Chapter 5 Notes

Consumer Markets and Buyer Behavior – Detailed Notes with Examples

1. Consumer Buyer Behavior
 Definition: The buying behavior of final consumers—individuals and
households—that buy goods and services for personal consumption.
 Example: A family purchasing groceries, a student buying a laptop for
studies, or an individual subscribing to a fitness app.

2. Model of Consumer Behavior

Consumer behavior is influenced by both external and internal factors, leading to
purchasing decisions.
Stimulus-Response Model
1. Marketing Stimuli – The 4Ps (Product, Price, Place, Promotion) influence
consumers.
2. Other Stimuli – Economic, Technological, Social, and Cultural factors.
3. Consumer’s Black Box – The internal decision-making process, including
personal and psychological influences.
4. Buyer Responses – The final decision: what, when, where, and how much
they buy.
Example:
 A company launching a new smartphone (Marketing Stimulus) in a
country where people prioritize budget-friendly phones (Economic
Stimulus) might create an affordable model with installment options to
match consumer behavior.

3. Factors Affecting Consumer Behavior

a. Cultural Factors
Cultural factors exert the strongest influence on consumer behavior.
Culture
 The basic values, perceptions, wants, and behaviors learned from family,
society, and institutions.
 Marketers need to adapt to cultural shifts.
 Example:
 o In Japan, gift-giving is an essential tradition, influencing consumer
behavior around holidays like Oseibo (year-end gift-giving).
o A fast-food chain in India introduces a vegetarian burger to align
with cultural preferences that avoid beef.
Subculture
 A smaller group within a culture that shares specific values based on
ethnicity, religion, nationality, or geography.
 Examples:
o Hispanic Americans in the U.S. tend to shop in family groups,
influencing brands like Walmart to create ads that emphasize family
togetherness.
o Muslim Consumers seek Halal-certified food products, prompting
fast-food chains like McDonald's in the Middle East to serve Halal
meat.
Social Class
 Society’s ordered divisions based on factors like income, education,
occupation, and wealth.
 Example:
o Upper-class consumers prefer luxury brands like Rolex, Tesla, and
Gucci.
o Working-class families prioritize affordability, choosing brands like
Walmart, Uniqlo, or Toyota for value-based purchases.

b. Social Factors
A person’s behavior is influenced by family, social roles, and online
communities.
Reference Groups
 People we look up to influence our buying decisions.
 Example:
o A fitness influencer on Instagram promoting protein shakes
influences health-conscious consumers to buy that brand’s
supplements.
Family
 The strongest influence on purchasing decisions.
  Example:
o Parents influence car choices for their children, often recommending
safe brands like Toyota or Volvo.
Roles & Status
 The role a person plays in a group (family, job, or social setting) affects their
buying choices.
 Example:
o A corporate executive may choose Apple products to maintain a
tech-savvy and professional image.

c. Personal Factors
Consumer choices are shaped by age, life stage, lifestyle, and personality.
Age & Life Stage
 Buying habits change as people move through life stages.
 Example:
o Teenagers spend more on fashion, gaming, and fast food.

o Retired individuals focus on healthcare, travel, and retirement

plans.
Occupation
 Work influences buying decisions.
 Example:
o Construction workers need rugged boots and safety gear, while
business professionals invest in formal attire.
Economic Situation
 Affects a consumer’s willingness to spend.
 Example:
o During economic downturns, consumers shift to budget-friendly
brands like Walmart and Aldi instead of premium brands.
Lifestyle
 A person’s way of living influences purchases.
 Example:
 o A minimalist consumer prefers eco-friendly brands like Tesla and
Patagonia.
Personality & Self-Concept
 People buy products that match their personality.
 Example:
o Adventure seekers prefer Jeep or GoPro cameras, while status-
conscious individuals choose luxury brands.

d. Psychological Factors
Motivation (Maslow’s Hierarchy of Needs)
Consumers buy based on their most pressing needs.
1. Physiological Needs – Basic survival (food, water).
o Example: Buying groceries, bottled water.

2. Safety Needs – Security & health.

o Example: Buying insurance, home security systems.

3. Social Needs – Belonging & love.

o Example: Buying gifts, social media subscriptions.

4. Esteem Needs – Status & recognition.

o Example: Buying luxury cars, designer clothes.

5. Self-Actualization – Fulfillment & personal growth.

o Example: Enrolling in self-improvement courses.

Perception
 How consumers interpret information.
 Example:
o A customer who sees "organic" labels perceives it as healthier,
influencing purchase decisions.
Learning
 Past experiences shape buying behavior.
 Example:
o A customer who had a great experience with Apple products is
more likely to stick with Apple.
Beliefs & Attitudes
 Strongly influence purchasing decisions.
 Example:
o Beyond Meat shifted consumer attitudes toward plant-based meat
alternatives.

4. Buying Decision Behavior

Different purchase decisions involve different levels of effort.
Types of Buying Behavior
1. Complex Buying Behavior – High involvement, significant brand
differences.
o Example: Buying a house or car (extensive research required).

2. Dissonance-Reducing Buying Behavior – High involvement, few

differences.
o Example: Buying a washing machine (few perceived differences, but
expensive).
3. Habitual Buying Behavior – Low involvement, few differences.
o Example: Buying salt or toothpaste.

4. Variety-Seeking Buying Behavior – Low involvement, significant brand

differences.
o Example: Trying different brands of chips or ice cream.

5. Buyer Decision Process

1. Need Recognition – Realizing a need.
o Example: Phone battery dies frequently → Need for a new phone.

2. Information Search – Gathering data.

o Example: Reading reviews before buying a laptop.

3. Evaluation of Alternatives – Comparing options.

o Example: Choosing between iPhone or Samsung Galaxy.

4. Purchase Decision – Making the final choice.

5. Post-Purchase Behavior – Satisfaction influences future behavior.
1. The Adoption Process
The adoption process refers to the stages consumers go through when deciding to
use a new product or innovation.
Stages of the Adoption Process
1. Awareness – Consumer becomes aware of the innovation but lacks
information.
o Example: A person sees an ad for Tesla’s new self-driving car but
doesn’t know how it works.
2. Interest – Consumer seeks information about the product.
o Example: They Google reviews, watch YouTube videos, and
compare Tesla's Autopilot with other car brands.
3. Evaluation – Consumer considers if the innovation is worth trying.
o Example: They compare the cost of a Tesla Model Y vs. a gasoline
car and evaluate if self-driving features are useful.
4. Trial – Consumer tries the product on a limited basis.
o Example: They test drive the Tesla at a dealership.

5. Adoption – Consumer fully commits and purchases the product.

o Example: They buy the Tesla Model Y and switch from gasoline cars.

Marketing Strategy Tip:

Companies offer free trials to encourage adoption, such as:
 Netflix giving a one-month free subscription.
 Apple offering a free trial of Apple Music.

2. Diffusion of Innovation (How Innovations Spread in Society)

The Diffusion of Innovation Theory explains how a new product spreads across a
population over time.
Types of Adopters in the Diffusion Curve
1. Innovators (2.5%)
o First adopters; risk-takers; love trying new things.
 o Example: Tech enthusiasts who pre-order the latest iPhone before
release.
2. Early Adopters (13.5%)
o Opinion leaders; influence others; quick to try but more cautious than
innovators.
o Example: Influencers who buy new electric cars and post reviews
on social media.
3. Early Majority (34%)
o Adopt products after seeing early adopters’ experiences.

o Example: General consumers who buy smartwatches after seeing

positive reviews.
4. Late Majority (34%)
o Skeptical; adopt only when the majority has already used it.

o Example: People who buy 5G phones years after their launch.

5. Laggards (16%)
o Very resistant to change; adopt only when necessary.

o Example: People who still use keypad phones while others have
smartphones.
Marketing Implication:
 Companies first target Innovators & Early Adopters to create hype.
 Once the Early Majority adopts, sales increase rapidly.

3. Factors Influencing Adoption Rate

Not all innovations spread at the same speed. The adoption rate depends on five
key factors:
1. Relative Advantage
 How much better the innovation is compared to existing products.
 Example:
o Electric Cars have lower fuel costs → Faster adoption.

o 3D TVs had few benefits over regular TVs → Failed adoption.

2. Compatibility
 How well the product fits consumers' needs and lifestyles.
  Example:
o Wireless earbuds (AirPods) became popular because they fit with
mobile lifestyles.
o Google Glass failed because it didn’t fit everyday fashion.

3. Complexity
 The easier the product is to use, the faster it gets adopted.
 Example:
o Zoom became widely adopted during COVID because it was easy
to use.
o Cryptocurrency adoption is slow because it is complex for most
people.
4. Trialability
 Can consumers test the product before committing?
 Example:
o Spotify and Apple Music offer free trials → More adoption.

o Expensive smart home systems are harder to try → Slower

adoption.
5. Observability
 Can people see others using it? If yes, adoption is faster.
 Example:
o iPhones and Apple Watches are visible → People want to buy
them.
o Home security systems are hidden → Slower adoption.

4. Marketing Strategies for New Products

1. Target Innovators & Early Adopters First
 Use influencers & tech reviewers to spread awareness.
 Example:
o Tesla first targeted technology enthusiasts before mass marketing.

2. Offer Free Trials or Demos

 Helps reduce consumer hesitation.
  Example:
o Amazon offers free Kindle books to encourage adoption.

3. Reduce Complexity
 Make user-friendly designs.
 Example:
o TikTok gained popularity because of its easy-to-use interface.

4. Improve Compatibility
 Ensure the product fits into daily life.
 Example:
o Wireless charging pads became successful because they worked
with all phones.