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CHAPTER ANALYZING CONSUMER

MARKETS

LEARNING OBJECTIVES
After studying this chapter, you should be able to:

3.1 Identify the key factors that influence consumer behavior.

3.2 Explain the role cultural, social, and personal factors play in consumer behavior.
3.3 Explain how consumers’ needs, emotions, and memory influence their behavior.
3.4 Illustrate the key stages of the buying decision process.
CHAPTER SUMMARY
1. To successfully compete in the market and create customer value, managers must fully
understand both the theory and the reality of consumer behavior.
2. Consumer behavior is influenced by three factors: cultural, social, and personal.
Research into these factors can provide clues to help companies reach and serve
consumers more effectively. Of these, cultural factors exert the broadest and
deepest influence on people’s perceptions and desires and on how they go about
fulfilling their needs and wants.
3. Four main psychological processes that affect consumer behavior are motivation,
perception, learning, and memory.
4. Understanding consumer motivation begins with understanding the needs that
consumers aim to fulfill with their actions. Some needs are biological and arise from
physiological states of tension such as hunger, thirst, or discomfort. Other needs are
psychological and arise from psychological states of tension such as the need for
recognition, esteem, or belonging. A need becomes a motivation when it is aroused to a
sufficient level of intensity to drive us to act. Motivation has both direction and intensity.
5. Perception is the process by which we select, organize, and interpret information inputs
to create a meaningful picture of the world. In marketing, perceptions are more important
than reality because they affect consumers’ actual behavior. People emerge with different
perceptions of the same object because of three perceptual processes: selective attention,
selective distortion, and selective retention.
6. Consumer response is not all cognitive and rational; much may be emotional and evoke
different kinds of feelings. Emotions are mental states that arise spontaneously rather
than from conscious effort and reflect people’s positive or negative reactions to internal
and external stimuli.
7. Memory—the brain’s ability to record, store, and retrieve information and events—plays
an important role in consumers’ purchasing decisions. There are two types of memory:
short-term memory—a temporary and limited repository of information—and long-term
memory—a more permanent, potentially unlimited repository. The associative network
model views long-term memory as a set of nodes and links. Nodes are stored information
connected by links that vary in strength.

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 8. The typical buying process consists of the following sequence of events: problem
recognition, information search, evaluation of alternatives, purchase decision, and
postpurchase behavior. Consumers will not necessarily go through the buying process in
an orderly fashion: they may skip and reverse stages and alternate between shopping
online and offline. The marketers’ job is to understand the buyer’s behavior at each
stage.
9. Consumers are constructive decision makers and are subject to many contextual
influences. They often exhibit low involvement in their decisions, using many heuristics
as a result. The attitudes of others and unanticipated situational factors may influence the
decision to buy. A consumer’s decision to modify, postpone, or avoid a purchase decision
is heavily influenced by one or more types of perceived risk.
10. Marketers must monitor customer satisfaction and the ways in which customers use the
company’s offerings. Satisfaction is a function of the match between consumer
expectations and the product’s perceived performance. Monitoring satisfaction is
important because it reflects the value customers receive from the company’s offering.
Examining customers’ postpurchase behavior aims to capture the use and disposal of the
offering both to detect potential problems and to identify new market opportunities.

OPENING THOUGHT

This chapter explores the buying dynamics of individual consumers. Adopting a holistic
marketing orientation requires fully understanding customers and gaining a 360-degree view of
both their daily lives and the changes that occur during their lifetimes to ensure that the right
products are marketed to the right customers in the right way at the right time.

This chapter perhaps might be the most difficult of all for some to grasp as it delves into psychological
theories surrounding our understanding of our own minds. It can be, however, an interesting one for
class discussions as it opens up and fosters student participation (as consumers). This is a good chapter
for such discussions on how students buy, what they buy, how they buy, and so forth.

Students new to marketing or new to psychology as a science need a full and comprehensive review
of the theories and ideas expressed in this chapter. The instructor is encouraged to spend a great deal
of class time with the four main psychological processes outlined in this chapter: motivation,
perception, learning, and memory. Repeated review of the key terms and definitions presented in this
chapter is necessary for complete student understanding and knowledge of these concepts.

The second challenge found in this chapter is that of the consumer buying process. It has been shown
to be helpful to have the students talk about their buying processes for goods or services that are of
interest to them and to then outline these processes on the blackboard. Having the students “talk
through” how they buy and then relating these actions to the steps in the consumer buying process
seems to make these concepts easier for them to understand and accept. The instructor is encouraged
to spend a great deal of class time on the concepts of the consumer buying process and the necessity of
marketers to fully understand their consumers’ preferences and motivations as it forms the basis of all
marketing strategies and concepts.

TEACHING STRATEGY AND CLASS ORGANIZATION

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 PROJECTS
1. At this point in the semester-long marketing project, students should present their definitive data
on the consumer for the product/service, including all demographic and other pertinent
information obtained, and prepare for instructor’s approval.

2. A consumer products company “knows” its consumers—it has to in order to be competitive and to
market successfully. During the course of the semester, students should choose a consumer
product (one sold in supermarkets, mass-merchants, or in drugstores) and contact the
manufacturer regarding their definitions, characteristics, demographics, etc. of their consumer.
Students should identify themselves as students working on a marketing research project, and for
this assignment it may be necessary for the instructor to write an introduction letter on official
school letterhead. Students should be ready to present their findings during the latter part of the
semester.

ASSIGNMENTS
Students should be assigned to survey their local business environment (city, town, campus area) and
collect examples of how local area businesses are trying to capture cultural market segments. For
example, the students should collect information regarding the number of cultural restaurants in the
area and then compare these numbers to the total amount of eating establishments and the percentage
of the population that is of that ethnicity. How do the numbers compare, contrast, and what marketing
strategies do they hint at?

Consumers often choose and use brands that have a brand personality consistent with their own actual
self-concept, ideal self-concept, or others self-concept. Have the students review their recent
purchases of a car, computer, furniture, or clothing and ask them to comment on why they purchased
this product, who influenced their purchase, and what this purchase says about their own self-concept
ideas. What is their definition of the “brand personality” of this recent purchase—as compared to the
definition stated in the chapter by Stanford’s Jennifer Aaker?

Figure 3.1 defines the model of consumer behavior. In an examination of each of these segments, ask
the students to rank the importance of each of these characteristics in their purchase behavior. For
example, under the box entitled Marketing Stimuli, some students will rank price ahead of products
and services as their primary stimulus.

Individually, ask each student to select a print advertisement and identify its behavioral, cognitive, and
affective parts and have them discuss how they feel reading the advertisement.

We all belong to some sort of reference group. Students that are members of fraternities, sororities,
and clubs are influenced by their members and through their participation. Students should investigate
(within their own reference group) who the opinion leaders are, how these opinion leaders affect the
overall dynamics of the group, and most importantly, how these opinion leaders affect consumption
decisions. Answers should be specific in their definitions of how these opinion leaders influence
specific consumption/purchase decisions, and students should share their observations with the class.

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END-OF-CHAPTER SUPPORT
Marketing Spotlight: Mayo Clinic
1. Explain why Mayo Clinic is exceptional at serving patients. What value does Mayo Clinic
create for patients?

Suggested answer: Mayo Clinic has been recognized by many third parties for its independent
thinking, outstanding service and performance, and core focus on patient care and satisfaction.
The clinic’s two interrelated core values can be traced back to its founders and are at the heart of all
the organization does: placing the patient’s interests above all others and practicing teamwork. Every
aspect of the patient experience is considered at Mayo Clinic’s three campuses in Rochester,
Minnesota; Scottsdale, Arizona; and Jacksonville, Florida. From the moment patients walk into one of
Mayo Clinic’s facilities, they experience something entirely different.

The Mayo Clinic creates value for its patients. It all starts with Mayo Clinic’s greeters, who
welcome new patients into the building and walk them through the administrative process.
Returning patients are greeted by name with a warm smile. The buildings and facilities them-
selves are designed and built with the needs of patients in mind. One architect explained that the
buildings are meant to make “patients feel a little better before they see their doctors.” For
example, the lobby of the Mayo Clinic hospital in Scottsdale has an indoor waterfall and a wall
of windows overlooking mountains.

2. What are the key points differentiating Mayo Clinic from other hospitals and medical
facilities?

Suggested answer: The Mayo Clinic differentiates itself from its competitors through constant
research and innovation. In order to come up with ideas, employees in the clinic’s Center for
Innovation observe patients, interview families, and conduct research, as well as test and model
possible solutions. For example, when Mayo Clinic called for a major room innovation, the Center
used prototype exam rooms in a flexible space so employees and patients could test the new layouts
and discover the most efficient and patient-friendly environment. The resulting design was called
“Jack and Jill rooms,” a concept that separated the exam space from the conversation space. Two
conversation rooms are now located on either side of the exam room and accessed by internal doors.
This design benefits both patients and physicians, who like having a separate place to talk away from
medical tools and equipment and the space to accommodate family members. In addition, physicians
found it beneficial not to have furniture in the exam room. The other significant difference between
the Mayo Clinic and other hospitals is the Mayo Clinic’s concept of teamwork in serving patients.

3. Do conflicts of interest exist between wanting to make patients happy and providing
the best medical care possible? Why or why not?

Suggested answer: No, the Mayo Clinic is structured to avoid conflicts of interest. For example,
Mayo’s doctors are on salary instead of being paid by the number of patients seen or tests ordered. As
a result, patients receive more individualized attention and care, and physicians work together instead
of against one another. As one pediatrician at Mayo explained, “We’re very comfortable with calling
colleagues for what I call ‘curbside consulting.’ I don’t have to make a decision about splitting a fee or
owing someone something. It’s never a case of quid pro quo.”
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Teamwork provides the best medical care and helps satisfy patients. Teams of medical
professionals work together to diagnose each patient’s medical problems. This can involve
analyzing and debating test results for hours in order to determine the most accurate diagnosis
and most effective treatments. Once a team consensus has been reached, the leader meets with
the patient and discusses his or her options. Throughout the process, patients are encouraged to
take part in the discussion.

Marketing Spotlight: Intuit

1. Why are consumer research and design thinking so critical to Intuit’s success?

Suggested answer: Intuit’s recognition that simplicity rather than in-depth accounting analysis is
the key to creating customer value stems from its extensive consumer research. Intuit spends a
significant amount of time and money—approximately 20 percent of net revenues—on research
and development each year. Consumer research helps Intuit understand exactly how customers
use and feel about their products amid the fast-paced world of technology, shifting consumer
needs, and increased competition. Field researchers can uncover insights from consumers in a
variety of ways. Intuit researchers visit users’ homes or offices to observe exactly how their
products are used, what works well, what frustrates consumers, and how the products could be
improved. Intuit conducts about 10,000 hours of these visits annually. Intuit also invites
consumers to one of its research labs to test out and experiment with the company’s new
products and ideas.

2. What value does Intuit create for its customers?

Suggested answer: Intuit recognizes that simplicity rather than in-depth accounting analysis is
the key to creating customer value. For example, Intuit employees watched younger consumers
get frustrated using an Intuit tax software program because they couldn’t complete their taxes via
their mobile device. This frustration and Intuit’s keen empathy for the consumer led to the
development of the tax app SnapTax.

3. What are the challenges Intuit faces in the near future?

Suggested answer: Intuit faces the challenge of making tax preparation as user friendly as
possible. Realizing the importance of streamlining the data entry process, Intuit acquired Mint—
an online personal finance management service that enables customers to enter their bank
password and download all their spending information automatically, eliminating data entry and
showing them a pie-chart view of their finances. Understanding that tax preparation is an
effortful and highly emotional process, Intuit began to focus not only on software functionality
but also on the emotional payoff of reducing effort and speeding up the process by which
customers receive their tax refunds.

DETAILED CHAPTER OUTLINE

Opening vignette: Marketers must have a thorough understanding of how consumers think, feel, and
act and must offer clear value to each and every target consumer. Understanding consumer needs is
the key to designing a value proposition that creates value for each and every customer. One of India’s

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fastest growing brands, Patanjali, has achieved phenomenal market success by developing products
tailored to the needs of its customers. This chapter explores individual consumers’ buying dynamics.
I. The Model of Consumer Behavior?
A. Research on consumer behavior explores how individuals, groups, and organizations
select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their
needs and wants.
i. To create customer value, marketers must fully understand both the theory and the
reality of consumer behavior.
ii. The starting point for understanding consumer behavior is the model in Fig. 3.1.
II. Consumer Characteristics
A. Cultural Factors. A consumer’s buying behavior is influenced by cultural, social, and personal
factors.
i. Of these, cultural factors exert the broadest and deepest influence.
ii. Culture is the fundamental determinant of a person’s wants and behavior.
iii. Through family and other key institutions, a child growing up in the United States is exposed
to values such as achievement and success, activity, efficiency and practicality, progress,
material comfort, individualism, freedom, external comfort, humanitarianism, and
youthfulness.
iv. Marketers must closely attend to cultural values in every country to understand how to best
market their existing products and find opportunities for new products.
v. Each culture consists of smaller subcultures that provide more specific identification and
socialization for their members.
vi. Subcultures include nationalities, religions, racial groups, and geographic regions.
vii. When subcultures grow large and affluent enough, companies often design specialized
marketing programs to serve them.
B. Virtually all human societies exhibit social stratification, most often in the form of social
classes, relatively homogeneous and enduring divisions in a society, hierarchically ordered
and with members who share similar values, interests, and behavior.
i. The United States has lower, middle, and upper classes.
ii. Social class members show distinct product and brand preferences in many areas.
C. Social Factors. In addition to cultural factors, social factors such as reference groups,
family, and social roles and statuses affect our buying behavior.
i. A person’s reference groups are all the groups that have a direct (face-to-face) or
indirect influence on their attitudes or behavior such as family, friends, neighbors or
coworkers.
ii. Individuals may also be influenced by groups to which they do not belong, such as
aspirational groups that they hope to join and dissociative groups whose values or
behavior they reject.
iii. An opinion leader, or an influencer, is a person who offers informal advice or
information about a specific product or product category, such as which of several
brands is best or how a particular product may be used. Opinion leaders are often
highly confident, socially active, and frequent users of the category.
iv. Marketers try to reach them by identifying their demographic and psychographic
characteristics, identifying the media they read, and directing messages to them.
v. The family, as the most influential primary reference group, is the most important
consumer buying organization in society. The family of orientation consists of parents and

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 siblings. Even if the buyer no longer interacts with parents, parental influence on behavior
can be a significant determinant of purchases.
vi. A more direct influence on everyday buying behavior is the family of procreation—
namely, the person’s spouse and children.
D. Personal Factors
i. Personality and Self-concept. Characteristics that influence buyers’ decisions include
their age and stage in the life cycle, occupation and economic circumstances,
personality and self-concept, and lifestyle and values.
ii. Consumption is shaped by the family life cycle and the number, age, and gender
of people in the household at any given time.
iii. Psychological life-cycle stages may matter. Adults experience transformations as
they go through life, causing their behavior to adapt.
iv. Marketers should consider critical life events or transitions—marriage, childbirth,
illness, divorce, career change, retirements—as giving rise to new needs.
v. Consumers typically choose brands with a brand personality consistent with:
1. their actual self-concept (how we view ourselves),
2. their ideal self-concept (how we would like to view ourselves),
3. or even on others’ self-concept of us (how we think others see us)
vi. Values and Lifestyle. Consumer behavior is guided by a value system—a set of
principles and notions of “right and wrong”—that determines what is meaningful
and important to consumers and how they choose to live and interact with others.
III. Consumer Psychology
i. The marketer’s task is to understand what happens in the consumer’s consciousness
between the arrival of the outside marketing stimuli and the ultimate purchase decisions.
ii. Four key psychological processes—motivation, perception, learning, and memory—
fundamentally influence consumer responses.
A. Consumer Motivation
i. Needs are the basic human requirements, such as air, food, water, clothing, and shelter.
1. Biological needs arise from physiological states of tension such as hunger,
thirst, or discomfort.
2. Psychological needs arise from psychological states of tension such as the
need for recognition, esteem, or belonging.
ii. Abraham Maslow theorized that human needs are arranged in a hierarchy from most to
least pressing—from physiological needs to safety needs, social needs, esteem needs, and
self-actualization needs. See Fig. 3.2.
iii. Needs become wants when directed to specific objects that might satisfy the need.
iv. Demands are wants for specific products backed by an ability to pay.
v. A need becomes a motivation when aroused to a sufficient level of intensity to drive us to
act.
vi. Another motivation researcher and cultural anthropologist, Clotaire Rapaille, worked on
breaking the “code” behind product behavior—the unconscious meaning people give to a
particular market offering.
B. Perception
i. Perception is the process by which we select, organize, and interpret information inputs to
create a meaningful picture of the world.
ii. People emerge with different perceptions of the same object because of three perceptual

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 processes: selective attention, selective distortion, and selective retention.
1. Selective attention: marketers must work hard to attract the notice of consumers.
2. Subliminal perception: marketers embed covert, subliminal messages in ads or
packaging that consumers are not consciously aware of but that affect their behavior.
3. Selective distortion is the tendency to interpret information to fit our
preconceptions.
C. Emotions
i. Consumer response is not all cognitive and rational. Many responses may be emotional and
evoke different kinds of feelings.
ii. Just as products and brands can elicit certain emotions, different emotional states can
influence people’s judgments and decisions.
iii. Seeing the emotions of others can also be used as a marketing tool.
D. Memory
i. Cognitive psychologists distinguish between short-term memory—a temporary and
limited repository of information—and long-term memory—a more permanent, potentially
unlimited repository.
ii. All the information and experiences we encode as we go through life can end up in our
long-term memory.
iii. Researchers distinguish three types of long-term memory: episodic, semantic, and
procedural.
iv. Brand associations consist of all brand-related thoughts, feelings, perceptions, images,
experiences, beliefs, and attitudes that become linked to the brand node.
v. Memory encoding describes how and where information gets into memory. Memory
retrieval is the way we reclaim information from memory.
vi. Because of selective retention, we’re likely to remember only the positive aspects of a
product we like, forgetting its negative aspects and the good points about competing
products.
IV. The Buying Decision Process
A. Key consumer behavior questions marketers should ask:
Who buys our product or service?
Who makes the decision to buy the product or service?
Who influences the decision to buy the product or service?
How is the purchase decision made? Who assumes what role?
What does the customer buy? What needs must be satisfied?
What wants are fulfilled?
Why do customers buy a particular brand? What benefits do they seek?
Where do they go or look to buy the product or service?
How is our product or service perceived by customers?
What are customers’ attitudes toward our product or service?
What social factors might influence the purchase decision?
Do customers’ lifestyles influence their decisions?
How do personal, demographic, or economic factors influence the purchase decision?
i. The buying decision process includes all the experiences in learning, choosing, using, and
even disposing of a product.
ii. The consumer typically passes through five stages: problem recognition, information
search, evaluation of alternatives, purchase decision, and postpurchase behavior.

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 iii. Consumers don’t always pass through all five stages—they may skip or reverse some.
iv. The model in Figure 3.3 captures the considerations that arise when a consumer
contemplates a new purchase or a high-involvement product that entails functional,
psychological, or monetary risk.
B. Problem Recognition
i. With an internal stimulus, one of the person’s normal needs—hunger, thirst, sex—rises to a
threshold level and becomes a drive.
ii. A need can also be aroused by an external stimulus.
iii. Marketers need to identify the circumstances that trigger a particular need by gathering
information from a number of consumers so they can then develop marketing strategies that
spark consumer interest.
C. Information Search
i. A mild search state is called heightened attention (the consumer becomes more receptive to
information about a product). See Fig. 3.4.
ii. Active information search includes: looking for reading material, phoning friends, going
online, and visiting stores to learn about the product.
iii. Major information sources to which consumers will turn fall into four groups:
1. Personal: Family, friends, neighbors, acquaintances
2. Commercial: Advertising, websites, emails, salespersons, dealers,
packaging, displays
3. Public: Mass media, social media, consumer-rating organizations
iv. The greatest quantity of information is received from commercial sources.
v. The most effective information often comes from personal or experiential sources or public
sources that are independent authorities.
vi. Only the consideration set will meet initial buying criteria.
D. Evaluation of Alternatives
i. The consumer is trying to satisfy a need.
ii. The consumer is looking for certain benefits from the product solution.
iii. The consumer sees each product as a bundle of attributes with varying abilities to deliver the
benefits. The attributes of interest to buyers vary by product.
iv. Consumers will pay the most attention to attributes that deliver the sought-after benefits.
v. Through experience and learning, people acquire beliefs and attitudes that influence buying
behavior.
1. A belief is a descriptive thought that a person holds about something.
2. Attitude is a person’s enduring favorable or unfavorable evaluations, emotional feelings, and
action tendencies toward some object or idea.
3. Attitudes economize on energy and thought so they can be very difficult to change.
4. Information processing. The most current models see the consumer forming judgments
largely on a conscious and rational basis.
5. Consumers will pay the most attention to attributes that deliver the sought-after benefits.
6. Consumers will expend brainpower, time, and effort only in proportion to the importance
of the decision task.

vi. The Expectancy-Value Model of attitude formation posits that consumers evaluate products
and services by combining their brand beliefs—both positive and negative—according to
importance.

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vii. Strategies to improve attitudes under the Expectancy-Value Model:
1. Redesign by changing functional attributes, modifying its form, and improving service.
2. Alter consumers’ beliefs by better communicating benefits.
3. Alter beliefs about competitors’ offerings by communicating its drawbacks.
4. Alter consumers’ beliefs about product attributes by persuading buyers to weigh the
attributes in which the brand excels.
E. Purchase Decision
i. Decision heuristics. A consumer may make as many as five sub-decisions: brand (brand
A), dealer (dealer 2), quantity (one computer), timing (weekend), and payment method
card).
ii. Non-compensatory models of consumer choice, positive and negative attribute
considerations, don’t necessarily net out. Evaluating attributes in isolation facilitates
decision making for consumers, but it also increases the likelihood that they would have
made a different choice if they had deliberated in greater detail.
iii. Rather than calculating the perceived importance of every attribute across products in
a consideration set, consumers often take “mental shortcuts,” called heuristics or rules
of thumb, in the decision process.
iv. The elaboration likelihood model, an influential model of attitude formation and
change, describes how consumers make evaluations in both low- and high-involvement
circumstances.
v. Involvement: the elaboration likelihood model
1. The central route: attitude formation or change stimulates much thought and is based on the
consumer’s diligent, rational consideration of the most important product information.
2. The peripheral route: attitude formation or change provokes much less thought and results
from the consumer’s association of a brand with either positive or negative peripheral cues.
3. Consumers follow the central route only if they possess sufficient motivation, ability, and
opportunity.
4. We buy many products under conditions of low involvement and without significant brand
differences.
5. Evidence suggests we have low involvement with most low-cost, frequently purchased
products.
vi. Marketers use four techniques to try to convert a low-involvement product into one that
encourages higher involvement. Four techniques to try to convert a low-involvement
product into one of higher involvement:
1. They can link the product to an engaging issue;
2. They can link the product to a personal situation;
3. They might design advertising to trigger strong emotions related to personal values or ego
defense;
4. They might add an important feature.
vii. Intervening Factors: Attitudes of others can intervene in the purchase process if the other
person’s negative attitude toward our preferred alternative is intense and our motivation
to comply with the other person’s wishes is high. See Fig. 3.5.
viii. The second intervening factor involves the situational considerations that may erupt to
change the purchase intention.
ix. A consumer’s decision to modify, postpone, or avoid a purchase decision is heavily
influenced by one or more types of perceived risk.

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1. Functional risk—The product does not perform to expectations.
2. Physical risk—The product poses a threat to the physical well-being or health of the user or
others.
3. Financial risk—The product is not worth the price paid.
4. Social risk—The product results in embarrassment in front of others.
5. Psychological risk—The product affects the mental well-being of the user.
6. Time risk—The failure of the product results in an opportunity cost of finding another
satisfactory product.
F. Postpurchase Behavior
i. Postpurchase Satisfaction is a function of the closeness between expectations and the
product’s perceived performance.
1. Some consumers magnify the gap when the product isn’t perfect and are
highly dissatisfied; others minimize it and are less dissatisfied.
2. A satisfied consumer is more likely to purchase the product again and will also
tend to say good things about the brand to others.
3. Dissatisfied consumers may abandon or return the product. They may seek
information that confirms its high value.
4. They may take public action by complaining to the company, going to a
lawyer, or complaining directly to other groups (such as business, private, or
government agencies) or to many others online.
5. Private actions include deciding to stop buying the product (exit option) or
warning friends (voice option).
ii. Postpurchase communications to buyers have been shown to result in fewer product returns
and order cancellations.
iii. Marketers should also monitor how buyers use and dispose of the product.

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