CURSTOMER SEGMENTATION AND TARGET MARKETING

Buyer Behavior in Consumer Markets

The goal of Marketing Strategy: to identify specific customer needs, then design a marketing program that can satisfy those needs.  The behavior of consumers is often irrational and unpredictable.  Ethnography-developing information about families to develop products/services that better-fit family lifestyles.  Successful marketing strategy depends on a clear understanding of customers who they are, what they need, what they prefer, and why they buy.

The Consumer Buying Process

  1. Need Recognition
  • Consumer needs and wants are not the same
  • An understanding of consumer wants is essential for market segmentation and the development of the marketing program
  • Marketers must create the appropriate stimuli to foster need recognition
  1. Information Search
  • Consumers trust internal/personal sources of information more than external sources.
  • The amount of time, effort, and expense dedicated to the search for information depends on (1) the degree of risk involved in the purchase, (2) the amount of the experience the consumer has with the product category, and (3) the actual cost of the search in terms of time and money
  • Consumers narrow their potential choices to an evoked set of suitable alternatives that may meet their needs
  1. Evaluation of Alternatives
  • Consumers translate their needs into wants for specific products or brands
  • Consumers evaluate products as bundles of attributes that have varying abilities to satisfy their needs
  • Marketers must ensure that their product is in the evoked set of potential alternatives
  • Marketers must take steps to understand consumers’ choice criteria and the importance they place on specific product attributes
  1. Purchase Decisions
  • A consumer’s purchase intention and the actual act of buying are distinct concepts.  Several factors may prevent the actual purchase from taking place.
  • Marketers must ensure that their product is available and offer solutions that increase possession utility=
  1. Postpurchase evaluation
  • Postpurchase evaluation is the connection between the buying process and the development of long-term customer relationships
  • Marketers must closely follow consumers’ responses (delight, satisfaction, dissatisfaction, cognitive dissonance) to monitor the product’s performance and its ability to meet customers’ expectations

Other stages may include actual consumption behaviors, product uses, and product disposal after consumption.  The buying process depicts the possible range of activities that may occur in making a purchase decision.  Buying process involves a parallel sequence of activities associated with finding the most suitable merchant of the product in question.  The choice of a suitable merchant may actually take precedence over the choice of a specific product.  Some merchants become so well-known for certain products that customers just naturally execute for certain products that customers just naturally execute their buying process with that merchant

Need Recognition

the buying process begins when consumers recognize that they have an unmet need.  Occurs when consumers realize that there is a discrepancy between their existing situation and their desired situation (satisfaction of fulfillment).  A need occurs when an individual’s current level of satisfaction does not equal their desired level of satisfaction.  A want is a consumer’s desire for specific products that will satisfy the need.  The firm must always understand the basic needs fulfilled by its products.  This idea is to build on the basic need and conceive potential consumers to want your product because it will fulfill their needs better than any competing product.  Demand occurs only when the consumer’s ability and willingness to purchase a specific product backs up their want for the product.  The marketer must first educate consumers on the need for the product, and then convince consumers to want his products over competing products.

Information Search

Marketing stimuli can prompt consumers to become interested in a product leading to a desire to seek out additional information.  Can be passive or active.  Passive information search-consumer becomes more attentive and receptive to information, such as noticing and paying attention to automobile advertisements if the customer has a want for a specific car brand.  Active information search-purposely seeks additional information, such as by surfing the Internet, asking friends, or visiting dealer showrooms.  Time effort and expense dedicated to the for information depends on a number of issues:
1. The degree of risk involved in the purchase: Financial risk, social risk, emotional risk, and personal risk
2. Amount of expertise or experience has with the product category.
3. The actual cost of the search in terms of time and money will limit the degree to wwhich consumers
search for information.
Throughout the information search, consumers learn about different products or brands and begin to remove some from further consideration  This list of suitable alternatives is called the evoked set, and it represents the outcome of the information search and the beginning of the next stage of the buying process.

Evaluation of Alternatives
The consumers essentially translate their need into a want for a specific product or brand.  The evaluation of alternatives is the hardest for marketers to understand, measure, or influence.
Consumers evaluate products as bundles of attributes that have varying abilities to satisfy their needs.  Brand Attributes-image, reputation, reliability, product features, esthetics’s attributes(styling, sportiness, roominess, color, and price)
Considerations:

  1. The marketer’s products must be in the evoked set of potential alternatives.
  2. Vital that marketers take steps to understand consumers’ choice criteria and the importance they place on specific product attributes.

Purchase Decision
Marketers can often reduce or eliminate these problems by reducing the risk of purchase through warranties or guarantees, making the purchase stage as easy as possible, or by finding creative solutions to unexpected problems.  The key issues for marketers during the purchase stage are product availability and possession utility.  The key to availability is convenience.  To increase possession utility the marketer may have to offer financing or layaway for large dollar purchases, delivery, and installation of products like appliances or furniture, home delivery of convenience items like pizza or newspapers, or the proper packaging and prompt shipment of items through the mail.

Postpurchase Evaluation

  • Delight- the product’s performance greatly exceeds the buyer’s expectations
  • Satisfaction- the product’s performance matches the buyer’s expectations
  • Dissatisfaction-The product’s performance falls short of the buyer’s expectations.
  • Cognitive dissonance-(Postpurchase Doubt) The buyer is unsure of the product’s performance relative to his or her expectations

Consumers are more likely to experience dissatisfaction or cognitive dissonance when the dollar value of the purchase increases, the opportunity costs of rejected alternatives are high, or the purchase decision is emotionally involving.  Firms manage these responses by offering liberal return policies, providing extensive sales support, or reinforcing the wisdom of the consumers purchase decision.  Major influence on the word-of-mouth information.

Factors that Affect the Consumer Buying Process
Variation in the buying process occurs because consumers are different, the products that they buy are different, and the situations in which consumers make purchase decisions are different.  Complexity of the purchase and decision, individual influences, social influences, and situational influences.

Decision-Making Complexity
The complexity of the purchase and decision-making process is the primary reason why the buying process will vary across consumers and with the same consumer in different situations.  Purchase characterized by high personal, social, financial risk, strong emotional involvement, and the lack of experience with the product or purchase situation.  Marketers of highly complex products must recognize that consumers are quite risk averse and need a great deal of information.  Firms that sell less complex products face the challenges of creating a brand image and ensuring that their pare products are easily recognizable.  Marketers issue branding, packaging, advertising, and point-of-purchase displays to solve these problems.

Individual Influences
Age, life cycle, occupation, and socioeconomic status, are fairly easy to understand and incorporate in the marketing strategy.  The individual factors are quite useful for marketers in target market selection, product development, and promotional strategy.  Individual factors such as perceptions, motives, interests, attitudes, opinions, or lifestyles, are much harder to understand because they do not clearly coincide with demographic characteristics like age, gender, or income levels.  These individual factors are also very difficult to change.  Many marketers adapt their products and promotional messages to fit existing attitudes, interest, or lifestyles.

Social Influences
Culture, subculture, social class, reference groups, and family have a profound impact on what, why, and how consumers buy.  Reference groups and opinion leaders also have an important impact on consumers’ buying process.  Reference groups act as a point of comparison and source of product information.  When consumers feel like they lack personal expertise, they seek the advice of of opinion leaders, who they view as being well informed in a particular field of knowledge.  Software manufacturers, release beta (test) versions of their products to opinion leaders before a full-scale launch.  Starts a word-of mouth.

Situational Influences
Hungry consumers who are in a hurry often grab the quickest lunch they can find.  Consumers facing emergency situations have little time to reflect on their product choices and whether they will make the right decision.  Consumers may also devote less time and effort the the buying process if they are uncomfortable Ex: Sit down restaurants

Physical and spacial influences
Ex: Retail atmospherics, retail crowding, store layout and design
Potential influences on buying behavior:  A comfortable atmosphere or ambiance promotes lingering, browsing, and buying.  Crowded stores may cause customers to leave or by less than planned.
Social and Interpersonal Influence
Ex: Shopping in groups, Salespeople, Other customers
Potential Influences on Buying Behavior:  Consumers are more susceptible to the influences of other consumers when shopping in groups.  When rude salespeople can end the buying process.  Obnoxious “other” customers may cause the consumer to leave or be dissatisfied.
Temporal Influence
Ex: Lack of time, emergencies, convenience
Potential Influences on Buying Behavior: Consumers will pay more for products when they are in a hurry or face an emergency.  Lack of time greatly reduces the search for information and the evaluation of alternatives.  Consumers with ample time can seek information and the evaluation of alternatives.  Consumers with ample time can seek information on many different product alternatives.
Purchase task or product usage Influences
Ex: Special occasions, buying for others, buying a gift
Potential Influences on Buying Behavior:  Consumers may buy higher quality products for gifts or special occasions.  The evoked set will differ when consumers are buying for others as opposed to themselves.
Consumer Dispositional Influences
Ex: Stress, Anxiety, Fear, Fatigue, Emotional Involvement, Good/Bad Mood
Potential Influences on Buying behavior:  Consumers suffering from stress or fatigue may not buy at all or they may indulge in certain products to make themselves feel better.  Consumers who are in a bad mood are exceptionally difficult to please.  An increase in fear or anxiety over a purchase may cause consumers to seek additional information and take great pains to make the right decision.

Product choices also change when consumers make the purchase for someone else, such as buying little or children. 812-322-8955

 

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