978-0136074892 Solution Manual Chapter 04 Part 1

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Chapter 4: Analyzing Consumer Behavior

Chapter Objectives

After reading this chapter, students should understand:

·The concept and activity of market segmentation

·Issues in implementing market segmentation strategies.

·Understanding why consumers make purchase decisions; the motives that drive

buying behavior

·Understanding how consumers make purchase decisions; the mechanism used to

make purchases

·The importance of where and when consumers purchase

·Implications for global and technology-based markets

Chapter Overview

In this chapter, the student learns how to analyze consumer markets. Students also learn the

implications of the marketing research process and how this analysis is one of the key

building blocks on which marketing strategy rests.

Chapter Outline and Key Terms

Who Are the Consumers?

Key Terms:

·Market segmentation

·One-to-one marketing

·Mass customization

·Segmentation variables

·Descriptors

·Geographic

·Demographic

·Cohort analysis

·Psychographic

Definition: Market Segmentation: breaking mass marketing into segments that have

different buying habits; also refers to the decision abut which customer groups a company

will pursue for a particular brand or product line.

A. Getting a complete picture of customer behavior includes:

·Understanding your current customers

·Analyzing competitors’ customers (why they are buying competitors’

products; gives ideas for stimulating brand switching)

·Analyzing former customers (helps you understand weaknesses in your

product or service)

·Analyzing customers who have never purchased the product (helps you

understand the market potential and how to expand the market)

B. Segmentation variables are descriptors that describe customers in terms of their

inherent characteristics. Three major categories of descriptors include:

·Geographic (geographic differences)

·Demographic (age, income, education, occupation, race differences)

·Cohort analysis: An analysis that develops age-related profiles of

each generation to segment the market

·Figure 4.1 (Page 95) Generational Cohorts. Outlines the six

common generational cohorts:

·GI Generation

·Silent Generation

·Baby Boomers

·Generation X

·Generation Y

·Millennials

·Psychographic (psychological differences in terms of lifestyles,

personalities, social class).

·VALS™ system segments include:

·Innovators

·Thinkers

·Experiencers

·Achievers

·Believers

·Strivers

·Makers

·Survivors

·Figure 4.2 (Page 97) Sample VALS™ Questions. Outlines

sample questions used in determining VALS™ groups.

Table 4.1 (Page 91) Consumer Market Segmentation Variables. Illustrates some

of the common segmentation variables

Table 4.2 Page 92) Consumer Market Segmentation Variables. Illustrates kinds of

behavioral variables that can be use to form segments

Table 4.3 (Page 92) Consumption index: Dental Accessories and Table 4.4 (Page

93) Product Preferences by Stage in Family Life Cycle. These tables are examples

of how the descriptor and behavioral variables can be linked.

C. Marketing Research Implications:

·Data Collection

·Use primary or secondary data

·Syndicated or proprietary data (purchased data) are often a good

source of secondary data.

·Developing Target Markets

·Considerations:

·What is the segment size?

·What is the segment’s growth rate?

·What is your potential competitive position?

·Illustration: Harley-Davidson (www.harley-davidson.com),

Page 105

·Table 4.7 (Page 106) Harley-Davidson Segmentation

Study/Lifestyle Factors

·Table 4.8 (Page 107) Harley-Davidson Segmentation

Scheme

Why Do Consumers Buy?

Key Terms:

·Hierarchy of needs

·Physiological

·Safety

·Social

·Ego

·Self-actualization

A. Marketing manager must translate consumer characteristics into product benefits

·Done by using: Managerial judgment or marketing research

B. Figure 4.6 (Page 109) Simplified Customer Behavior Model. Demonstrates a

simplified model in the purchase process of any product or service.

C. Figure 4.7 (Page 110) Goodyear Tires Web Page. Demonstrates a good example

of communications drawing a distinction between product benefits and features.

Webpage is: www.goodyeartires.com

How Do Consumers Make Purchase Decisions?

Key Terms

·Evoked or consideration set

·Purchase set

·Inert set

·Multivariate model

·Compensatory model

·Expectations

·Family life cycle

·Relative advantage

·Compatibility

·Complexity

·Trialability

·Observability

·Network externalitities

A. Consumers Search for Alternatives:

·They use internal sources of information that are retrieved from memory

including:

·Past experiences with products

·Past conversations with experts

·Old magazine articles such as those in Consumer Reports

·Amount information gathered varies by:

·Expertise in a product category

·How recently a purchase was made

·The importance of the purchase to the customer

B. What Happens Next:

·Customers form three different sets of options:

·Evoked or consideration set (set of products from customer will

choose to purchase)

·Purchase set (the set of products that customer has actually

chosen within a specified period of time)

·Inert set (the set of products that customer has no intention of

buying or has no information about)

C. Evaluating Options

·Customers form options from the evoked or consideration set

·Multivariate model (popular decision-making model based on

how useful or important each attribute is to the customer)

·Illustration: Hyundai (www.hyundai.com) Page 112

·Table 4.10 (Page 113) Sample Multiattribute Model Data.

Provides an illustration of the kind of data collected using these

methods.

·Post purchase Behavior

·Customers form expectations about the product’s performance

before the purchase.

·Products must receive a favorable post purchase evaluation for

repurchase to occur.

·Purchase Influences

·Group influences (including family and friends)

·Social class

·Culture

·Figure 4.8 (Page 115) Analysis for Marketing Decisions.

Sociocultural environment is composed of the factors show in

this figure.

·Product Class Influences

·A number of factors affect the adoption of new technologies

including:

·Relative advantage

·Compatibility

·Complexity

·Trialability

·Observability

·Network externalities

·Illustration: Fax Machines (Page 118)

·Perceived risk

·Situational Influences

·Physical surroundings

·Social surroundings

·Temporal factors

·Task definition factors

·Antecedent states

·Situational influences are often called context effects

·Buying Roles

·The initiator (person who first recognizes the need for the

product or service)

·The influencers (people who influence the decision)

·The decider (person with ultimate buying authority)

·The purchaser (person who actually authorizes payment)

·The users (the people who actually use the product)

·Illustration: Nestle Purina (www.alpo.com) Page 119

·Illustration: Pharmaceuticals (www.purplepill.com)

Page 120

Where Do Consumers Buy?

A. Important to understand where your customers buy

B. Understand what channels of distribution they are using

·Illustration: Netflix (www.netflix.com) Page 121

When Do Consumers Buy?

A. Important to understand when customers are buying (purchase timing)

·Time of day

·Day of week

·Month of season

·Cycles defined in years

B. Timing issues affect:

·Both marketing and operations personnel

·Marketing communications

·Channels of distribution

·Inventories and stock of products