Leg 2 from Lisbon to Cape Town. Theme 1: Segmentation Consumer Markets. Part 3.
Hope you have a good weekend. During Leg 2, the Volvo Ocean Race teams do not stop to sail on the weekends, neither do I. We will continue this day with the topic Psychological processes affecting consumer behavior.
Among the factors influencing consumer behavior, psychological factors are divided into 4 categories: motivation, perception, learning, and memory.
- Motivation
Motivation refers to the motives that contribute to our purchasing actions. We all have many needs at any given time. These motives stem from the conscious or unconscious goal or satisfying our “needs” and “wants”.
Needs are the basic, often instinctive human forces that motivate us to do something. Wants are the “needs” that we learn during our lifetime.
A “need” or a “want” becomes a motive when it is aroused to a sufficient level of intensity to drive us to act. Motivation has both direction—we select one goal over another—and intensity—we pursue the goal with more or less vigor.
Some needs are biogenic; they arise from physiological states of tension such as hunger, thirst, or discomfort. Other needs are psychogenic; they arise from psychological states of tension such as the need for recognition, esteem, or belonging. Another group of needs may be functional, such as the need for transportation. People are usually motivated by the benefit of satisfying some combination of needs, which may be biogenic, psychogenic, conscious or unconscious, functional, etc.
Three of the best-known theories of human motivation—those of Sigmund Freud, Abraham Maslow, and Frederick Herzberg—carry quite different implications for consumer analysis and marketing strategy.
FREUD’S THEORY. Sigmund Freud assumed the psychological forces shaping people’s behavior are largely unconscious, and that a person cannot fully understand his or her own motivations. Based on Freud´s Theory, the starting point for understanding consumer behavior is the stimulus-response model shown below:
Marketing and environmental stimuli enter the consumer’s consciousness, and a set of psychological processes combine with certain consumer characteristics to result in decision processes and purchase decisions. The strategists should work with the marketer in order to help him/her to understand how to fit his work with the strategy, and align the strategy with the marketing task of understanding what happens in the consumer’s consciousness between the arrival of the outside marketing stimuli and the ultimate purchase decisions.
MASLOW’S THEORY. Abraham Maslow developed the classic model called the Pyramid of Maslow. This model pursued to explain why people could meet their needs according to priorities, and why people are driven by particular needs at particular times.
Maslow stated that human needs are arranged in a hierarchy from most to least pressing physiological needs, safety needs, social needs, esteem needs, and self-actualization needs. Maslow maintained that the lower, physiological and safety needs dominate human behavior and must be satisfied before the higher, socially acquired needs (or wants) become meaningful. The highest need, self-actualization is the culmination of fulfilling all the lower needs and reaching to discover the true self.
“People will try to satisfy their most important need first and then try to satisfy the next most important. For example, a starving man (need 1) will not take an interest in the latest happenings in the art world (need 5), nor in how he is viewed by others (need 3 or 4), nor even in whether he is breathing clean air (need 2), but when he has enough food and water, the next most important need will become salient”.
For example, if we wish to target to help the majority of the population, we must try to sell products, which satisfy the basic needs of the Maslow´s bottom of the pyramid. This is the case of the retailers Dollar Store, Dollar Tree, Family Dollar, Dollarama and other similar retailers with the same value proposition.
If we wish to sell our products to the top of the Pyramid segment or high-end consumers, we must understand we have to address a different segment of a population, which has already fulfilled all the four levels below. Some products for this segment could be a golf club or contemporary museum membership, or a Patek Phillipe watch. And now I will use the example of Reserve Roasteries Concept at Starbucks. Starbucks is opening a new segment for all of us. Starbucks is offering a highly customized and elevated experience targetting the premium customers who know about coffee. According to a Forbes article from last year:
“Starbucks is looking at potentially 10 Roasteries, offering different types of coffee experiences: pour-over, siphon, clover, specifically roasted Reserve coffees on-site that you are able to buy from a scoop bar, and interactive experience with bars and baristas. The Roasteries have added a value-added experience: the Italian food from Princi´s. Second in the pyramid structure is the segment Reserve Stores, which will have twice the square footage of a normal store. The company is hoping to open approximately 500 new Reserve stores targeting the upper-middle income group, offering the premium Roastery experience but at a lower cost. Through its new store portfolio, the company hopes to address the problems of competition and ubiquity by delivering customers the highest quality coffee”.
The Maslow´s theory about needs and motives has evolved into more strategic concepts for the use of strategists and marketers. The eight fundamental purchase and usage motives by Rossiter and Percy, identifies two groups of motives, the negatively originated (informational) and the positively originated (transformational).
HERZBERG’S THEORY. Frederick Herzberg developed a two-factor theory that distinguishes dissatisfiers (factors that cause dissatisfaction) from satisfiers (factors that cause satisfaction). The absence of dissatisfiers is not enough to motivate a purchase; satisfiers must be present. For example, a computer that does not come with a warranty would be a dissatisfier. Yet the presence of a product warranty would not act as a satisfier or motivator of a purchase because it is not a source of intrinsic satisfaction. Ease of use would be a satisfier.
2. Perception
A motivated person is ready to act—how is influenced by his or her perception of the situation. Perceptions are more important than reality because perceptions affect consumers’ actual behavior. Perception is the process by which we select, organize, and interpret information inputs to create a meaningful picture of the world. The term perception refers to the personalized way we sense, interpret and comprehend various stimuli. Let me share with you the model of the consumer perception:
This model suggests there are several key concepts in the consumer perception process we have to understand and digest very well:
- Stimulus: A stimulus is a physical information we receive through our senses. Examples: we can see a concert ad in a Facebook post of my best friend. We can perceive the smell of the leather of a new car. We can listen to the purr of a car engine. All those examples are stimulus examples. Objects of physical nature such as an advertising commercial, or a price tag on a pair of shoes, or a song stimulate our senses.
- Perceptual Screens:
The second key element in perception is the personalized way of sensing and interpreting data or information. There is two type of perceptual screens; physiological and psychological. The Physiological screens comprise the five senses: sight, hearing, touch, taste, and smell. The senses detect the incoming information and measure the dimension and intensity of the physical stimuli. Each consumer uses psychological screens to evaluate, filter and personalize information according to subjective emotional standards. These screens evaluate information on innate factors, such as the consumer´s personality and instinctive human needs and learned factors, such as self-concept, interests, attitudes, beliefs and past experiences.
For example,
I learned to discover the taste of a macaron or luxemburgerli when I was living in Zurich. Before that, I had no idea the macarons even existed. I passed in front of Confiserie Sprungli, a famous chocolatier and pastry shop in Paradeplatz every single day, just because I had to switch the tram in that location stop. I could see Sprungli shop twice a day, every day on my way to and from my job offices, and I had the opportunity to buy macarons or luxemburgerlis every day. A luxurious macaron turned to be a quotidian part of my lifestyle. For me, there was nothing better than buying those little macarons, an indulgence adapted by the sense of seeing the products every day.
Self-concept 
is the image we have of who we are and who we no longer want to be. For example, when I was recently graduated as a civil engineer and started to work as that, I started to discover for sure I wanted to do something different. I had no idea at that time I wanted to become a strategist and writer, but I knew something has to change. I decided to study business administration, and now I am sure my “own self-concept” has nothing to do with a technical engineering background.
Beliefs and Attitudes: 
Through experience and learning, people acquire beliefs and attitudes. These in turn influence buying behavior. A belief is a descriptive thought that a person holds about something. Just as important are attitudes, a person’s enduring favorable or unfavorable evaluations, emotional feelings, and action tendencies toward some object or idea. People have attitudes toward almost everything: religion, politics, clothes, music, food. Attitudes put us into a frame of mind: liking or disliking an object, moving toward or away from them
- Cognition: The third key element in perception is comprehending the stimulus. Once we detect the stimulus and allow it through our perceptual screens (either physical or psychological) we can comprehend it and accept it. In this moment the stimulus reaches the consumer reality zone.
- Mental Files: The mind is like a memory bank and the stored memories in our minds are called the mental files.
Finally, people emerge with different perceptions of the same object because of three perceptual processes: selective attention, selective distortion, and selective retention.
3. Learning
When we act, we learn. Learning induces changes in our behavior arising from experience. Learning is a relatively permanent change in thought process or behavior that occurs because of reinforced experience. Most human behavior is learned, although much learning is incidental. Learning theorists believe learning is produced through the interplay of drives, stimuli, cues, responses, and reinforcement.
A drive is a strong internal stimulus impelling action. Cues are minor stimuli that determine when, where, and how a person responds. For example, my experience as a macaron or luxemburgerli buyer at Sprungli was so rewarding that every time I see macarons in a store, I want to buy them. I have generalized my response to similar stimuli in other stores. A countertendency to generalization is discrimination. Discrimination means we have learned to recognize differences in sets of similar stimuli and can adjust our responses accordingly.
Learning and persuasion are closely linked. As strategists, we can recommend the use of persuasion to marketers in order to build demand for a product by associating it with strong drives, using motivating cues, and providing positive reinforcement. A new company can enter the market by appealing to the same drives competitors use and by providing similar cues, because buyers are more likely to transfer loyalty to similar brands (generalization); or the company might design its brand to appeal to a different set of drives and offer strong cue inducements to switch (discrimination).
Learning produces our habits and skills and leads to brand loyalty. It also contributes to the development of interest, attitudes, beliefs, preferences, prejudices, emotions and standards of conducts. A habit is the acquired behavior pattern that becomes nearly or completely involuntary. A habit is the natural extension of learning. We really are creatures of habit. Most consumer behavior is habitual for three reasons: It is safe, simple and essential. 
In order to produce loyalty in our clients, we have to understand first what is loyalty. Loyalty is the client´s conscious or unconscious decision expressed through intention or behavior to repurchase a brand continually. To develop our clients’ loyalty is very difficult today due to consumer´s increased sophistication and to the numerous new competitors which provoke habit-breaking. Emotions: The power of emotions in consumer decision making is incredible. Consumer response is not cognitive and rational, but much may be emotional and invoke different kinds of feelings. A product may make a consumer feel proud, excited, or confident. A service may create feelings of amusement, disgust, or wonder.
Learning produces attitudes and interest. An attitude is our acquired mental position regarding some idea or object. It is the positive or negative evaluations, feelings or action tendencies that we learn and cling to.
4. Memory.
Cognitive psychologists distinguish between short-term memory (STM)—a temporary and limited repository of information—and long-term memory (LTM)—a more permanent, essentially unlimited repository. All the information and experiences we encounter as we go through life can end up in our long-term memory.
Memory encoding describes how and where information gets into memory. The strength of the resulting association depends on how much we process the information at encoding (how much we think about it, for instance) and in what way. In general, the more attention we pay to the meaning of information during encoding, the stronger the resulting associations in memory will be.
We will stop here. Tomorrow we will continue with the next topic: Understanding the consumer buying process.
Cheers!
Source References:
http://www.mypearsonstore.com/bookstore/marketing-management-0133856461
https://www.mhprofessional.com/9780078028960-usa-m-advertising
http://managementstudyguide.com/psychological-factors-affecting-consumer-behaviour.htm
http://businessjargons.com/psychological-factors-influencing-consumer-behavior.html
http://smallbusiness.chron.com/psychological-factors-influence-consumer-buying-behavior-80618.html
https://www.gktoday.in/personal-factors-affecting-buyers-behavior/
https://bizfluent.com/list-7599973-psychological-influence-consumer-buying-behavior.html
http://marketmedialife.blogspot.com/2012/11/marketing-101-pyschological-factors-of.html
http://www.entrepreneurshipsecret.com/how-psychological-factors-affects-consumer-behaviour/
https://www.spruengli.ch/cms/en/
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Eleonora Escalante Strategy 