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Chapter 5 principles of marketing

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Chapter 5 principles of marketing

  1. 1. Chapter 5 Consumer Behavior Mr. Anthony F. Balatar Jr. Subject Instructor
  2. 2. Introduction As a consumer of various goods and services, How do you decide on what you buy, and which size and variant, if any? Why do you need this product and why buy this particular brand? How do you choose where to shop? When do you decide to shop? Why on this particular day and time? How often do you shop? Who do you shop with?
  3. 3. Consumer Behavior It is the study of how consumers (individuals, households, groups, or organizations) decide to buy, use, and dispose of goods, services, experiences, and ideas to satisfy their needs and wants. These final buyers make up the consumer market.
  4. 4. Some Insights on the Consumption Behavior of Filipino Consumers (Source: rappler.com – factors explain Filipino buying behavior) In the research conducted by Kantar Worldpanel, it was noted that Filipinos put more importance in looking good, citing 72% of the respondents wanted to improve their hair and change their complexion. This translates to an increase in sales in hair conditioners and whitening lotion.
  5. 5. Some Insights on the Consumption Behavior of Filipino Consumers Filipinos want germ protection – there was a 19% growth in the hand sanitizer sales from 2009 to 2013. Likewise, wet tissue or baby wipes also saw an increase in sales. There are now Filipinos who choose a healthy lifestyle by doing physical activities and consciously buying healthy products.
  6. 6. Some Insights on the Consumption Behavior of Filipino Consumers Ironically, there was an increase in the demand for an “instant” lifestyle, which increased the sales of instant noodles, instant coffee, and ready-to-drink chocolate drinks.
  7. 7. Some Insights on the Consumption Behavior of Filipino Consumers Filipinos value accessibility, trust, and distance – which may be the reason why malls and commercial centers thrive in every corner in big cities. According to Visa e-Commerce Consumer Monitor, 9 out of 10 consumers see value in online shopping, and the top reasons are convenience, price and deals.
  8. 8. Consumer Decision-Making Process Consumers make purchase decisions everyday – from commuting to and from work or school to buying meals, drinks, and snacks. When a consumer enters a supermarket, there are even more decisions to make such as which brand to buy, what size, how many, and which variants, among others.
  9. 9. Consumer Decision-Making Process How do consumers respond to marketing efforts created by marketers to promote their brands? If the response is positive, the companies are doing great in communicating with their consumers. If the response is negative or if there is no response at all, the companies may need to make adjustments to communicate better with the market.
  10. 10. Stimulus-Response Model of Buyer Behavior (Kotler and Armstrong, 2014) • Marketing stimuli (product, price, place, promotion) • Other factors (economic, technological, social, cultural) • Buyer’s characteristics • Buyer’s decision process • Buying attitudes and preferences • Purchase behavior • Brand and company relationship behavior Environment Buyer’s Black Box Buyer Responses
  11. 11. Stimulus-Response Model of Buyer Behavior (Kotler and Armstrong, 2014) Based on the model, the buyer’s black box is central to consumer’s decision making. In its core are the buyer’s characteristics – demographics, psychographics, behavior – where the buyer’s unique attributes reside.
  12. 12. Stimulus-Response Model of Buyer Behavior (Kotler and Armstrong, 2014) The buyer’s black box is influenced by the environment. The stimuli in the environment may motivate purchase or awaken the desire to buy. The environment includes the marketing mix – when a consumer sees a new product or if his or her favorite item is on sale, it may stimulate purchase. Other stimuli include external variables such as economic, technological, social and cultural factors.
  13. 13. Stimulus-Response Model of Buyer Behavior (Kotler and Armstrong, 2014) As a response to stimuli in the environment, the buyer forms his or her own attitudes and preferences toward certain brands and products.
  14. 14. Activity #1 1. When was the last time you tried a new product? What influenced you to buy it? Relate your experience to the stimulus-response model of buyer behavior. 2. How important is understanding consumer behavior to marketers? 3. What happens in the buyer’s mind from the arrival of stimuli to his or her purchase decision?
  15. 15. Consumer Decision-Making Process Consumers go through consumer decision-making process when making a purchase. However, there may be times when a consumer may skip a step, like when he or she is making a repeat purchase.
  16. 16. Consumer Decision-Making Process It consists of five stages: Need Recognition Information Search Evaluation of Alternatives Purchase Decision Post-purchase Evaluation
  17. 17. Consumer Decision-Making Process Need Recognition. In this stage, the buyer recognizes a need or a problem. It can be triggered by internal stimuli, like feeling thirsty or hungry. It can also be influenced by external stimuli, such as when the consumer sees an ad of a new phone model.
  18. 18. Consumer Decision-Making Process Information Search. When a consumer recognizes a need, he or she would usually look for information about a product. Here are some of the sources he or she can consider: Personal Sources Recommendations of family and friends Commercial Sources Advertisements, salespeople, web sites, shop displays Public Sources Mass media (e.g. product feature in TV shows), consumer reviews Experiential Sources Actual handling and examination of the product
  19. 19. Activity #2 1. When you buy a new product, which source of information do you consider the most credible? Why? 2. Cite a real-life experience wherein you apply the different sources of information in purchasing the product.
  20. 20. Consumer Decision-Making Process Evaluation of Alternatives. There is no single formula for consumers in their alternative evaluation. Some consumers would impulsively buy an item, while others would have several considerations such as budget, style, color, or specifications. For those who choose based on budget, consumers usually would go around to canvass about prices and freebies (if any). Some consumers would rank their choices based on their preferences and use this as their basis in making the purchase.
  21. 21. Consumer Decision-Making Process Purchase Decision. Purchase comes once the consumer has decided on the product that he or she is buying. Two factors may play a role between purchase intention and purchase decision – attitude of others and unexpected situational factors. The first factor comes into play when someone important to you, tells you to get the lowest- priced item instead of the one you prefer.
  22. 22. Consumer Decision-Making Process Purchase Decision. The second factor plays a role when, for example, the specific model of the item you want is out of stock or the more expensive second choice is suddenly on sale. During purchase, the consumer makes a decision whether to pay in cash or use a credit card, or pay in installment, if available. If there are several retail channels that offer the same product, the consumer will have to choose which retailer he or she should purchase from.
  23. 23. Consumer Decision-Making Process Post–purchase Evaluation. After purchase, the consumer will evaluate if the product is able to meet his or her expectations or not. Thus, the company’s job does not end when the consumer has bought the product. If the consumer is satisfied, the consumer will most likely buy from the same brand again in the future, and will make positive recommendations of the product to friends. However, if the consumer is unhappy, it may result to negative word of mouth.
  24. 24. Activity #3 You are marketing officer and the marketing manager has assigned you to research the consumer decision-making process of customers who buy a new cellphone. Your company will be soon be selling the cellphone with a price of Php 15, 000, and your company wants to know what customers to consider in getting a new cellphone. To make the research valid, you are to interview (thru social media) about 10 people who have bought a new cellphone recently. Create a powerpoint presentation of the consumer decision-making process of cellphone customers, and present it to the marketing manager.
  25. 25. Adoption Process Marketers also want to understand the thought process of consumers in buying new products. A new product is any good, service or idea that is perceived by some potential customers as new, even if it may have been around for a while. Marketers want to know how consumers learn about products for the first time and how their interest develops to the adoption of the new product.
  26. 26. Adoption Process It is called the adoption process, which is the mental process an individual goes through from awareness of a new product to the decision to become a regular user of that product. The five stages in the adoption process are: awareness, interest, evaluation, trial, and adoption.
  27. 27. Adoption Process It consists of five stages: Awareness Interest Evaluation Trial Adoption
  28. 28. Adoption Process Awareness – a consumer becomes aware of the product through an advertisement or a flyer, or may have heard about it from a friend. Interest – a consumer lacks information about it, he or she seeks through research. Evaluation – a consumer has enough information to consider buying the product.
  29. 29. Adoption Process Trial – a consumer try the new product on a small scale for him or her to gauge the value of the product. Adoption – a consumer decides to purchase and use the new product.
  30. 30. Adoption Process Consumer differ in their readiness and willingness to adopt a new product. Thus, there are five adopter groups: innovators, early adopters, early mainstream, late mainstream, and lagging adopters.
  31. 31. Adoption Process New Product Lagging Adopters Early Adopters Late Mainstream Early Mainstream Innovators
  32. 32. Adoption Process Five Adopter Groups: Innovators – are the first ones who get their hands on any new product or technology. They are willing to take risks in trying innovative products. Early adopters – are opinion leaders--- they have a following and adopt ahead of the mainstream users but do so carefully.
  33. 33. Adoption Process Five Adopter Groups: Early mainstream – are people who adopt technology before the average person does. Late mainstream – are people who would adopt innovation only after a lot of people have already tried it. Lagging adopters – are the most traditional and will not adopt the innovation until it becomes the norm.
  34. 34. Activity #4 Remember the first time you bought a cellphone or any electronic gadgets. Did you go through the adoption process? How would you categorize yourself according to the different adoption groups? Explain.
  35. 35. Factors that Influence Consumer Buying Decisions Consumers are influenced by different factors prior to purchase. These factors, and more often than not, marketers have no control over them--- but it is important for companies to understand them.
  36. 36. Factors that Influence Consumer Buying Decisions BuyerCultural Social Personal Psychological
  37. 37. Factors that Influence Consumer Buying Decisions 1. Cultural Factors. Every group or society has a culture. It is the most basic influencer in a person’s decision-making. As people grow up in a society, cultural norms shape their basic values, perceptions, wants, and behaviors. These are learned from the parents, other family members, church, school, and other important institutions.
  38. 38. Factors that Influence Consumer Buying Decisions 2.Social Factors. Because consumers interact with different people everyday, social factors play an important role in influencing consumer choices. These include small groups, family, and social roles and status.
  39. 39. Factors that Influence Consumer Buying Decisions Small Groups. It can be a membership group where the consumer belongs (e.g., a school club or a group of friends) or an aspirational or reference group that an individual wishes to belong to. Reference groups open the eyes of consumers to a totally different set of behaviors and lifestyles that influence decision-making.
  40. 40. Factors that Influence Consumer Buying Decisions Social Media. It has become an important influencing factor in consumer choices. This is called word-of-mouth influence. Because you trust the people in your social circle, you see their posts and recommendations as honest and credible opinions on certain products. It resulted in instant popularity, which drove sales for the company and created a positive image of the brand.
  41. 41. Factors that Influence Consumer Buying Decisions Social Media. On the other hand, this type of marketing influence can also break a company. Because of the viral nature of how a post spreads, negative feedback on social media can break the image of a brand.
  42. 42. Factors that Influence Consumer Buying Decisions Buzz marketing. Uses opinion leaders – people who have the knowledge, personality, and expertise to exert social influence on others – in order to promote brands. Popular bloggers as well as celebrities have been tapped to become brand ambassadors. People with hundreds of thousands or millions of followers on social media are usually tapped, for a fee, to post about a company’s brands.
  43. 43. Factors that Influence Consumer Buying Decisions Family. They have the greatest influence on consumers’ product choices. Loyalty to a brand sometimes starts during childhood, and this is influenced by what the parents purchase for the household. Children also influence purchase behavior of parents. Parents may choose to stay in hotels that have child- friendly playgrounds and areas where kids can do different activities.
  44. 44. Factors that Influence Consumer Buying Decisions Role and Status. A person’s role and status may also influence his or her purchase behavior. Capability to buy, economical-wise, or practical wise persons are the factors under this.
  45. 45. Factors that Influence Consumer Buying Decisions 3.Personal Factors. It includes person’s age and life cycle stage, occupation, economic situation, lifestyle and personality. Personal characteristics will always influence purchase decisions.
  46. 46. Factors that Influence Consumer Buying Decisions 4.Psychological Factors. It includes recognition, self- esteem, and achievement. A need becomes a motive when it is strong enough to warrant an action or seek satisfaction. Aside from motivation, learning and beliefs and attitudes are psychological factors in consumer buying decisions.
  47. 47. Factors that Influence Consumer Buying Decisions Motivation. It is a key component in a consumer purchase. It is what drives buyers to satisfy a need. Learning. It is a response arising from an experience. Beliefs and Attitudes. It shapes based on one’s value system. A belief is a perception or a thought of a person about something, which may have been based on knowledge, opinion, or faith.
  48. 48. Factors that Influence Consumer Buying Decisions Beliefs and Attitudes. An attitude is “a person’s relatively consistent evaluations, feelings, and tendencies towards an object or idea”.
  49. 49. Activity #4 1. Cite your specific personal or other person’s experiences on different factors that influence consumer buying decisions. 2. Why do you think it is important for marketers to know these factors?
  50. 50. Types of Buying Decision Behavior 1. Complex buying behavior – purchases that require more thinking and involvement from the consumers. 2.Dissonance-reducing buying behavior – occurs when consumers are involved with a non-routine purchase but see little difference among brands.
  51. 51. Types of Buying Decision Behavior 3.Habitual buying behavior – purchases of products that are regularly bought by consumers, and thus require low involvement. 4.Variety-seeking buying behavior – occurs when consumers who like trying different products.
  52. 52. Business versus Personal Consumers Personal Consumers – are conscientious buyers who consider different factors before making non-routine purchases. Business Consumers – have to meticulously consider different requirements by the company.
  53. 53. Activity #5 1. Cite three (3) specific examples on different buying decision behavior. 2. Provide at least two (2) examples of business consumers and personal consumers.