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Consumer BUYER Behaviour

Consumer Buying Behaviour refers to the buying behaviour of final consumers (individuals & households) who buy goods and services for personal consumption. We Study consumer behaviour to answer: How do consumers respond to marketing efforts the company might use?

Who Buys and Uses the Products


Initiator -who identifies the need for product Influencer -who has informational or preference input to the decision Decider who makes the final decision through budget authorization Purchaser who makes the actual purchase User

Simplified Model

Marketing Stimuli

Black Box

Target Audience Response

Expanding the Black Box


Intra-Personal, psychological Influences Situational Influences Occasion, usage InterPersonal, social Influences

Motives, perceptions,..

Culture, social class,..

Mediated by audience characteristics: Gender,age, Decision Process

Why Study Consumer Behavior?


To implement the Marketing Concept . . a plan to influence buyer seller exchanges to meet consumer & organizational goals To understand complex influences on consumption processes. To know the why of consumer behaviour. To increase a managers confidence to predict consumer responses to their marketing strategy

Multiple Stimuli
Marketing Mix Product Price Place Promotion

Black Box
Environmental Events Economic Technology Political Cultural

Consumer Benefits
People do not buy products or services, they buy benefits Hence we make purchases not for the products themselves, but for the benefits of the problems they solve or the opportunities they offer
e.g., always late so a watch helps solve problem; has stopwatch feature so now can keep track of work out times

Consumer Benefits
Consumers seek bundles of types of benefits: Tangible benefits: e.g., a watch keeps good time; has leather band Intangible benefits: e.g., the reliability reputation of the watch manufacturer; the image of the watch wearer

The Consumer DecisionMaking Process


A consumer decision model is a means of describing the processes that consumers go through before, during, and after making a purchase (choice).

Factors Influencing Buyer Behaviour


Personal

Cultural

Social

Age & lifecycle stage Occupation Economic circumstanc e Lifestyle

Psycholog ical Motivation B Perception Learning Beliefs and Attitudes


U Y

Referen Culture ce Subcult Groups ure Family Social Class Roles & Status

E
R

Personality and Selfwww.mba4career.com

Consumer Decision Making Process

Step 1: Need Recognition


Marketing helps consumers When the consumer is recognize an running out of an product imbalance Preferred State between When another product seems present status superior to the one currently and preferred used state
When a current product isnt performing properly

Major Causes of Problem Recognition or Opportunity


Science and Technology Advancements new products new information Changing Consumer Circumstances & Expectations improved education family life cycle changes income adjustments

Step 2 he information search stage


An internal search involves the scanning of one's memory to recall previous experiences or knowledge concerning solutions to the problem-- often sufficient for frequently purchased products. An external search may be necessary when past experience or knowledge is insufficient, the risk of making a wrong purchase decision is high, and/or the cost of gathering information is low.

Personal sources (friends and family)

Public sources (rating services like Consumer Reports) Marketerdominated sources (advertising or sales people)

The evoked set: a group of brands from which the buyer can choose

Information Sources
. Internal Sources (Psychological) Experience (first preference) memory storage/retrieval mental processing

External Sources (Social) - Family (word of mouth) - friends - professionals

Information Sources
Public Sources
government studies product testing magazines media stories

Commercial Sources
advertising (least preference) sales people product pamphlets

Applied Marketing

Picking Physicians
Surveyed consumers said the most frequent sources for selecting a doctor are:
Referral from friend 24%

Referral from another doctor 14% Referral from family member 10% General word of mouth 9%
WSJ, Sect.2, pg.37, 24June 1986.

Influences on Intensity of Information Search


Personal factors - ability to process product
information, physical energy and mobility to search out alternative information .. Shopping propensity special sales, return policies.

Social factors - social pressures for right


choice, time pressure on the purchase Environmental Factors - availability of product substitutes, supplier alternatives and resources to search, Product life (long or short?)

Information Gaps
Examples of Dells Customer Feedback - Wheres the power button? - Wont work after I washed the keyboard - Wheres the any key? (Click any key to continue) - fax wont work - I refuse to read manual

Applied Marketing

Step 3 Evaluation of alternatives

Other people often influence a consumers purchase decision. The marketer needs to know which people are involved in the buying decision and what role each person plays, so that marketing strategies can also be aimed at these people. (Kotler et al, 1994).
s

Major Evaluation Criteria


Economic: cost/performance Behavioural: prestige/status/ . sociological: peer influence, lifestyle e Societal : product externalities environmental effects societys long run welfare

Evaluation Criteria
Principle: Evaluation criteria change over time and among market segments.

Promotions frame certain product attributes (evaluation criteria) to influence their perceived relative importance

Evaluation criteria are the basis of product attitudes


Retailer Attributes Product Attributes - Price (value), - location, - Quality, - credit terms, - return policies,etc. - style, etc. + relative + relative importance (utility) importance (utility) = Attitude toward = Attitude toward Product Retailer (Image)

Buying Process
Purchase Decision(s)

WHO BUYS? WHAT? WHEN? WHERE? AND WHY?

Consumer decision making Problem Solving

Extensive: problem solving occurs when buyers purchase more expensive, less frequently purchased products in an unfamiliar product category requiring information search & evaluation

Limited: problem solving occurs when

buyers are confronted with an unfamiliar brand in a familiar product category Routine: response behaviour occurs when buyers purchase low cost, low risk, brand loyal, frequently purchased, low personal identification or relevance, items with which they are familiar.

Three Levels of Problem Solving


Low involvement Frequently purchased Inexpensive Little risk Little information High involvement Infrequently purchased Expensive High risk Much information desired

Routinized Response Behavior


Low involvement

Limited Problem Solving

Extensive Problem Solving


High involvement

2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Decision Processm Involvement

Strong attitude Social Visibility

Low Involvement

Weak attitude

High Involvement

Factors affecting Consumer involvement

Previous experience: low level involvement Interest: high involvement

Perceived risk of negative consequences:


high

involvement
Social visibility: involvement increases
s with product visibility high involvement

Buying Process
Post-Purchase Behavior

Cognitive dissonance: post-purchase tension .

Postpurchase Behavior
Cognitive Dissonance
Did I make a good decision?
Did I buy the right product? Did I get a good value?

Effective Communication Follow-up Guarantees Warranties Underpromise & overdeliver

The Buyer Decision Process


Step 5. Postpurchase Behavior
Consumers Expectations of Products Performance Products Perceived Performance

Satisfied Customer!

Dissatisfied Customer

Cognitive Dissonance

Cognitive Dissonance

psychological discomfort caused by inconsistencies among a persons beliefs, attitudes, and actions varies in intensity based on importance of issue and degree of inconsistency
:

Post Purchase Behavior


Principle: Dissatisfied customers

communicate more negative word of mouth than satisfied customers communicating positive word of mouth FORD says happy customers tell 8 people while unhappy people tell 22 people.

Cognitive Dissonance
Causes: Perceived Risk Performance risk Physical risk (wear-out) High financial commitment High involvement level High social visibility Discrepant information Information Overload insufficient time to evaluate

Characteristics Affecting Consumer Behavior

Culture Social Personal Psychologica l Buyer

Factors Affecting Consumer Behavior: Social


Groups
Membership

Reference Family Husband, wife, kids Influencer, buyer, user

Social Factors

Roles and Status

Factors Affecting Consumer Behavior:Personal


Personal Influences
Age and Family Life Cycle Occupation Stage Economic Situation Personality & Self-Concept

Lifestyle Identification
Activities Opinions

Interests

Stages in the Adoption Process


Awareness Interest Evaluation Trial Adoption

Adoption of Innovations
innovators Early Adapters
13.5% 2.5%

Early Majority

34%

Late Majority
Laggards

34% 16%

Influences on the Rate of Adoption of New Products


Communicabiliy

Relative Advantage

Divisibility

Product Characteristics

Compatibility

Complexit y

Psychological Influences within an Individual


Needs

Wants

Drives

Consumers seek benefits to match needs and wants!


2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Maslows Hierarchy of Needs


Self Actualization
(Self-development)

Esteem Needs (self-esteem, status) Social Needs


(sense of belonging, love)

Safety Needs
(security, protection)

Physiological Needs
(hunger, thirst)

Perception Determines What Consumers See and Feel


Selective Exposure

Selective Retention
2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Selective Perception

Operant Conditioning (Learning)

Drive

Cues Reinforcement Response

2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Classical Conditioning (Learning)

Unconditioned Stimulus

Conditioned Stimuluse

Unconditioned Response

Conditioned Response

2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Individuals Are Affected by the Purchase Situation


Purchase Reason

Purchase Reason

Physical Surroundi ngs


Time Time Available Available

Purchase Decesion
2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Differences Between Organizational and Consumer Markets


Demand Characteristics
The demand for industrial goods and services is: 1. Derived from the demand for consumer goods and services. 2. Relatively inelasticprice changes in the short run are not likely to significantly affect demand. 3. More erratic because small increases or decreases in consumer demand can, over time, strongly affect the demand for manufacturing plants and equipment.MGT, UCDHSC Forlani, MKTG 50 4. More cyclical.

Differences Between Organizational and Consumer Markets (2 of 3)

Market Demographics
Compared to Consumers, Organizational buyers are:

1. Fewer in number. 2. Larger in size. 3. Geographically concentrated.

Forlani, MKTG MGT, UCDHSC

51

Differences Between Organizational and Consumer Markets (3 of 3)

Characteristics of Buyer Behavior


Compared with markets for Consumer goods, Organizational markets are characterized by:

1. The use of professional buying specialists following prescribed procedures. 2. Closer buyerseller relationships. 3. Presence of multiple individuals in the buying process (Relevant Others). More apt to Forlani, MKTG MGT, UCDHSC buy on specification than price.

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Customer Satisfaction and Customer Delight

Marketing is not selling products. It is satisfying wants


Scott Smith

Meaning of Satisfaction & Benefit


Benefit: Enhance well being To be helpful or advantageous To improve or gain advantage Satisfaction: To gratify the need, desire or expectation To fulfill a need or desire

What is Customer Satisfaction? Customer satisfaction not only involves assuring the quality of the product or service provided, but also meeting the consumer's need as an individual.

Importance of Customer Satisfaction

Business is made up of the largest group of volunteers in the world......customers!

Impact of Dissatisfied Customers


Deming proved that a dissatisfied customer tells 16 other people but a satisfied person only 8 others. Negative word-of-mouth has blocked close to 4 million from purchasing atain product in the . .

Impact of Customer Dissatisfaction


No initial sale of the product

No repeat purchase of the product Negative word-of-mouth advertising


Less referral business

Impact of Customer Dissatisfaction


Higher employee turnover & absenteeism Lower staff morale Lower compliance with instructions More malpractice suits Lower profitability

Satisfaction reflects the total interactions a customer has with a company and its products It starts the moment a customer thinks of your product

It does not end until the customer is completely satisfied with it

Maximizing the Customer Experience Addresses 3 Questions How well do you meet customer needs?
How smoothly do you solve your customersrp oblems? How quickly do you anticipate what theyll want next?

Customer satisfaction with any product or survey reflects the evaluation of the product, service, company, and environment. Customer satisfaction is critical to any product or service because customer satisfaction is a strong predictor of customer loyalty and product repurchase.

Not Customer Satisfaction, but...

Customer Delight

Adequate Is Not Acceptable Most of what we do is adequate People talk about Customer Delight People talk about bad service People dont talk about adequate service

The Truth About Customers


Ten times more expensive to acquire a new customer than to keep a current customer
- Bain & Company Research

Customers are lost primarily due to indifference (66%) versus dissatisfaction (14%) WSJ

The Best
Woo the ability to win others over Empathy the ability to understand the mood of others Discipline the ability to work systematically and consistently Command the ability to control a situation through communication Responsibility the ability to own a problem until it is solved
Gallup Survey of Best Customer Service Representatives

Actually
Customer expectations are typically not very high Your job is to surprise them

Customer Delight is doing what they havent even imagined


What will cause them to say WOW! You know what you can do - they dont

Cusromer Value
The difference between all the benefits derived from a total product and all the costs of acquiring those benefits.

Customer Value
a customer can evaluate a company's value-proposition on two broad dimensions with multiple subsets: relative performance: what the customer gets from the vendor relative to a competitor's offering; price: which consists of the payment the customer makes to acquire the product or service; plus the access cost

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