Hugh Leastmoon has an annual income of $75,000 a year. He pays $25,000 in taxes, and spends another $15,000 on his home, car, food, and other "necessities." Last year, he decided to really enjoy his annual vacation, so he spent $5,000 to go skiing in Austria. What was Hugh's discretionary income last year? Need recognition
The start of the buying process begins with the recognition that there is a need or want that requires satisfaction.
Need recognition comes as a result of some form of stimuli, whether it is an element of the marketing mix, a primary or secondary need, or another external stimulus, such as seeing something you want.
The consumer will engage in some search of information about alternatives that may satisfy the need.
An information search can occur internally or externally. An internal search is the process of recalling information stored in the memory. An external information search seeks information in the outside environment, such as from advertising, other marketing elements, or a salesperson.
Once the consumers have settled on a set of alternatives, they engage in an evaluation of which is best suited to their needs. What determines the alternative selected is an attribute or set of attributes that the individual uses to judge the alternatives.
The purchase decision stage of the consumer buying process includes whether to buy a product as well as where and how to buy it.
Cognitive dissonance, or a feeling of anxiety or regret following a purchase decision, is a key factor in this final process. Whether a consumer experiences this phenomenon depends on his or her level of satisfaction versus his or her expectations. This is known as expectancy gap theory. The imperative and difficulty for marketers is to deliver on performance through quality products and consistent services and to attract customers without exaggerating what they should expect.
Routine decision making—for low-priced, everyday items like chewing gum, soft drinks, or magazines.
Limited decision making—for moderately-priced items like small appliances, or clothing.
Extensive decision making—for high-priced purchases like a house, automobile, or university education. In general, the more expensive an item is to the consumer, the more involved the consumer will be: more time will be spent searching for information, evaluating the alternatives, and evaluating the performance of the product.
Social influences—Some examples of social influences are culture, subcultures, class, reference groups, and families/households.
Psychological influences—Some examples of psychological influences are those identified in Maslow's hierarchy of needs (physiological needs, safety, belonging and love, esteem, and self-actualization) and also perception, learning, personality, and attitudes.
Situational influences—Some examples of situational influences are time, surroundings, purchase terms, and consumer moods and motives.
Geographic segmentation—subdividing markets into segments based on location (regions, counties, cities). This is done because consumers' wants and product or service usage are often related to one or more subcategory.
Demographic segmentation—subdividing markets into segments based on age, gender, family life-cycle stage, income, and education. Segments are based on these characteristics because they are often strongly related to demand and are relatively easy to measure.
Psychographic segmentation—examining attributes related to how a person thinks, feels, and behaves. Frequently included in a psychographic segmentation are personality dimensions, life-style characteristics (activities, hobbies, opinions, etc.), and consumer values.
Behavioral segmentation—segmenting based on product or service-related behaviors, particularly the benefits that a consumer desires to obtain, and their usage rate.
Primary data are new data gathered specifically for the project at hand. Collection of primary data should begin only once secondary data sources have been exhausted. Methods of acquiring primary data include observation, surveys, interviews, and experiments.
Secondary data are available data already gathered for some other purpose that is applicable to the project at hand. Typically, secondary data can be gathered much faster and at far less expense than primary data. Some excellent sources of secondary data are internal firm records, various federal government agencies, firm Web sites, private research firms, universities, business publications, and libraries.