Consumer Behavior

Revision Sheet
20.12.2023

Exam Scheme
● Short answer, ideally 2 paragraphs
● Essay questions

1) Difference between drive theory and expectancy theory.

Drive theory and expectancy theory are distinct psychological perspectives that offer insights
into human motivation. Drive theory, rooted in early behavioral psychology, posits that
behavior is primarily motivated by biological needs and instincts. Pioneered by psychologists
like Clark Hull, it suggests that internal drives, such as hunger or thirst, propel individuals to
act in ways that alleviate physiological tensions. In essence, drive theory emphasizes the role
of innate impulses in driving behavior.

On the other hand, expectancy theory, associated with Victor Vroom, takes a cognitive
approach, asserting that individuals are motivated by their expectations of achieving desired
outcomes. It highlights the importance of the link between effort, performance, and the belief
that such efforts will lead to specific rewards. Unlike drive theory, expectancy theory goes
beyond basic biological needs, focusing on how cognitive processes and perceptions of future
events shape motivation. In summary, while drive theory emphasizes instinctual drives,
expectancy theory underscores the significance of cognitive factors in motivating behavior.

2) Factors that motivate a person.

Human motivation is a dynamic interplay of various factors that can be broadly categorized
into intrinsic and extrinsic motivators. Intrinsic motivation stems from internal sources, such
as personal satisfaction, a sense of accomplishment, or the inherent enjoyment of an activity.
This type of motivation is often associated with tasks that align with an individual's interests
and values, fostering a genuine and sustained commitment to achieving goals. On the other
hand, extrinsic motivation is driven by external factors, including tangible rewards,
recognition, or societal expectations. These external incentives can influence behavior by
providing tangible benefits or fulfilling external demands.

Furthermore, the social context plays a significant role in motivation. Relationships, group
dynamics, and cultural influences contribute to a person's drive. Social connections and a
sense of belonging can serve as powerful motivators, influencing behavior to meet societal
norms or gain approval from others. Ultimately, understanding human motivation requires a
nuanced consideration of both internal and external factors, acknowledging the intricate web
of influences that drive individuals to act in certain ways.

3) How to create value for customers?

Creating value for customers is a fundamental aspect of business success and involves
meeting or exceeding customer expectations in a way that distinguishes a product or service
from competitors. One key strategy is innovation, introducing new features or technologies
that address customer needs or pain points. This not only attracts new customers but also
retains existing ones who seek cutting-edge solutions. Quality is another crucial factor;
delivering reliable and well-crafted products builds trust and loyalty, contributing to the
perceived value.

Customer service plays a pivotal role in value creation. Providing exceptional support,
addressing issues promptly, and ensuring a positive overall experience contribute
significantly to customer satisfaction. Moreover, customization and personalization allow
businesses to tailor products or services to individual preferences, enhancing the perceived
value for customers. Finally, effective communication about the benefits and features of a
product or service, through marketing and other channels, helps customers understand and
appreciate the value proposition. In essence, creating value involves a combination of
innovation, quality, customer service, and communication to build strong and lasting
relationships with customers.

4) What is market segmentation?

Market segmentation is a strategic approach that involves dividing a heterogeneous target

market into smaller, more homogeneous groups based on specific characteristics. This
segmentation allows businesses to better understand and address the diverse needs,
preferences, and behaviors of distinct consumer segments. By tailoring marketing strategies,
products, and messages to each segment, companies can enhance their overall effectiveness
and competitiveness in the marketplace.

The criteria for segmentation can vary widely, including demographic factors (such as age,
gender, income), psychographic factors (such as lifestyle, values, personality), geographic
location, and behavioral patterns (such as usage, loyalty). The goal of market segmentation is
to identify and target segments that are likely to respond positively to a particular marketing
mix, ensuring that resources are allocated efficiently and that the product or service resonates
with the intended audience. In summary, market segmentation is a strategic tool that enables
businesses to navigate the complexities of diverse consumer markets by categorizing them
into more manageable and actionable segments.

5) Types of market segmentation. Provide examples.

Market segmentation can be categorized into various types based on different criteria. One
common type is demographic segmentation, which involves dividing the market based on
demographic factors such as age, gender, income, education, and family size. For instance, a
company targeting teenagers might develop products and marketing strategies that align with
their specific interests and preferences.
Psychographic segmentation focuses on consumers' lifestyles, values, attitudes, and interests.
This type of segmentation recognizes that individuals within the same demographic group
may have diverse psychographic profiles. For example, a brand might appeal to
environmentally conscious consumers by promoting eco-friendly practices and products.
Geographic segmentation divides the market based on geographical location, taking into
account factors like region, climate, and population density. An example could be a company
adapting its product offerings to suit the preferences and needs of consumers in different
regions or countries. Behavioral segmentation, another type, categorizes consumers based on
their behaviors, such as purchasing habits, product usage, and brand loyalty. For instance, a
company might target frequent users of its products with loyalty programs or incentives to
encourage continued patronage. In summary, these segmentation types offer businesses
versatile tools to tailor their marketing efforts to specific characteristics and behaviors within
their target audience.

6) Phases of consumer involvement.

Consumer involvement refers to the degree of interest, personal relevance, and commitment
that an individual has toward a particular product or service. Understanding the phases of
consumer involvement is crucial for marketers to tailor their strategies effectively. The first
phase is awareness, where consumers become acquainted with a product or service. This
initial exposure sparks their interest and prompts them to seek more information.

The second phase is interest, where consumers actively seek information to understand the
product better. They may compare alternatives, evaluate features, and assess how the offering
aligns with their needs. The third phase is consideration, during which consumers weigh the
pros and cons of different options and start forming preferences. Marketers can influence this
phase by highlighting unique selling points and demonstrating how the product meets specific
needs. Finally, the decision phase involves the actual purchase. Consumers make a choice
based on the information gathered and their evaluation of alternatives. Post-purchase,
consumers may enter a phase of satisfaction or dissatisfaction, impacting their future
engagement with the brand. Recognizing and addressing these phases helps marketers
develop targeted strategies that guide consumers smoothly through the decision-making
process.

7) Emotional and transactional bond.

Building both emotional and transactional bonds with customers is crucial for establishing
strong and lasting relationships. An emotional bond involves creating a connection with
customers on a personal and psychological level. This connection is often based on shared
values, positive experiences, and a sense of belonging. Companies strive to evoke emotions
such as trust, loyalty, and joy, fostering a deep and meaningful connection that goes beyond
the transactional aspects of a purchase. For example, a brand might create emotional bonds
through heartfelt advertising campaigns or by supporting charitable causes that resonate with
their target audience.
On the other hand, a transactional bond revolves around the more tangible aspects of the
customer-business relationship, primarily centered on the exchange of goods or services for
payment. This bond is transaction-focused, emphasizing efficiency, reliability, and the
fulfillment of customer needs. Transactional bonds are crucial for customer satisfaction and
retention, as they ensure that the product or service meets expectations and is delivered in a
timely and dependable manner. Striking the right balance between emotional and
transactional bonds is key for businesses seeking to not only make successful transactions but
also to create a meaningful and enduring connection with their customers.

8) The variables of Psychographics.

Psychographics involves the study of individuals' lifestyles, values, attitudes, interests, and
personality traits to understand their behavior and preferences. The variables of
psychographics are diverse and provide marketers with valuable insights into the nuanced
aspects of consumer decision-making. Lifestyles encompass how individuals live, spend their
time, and make choices, offering a glimpse into their daily routines and habits. For example,
a brand targeting health-conscious consumers might consider psychographic variables related
to exercise routines, dietary preferences, and wellness practices to tailor their marketing
messages effectively.

Values and attitudes play a significant role in psychographics, influencing consumer choices
based on their belief systems and perceptions. Understanding the values a particular segment
holds can guide businesses in crafting messages that resonate with those beliefs. For instance,
a company promoting sustainability may appeal to environmentally conscious consumers by
aligning their products with eco-friendly practices. These psychographic variables go beyond
demographics, allowing marketers to create more personalized and targeted strategies that
resonate with the unique characteristics of their audience.

9) Biogenic and psychogenic needs.

Biogenic and psychogenic needs are two distinct categories that help explain human
motivations and desires. Biogenic needs are essential, basic requirements that are necessary
for survival and physical well-being. These needs include fundamental elements like food,
water, shelter, and sleep. Biogenic needs are considered innate and instinctive, rooted in the
biological necessities of human life. Businesses often address biogenic needs in their
products and services, recognizing that satisfying these fundamental requirements is a
primary concern for consumers.

In contrast, psychogenic needs are psychological desires that are shaped by culture, society,
and individual experiences. These needs go beyond the basic survival instincts and are often
driven by social and emotional factors. Examples of psychogenic needs include the desire for
status, recognition, self-esteem, and personal fulfillment. Marketers often tap into
psychogenic needs by emphasizing how their products or services can enhance customers'
lifestyles, self-image, or overall well-being, appealing to the emotional and social aspects of
human motivation. Understanding the interplay between biogenic and psychogenic needs is
crucial for businesses to develop comprehensive strategies that address both the basic
necessities and the higher-level aspirations of their target audience.

10) Cultural values and hierarchy of needs.

Cultural values play a significant role in shaping individuals' perceptions, behaviors, and
priorities within a society. The hierarchy of needs, proposed by Abraham Maslow, outlines a
psychological theory that categorizes human needs into five levels: physiological, safety,
social, esteem, and self-actualization. Cultural values influence how individuals prioritize and
seek to fulfill these needs, creating variations in the hierarchy across different societies. For
example, cultures that prioritize collectivism may place a higher emphasis on social needs,
valuing community and interpersonal relationships over individual accomplishments. On the
other hand, cultures emphasizing individualism may prioritize esteem and self-actualization
needs, valuing personal achievements and self-expression.

Understanding the cultural context is crucial for businesses as they tailor their products,
marketing strategies, and communication to resonate with diverse consumer bases. For
instance, a company operating in a culture that highly values family and social connections
may design products and campaigns that emphasize these aspects, aligning with the cultural
values of the target audience. Recognizing the influence of cultural values on the hierarchy of
needs enables businesses to create more culturally sensitive and effective approaches that
align with the aspirations and priorities of consumers in different societies.