The Consumer
Decision Making, Segmentation and
Target Market selection
Why Consumer Behavior?
consumers make
purchase decisions
Consumer
behavior
= HOW
consumers use and
dispose of product
Purchase Example
• You have decided you need to buy the
following:
– New laptop
– Tablet
– A taco
– New pair of jeans
– Bottle of shampoo
– Gnocchi
Consumer Decision Process
A Simple “Value” Example
Social Media Application
Need Recognition
• Difference between current state and desired
state
– Physical/Functional
– Psychological
– Product Issues (running out, try new, need new)
• Stimuli
– External  Marketing  Saw a Wendy’s ad
– Internal  YOU  Stomach growling
Information Search
• Internal
– What you know
– Previous experience
– Information you’ve been made
aware of previously
• External
– Research  collect information
• Other People  Friends, Family, etc.
• Marketing  Advertising, company
websites, etc.
• Non Marketing  Reviews, specialty
sites, etc.
• Involvement
– High
– Low
• Risk
– Performance
– Social
– Financial
Information Search: Involvement
High-involvement
purchases require:
Extensive and informative
promotion to target market
Low-involvement
purchases require:
In-store promotion,
eye-catching package
design, and good displays.
Coupons, cents-off,
2-for-1 offers
Evaluation of Alternatives
Evaluation of Alternatives
• Attributes
• Cutoff Criteria
• Ranking
• What attributes must it have?
• Which are more important?
• Which can you live without?
Evaluation of Alternatives
• Mentally Taxing  Use of Heuristics
(shortcuts)
– Price
– Brand
– Packaging/Presentation
Purchase and Consumption
•
•
•
•
Whether to buy
When to buy
What to buy (product type and brand)
Where to buy (type of retailer, specific retailer,
online or in store)
• How to pay
Post Purchase
• Did product deliver promise?
• Was it worth the price?
• Cognitive Dissonance/Buyers remorse
Influences on CDM
Cultural
Factors
Individual
Factors
Social
Factors
Psychological
Factors
CONSUMER
DECISIONMAKING
PROCESS
BUY /
DON’T BUY
Social Factors
Primary: small,
informal group
Direct Face-to-Face
membership
Secondary: large,
formal group
Reference Groups
Aspirational Group
that someone would
like to join
Indirect
Nonmembership
Nonaspirational Group
with which someone
wants to avoid being
identified
Social Factors
• Opinion Leaders
• Family Members
Psychological Factors
•
•
•
•
Motives
Attitudes
Perceptions
Learning
Motives
Perception
• Select
• Organize
• Interpret
Selective
Exposure
Selective
Distortion
Selective
Retention
Consumer notices certain stimuli
and ignores others
Consumer changes or distorts information
that conflicts
with feelings or beliefs
Consumer remembers only
that information that
supports personal beliefs
Why should we care about these?
•
•
•
•
•
•
•
•
Important attributes
Price
Brand names
Quality and reliability
Threshold level of perception
Product or repositioning changes
Foreign consumer perception
Subliminal perception
Attitudes
• Affect
• Cognitive
• Conative
Emotions
Thoughts
Behavior/Action
Individual Factors
• Age
• Lifestyle/Personality
• Lifecycle
– Single
– Married
– Married w/kids
– Empty nesters
– Retired
Age of kids
•Babies
•Toddlers
•Teenagers
•College
Additionally….
• Purchase Situation
– What occasion am I buying for?
– Who am I buying for?
• Shopping Situation
–
–
–
–
–
–
Store atmosphere
Salespeople
Crowding
In-Store Demos
Promotions
Packaging
• Temporal State
– mood
SWOT & Industry Analysis
• SWOT in Table form
– Short concise statements
• Discussion section
– Implications of above statements
• Industry Analysis
– Sales
– Market share
– Trends