is your task as the
entrepreneur to construct an
effective marketing mix to
properly influence customer
purchase behavior and
achieve venture success.
Business Customers vs.
Individual Consumers
• Business Customers:
- Purchase in bulk
- Emphasize cost, efficiency, and
ROI
- Longer decision-making
process
• Individual Consumers:
- Buy in smaller quantities
- More influenced by branding,
advertising, and emotions
- Quicker decision-making
Competitor
Analysis
• Identify direct and indirect
competitors
• Evaluate competitors' strengths
and weaknesses
• Conduct SWOT analysis:
- Strengths: What are they doing
well?
- Weaknesses: Where are they
failing?
- Opportunities: How can you gain
an advantage?
- Threats: What external factors
affect competition?
Example: Amazon
vs. Walmart
• Amazon Strengths:
- Extensive online presence
- Fast delivery (Prime)
- AI-based recommendations
•
Walmart Strengths:
- Strong physical retail network
- Competitive pricing
- Efficient supply chain
• Who has the competitive edge? Why?
Class Activity:
Customer &
Competitor Insights
Challenge
1. Divide into teams
• Select a startup or existing
brand
• Identify the ideal customer
profile:
- Age, Income, Lifestyle
- Needs and buying behavior
2. Conduct a competitor analysis:
- Who are their top 2 competitors?
- What are their strengths &
weaknesses?
• Present a 5-minute summary of
findings.
Summary and Key
Takeaways
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Customers are influenced by
psychology, culture, and social factors.
Business buyers differ from individual
consumers in decision-making.
Understanding competitors helps in
strategic positioning.
Market research is crucial for
sustainable business growth.
Apply these insights to create
better marketing strategies!
Reading
•
Crane, F. G. (2022). Marketing for entrepreneurs: Concepts and
applications for New Ventures. SAGE Publications, Inc.