Summary of Marketing Strategies, Branding, and Consumer Behavior

## Introduction Consumer behaviour explores why and how people make buying choices. Understanding these decisions helps businesses identify customer needs and create better products and offers — but not through advertising or branding strategies (those topics are covered elsewhere). This guide focuses on the psychological, social, personal and economic factors that shape buyer behaviour and how firms can segment markets more effectively than by income alone. ## The Stimulus–Response Model of Buyer Behaviour Kotler described buyer behaviour using a stimulus-response framework: external stimuli influence a buyer’s internal processes, which generate responses (buying decisions). > Definition: The stimulus-response model explains how marketing and environmental stimuli enter a consumer’s decision process, are filtered by internal characteristics, and lead to a purchase (response). ### Parts of the model - Stimuli: External inputs such as product features, price, place, and non-marketing environmental forces (economic, political, technological, social). - Buyer’s black box: The internal processes (perception, motives, attitudes, personality, learning) that determine how a consumer reacts to stimuli. - Response: The consumer’s purchase decision, brand choice, purchase timing and quantity. ### Example A new smartphone (stimulus) with a lower price and strong online reviews may catch a teenager’s attention. Their personal traits (tech interest), social influences (friends’ opinions), and psychological factors (perception of status) form the black box and result in the response: deciding to buy that phone. ## Key Influences on Consumer Behaviour Breakdown of the main factor groups that shape buying choices. ### Personal characteristics - Age and life-cycle stage (e.g., single teen, married with children, caring for elderly parents) - Occupation and economic situation (current income, savings, expenses) - Lifestyle and personality > Definition: Personal characteristics are individual traits and life circumstances that influence preferences and buying patterns. ### Psychological factors - Motivation: Needs drive behaviour (e.g., safety, social belonging) - Perception: How people interpret stimuli influences choice - Learning: Past experiences change future choices - Attitudes and beliefs: Stable evaluations that shape purchase intent > Definition: Psychological factors are internal mental processes that affect how consumers perceive and react to information. ### Social factors - Family, friends and reference groups that influence opinions and norms - Roles and status within groups > Definition: Social factors are influences from other people and groups that shape consumer behaviour. ### Economic and environmental factors - Broader economic conditions can raise or lower buying power - Technological change affects product availability and consumer expectations - Political and legal context may restrict or enable choices > Definition: Economic and environmental factors are external conditions (like income levels, laws and technology) that affect buying decisions. ## Market Segmentation: Beyond Income (LSM and Alternatives) Many businesses use segmentation to target specific groups. LSM (Living Standards Measure) groups people by asset and living standards; common LSM bands run from 1 (low) to 10 (high). > Definition: Market segmentation divides a market into distinct groups of buyers who have different needs, characteristics, or behaviours. ### LSM — strengths and limits - Strength: Useful quick snapshot for targeting products and services by disposable income and assets. - Limitations: Outdated in some contexts — lower-income consumers may still own smartphones, TVs, or other modern goods, so technology ownership alone may not predict purchases. ### SEM and other approaches - SEM (Socio-Economic Measurement) focuses more on dwelling type and socio-economic environment rather than specific assets. - Psychographic segmentati