Copyright © 2002 All rights reserved. 1 CHAPTER 2 Determinants of Customer Behavior: Personal Factors and Market Environment

1

Copyright © 2002

All rights reserved.

CHAPTER 2CHAPTER 2

Determinants of Customer Behavior:

Personal Factors

and Market Environment

Determinants of Customer Behavior:

Personal Factors

and Market Environment

CUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVECUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVE

PART 1:PART 1:

CUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVECUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVE

PART 1:PART 1:

Copyright © 1999 by Thomas Southwestern. All rights reserved.

CHAPTER 2CHAPTER 2PART 1Customer Behavior: A Managerial Perspective

2 Copyright © 2002


FrameworkFramework

Payer

UserBuyer

Personal Context• Culture• Groups and Institutions• Personal Worth• Social Class

Personal Context• Culture• Groups and Institutions• Personal Worth• Social Class

Personal Traits• Genetics• Biogenics• Personality

Personal Traits• Genetics• Biogenics• Personality

Market Context• Economy• Government Policy• Technology

Market Context• Economy• Government Policy• Technology

Market Traits• Climate• Topography• Ecology

Market Traits• Climate• Topography• Ecology



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Two Broad ClassesTwo Broad Classes

Personal traits Those biological and physiological features a person is

born with and those that develop as a person grows but whose origin derives from biological heredity.

Individual traits Group traits

Personal context The characteristics of the socio-econocultural

environment in which we have lived and are living, which has intimately influenced our resources, tastes, and preferences

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Personal FactorsPersonal Factors



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Personal TraitsPersonal Traits

Genetics

Biogenics

Race

Gender

Age

Personality



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Genetics: The Cards We Are Dealt at BirthGenetics: The Cards We Are Dealt at Birth

DNA (deoxyribonucleic acid) Chemicals in cell nuclei that form the

molecular basis of heredity in organisms Genes (segments of DNA) provide the code

that determines our characteristics



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ResearchResearch

Research is in progress on genetics and DNA, seeking to discover secrets of the human condition and behaviorAdvances in neurology are uncovering various chemicals that regulate human emotions and behavior These discoveries support the idea of biological

determinism – the belief that human behavior is determined by biological factors such as genetics and DNA

Other non-biological factors such as culture, perception, learning, and individual motivation, determine much of adult behavior as well



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Genetics Affect Customer Needs and BehaviorGenetics Affect Customer Needs and Behavior

Four Factors Physiological differences Diseases and mental disorder Circadian rhythm Emotions and behavior



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Direct Effects of GeneticsDirect Effects of Genetics

Physical features and physiological characteristics Height, weight, skin color and tone, color of

eyes, color and texture of hair, and bodily reactions to variations in temperature and other environmental changes (i.e., allergies)



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Daily Cycle of ActivityDaily Cycle of Activity

Circadian Rhythm – biological “clock” governs rhythms like sleep-wake cycles

People’s rhythms affect,, when shoppers like to shop, among other things

Research is also examining whether consumers might process advertisements differently at different times of the day according to their circadian rhythm





Human BehaviorHuman Behavior

Nature (biological factors) Behavior is determined by a person’s upbringing, by

family life, by parental values, by peer group influences, by school, and by church groups

Nurture (the familial and social environment) Behavior is determined by a person’s genetic makeup:

our emotions, our sexual preference, tribalism, love of status, notions of beauty, our sociability, creativity, and morality itself





Birth Order MattersBirth Order Matters

Birth order is the sequence among all siblings born of the same mother Older children are control freaks, aspiring,

ambitious and driven Younger siblings, in contrast, take themselves

much less seriously, are more sociable and less judgmental, more risk taking and more open to new things and change





BiogenicsBiogenics

Three biogenic characteristics that influence customer behavior: Race Gender Age





RaceRace

In the United States, the Bureau of the Census specifies the following four race categories: 1. Caucasian

2. African American

3. American Indian and Alaskan Eskimos

4. Asian and Pacific Islanders





GenderGender

Gender is a biogenic group trait that divides customers into two groups males and females

This group trait remains constant through a person’s life, and it influences customer values and preferences





AgeAge

Age is perhaps the most pervasive influence on customer behavior

Both needs and wants vary immensely by age

Age helps determine the lifetime revenue from a customer Lifetime revenue is the estimated revenue a firm may

expect to receive from a customer over the customer’s lifetime





Chronological Age-based GroupingChronological Age-based Grouping

The GI Generation (born from 1901 to 1924)

Silent Generation (born between 1925)

Baby Boomers (born between 1946 to 19640

Generation X (Post 1964)

Generation Y (born between 1977 and 1995)

Children





Distribution of Online Buyers By AgeDistribution of Online Buyers By Age





Customer PersonalityCustomer Personality

Personality refers to a person’s consistent ways of responding to the environment in which he or she lives

Customer personality is a function of two factors: Genetic makeup Environmental conditioning

Personality = Genetics x Environment





Behaviorism TheoryBehaviorism Theory

A person develops a pattern of behavioral responses because of the rewards and punishments offered by his or her environment





Freudian TheoryFreudian Theory

Human personality is driven by both conscious and unconscious motivesThree divisions of the human psyche: id

the basic source of inner energy directed at avoiding pain and obtaining pleasure and represents the unconscious drives and urges

ego between the unconscious and impulsive desires of the id and the

societal ideals internalized by the superego superego

the moral side of the psyche, reflecting societal ideals





Unconscious Tactics of the EgoUnconscious Tactics of the Ego

Aggression

Rationalization

Projection

Repression

Withdrawal

Regression





Trait TheoryTrait Theory

A person is viewed as a composite of several personality traits

A personality trait is a consistent, characteristic way of behaving





Personality of the Business CustomerPersonality of the Business Customer

Two personality traits of the “social styles” classification Assertiveness Responsiveness

Classification of Personality Into Social StylesClassification of Personality Into Social Styles

Analytical• Slow reaction• Maximum effort to organize• Minimum concern for

relationships• Historical time frame• Cautious action• Tends to reject involvement

Driving• Swift reaction• Maximum effort to control• Minimum concern for caution

in relationships• Present time frame• Direct action• Tends to reject inaction

Amiable• Unhurried reaction• Maximum effort to relate• Minimum concern for effecting

change• Present time frame• Supportive action• Tends to reject conflict

Expressive• Rapid reaction• Maximum effort to involve• Minimum concern for routine• Future time frame• Impulsive action• Tends to reject isolation

RESPONSIVENESS

AS

SE

RT

IVE

NE

SS

LOW HIGH

HIGH

LOW

RESPONSIVENESS

AS

SE

RT

IVE

NE

SS





Personal ContextPersonal Context

Culture

Institutions and groups

Personal worth

Social class





CultureCulture

Enculturation Acculturation

Elements of Culture

Characteristics of CultureDimensions of

Cross-cultural Values

Values

Norms

Rituals

Myths

Culture is learned

Culture regulates society

Culture makes living more efficient

Culture is adaptive

Culture is environmental

Multiple cultures are nested hierarchically

Individual vs. collectivism

Large vs. small power distance

Strong vs. weak uncertainty avoidance

Masculinity vs.femininity

Abstract vs. associative thinking





Institutions and GroupsInstitutions and Groups

Institutions More permanent groups with pervasive and

universal presence in society

Groups Two or more persons sharing a common

purpose





Types of GroupsTypes of Groups

PRIMARY SECONDARY

• Family• Work organization• Church groups• Fraternities/sororities

• Professional associations• Credit unions• Political campaign volunteers• YMCA

• Personal role model• A significant other• The person one “secretly

admires”

• Celebrities• Fortune 500 companies• Other artists (for an artist)

ME

MB

ER

SH

IPS

YM

BO

LIC





Classification of Groups for Household CustomersClassification of Groups for Household Customers

TYPE OF INSTITUTIONS/GROUPS

INFORMAL FORMAL

CHOICE

Volunteer groups

Community

Friendship groups

Cultural heroes

School

Workplace

Fraternities/sororities

TYPE OF MEMBERSHIP

ASCRIBED OR ASSIGNED

Family

Relatives

Tribes

Religion

Prison





Private-Public, Luxury-Necessity, Product-Brand InfluencesPrivate-Public, Luxury-Necessity, Product-Brand Influences

PUBLIC

PRODUCTBRAND

WEAK REFERENCEGROUP INFLUENCE (-)

STRONG REFERENCEGROUP INFLUENCE (+)

STRONG REFERENCE GROUP INFLUENCE (+)

Public Necessities

Influence: weak product and brand

Examples: Wristwatch, automobile, man’s suit

Public Luxuries

Influence: Strong product and weak brand

Examples: TV game, trash compactor, icemaker

WEAK REFERENCEGROUP INFLUENCE (-)

Private Necessities

Influence: Weak product and brand

Examples: Mattress, floor lamp, refrigerator

Private Luxuries

Influence: Strong product and weak brand

Examples: TV game, trash compactor, icemaker

PRIVATE

NE

CE

SS

ITY

LU

XU

RY





Personal WorthPersonal Worth

Three components of personal worth Income Wealth Borrowing power





Social Class CharacteristicsSocial Class Characteristics

Rank ordering

Relative permanence

Intergenerational class mobility

Internal homogeneity

Distinct from income

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Market EnvironmentMarket Environment





Two Broad ClassesTwo Broad Classes

Market traits The physical characteristics of the surroundings in

which consumers select, use, and pay for products and services in both household and business markets

Market context The man-made market forces (as opposed to the

nature-made forces) of the market as a physical place that affects customer needs and wants





Market TraitsMarket Traits

Climate

Topography

Ecology





ClimateClimate

Climate is the first major component of the geophysical market environment, which consists of temperature, wind, humidity, and rainfall in the area Homeostasis Influences consumer behaviors

Food consumption Use of clothing Housing patterns Geographical distribution of population

Climate also affects business customers’ needs and purchases





TopographyTopography

Topography is another major component of the geophysical environment which is the terrain, altitude, and soil conditions of the market where customers buy and use the product or service Consumption varies across different regions of the

world Geographical variation

Different patterns of consumption in different regions Regional marketing

Adapting marketing programs according to segmentation based on geographic differences among customers





EcologyEcology

Ecology refers to the natural resources and the delicate balance and interdependence among vegetation, animals and humans

Ecology affects customer behavior by making certain market options less convenient or less attractive, and by customers exercising their environmental values, which then bear upon their market choices Green consumer Environmentally conscious consumer





Market ContextMarket Context

Economy

Government policy

Technology





EconomyEconomy

The economic climate affects customer behavior by: Encouraging or constraining customer

purchases at the individual household levels as well as for business customers

Influencing customer sentiment Driving business cycles





Government PolicyGovernment Policy

Government policy comprises: Monetary policy Fiscal policy Public policy Facilitative infrastructure





TechnologyTechnology

Technological breakthroughs can significantly change market behaviors and customer expectationsAvenues of impact Increased access to information Product innovation: new options More flexibility and control Customized products and services

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Copyright © 2002 All rights reserved. 1 CHAPTER 2 Determinants of Customer Behavior: Personal Factors and Market Environment