Class 1 & 2 - Social Factors

In addition to cultural factors, social factors such as reference groups, family, and social roles and
statuses affect our buying behavior.

Reference Groups - A person’s reference groups are all the groups that have a direct (face-to-face)
or indirect influence on their attitudes or behavior. Groups having a direct influence are called
membership groups.

Some of these are primary groups with whom the person interacts fairly continuously and
informally, such as family, friends, neighbors, and coworkers. People also belong to secondary
groups, such as religious, professional,and trade-union groups, which tend to be more formal and
require less continuous interaction.

Reference groups influence members in at least three ways. They expose an individual to new
behaviors and lifestyles, they influence attitudes and self-concept, and they create pressures for
conformity that may affect product and brand choices. People are also influenced by groups to
which they do not belong. Aspirational groups are those a person hopes to join; dissociative groups
are those whose values or behavior an individual rejects.

Where reference group influence is strong, marketers must determine how to reach and influence
the group’s opinion leaders. An opinion leader is the person who offers informal advice or
information about a specific product or product category, such as which of several brands is best or
how a particular product may be used.5

Opinion leaders are often highly confident, socially active, and frequent users of the category.
Marketers try to reach them by identifying their demographic and psychographic characteristics,
identifying the media they read, and directing messages to them.

Class 3&4 - Occupation and Economic Circumstances

Occupationalso influences consumption patterns. Marketers try to identify the occupational groups
that have above-average interest in their products and services and even tailor products for certain
occupational groups: Computer software companies, for example, design different products for
brand managers, engineers, lawyers, and physicians. As the recent prolonged recession clearly
indicated, both product and brand choice are greatly affected by economic circumstances like
spendable income(level, stability, and pattern over time), savings and assets (including the
percentage that is liquid), debts, borrowing power, and attitudes toward spending and saving.
Although luxury-goods makers such as Gucci, Prada, and Burberry may be vulnerable to an economic
downturn, some luxury brands did surprisingly well in the latest recession.24 If economic indicators
point to a recession, marketers can take steps to redesign, reposition, and reprice their products or
introduce or increase the emphasis

Class 4 & 5 - Information Search

Surprisingly, consumers often search for only limited information. Surveys have shown that for
durables, half of all consumers look at only one store, and only 30 percent look at more than one
brand of appliances. We can distinguish between two levels of engagement in the search. The milder
search state is called heightened attention. At this level a person simply becomes more receptive to
information about a product. At the next level, the person may enter an active information search:
looking for reading material, phoning friends, going online, and visiting stores to learn about the
product. Marketers must understand what type of information consumers seek—or are at least
receptive to—at different times and places.55 Unilever, in collaboration with Kroger, the largest U.S.
retail grocery chain, has learned that meal planning goes through a three-step process: discussion of
meals and what might go into them; choice of exactly what will go into a particular meal, and finally
purchase. Mondays turn out to be critical days for planning for the week. Conversations at breakfast
time tend to focus on health, but later in the day, at lunch, discussion centers more on how meals
could possibly be repurposed for leftovers.

Information Sources Major information sources to which consumers will turn fall into four groups:

• Personal. Family, friends, neighbors, acquaintances

• Commercial. Advertising, Web sites, e-mails, salespersons, dealers, packaging, displays

• Public. Mass media, social media, consumer-rating organizations

• Experiential. Handling, examining, using the product

The relative amount of information and influence of these sources vary with the product category
and the buyer’s characteristics. Generally speaking, although consumers receive the greatest
amount of information about a product from commercial—that is, marketer-dominated—sources,
the most effective information often comes from personal or experiential sources or public sources
that are independent authorities. Each source performs a different function in influencing the buying
decision. Commercial sources normally perform an information function, whereas personal sources
perform a legitimizing or evaluation function. For example, physicians often learn of new drugs from
commercial sources but turn to other doctors for evaluations. Many consumers alternate between
going online and offline (in stores) to learn about products and brands.

Class 6 &7 – Business Markets

More dollars and items change hands in sales to business buyers than to consumers. Consider the
process of producing and selling a simple pair of shoes. A broad spectrum of materials and material
combinations are used today in shoe manufacturing. Leathers, synthetics, rubber and textile
materials are counted among the basic upper materials. Each material has its own specific character
and they differ not only in their appearance but also in their physical properties, their service life and
treatment needs. The choice of shoe material significantly influences the life of the footwear, and in
many cases dictates its use. For leather shoes, hide dealers must sell hides to tanners, who sell
leather to shoe manufacturers, who sell shoes to wholesalers, who sell shoes to retailers, who finally
sell them to consumers. Each party in the supply chain also buys many other goods and services to
support its operations.

Class 8&9 – Segmentation

Bases for Segmenting Consumer Markets

Market segmentation divides a market into well-defined slices. A market segment consists of a
group of customers who share a similar set of needs and wants. The marketer’s task is to identify the
appropriate number and nature of market segments and decide which one(s) to target. We use two
broad groups of variables to segment consumer markets. Some researchers define segments by
looking at descriptive characteristics—geographic, demographic, and psychographic—and asking
whether these segments exhibit different needs or product responses. For example, they might
examine the differing attitudes of “professionals,” “blue collars,” and other groups toward, say,
“safety” as a product benefit. Other researchers define segments by looking at behavioral
considerations, such as consumer responses to benefits, usage occasions, or brands, then seeing
whether different characteristics are associated with each consumer response segment. For
example, do people who want “quality” rather than “low price” in an automobile differ in their
geographic, demographic, and/or psychographic makeup? Regardless of which type of segmentation
scheme we use, the key is adjusting the marketing program to recognize customer differences.

Class 10 – Targeting

Not all segmentation schemes are useful. We could divide buyers of table salt into blond and
brunette customers, but hair color is undoubtedly irrelevant to the purchase of salt. Furthermore, if
all salt buyers buy the same amount of salt each month, believe all salt is the same, and would pay
only one price for salt, this market is minimally segmentable from a marketing point of view. To be
useful, market segments must rate favorably on five key criteria:

• Measurable. The size, purchasing power, and characteristics of the segments can be measured.

• Substantial. The segments are large and profitable enough to serve. A segment should be the
largest possible homogeneous group worth going after with a tailored marketing program. It would
not pay, for example, for an automobile manufacturer to develop cars for people who are under four
feet tall.

• Accessible. The segments can be effectively reached and served.

• Differentiable. The segments are conceptually distinguishable and respond differently to different
marketing mix elements and programs. If married and single women respond similarly to a sale on
perfume, they do not constitute separate segments.

• Actionable. Effective programs can be formulated for attracting and serving the segments.