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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.

Friday, 10 February 2012

Consumer Behaviour
Consumer Behaviour

The term consumer behaviour is defined 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 today s 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

Friday, 10 February 2012

Evolution

The field 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, efficient 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 marketer’s primary focus is selling the product(s) that it has unilaterally decided to produce - “Hard Sell Approach” Marketing Concept - The field 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 firm had already produced, marketing-oriented firms found that it was a lot easier to produce only products they had first confirmed, through research, that consumers wanted. Consumer needs and wants became the firm’s primary focus. This consumer-oriented marketing philosophy came to be known as the marketing concept .

Friday, 10 February 2012

Implementing the Marketing Concept

1. The widespread adoption of the marketing concept led to the study of consumer

behaviour.

2. To identify unsatisfied 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 fulfill 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.

Friday, 10 February 2012

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 final 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.

Friday, 10 February 2012

Consumer Behaviour - Model

The Environment:

Marketing stimuli:

Product, Price, Place and Promotion Other:

Economic, Technological, Social, Cultural

Buyer’s Black Box Buyer’s characteristics Buyer’s decision process

Buyer Responses Buying attitudes and preferences Purchase behaviour: what the buyer buys, when, where and how much Brand and company relationship behaviour

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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 society s relatively permanent and ordered divisions whose members share similar values, interests and behaviours.

Friday, 10 February 2012

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 society s relatively permanent and ordered divisions whose members share similar values, interests and behaviours. Family :

Roles & status :

Friday, 10 February 2012

Characteristics affecting consumer behaviour

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 one s own environment. Brand Personality : Sincerity, Excitement, Competence, Sophistication, Ruggedness

Friday, 10 February 2012

Characteristics affecting consumer behaviour

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 person s relatively consistent evaluations, feelings and tendencies toward an object or an idea.

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Types of Buying Decision Behaviour

Significant Differences between brands

Few Differences between brands

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High Involvement

Low Involvement

Complex buying behaviour

Variety Seeking Buying Behaviour

Dissonance reducing buying behaviour

Habitual buying behaviour

Types of Buying Decision Behaviour

Complex Buying Behaviour:

Consumer:

* High involvement in purchase - product is expensive, risky, infrequent purchase, highly self expressive

* Perceive significant 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 influence the final brand choice

Friday, 10 February 2012

Types of Buying Decision Behaviour

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.

Friday, 10 February 2012

Types of Buying Decision Behaviour

Habitual Buying Behaviour:

Consumer:

* Low involvement in purchase, low-cost, frequently purchased products

* Little significant 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

Friday, 10 February 2012

Types of Buying Decision Behaviour

Variety-Seeking Buying Behaviour:

Consumer:

* Low consumer involvement

* Significant 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.

Friday, 10 February 2012

Buyer Decision Process

Need

Recognition

Information

Search

Evaluation of Alternatives

Purchase

Decision

Post Purchase Behaviour

of Alternatives Purchase Decision Post Purchase Behaviour Need Recognition: The buyers recognize a problem or a
of Alternatives Purchase Decision Post Purchase Behaviour Need Recognition: The buyers recognize a problem or a
of Alternatives Purchase Decision Post Purchase Behaviour Need Recognition: The buyers recognize a problem or a
of Alternatives Purchase Decision Post Purchase Behaviour Need Recognition: The buyers recognize a problem or a

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

Friday, 10 February 2012

Buyer Decision Process

Information Search:

Consumer may or may not search for more information If the consumer s 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 consumer s 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

Friday, 10 February 2012

Buyer Decision Process

Evaluation of Alternatives:

Use of information to arrive at a final 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 specific 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”

Friday, 10 February 2012

Buyer Decision Process

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 benefits)

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Buyer Decision Process

Post Purchase Behaviour:

Once the product is purchased, the marketer gets engaged in the post purchase behaviour Determinants : whether the buyer is satisfied or dissatisfied with the product:

Relationship between the consumer s expectations and perceived performance Cognitive Dissonance: discomfort caused by post purchase conflict. Customer satisfaction is of prime importance Dissatisfied customer - word of mouth

Friday, 10 February 2012

The Buyer Decision Process for New Products

Adoption Process: Five Stages

Awareness

Interest

Evaluation

Trial

Adoption

Friday, 10 February 2012

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

Friday, 10 February 2012