CONSUMER BEHAVIOUR

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CONSUMER BEHAVIOUR
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INTRODUCTION TO

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PREVIEW

Definition of CB
Focus of CB Scope of CB Development of CB Field CB and Marketing Strategy Understanding CB Consumer Lifestyles and CB Factors determining CB Consumer Decision Making Process Overall Model of CB
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CONSUMER DEFINITION
by Mahatma Gandhi

A Customer is the most important visitor on our premises

He is not dependent on us We are dependent on him He is not an interruption on our work He is the purpose of it He is not an outsider on our businesses He is part of it

We are not doing him a favour by serving him

He is doing us a favour by giving us an opportunity to do so
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DEFINITIONS OF CONSUMER BEHAVIOUR

The dynamic interaction of cognition, behaviour and environmental events by which human beings conduct the exchange aspects of their lives. American marketing association Those behaviours performed by decisionmaking units in the purchase, usage and disposal of goods and services (Kotler & Levy)

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DEFINITIONS OF CONSUMER BEHAVIOUR (cont.)

The decision process and physical activity individuals engage in when evaluating, acquiring, using or disposing of goods and services (London & Delli Bitta). Those actions directly involved in obtaining, consuming, and disposing of products and services, including the decision processes that precede and follow these actions (Engel, Blackwell & Miniard) The behaviour that consumer display in searching for, purchasing, using, evaluating, and disposing of products, services, ideas.
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FOCUSSES ATTENTION ON How individual s make decisions to spend their valuable resources (time, money, effort) on consumption related items,
What they buy ? Why they buy it ? When they buy it ? Where they buy it ? How often they buy it ? How often they use it ? How they evaluate it after they purchase and the impact of such evaluations on future purchases, how they dispose of it.

CONSUMER BEHAVIOUR

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SCOPE OF CONSUMER BEHAVIOUR

CB describes TWO different kinds of consuming entities: I. Personal Consumer, and II. Organisational Consumer We focus on the Individual Consumer, who purchases for his or her own personal use or for household use.
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DEVELOPMENT OF THE DISCIPLINE OF CONSUMER BEHAVIOUR

Field of CB is rooted in the Marketing concept when business orientation evolved in the 1950s through several alternative approaches (Production concept, product concept, selling concept) toward doing business. Production Concept: Producing product without considering the customer need, that lead to marketing myopia. Product Concept: Producing product with high quality, the best performance and the most wanted features. (Eg. Railroad, PDA)_
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DEVELOPMENT OF THE DISCIPLINE OF CONSUMER BEHAVIOUR (cont.)

Selling Concept: Marketers primary focus is

Implementing the Marketing Concept

selling the products that it has ultimately decided to produce, Hard Sell.

The strategic tools used to implement the marketing concept include: Segmentation, Targeting, Positioning, and Marketing mix.
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DEVELOPMENT OF THE DISCIPLINE OF CONSUMER BEHAVIOUR (cont.)

Role Marketing Research

Two theoretical perspectives that guide the development of consumer research methodology: The positivist approach tend to be objective and empirical, to seek causes of behaviour and to conduct research studies based on large population. Interpretivist approach tends to be qualitative and based on small samples.
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DRIVERS OF SUCCESSFUL RELATIONSHIP BETWEEN MARKETERS AND CUSTOMERS

Customer Value, High level of Customer satisfaction, and Customer retention.

CUSTOMER VALUE as the ratio between the

customers perceived benefits (economic, functional, and psychological) and the resources (monetary, time, effort, psychological) use to obtain those benefits. Developing a value proportion (USP) is the core of successful positioning. 1-Jan-14 12
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DRIVERS OF SUCCESSFUL RELATIONSHIP BETWEEN MARKETERS AND CUSTOMERS (cont.)

CUSTOMER

is the individual perception of the performance of the product or service in relation to his / her expectations.
Completely satisfied customers & keep purchasing (Loyalists) Highly satisfied customers & extend +ve WoM (Apostles) Merely satisfied customers & stop buying from the Coy. (Defectors)

SATISFACTION

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DRIVERS OF SUCCESSFUL RELATIONSHIP BETWEEN MARKETERS AND CUSTOMERS (cont.) Not satisfied negative experiences & spread ve WoM, and buy other companys products (Terrorists) Not satisfied negative experiences & spread ve Wom, and buy same product doe to monopoly (Hostages) Completely satisfied customers, no loyalty to the company, due low price of the same type of product elsewhere (Mercenaries)

Companies should strive to create apostles, raise the satisfaction of defectors, and turn then into loyalists, avoid having terrorists, or hostages, and reduce the number of mercenaries. 1-Jan-14 14
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DRIVERS OF SUCCESSFUL RELATIONSHIP BETWEEN MARKETERS AND CUSTOMERS (cont.)

CUSTOMER RETENTION providing value

to customers continuously so they will stay with the company rather than switch to another firm. It increases firms profits:
- Loyal customers buy more products, - Loyal customers are less price sensitive and pay less attention to competitors advertising, - Servicing existing customers is cheaper, and - Loyal customers spread positive WoM.
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DRIVERS OF SUCCESSFUL RELATIONSHIP BETWEEN MARKETERS AND CUSTOMERS (cont.)

Customer profitability-focused marketing (Categorise customers into FOUR tiers) 1. The platinum tier includes heavy users who are not price sensitive and who are willing to try new offerings, 2. The Gold tier consist of customers who are heavy users but not as profitable, because they are more price sensitive than the platinum tier category, and ask for more discounts and are likely to buy from several producers,
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DRIVERS OF SUCCESSFUL RELATIONSHIP BETWEEN MARKETERS AND CUSTOMERS (cont.)

Customer profitability-focused marketing (Categorise customers into FOUR tiers) 3. The iron tier consists of customers whose spending volume and profitability do not merit special treatment from the company, and 4. The lead tier consist of customers who actually cost the company money because they claim more attention than is merited by their spending, tie up company resources, and spread negative WoM. 1-Jan-14 17
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CONSUMER BEHAVIOUR AND MARKETING STRATEGY

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Positioning strategy Market segmentation New products New market applications Global marketing Marketing mix Consumerism and non-profit marketing
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UNDERSTANDING CONSUMER BEHAVIOUR

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CONSUMER LIFESTYLE AND CONSUMER DECISIONS

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FACTORS THAT DETERMINE AND INFLUENCE CONSUMER LIFESTYLES

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CONSUMER DECISION PROCESS

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CONSUMER BEHAIOUR AND DECISION MAKING ARE INTERDISCIPLINARY

External Influences

Input

Firms Marketing Efforts Product, Price, Promotion, Channels of distribution

Socio-cultural Environment Family, Informal sources, Social class, Culture, and subculture, other noncommercial sources Psychological Field Motivation, Perception, Learning, Personality, Attitudes Experience

Consumer Decision Making

Need Recognition Prepurchase search Evaluation of Alternatives

Process

Post decision Behaviour

Output
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Purchase Trial, Repeat purchase Post purchase Evaluation

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OVERALL MODEL OF CONSUMER BEHAVIOUR

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CONSUMER BEHAVIOUR MODELS

Economic Model (Marshallian model) It is based on: - Price Effect - Substitution Effect - Income Effect
Sociological Model - It is concerned with society Eg. Joining with Political party Having a club membership
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CONSUMER BEHAVIOUR MODELS contd.

Psychological Model - It is based on Maslows hierarchy of needs theory of motivation.
Self Actualization
Self Fulfillment

Ego Needs
Status, Success, vv

Park Avenue
Employee Treatment

Social Needs
Affection, Friendship, Belongingness

Safety and Security Needs

Protection, Security

Insurance Policy
Cadbury Perk
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Physiological Needs
Air, Water, Food, Cloth, Shelter
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CONSUMER BEHAVIOUR MODELS contd.

Pavlovian Learning Model (Russian Physiologist)
- Drives or Cues (that suggest a specific way to satisfy a salient motive)
- Cues are TWO types

a. Triggering Cues: Activate the decision process b. Non-triggering Cues: Do not activate the decision process, they are:
- Product Cues: Coler, Package, Weight, Style - Informational Cues: Adds, Sales Promotion tools, Sales personnel

c. Reinforcement
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CONSUMER BEHAVIOUR MODELS contd.

Howard Sheth Model. It basically serves two purposes 1. It indicates how complex the whole consumer behaviour process really is, and 2. It provides the framework for including various concepts like learning, perception, attitudes, etc which play a role in influencing consumer behavior. The model is divided into FOUR major stages of process. They are Input, Perceptual constructs, 1-Jan-14 Learning constructs, and output stage.

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Howard Sheth Model

Input

Perceptual Constructs

Learning Constructs Intention

Output
Purchase

Significative Stimuli -Quality

-Price -Distinctiveness -Service -Availability

-Price -Distinctiveness -Service -Availability

Stimulus Ambiguity

Attitude

Symbolic Stimuli -Family

-Reference groups -Social class 1-Jan-14

Brand Moti- Choice Compreves Criteria hension

Attention

Perceptual Bias

Satisfaction

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Attitude Attention Brand Comprehension

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Symbolic Stimuli -Quality

Intention

Overt search

Confidence

QUIZ TIME

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