BUSI 406: Principles of Marketing Lecture 6 Outline of Last Lecture I. Segmentation a. Defining markets b. Dimensions to use c. Identifying segments d. Identifying segments to target e. Segmentation approaches II. Positioning a. Understanding customer’s view b. Positioning techniques c. Evaluating segment preferences d. Differentiating the marketing mix e. Relationship between positioning & targeting Outline of Current Lecture I. Understanding Buying Behaviora. Why do we care?b. Who are our potential consumers? What do we know about them?c. Consumer Behavior Model1. Characteristics Affecting Consumer Behavior a. beyond pure economic needsb. Psychological influencesc. Social influencesd. Culturee. Situational influencesCurrent LectureHow we view Consumer BehaviorEconomics and psychology are often cited as key sources of marketing thought, but marketing also derives a great deal of knowledge about consumer behavior from sociology, anthropology, and other social sciences. The basic model of consumer behavior shown here integrates many of these influences. 1. Economic needsa. economy of purchaseThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.b. conveniencec. efficiencyd. dependabilityi. Economic buyers: people who know all the facts and logically compare choices to get the greatest satisfaction from spending their time and moneyii. Economic needs: those needs that are concerned with the consumer making the best use of his or her time and money [maximizing utility] 2. Psychological variables: a. motivationb. perceptionc. learningd. attitudee. trustf. lifestylei. Psychological variables: things that are going on in the mind of the consumer that affect purchase. ii. Examples: attitudes, personality, learning processes, trust and perceptions3. Social Influencea. familyb. social classc. reference groupsi. Social influences: have to do with the associations that the buyer might have with other people. ii. Examples: culture, social class, and family influences.4. Culturea. ethnicityb. internationali. Cultural influences include a consumer’s ethnic background and international factors.5. Purchase situationa. purchase reasonb. timec. surroundingsi. Purchase situation factors: reason for the purchase, time pressure involved, and surroundings of the purchase.Economic NeedsMost economists assume that consumers are economic buyers, meaning buyers use perfect information to make buying decisions to maximize utility… - Economic-buyer theory says that consumers decide what to buy based on economic needs.- Some economic needs include:• economy of purchase or use,• efficiency in operation or use,• dependability in use,• improvement of earnings, and• convenience.Economic needs help marketers to understand the who, what, when and where of many aspectsof consumer buying behavior. However, economic needs often don’t tell the full story. So marketers have turned to other behavioral sciences in order to consider the full range of buying influences. This is especially necessary when one considers it is impossible for customers to have true access to perfect information, let alone have the time to evaluate it long enough to truly ‘maximize utility.’ So what are decisions based on?Economic Needs are Relevant BUT…Consumers sometimes behave in ways that are consistent with the economist’s idea of an economic buyer however:• Customer’s incomes are likely to affect their needs – o how much money does a customer have available drives their buying behavior. • For many marketers, they need to determine their target market’s discretionary income o what is left of income after paying taxes and paying for necessities.• Many consumers face budget constraints, and even when they don’t they usually pay attention to factors such as the cost to acquire and use a product, dependability, convenience, how long it will last, and the likePsychological InfluencesMany different levels of needs can appeal to or motivate a person. The PSSP pyramid from bottom to top: Physiological needs; Safety needs; Social needs; Personal needs. - Physiological needs: the most basic needs people experience. o biological needs for food, liquid, and rest, etc.- Safety needs: concerned with protection and physical well-being.o health, medicine, exercise, and security, etc.- Social needs: derived from a person’s interactions with others.o love, friendship, status, esteem, and connecting with others.- Personal needs: concerned with an individual’s need for personal satisfaction, unrelated to what others do. o personal satisfaction, accomplishment, fun, freedom, and relaxation, etcPerception determines how Consumers think and feelConsumers select varying ways to meet their needs sometimes because of differences in perception —how we gather and interpret information from the world around us.- Selective processes applied:o Selective exposure—our eyes and minds seek out and notice only information that interests us.o Selective perception—we screen out or modify ideas, messages, and informationthat conflict with previously learned attitudes and beliefs.o Selective retention—we remember only what we want to remember.Learning Determines what Response is LikelyMarketers understand that virtually all of consumer behavior is learned, so they are very interested in how they can positively affect the learning process.- Learning o is a change in a person’s thought processes caused by prior experience. - A drive o is a strong internal stimulus that encourages action to reduce a need. - Cues o are stimuli in the environment that trigger a drive or response. - A response o is an effort to satisfy a drive. - Reinforcement o occurs when the response is followed by satisfaction, which reduces the drive. Marketers often try to identify positive cues because they help a marketing mix. Many needs are culturally learned.Attitudes and BeliefsBasic difference between the two:1. Attitude has to do with liking/ disliking2. Beliefs are measurable and can be right/ wrong Ex. Believing Fijiji water is $10 when its $2More Formally:- Attitude is a person’s point of view about something.o Attitudes tend to be learned. They shape information processing in the consumer’s mind. o Attitudes also relate to buying decisions consumers make. Therefore, marketers do a lot of attitude