Consumer Behaviour

Consumer Behaviour
Friday, 10 February 2012
How are we (consumers) important

Clearly, as individuals we are all unique. However, one of the most important constants among all of us despite our differences is that, above all, we are consumers. * We use or consume on a regular basis food, clothing, shelter, transport, education, equipment, holidays, necessities, luxuries, services and even ideas. * As consumers we play a vital role in the health of the economy local, national and international. * The purchase decisions we make affect the demand for basic raw materials, for transport, for production, for banking; they affect the employment of workers and the deployment of resources, the success of some industries and the failure of others.
The term consumer behaviour is dened as the behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs. Consumer behaviour focuses on how individuals make decisions to spend their available resources (time, money, effort) on consumption related items. In order to succeed in any business, and especially in todays dynamic and rapidly evolving marketplace, marketers need to know everything they can about consumers. That includes: 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 the purchase the impact of such evaluations on future purchases how they dispose of it
Consumer Behaviour
Evolution
The eld of consumer behaviour is rooted in the marketing concept , a business orientation that evolved in the 1950s through several alternative approaches towards doing business referred to as: The production concept - The production concept assumes that consumers are mostly interested in product availability at low prices; its implicit marketing objectives are cheap, efcient production and intensive distribution The product concept - The product concept assumes that consumers will buy the product that offers them the highest quality, the best performance and the most features. A product orientation often leads to marketing myopia, that is, a focus on the product rather than on the consumer needs it presumes to satisfy. The selling concept - A natural evolution from both the production concept and the product concept is the selling concept , in which a marketers primary focus is selling the product(s) that it has unilaterally decided to produce - Hard Sell Approach Marketing Concept - The eld of consumer behaviour is rooted in a marketing strategy that evolved in the late 1950s, when some marketers began to realise that they could sell more goods, more easily, if they produced only those goods they had already determined that consumers would buy. Instead of trying to persuade customers to buy what the rm had already produced, marketing-oriented rms found that it was a lot easier to produce only products they had rst conrmed, through research, that consumers wanted. Consumer needs and wants became the rms primary focus. This consumer-oriented marketing philosophy came to be known as the marketing concept .
Implementing the Marketing Concept

1. The widespread adoption of the marketing concept led to the study of consumer behaviour. 2. To identify unsatised consumer needs, companies had to engage in extensive marketing research. 3. In so doing, they discovered that consumers were highly complex individuals, subject to a variety of psychological and social needs quite apart from their survival needs. 4. They discovered that the needs and priorities of different consumer segments differed dramatically, and in order to design new products and marketing strategies that would fulll consumer needs, they had to study consumers and their consumption behaviour in depth. 5. Thus, the marketing concept underscored the importance of consumer research that is used to apply consumer behaviour principles to create a marketing strategy. 6. The strategic tools that are used to implement the marketing concept include segmentation, targeting, positioning and the marketing mix.
Consuming Entities
The term consumer behaviour describes two different kinds of consuming entities: The personal consumer - The personal consumer buys goods and services for his or her own use, for the use of the household, or as a gift for a friend. In each of these contexts, the products are bought for nal use by individuals, who are referred to as end-users or ultimate consumers. The organisational consumer - includes companies and charities, government agencies (local and national), and institutions (e.g. schools, hospitals and prisons), all of which must buy products, equipment and services in order to run their organisations.
Consumer Behaviour - Model

The Environment: Marketing stimuli: Product, Price, Place and Promotion Other: Economic, Technological, Social, Cultural Buyers Black Box Buyers characteristics Buyers decision process Buyer Responses Buying attitudes and preferences Purchase behaviour: what the buyer buys, when, where and how much Brand and company relationship behaviour
Characteristics affecting consumer behaviour (Kotler)

Cultural Factors: The Marketer is required to understand: Cultural : basic values, perceptions, wants, behaviours etc. Also, they need to consider the cultural shifts. Subcultural : group of people with shared value systems based on common life experiences and situations. It includes: nationalities, religions, racial groups, geographic regions etc. Social Class : Social classes are societys relatively permanent and ordered divisions whose members share similar values, interests and behaviours.
Characteristics affecting consumer behaviour

Social Factors: The Marketer is required to understand: Groups & Social Networks : Membership groups & Reference Groups Word of Mouth & Buzz Marketing : Opinion leaders & Brand Ambassadors Online Social Networks : Social classes are societys relatively permanent and ordered divisions whose members share similar values, interests and behaviours. Family : Roles & status :

Personal Factors: The Marketer is required to understand: Age & Life Cycle Stage : Young, Singles, Married couples, Children Occupation : Economic situation : Personal income, savings, interest rates and economic indicators such as recession Lifestyle : AIO dimensions - Activities (work, hobbies, shopping, sports etc.) Interests (food, fashion, family etc.) Opinions (social issues, products etc.) Personality & Self-Concept : Unique psychological characteristics that lead to relatively consistent and lasting responses to ones own environment. Brand Personality : Sincerity, Excitement, Competence, Sophistication, Ruggedness

Psychological Factors: The Marketer is required to understand: Motivation : Sigmund Freud - Abraham Maslow Self-actualization needs (self development and realization) Esteem Needs (self-esteem, recognition and status) Social Needs (Sense of belonging, love) Safety Needs ( Security, protection) Physiologinal Needs (Hunger, Thirst) Perception : Selective attention and selective distortion, selective retention Learning : Drive, Cues, Response, Reinforced Beliefs & Attitudes : Beliefs may be based on knowledge, opinion, faith etc. Attitudes describes a persons relatively consistent evaluations, feelings and tendencies toward an object or an idea.
Types of Buying Decision Behaviour

High Involvement Low Involvement
Signicant Differences between brands
Complex buying behaviour
Variety Seeking Buying Behaviour
Few Differences between brands
Dissonance Habitual buying reducing buying behaviour behaviour

Complex Buying Behaviour: Consumer: * High involvement in purchase - product is expensive, risky, infrequent purchase, highly self expressive * Perceive signicant differences among brands * To learn about the product category * Learning Process - Developing beliefs about the product - Attitudes Purchase choice Marketer: * Understand information gathering * Be able to evaluate behaviour of high-involvement consumers * Assist buyers learn about product - class attributes and their importance, differentiate the brand features * Store salespeople should be motivated enough to inuence the nal brand choice

Dissonance - Reducing Buying Behaviour: Consumer: * High involvement in purchase - product is expensive, risky, infrequent purchase * Little difference among brands * To learn about the product category * Buyers shop around to learn what is available * Buy relatively fast * Good Price or convenience is considered for product purchase Marketer: * Post purchase Dissonance can be experienced * After sales service should be strong enough to make consumers feel good about their choice.
Habitual Buying Behaviour: Consumer: * Low involvement in purchase, low-cost, frequently purchased products * Little signicant brand difference * Little involvement about the product category * Passive information - television or magazines * Familiarity habit - strong brand loyalty - Choice evaluation is not seen most of the times Marketer: * Price and sales promotions to stimulate product trial * Short duration messages - high repetition - attached to a brand
Variety-Seeking Buying Behaviour: Consumer: * Low consumer involvement * Signicant brand differences * Brand Switching - sake of variety rather than dissatisfaction Marketer: * Try and encourage habitual buying behaviour - occupying shelf space, fully stocked shelves, frequent reminder advertising. * Lower prices, Special deals, coupons, free samples etc.
Buyer Decision Process

Need Recognition Information Search Evaluation of Alternatives Purchase Decision Post Purchase Behaviour
Need Recognition: The buyers recognize a problem or a need triggered by internal or external stimuli Needs become a drive The Marketer is expected to know the kinds of needs or problems arise, what brought them about, how they led to a particular product

Information Search: Consumer may or may not search for more information If the consumers drive is not that strong or the product is not near, the need can be stored in his memory and information related to his need can be searched. The amount of Searching depends on the strength of consumers drive, the amount of information he starts with, the ease of searching more information, the value he has for additional information, and the satisfaction he gets from searching. Sources of Information: Personal sources Commercial sources Public sources Experiential sources

Evaluation of Alternatives: Use of information to arrive at a nal brand choice. Alternative evaluation : How does the consumer processes information to arrive at brand choices. Consumer use different evaluation processes based on individual thinking and the specic buying situation: using careful calculations& logical thinking; little or no evaluation done (buy on impulse or rely on intuition); decision based on the information from friends, consumer guides, or salespeople. Marketers study the buyers : how they actually evaluate brand alternatives
Purchase Decision: Consumer ranks brands and forms purchase intentions. Decision based on the most preferred brand. Factors between the purchase intention & the purchase decision: Attitudes of others Unexpected situational factors (expected income, expected price, and expected product benets)

Post Purchase Behaviour: Once the product is purchased, the marketer gets engaged in the post purchase behaviour Determinants : whether the buyer is satised or dissatised with the product: Relationship between the consumers expectations and perceived performance Cognitive Dissonance: discomfort caused by post purchase conict. Customer satisfaction is of prime importance Dissatised customer - word of mouth
The Buyer Decision Process for New Products

Adoption Process: Five Stages Awareness Interest Evaluation Trial Adoption
Extra Reading
* Business Marketing: Understand What Customers Value by James C. Anderson and James A. Narus * Learning from customer defections by Frederick F. Reichheld * Case study on : TiVo in 2002: Consumer Behavior

Consumer Behaviour

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Consumer Behaviour

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Consumer Behaviour

Friday, 10 February 2012

How are we (consumers) important

Friday, 10 February 2012

Friday, 10 February 2012

Implementing the Marketing Concept

Friday, 10 February 2012

Friday, 10 February 2012