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International Marketing MKT630

Lesson # 30

INTERNATIONAL CONSUMER MARKETS

International consumer markets are described as all the individuals & households in international

markets who buy or acquire goods & services for personal consumption.

Markets (and those which they serve) have to be understood before marketing strategies can be

developed. The consumer market buys goods and services for personal consumption. At present, the

world consumer market consists of 6.2 billion people.

With respect to the individuals in the consumer market, the behavior of the consumer is influenced by

the buyer's decision process. Buyer characteristics include four major factors: cultural, social, personal,

and psychological. Each of these factors is explored in detail. Relationships are drawn between the

factors (and factor subparts) and the consumption purchases made by consumers. Because many of

these factors are deep and long lasting in their effect, the marketing manager should pay special

attention to acquiring information about them with respect to the organization's target markets. Several

examples are presented to illustrate how this might be done.

After the following section examines the influences that affect buyers, a discussion is presented which

examines how consumers make actual buying decisions. Decisions vary based on the degree of buyer

involvement and the degree of differences among brands. A summary discussion is also presented in the

following that outlines complex buying behavior, dissonance-reducing buying behavior, habitual buying

behavior, and variety-seeking buying behavior. Special focus is directed toward a simple model of

buying behavior that explains most of the terms pertinent to the study of buying behavior. The simple

model (consisting of five stages--need recognition, information search, evaluation of alternatives,

purchase decision, and postpurchase behavior) ties together material about the buying decision process.

For new products, special situations affect the consumer choice decision. It has been found that

consumers respond at different rates (depending on consumer and product characteristics), gain

knowledge about the products in different ways, and become aware of "newness" with varying rates of

consideration. Factors that speed the rate of adoption of new products are covered and explained.

Understanding consumer behavior is difficult enough for companies marketing within the borders of a

single country. The problem is compounded when a firm attempts to market in the global environment.

The section briefly discloses differences between global and local consumer markets. Lastly, marketers

must decide whether to adapt their products to match the demands of the global marketplace or not. The

question of adaptation or standardization will be a topic for debate for several years to come.

Introducing consumer buying behavior

a. Many different factors affect consumer buying behavior. Buying behavior is never

simple. Understanding it, however, is the essential task of marketing management.

b. Consumer buying behavior refers to the buying behavior of final consumers--

individuals and households who buy goods and services for personal consumption.

c. The consumer market is all the individuals and households who buy or acquire

goods and services for personal consumption.

1). The largest consumer market, American consumer market, consists of about 287 million

people.

2). These people consume trillions of dollars of goods and services each year.

3). The world consumer market consists of more than 6.2 billion people.

4). Consumers vary tremendously in age, income, education level, and tastes.

2. Model of Consumer Behavior

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International Marketing MKT630

a. Consumers make many buying decisions every day.

b. A model of consumer behavior helps managers answer questions about what

consumers buy, where they buy, how and how much they buy, when they buy,

and why they buy.

1). Learning about the what, where, when, and how much is fairly easy.

2). Learning about the "why" is much more difficult.

c. The central question is: How do consumers respond to various marketing efforts

the company might use?

d. The stimulus-response model of buyer behavior shows that marketing (made up of

the four P's--product, price, place, and promotion) and other stimuli (such as the

economic, technological, political, and cultural environments) center on the

consumer's "black box" and produce certain responses.

e. Marketer's must figure out what is "in" the consumer's "black box."

f. The "black box" has two parts.

1). The buyer's characteristics influence how he or she perceive and react to

stimuli.

2). The buyer's decision process itself affects the buyer's behavior.

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International Marketing MKT630

3. Characteristics Affecting Consumer Behavior

a. Consumer purchases are strongly influenced by cultural, social, personal, and

psychological characteristics. For the most part, the marketer cannot control

them, but they must be taken into account.

Cultural Factors

b. Cultural factors exert the broadest and deepest influence on consumer behavior.

The marketer needs to understand the role played by the buyer's culture, sub-

culture, and social class.

c. Culture is the set of basic values, perceptions, wants, and behaviors learned by a

member of society from family and other important institutions.

1). Culture is the most basic cause of a person's wants and behavior.

2). A child learns or is exposed to the following values:

a). Achievement and success.

b). Activity and involvement.

c). Efficiency and practicality.

d). Progress.

e). Material comfort.

f). Individualism.

g). Freedom.

h). Humanitarianism.

i). Youthfulness.

j). Fitness and health.

3). Marketers are always trying to spot cultural shifts in order to imagine new

products that might be wanted (the fitness and health craze in the developed world of the late

80s and

90s for example).

d. Each culture contains smaller subcultures. Subculture is a group of people with

shared value systems based on common life experiences and situations.

e. Subcultures might be nationality groups, religious groups, racial groups, or geo-

graphic area groups. Many of these subcultures make up important market

segments and many times products are designed for them.

f. Almost every society has some form of social class structure. Social class is the

relatively permanent and ordered divisions in a society whose members share

similar values, interests, and behaviors.

1). Social class is not determined by a single factor such as income but is

measured as a combination of occupation, income, education, wealth, and other

variables.

2). Marketers are interested in social class because people within a given social

class tend to exhibit similar behavior, including buying behavior. This is most

evident in the selection of clothing, home furnishings, leisure activity, and

automobiles.

Social Factors

g. A consumer's behavior is influenced by social factors. These include small

groups, family, and social roles and status.

h. A person's behavior is influenced by many small groups. There are several

specialized group formations within the larger configuration:

1). Membership groups are groups that have a direct influence on a person's

behavior; they are groups to which a person belongs.

2). Reference groups are groups that that have a direct (face-to-face) or indirect

influence on the person's attitudes or behavior. People are often influenced by

reference groups to which they do not belong.

a). An aspirational group is a group to which an individual wishes to belong.

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International Marketing MKT630

b). Reference groups expose a person to new behaviors and lifestyles.

c). Influence the person's attitudes and self-concept.

d). They also create pressures to conform that may affect the person's product

and brand choices.

e). An opinion leader is a person within a reference group who, because of

special skills, knowledge, personality, or other characteristics, exert

influence on others. Marketers try to identify opinion leaders and direct

products and communications toward them.

i. A consumer's purchases are also influenced by family members. The influence can

be very strong because the family is the most important consumer-buying

organization in society. It has been extensively researched.

j. Marketers are interested in the roles and influence of the husband, wife, and

children in the purchase of different products and services. Buying roles change

with evolving lifestyles (such as more females working outside the home).

Marketers try to identify the influencer role in a family unit (such as children).

k. A person belongs to many groups and the person's position within each group can

be defined in terms of both role and status. A role is the activities a person is

expected to perform according to the people around him or her. Status is the

general esteem given to a role by society. People often choose products that show

their status in society.

Personal Factors

l. A buyer's decisions are also influenced by personal characteristics such the buyer's

age and life-cycle stage, occupation, economic situation, lifestyle, personality and

self-concept.

m. People change the goods and services that they buy over their lifetimes. Part of

these changes are shaped by the family life cycle (stages throughout which families

might pass as they mature over time). The traditional life cycle stages are being

modified as people form new lifestyles (such single parenting).

n. A person's occupation affects the goods and services bought (software bought by

accountants, lawyers, and doctors).

o. The economic situation of the buyer is very important in purchase consideration.

If a person fears losing their job, their purchasing habits generally change. If the

person perceives that their economic situation is going to improve, they might

consider making a major purchase.

p. People from the same social strata can have very different lifestyles. A lifestyle is

a person's pattern of living as expressed in his or her psychographics (such as

activities, interests, and opinions). Lifestyle profiles a person's whole pattern of

acting and interacting in the world. It is more than the person's social class or

personality.

1). Examples include:

a). Activities (work, hobbies, shopping, etc.).

b). Interests (food, fashion, recreation, etc.).

c). Opinions (about themselves, social issues, business, etc.).

2). The most widely used lifestyle classification is the (Stanford Research Institute) SRI Values

and Lifestyles

(VALS) typology. VALS classifies people according to their consumption

tendencies by how they spend their time and money. A person could change

positions over time. It is felt that a person's lifestyle does affect their purchase

behavior. Groups are further subdivided based on self-orientation and

resources.

a). Self-orientation groups include:

1]. Principle-oriented consumers who buy based on their views of the

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International Marketing MKT630

world.

2]. Status-oriented consumers who base their purchases on the actions

and opinions of others.

3]. Action-oriented buyers who are driven by their desire for activity,

variety, and risk taking.

b). Resources can be either abundant or minimal depending on whether the

the buyer has high or low levels of income, education, health, self-

confidence, energy, and other factors. Note: See SRI's Web site at

www.sri-bi.com for additional information. A survey can be filled out

at the site to determine your SRI VALS position.

q. Each person's personality and self-concept will influence their buying behavior.

Personality is a person's unique psychological characteristics that lead to relatively

consistent and lasting responses to his or her own environment. Personality is

usually described in terms of traits (such as self-confidence, dominance,

sociability, etc.). Personality can be useful for analyzing consumer behavior

for certain brand or product choices.

1). A brand personality is the specific mix of human traits that may be attributed

to a particular brand.

2). Five brand personalities might be:

a). Sincerity.

b). Excitement.

c). Competence.

d). Sophistication.

e). Ruggedness.

r. The self-concept describes the self-image. The basic idea is that people's

possessions contribute to and reflect their identities.

Psychological Factors

s. A buyer's choices are influenced by four major psychological factors (motivation,

perception, learning, and beliefs and attitudes):

1). A motive (drive) is a need that is sufficiently pressing to direct the person to

seek satisfaction. A person has many needs at any given time and they can be

biological or psychological. Several theories of motivation include:

a). Freud's theory of motivation assumed that people are largely unconscious

about the real psychological forces shaping their behavior. A person does

not fully understand his or her motivation according to Freud.

1). These ideas spawned the field of motivation research.

b). Maslow's theory of motivation sought to explain why people are driven by

particular needs at particular times. He believed that needs were arranged

in a hierarchy (beginning with physiological needs and then continuing with

safety, social, esteem, and self-actualization needs). Under this idea, a

person would try to satisfy the most important needs first. The needs

include:

1]. Physiological needs.

2]. Safety needs.

3]. Social needs.

4]. Esteem needs.

5]. Self-actualization needs.

2). Perception is the process by which people select, organize, and interpret

information to form a meaningful picture of the world. The marketer must

remember that two people with the same motivation and in the same situation

may act differently because they perceive the situation differently. These

differences in perception can be accounted for by three perceptual processes:

a). Selective attention is the tendency of people to screen out most of the

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International Marketing MKT630

information to which they are exposed.

b). Selective distortion is the tendency of people to interpret information in a

way that will support what they already believe.

c). Selective retention is the tendency of people to retain only part of the

information to which they are exposed, usually information that supports

their attitudes and beliefs. An interesting side bar is the concept of

subliminal advertising where some researchers attempted to appeal to

consumers below the conscious thinking and perception level. Most

agree that no link has been found between this somewhat devious technique

and consumer behavior.

3). Learning is described as changes in an individual's behavior arising from

experience. Learning occurs through the interplay of:

a). A drive (a strong internal stimulus that calls for action).

b). A drive becoming a motive when it is directed toward a particular stimulus

object.

c). Cues are minor stimuli that determine when, where, and how the person

responds.

d). Cues can influence a buyer's response to an impulse.

e). If the experience is rewarding, then the response is reinforced.

f). The practical significance of learning theory for marketers is that they can

build up demand for a product by associating it with strong drives, using

motivation cues, and providing positive reinforcement.

4). A person's beliefs and attitudes are acquired through acting and learning. A

belief is a descriptive thought that a person holds about something.

a). A belief may be based on real knowledge, opinion, or faith.

b). Beliefs may or may not carry an emotional charge.

c). Because beliefs make up product and brand images, they are important to

marketers. People tend to act on their beliefs.

5). An attitude is a person's consistently favorable or unfavorable evaluations,

feelings, and tendencies toward an object or idea.

a). Attitudes put people into a frame of mind of liking or disliking things,

moving toward or away from them.

b). Attitudes are difficult to change.

c). A person's attitudes fit into a pattern and changing one attitude may

require changing others.

d). A company should try to fit its products into existing attitudes rather than

try to change them.

4. Types of Buying-Decision Behavior

a. Buying behavior differs greatly depending on what is being bought.

b. More complex decisions usually involve more buying participants and more

buyer deliberation.

Complex Buying Behavior

c. Complex buying behavior occurs when consumers are highly involved in a

purchase and perceive significant differences among brands.

d. Consumers may be highly involved when the product is expensive, risky,

purchased infrequently, and highly self-expressive.

Dissonance-Reducing Buying Behavior

e. Dissonance-reducing buying behavior occurs when consumers are highly

involved with expensive, infrequent, or risky purchase, but see little difference

among brands. After these purchases, it is common to experience postpurchase

dissonance (after-sale discomfort) when they notice certain disadvantages of the

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International Marketing MKT630

purchase or hear favorable things about brands not purchased. Counter dissonance

occurs with after-sale communications to support claims and make consumers feel

better about purchases.

Habitual Buying Behavior

f. Habitual buying behavior occurs under conditions of low consumer involvement

and little significant brand difference.

g. In these cases, consumer behavior does not pass through the usual belief-attitude-

behavior sequence. Ad repetition creates brand familiarity rather than brand

conviction.

Variety-Seeking Buying Behavior

h. Consumers undertake variety-seeking buying behavior in situations characterized

by low consumer involvement, but significant perceived brand differences.

i. In such cases, consumers would do more than usual brand switching.

5. The Buyer Decision Process

a. The buyer decision process examines how consumers make buying decisions.

There are five stages within the process: need recognition, information search,

evaluation of alternatives, purchase decision, and postpurchase behavior. The

model seems to imply that consumers pass through all five stages with every

purchase. In more routine purchases, however, a person might skip or reverse

some of the stages. Marketers need to focus on the entire buying process rather

than on just the purchase decision.

Need Recognition

b. Need recognition is the first stage of the buyer decision process in which the

consumer recognizes a problem or need.

1). The need can be triggered by internal stimuli when one of the person's normal

needs rises to a level high enough to become a drive.

2). A need can also be triggered by external stimuli (such as an advertisement).

3). At this stage, the marketer needs to determine the factors and situations that

usually trigger consumer need recognition.

Information Search

c. Information search is the stage of the buyer decision process in which the con-

sumer is aroused to search for more information; the consumer may simply have

heightened attention or may go into active information search. Information can be

obtained from several sources:

1). Personal sources such as family and friends.

2). Commercial sources such as advertising and salespeople.

3). Public sources such as the mass media and consumer-rating organizations.

4). Experiential sources such as handling, examining, or using the product.

d. The relative influence of these information sources varies with the product and the

buyer.

1). Generally, the consumer receives the most information about a product from

commercial sources.

2). Yet, the most effective sources tend to be personal. Personal sources

legitimize or evaluate products for the buyer.

e. As more information is obtained, the consumer's awareness and knowledge of

available brands and features increases.

f. Marketers should carefully understand consumer's sources of information and the

importance of each source.

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International Marketing MKT630

Evaluation of Alternatives

g. Alternative evaluation is the stage of the buyer decision process in which the

consumer uses information to evaluate alternative brands choices. Several basic

concepts help to explain the consumer-evaluation process:

1). The consumer arrives at attitudes toward different brands through some

evaluation procedure.

2). In some cases consumers use careful calculations and logical thinking.

3). In other instances, consumers buy on impulse and rely on intuition.

4). Sometimes, consumers make buying decisions by themselves. At other times,

the consumer uses friends, buying or consumer guides, or salespeople for

advice.

5). Marketers should study buyers to find out how they actually evaluate brand

alternatives.

Purchase Decision

h. The purchase decision is the stage of the buyer decision process in which the

consumer actually buys the product. Generally, the consumer's purchase decision

will be to buy the most preferred brand; however, two factor's can come between

purchase intention and the purchase decision. They are:

1). The attitude of others. How much another person's attitudes will affect

individual choices depends both on the strength of the other person's attitudes

toward the buying decision and on an individual's motivation to comply with

that person's wishes.

2). Purchase intention is also influenced by unexpected situational factors. If

unexpected situational factors arise as the consumer is about to act, the

purchase intention may be affected.

Postpurchase Behavior

i. Postpurchase behavior is the stage of the buyer decision process in which

consumers take further action after purchase based on their satisfaction or

dissatisfaction. Determinates are:

1). The relationship between the consumer's expectations and the product's

perceived performance. The larger the gap between expectations and

performance, the greater the consumer's dissatisfaction.

2). Some sellers might even understate performance levels to boost consumer

satisfaction with the product.

j. Cognitive dissonance is buyer discomfort caused by postpurchase conflict and it is

very common.

k. It is very important to satisfy customers because a company's sales come from two

basic groups: new customers and retained customers.

1). Because it is more expensive to attract new customers than to retain current

ones, it is important to keep current customers happy.

2). A satisfied customer also tells others about their experience.

6. The Buyer Decision Process For New Products

a. A new product is a good, service, or idea that is perceived by some potential

customers as new. The product may have been around for a while, but marketers

are interested in how customers learn about products for the first time and make

decisions on whether to adopt them.

b. The adoption process is the mental process through which an individual passes

from first hearing about an innovation to final adoption. Adoption is defined as the

decision by an individual to become a regular user of the product.

Stages in the Adoption Process

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c. The five stages of the adoption process are:

1). Awareness--where the consumer becomes aware of the new product, but lacks

information about it.

2). Interest--in which the consumer is stimulated to seek information about the

new product.

3). Evaluation--in which the consumer considers whether trying the new product

makes sense.

4). Trial--in which the consumer tries the new product on a small scale to improve

his or her estimate of its value.

5). Adoption--in which the consumer decides to make full and regular use of the

new product.

d. The marketer must plan how to help the consumer move through these stages.

Individual Differences in Innovativeness

e. People differ in their innovativeness or readiness to try new products.

f. Five different adopter categories can be identified as:

1). Innovators are venturesome and they try new ideas at some risk (2.5 percent).

2). Early adopters are guided by respect. They are opinion leaders in their

community and adopt new ideas early but carefully (13.5 percent).

3). The early majority are deliberate. Although rarely leaders, they adopt new

ideas before the average person (34 percent).

4). The late majority are skeptical. They adopt an innovation only after a

majority of people have tried it (34 percent).

5). Laggards are tradition bound. They are suspicious of changes and adopt the

innovation only when it has become something of a tradition itself (16 percent).

Influence of Product Characteristics on Rate of Adoption

g. The new product's characteristics will also influence the rate of adoption. Five

characteristics that are especially important to consider are:

1). The innovation's relative advantage or the degree to which it appears superior

to existing products.

2). The innovation's compatibility or degree to which it fits the values and

experiences of potential customers.

3). The innovation's complexity or the degree to which it is difficult to understand

or use.

4). The innovation's divisibility or the degree to which it may be tried on a limited

basis.

5). The innovation's communicability or the degree to which the results can be

observed or described to others.

h. Other characteristics such as initial and ongoing costs, risk and uncertainty, and

social approval also affect the rate of adoption.

Consumer Behavior Across International Borders

i. For companies operating in many countries, it is more difficult, but just as

important to understand the consumer behavior of the international market.

j. Sometimes the differences can be obvious, but most likely they will be subtle.

k. Failing to understand such differences in customs and behaviors from one country

to another can spell disaster for a marketer's international products and programs.

l. The marketer will have to decide on the degree of adaptation or standardization

that will be appropriate for the international marketplace. Which is the best course

of action is open to debate.

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International Marketing MKT630