Consumer Behavior: Buying Process and Market Segmentation

Situational factors

Temporary conditions surrounding a purchase that influence what, when, and how someone buys. Example: A shopper chooses a quick meal because of limited time. Key detail: Know the five factors: social situation, time, reason for the purchase, mood, and economic conditions.

Social situation

The people present and the social setting surrounding a purchase. Example: At Starbucks with friends, you order a Frappuccino because the visit feels like a social indulgence. Key detail: A date may lead someone to choose a more expensive entrée or avoid messy ribs.

Time

The time available or the time of day that affects buying behavior. Example: With only 30 minutes between meetings, you grab a Chipotle bowl. Key detail: Late-night purchases can differ from morning purchases.

Reason for the purchase

The purpose or occasion motivating a purchase. Example: You buy a $60 bottle of wine as a birthday gift even though you would not spend that much on yourself. Key detail: Buying for someone else or for a job interview changes the criteria used.

Mood

A temporary emotional state that influences purchase decisions. Example: After a stressful day, you order pizza and ice cream instead of a planned healthy dinner. Key detail: A good mood can also encourage spending, such as celebrating a promotion.

Economic conditions

Broader financial conditions that influence consumers' willingness and ability to spend. Example: During inflation, shoppers switch from name brands to store brands. Key detail: When jobs and income feel secure, consumers may upgrade cars or take vacations.

Personal factors

Individual characteristics and ways of living that influence purchases. Example: A new parent shifts spending toward diapers and a car seat. Key detail: The deck groups these as personality and self-concept; gender, age, and stage in life; and lifestyle.

Personality and self-concept

Personality concerns characteristic traits; self-concept concerns how someone sees themselves. Example: Someone with an adventurous self-image chooses a Jeep Wrangler. Key detail: Consumers may choose brands that fit their identity, such as an environmentally responsible image.

Gender age and stage in life

Personal characteristics and life circumstances that influence needs and spending. Example: A 20-year-old may prioritize concerts, while new parents prioritize diapers and a larger vehicle. Key detail: Age and stage in life are related but distinct: parenthood changes needs beyond age alone.

Lifestyle

A person's pattern of living, including daily activities and priorities. Example: A dedicated runner buys a Garmin watch, HOKA shoes, and protein snacks. Key detail: A busy city professional may prioritize Uber, DoorDash, or meal kits for convenience.

Psychological factors

Internal mental processes that shape consumer decisions. Example: A person buys a luxury watch to satisfy a desire for status. Key detail: Four factors: motivation, perception, learning, and attitude.

Motivation

The internal drive that prompts a person to act to satisfy a need or desire. Example: Hunger motivates a shopper to buy a cinnamon roll after smelling Cinnabon. Key detail: Motives may involve basic needs or symbolic benefits such as status.

Perception

How a person interprets information and forms an impression of a product. Example: Wine seems higher quality in a heavy bottle with an elegant label. Key detail: Price can shape perceived quality before the consumer compares actual performance.

Learning

Changes in preferences or behavior resulting from experience. Example: Repeated rewards teach a customer to choose Starbucks. Key detail: A bad airline experience can also teach a customer to avoid a brand.

Attitude

An overall evaluation or favorable or unfavorable view of something. Example: Believing Apple is innovative and premium encourages an iPhone purchase. Key detail: A sustainability attitude may encourage reusable products.

Societal factors

Influences from the larger social environment and the groups to which people belong. Example: Friends' clothing choices influence a college student's purchases. Key detail: Know culture, subcultures, social class, reference groups/opinion leaders/influencers, and family.

Culture

Shared values, customs, and practices that influence consumption. Example: Black Friday has become a U.S. shopping tradition. Key detail: The deck also describes the importance of beautifully packaged seasonal gifts in Japan.

Subculture

A group within a broader culture with shared interests, identities, or practices. Example: Sneakerheads seek limited-edition Nike or Jordan releases. Key detail: Gaming communities may favor specialized PCs, keyboards, and chairs.

Social class

A person's social and economic position that can influence preferences and spending patterns. Example: Some consumers buy luxury goods to signal status; budget-conscious shoppers may favor Aldi. Key detail: Do not treat the examples as rules that every member of a group follows.

Reference group

A group a consumer uses as a point of comparison or whose choices influence the consumer. Example: A student buys Nike because friends wear it. Key detail: The influence comes from the group's choices and expectations.

Opinion leader

A person whose knowledge or credibility influences others' choices in a product category. Example: A respected running coach recommends HOKA shoes. Key detail: Expertise or respect is central to this example.

Influencer

A person whose content and audience influence followers' product choices. Example: A TikTok creator features a Stanley tumbler, and followers buy the same color. Key detail: The deck distinguishes this content-driven influence from the coach example.

Family influence

The effect of family members on purchase decisions. Example: A child convinces a parent to buy Disney-themed cereal. Key detail: A spouse may favor a practical Honda CR-V over a sporty car for family trips.

Consumer buying process

The six-stage process consumers use to recognize needs, gather information, choose, evaluate, and dispose of products. Example: A car buyer recognizes a transportation need, researches, compares, buys, evaluates, and eventually sells the car. [Added example] Key detail: Order: need recognition; information search; product evaluation; choice and purchase; post-purchase use and evaluation; disposal. Perceived risk and category expertise are key determinants.

Need recognition

Recognizing a gap between actual satisfaction and desired satisfaction. Example: Your current laptop no longer meets your class needs. [Added example] Key detail: A discrepancy must exist between the actual and desired states.

Need want and demand

Study clarification: a need is an underlying requirement; a want is a preferred way to satisfy it; demand is a want supported by purchasing ability. Example: You need transportation, want a particular car, and create demand when you can afford to buy it. [Added example] Key detail: The slide names these terms but does not define them. A consumer may need something without wanting it, such as an unpleasant service.

Information search

Gathering information about possible products and solutions. Example: You recall a previous purchase and read customer reviews. [Added example] Key detail: Distinguish internal sources from external sources.

Internal information

Information retrieved from personal experience and memory. Example: Remembering that your last pair of shoes was comfortable. [Added example] Key detail: The source is already in the consumer's memory.

External personal information

Information obtained from other people through word of mouth. Example: Advice from friends, family, or coworkers. Key detail: WOM means word of mouth.

External impersonal information

Information such as customer reviews rather than direct advice from a personal contact. Example: Reading online customer reviews. Key detail: The deck places customer reviews in this category.

Firm-initiated information

Information provided by the company to inform or persuade customers. Example: Advertising, websites, packaging, displays, and salespeople. Key detail: Recognize the source's connection to the seller.

Product evaluation

Comparing alternatives using personally important criteria. Example: For a car, compare brand reputation, reliability, safety, features, styling, roominess, and price. Key detail: Evaluative criteria are highly subjective. Consumers may evaluate bundles of attributes.

Product choice and purchase

Selecting and buying a product, largely based on perceived value. Example: A shopper chooses a brand because its benefits seem worth its burdens. [Added example] Key detail: The slide presents benefits minus burdens and quality relative to price as value considerations.

Heuristic

A mental shortcut used to simplify a decision. Example: Assuming that higher price means higher quality. Key detail: Other deck examples: brand loyalty and country of origin, such as assuming chocolate must be Belgian.

Post-purchase use and evaluation

Using a product and assessing the purchase after buying it. Example: A buyer checks whether a new product meets expectations. [Added example] Key detail: This stage can include post-purchase dissonance.

Post-purchase dissonance

Doubt or discomfort about whether a purchase was the right decision. Example: After buying an expensive phone, you wonder whether a cheaper one would have been better. [Added example] Key detail: Reassurance, easy returns, warranties, testimonials, support, benefit reminders, and loyalty offers can help.

Disposal of the product

Deciding what happens to a product after use. Example: Recycling, reselling, or throwing away an old item. [Added example] Key detail: The slide contrasts circular and linear supply chains.

Circular versus linear supply chains

Study clarification: a circular system returns products or materials to use; a linear system generally ends in disposal. Example: Repairing or recycling an item versus using it and discarding it. [Added example] Key detail: The slide names the comparison without further definitions.

Segmentation

The process of dividing customers into groups with similar needs. Example: A shampoo company groups customers by dandruff control, repair, hydration, or volume needs. Key detail: The goal is to group similar needs and profile each segment. It helps optimize marketing expenditures by identifying customers likely to respond similarly.

Segmentation approaches

The bases used to define customer groups. Example: Group by behavior, psychographics, demographics, or geography. Key detail: The deck identifies behavioral segmentation as preferred. Geography is named in the deck but not listed in the review guide.

Behavioral segmentation

Grouping consumers by how they behave with or act toward products. Example: Grouping shampoo buyers by the benefit they seek. Key detail: Five bases: benefits sought, usage rate, price sensitivity, loyalty plus profitability, and applications.

Benefits sought

Grouping customers by the particular benefit they want from a product. Example: Shampoo segments include dandruff control, repair, moisturizing, volume, color protection, and natural ingredients. Key detail: The same product category can satisfy different needs.

Usage rate

Grouping consumers by how much or how often they use a product. Example: Heavy, moderate, light, and non-users. Key detail: The deck says heavy users should receive the most attention.

Heavy users

Consumers in the highest-consumption segment. Example: The deck reports that the heaviest soap/detergent consumption segment accounts for 75% of sales; for toilet tissue, 71%. Key detail: These are lecture figures, not current market estimates. The deck says 94% use soap/detergent and 95% use toilet tissue.

Price sensitivity

How strongly purchase decisions respond to price and willingness to pay for quality. Example: Two shoppers like better quality, but only one will pay a premium. [Added example] Key detail: Consumers can prefer higher quality while differing in what they will pay for it.

Loyalty and profitability

Grouping and prioritizing customers using their commitment to the brand and economic value to the firm. Example: A business works to retain its loyal customers and encourage referrals. [Added example] Key detail: The deck prioritizes retaining loyal customers, increasing commitment, and encouraging word of mouth.

Applications

Grouping customers by the uses or tasks for which they use a product. Example: Arm & Hammer focuses on deodorizing carpets, kitty litter, clothes, underarms, and refrigerators. Key detail: Benefits sought asks what outcome a customer wants; applications asks how or where the product is used.

Psychographic segmentation

Grouping customers by activities, interests, opinions, values, attitudes, and lifestyles. Example: Grouping shoppers by their interest in fashion or by a practical family-shopping lifestyle. Key detail: Remember activities, interests, and opinions, plus values, attitudes, and lifestyles.

Demographic segmentation

Grouping customers by personal characteristics. Example: Gender, family lifecycle, income and social class, and ethnicity. Key detail: Psychographics concerns how people live and think; demographics concerns personal characteristics.

Gender segmentation

Using gender-related differences in needs or buying patterns to define groups. Example: The deck uses makeup and household-shopping examples. Key detail: Treat the slide examples as illustrations of possible patterns, not universal claims.

Family lifecycle segmentation

Grouping consumers according to their household or family stage. Example: Young and single; newly married couple; full nest family; empty nest family; solitary. Key detail: These are the five stages listed in the deck, attributed there to Wells and Gruber (1986).

Income and social class segmentation

Grouping consumers by financial resources and social position. Example: The deck lists upper class, middle class, working class, and lower class categories. Key detail: Its specific labels include elite, white collar middle class, affluent working class, blue/khaki collar workers, and poor low class.

Ethnicity segmentation

Using ethnic identity or background as a segmentation characteristic. Example: A firm considers different cultural preferences when defining customer groups. [Added example] Key detail: The deck emphasizes increasing U.S. ethnic diversity and purchasing power.

Geographic segmentation

Study clarification: grouping customers by location. Example: Grouping customers by region or climate. [Added example] Key detail: Named as an approach on STP slide 3, but not developed further or specifically listed in the review guide.

Targeting

Selecting the segments a firm wants to focus on with its products or services. Example: Ferrari focuses on a narrow market segment. Key detail: The goal is to maximize long-term profitability in the selected segments.

Single-segment targeting

Focusing on one segment, often through a niche strategy. Example: Ferrari is the deck's example. Key detail: Can allow a dominant share in a small segment and high margins. The deck gives about $80,000 profit per car as a lecture illustration.

Multi-segment targeting

Targeting multiple segments, often with different products or messages for different needs. Example: McDonald's targets value seekers, families with kids, convenience-driven adults, and Gen Z/culture-driven consumers. Key detail: For families, the experience matters; for convenience-driven adults, saving time matters.

All-segments targeting

Attempting to serve every segment in the market. Example: Sansiri offers housing across high, medium, and low prices and across houses, townhouses, and condos. Key detail: The deck warns that a lack of focus can cause failure.

Positioning

Designing an offer and image to occupy a distinct and valued place in target customers' minds. Example: Volvo is associated with safety. Key detail: Know the target customer, main competitors, and how the brand is similar to and different from competitors.

Point of difference or POD

A distinctive benefit or attribute that is unique and hard to replicate. Example: A difficult-to-copy advantage helps distinguish a brand from competitors. [Added example] Key detail: The deck's two defining criteria are unique and hard to replicate.

Single-benefit positioning

Positioning around one primary benefit or attribute. Example: Volvo: safety. Maytag: reliability. Key detail: Other examples: Visa's worldwide acceptance, Southwest's low price, and Montblanc's prestige.

Types of single-benefit positioning

Single-benefit positioning may emphasize an attribute, functional benefit, monetary benefit, or psychological benefit. Example: Functional: Visa acceptance; monetary: Southwest price; psychological: Montblanc luxury. Key detail: The deck identifies safety and reliability as single-attribute examples.

Multi-benefit positioning

Positioning around two or more primary attributes. Example: Ivory Soap: "99 44/100 pure" and "it floats." Key detail: Identify both attributes rather than reducing the message to one benefit.

Holistic positioning

Positioning around overall performance or an overall brand impression. Example: Tylenol: "the brand most hospitals trust." Key detail: The emphasis is the overall offering or reputation.

Positioning statement

A concise statement identifying the offering, category, target customer, and primary reason to choose it. Example: [Offering] is the best [product category] for [target customers] because [primary reason]. Key detail: This is the deck's non-comparative positioning statement format.

STP sequence

Segmenting forms groups; targeting selects groups; positioning shapes how those selected customers perceive the offer. Example: Group shampoo customers by needs, choose the hydration segment, and emphasize moisture benefits. [Added example] Key detail: Do not confuse creating a segment with choosing to serve it.

Product

Anything offered to a market for attention, acquisition, use, or consumption that might satisfy a need. Example: An air conditioner provides cooling. Key detail: The definition includes more than physical goods.

Brand

A product plus dimensions that differentiate it from other products satisfying the same need. Example: Two products can meet the same need while their brands communicate different benefits or images. [Added example] Key detail: A brand is always more than the product alone in the deck's explanation.

Customer value hierarchy

Five levels of value, from the fundamental need to possible future transformations. Example: For an air conditioner: comfort, basic functioning, expected attributes, distinguishing additions, and future possibilities. Key detail: Order: core benefit, generic product, expected product, augmented product, potential product. Slide 8 repeats "Level 4"; potential product is the fifth level in the sequence.

Core benefit

The fundamental need consumers satisfy by consuming the product. Example: For an air conditioner: cooling and comfort. Key detail: Ask what underlying need the customer is satisfying.

Generic product

A basic product with only the attributes necessary to function and no distinguishing features. Example: Air conditioner: sufficient cooling capacity, acceptable energy efficiency, and adequate air intakes and exhausts. Key detail: This is the basic functioning version.

Expected product

The attributes buyers reasonably expect and agree to when purchasing. Example: Air conditioner: at least two cooling speeds, removable filter, environmentally friendly refrigerant, cord at least 60 inches long, and warranty. Key detail: What is expected depends on the example and market context.

Augmented product

Additional attributes, benefits, or services that distinguish the product from competitors. Example: Air conditioner: touch-pad controls, temperature display, and a toll-free customer-service number. Key detail: The defining idea is an addition that differentiates the offering.

Potential product

All augmentations or transformations the product might undergo in the future. Example: Air conditioner: silent operation, completely balanced room cooling, and complete energy self-sufficiency. Key detail: Future possibilities differ from attributes already offered.

New product development feedback loop

An iterative process of building, testing, gathering feedback, and revising a product. Example: Build a model, test it, show it to customers, collect reactions, and revise. Key detail: Repeat build-test-feedback-revise. The deck emphasizes that customers may not know what they want until they see or experience it.

Prototype and MVP

A prototype is a version or model used for testing; MVP means minimum viable product, an initial version used to learn from users. Example: Show customers an early model before committing to a final design. [Added example] Key detail: The slide refers to testing the prototype as an MVP. Reactions include likes, dislikes, willingness to pay, and purchase intent.

Willingness to pay or WTP

How much a customer is willing to pay for an offering. Example: Ask customers what price they would pay for a prototype. [Added example] Key detail: WTP is one type of customer feedback in the development loop.

Purchase intent

A customer's stated likelihood or intention to buy. Example: Ask whether customers would buy the tested product. [Added example] Key detail: Purchase intent differs from liking a product and from an actual purchase.

Product quality

The deck's six dimensions for evaluating how well a product and its experience serve customers. Example: A product can perform well but have frustrating support or a poor buying process. [Added example] Key detail: Know performance, conformance to specifications, features, customer support, process quality, and aesthetic design.

Performance

How well the product performs its task. Example: How effectively an air conditioner cools a room. [Added example] Key detail: Focus on the main job being done.

Conformance to specifications

Whether the product performs reliably and provides customer satisfaction, as framed in the deck. Example: An appliance consistently works as promised. [Added example] Key detail: Distinguish reliable delivery of promised performance from the presence of extra features.

Features

The product's physical characteristics, latest capabilities, and "wow" attributes. Example: A device offers a foldable screen or split-screen multitasking. Key detail: The slide's "iPhone Duo" specifications are a classroom illustration, not verified product information.

Customer support

The assistance a firm provides to customers. Example: Helping a buyer troubleshoot a product. [Added example] Key detail: Ask whether the firm supports the customer.

Process quality

How pleasant or frustrating the process of buying and using the product is. Example: A smooth checkout and easy setup. [Added example] Key detail: This concerns the experience of obtaining and using the product.

Aesthetic design

How design adds pleasure to buying or using a product. Example: An attractive, comfortable-to-use product design. [Added example] Key detail: Focus on the enjoyment created by design.

Intangibility

Services cannot be inspected through the five senses in the same way as a physical product before purchase. Example: You cannot hold a haircut service in your hand before receiving it. [Added example] Key detail: The deck describes services as not subject to the five senses.

Perishability

A service cannot be stored for later sale or consumption. Example: An unused appointment slot cannot be saved and sold tomorrow as yesterday's slot. [Added example] Key detail: Unused service capacity is lost.

Variability

Service performance is not uniform across different points in time. Example: The same restaurant may deliver different service on two visits. [Added example] Key detail: Quality can vary across service encounters.

Inseparability

The production and consumption of a service occur together. Example: A haircut is produced while the customer receives it. [Added example] Key detail: Know this separately from perishability.

Service lesson 1 value is not price

Value equals benefits or gains minus burdens or losses. Example: A more expensive service can provide greater value if it saves enough time and effort. [Added example] Key detail: Formula: Value = benefits − burdens. Burdens include more than the price alone.

Service lesson 2 disrespect pervades service failure

Disrespect commonly underlies or accompanies a failed service experience. Example: An employee dismisses a customer's complaint. [Added example] Key detail: How the customer is treated is part of service quality.

Service lesson 3 customers are detectives

Customers use clues about processes, atmosphere, and people to judge service quality. Example: A customer notices wait times, cleanliness, and employee behavior. [Added example] Key detail: The three dimensions are functional, mechanistic, and humanistic.

Functional service quality

The process dimension of service quality. Example: An accurate order and an efficient check-in process. [Added example] Key detail: Functional means processes in this service-quality framework.

Mechanistic service quality

The atmosphere dimension of service quality. Example: Lighting, music, scent, or seating influences the service experience. [Added example] Key detail: Connect this dimension to sensory marketing.

Sensory marketing

Using hearing, sight, touch, smell, and taste to shape the customer experience. Example: A restaurant uses lighting, music, and food aromas to shape its atmosphere. [Added example] Key detail: Know all five senses listed in the slide.

Humanistic service quality

The people dimension of service quality, especially front-line personnel. Example: An employee responds promptly and shows empathy. [Added example] Key detail: Three key qualities: competence, responsiveness, and empathy.

Competence responsiveness and empathy

Competence means ability to do the job; responsiveness means willingness and promptness in helping; empathy means understanding the customer's perspective. Example: A capable employee quickly resolves a problem while acknowledging the customer's frustration. [Added example] Key detail: These explain the personnel qualities named in the deck.

Service lesson 4 employees are volunteers

Employees choose how much discretionary effort to contribute beyond basic requirements. Example: An employee voluntarily takes extra care to solve a customer's problem. [Added example] Key detail: The slide's metaphor concerns extra effort, not unpaid employment. Humane organizational values help sustain it.

Discretionary effort

Extra effort an employee chooses to give rather than effort that can simply be required. Example: A server anticipates a guest's needs without being told. [Added example] Key detail: The challenge is to keep the "volunteer volunteering."

Service lesson 5 everyone builds the service brand

Every employee shares responsibility for a strong service brand. Example: Different departments coordinate to keep a service promise. [Added example] Key detail: Internal brand development and employee buy-in matter.