Consumer Behaviour Concepts and Applications

Not a simple picture !!!

To consider

influences on consumer buying processes problem-solving: pleasure seeking (irrational) vs. rational views of buying how we construe our buying/spending: perceptions, attitudes & motivations

pre-exchange, in the exchange itself & post exchange

environmental and cultural individual and reference groups

categories of influence:

Insights from learning theory B2C and B2B organisational buying behaviours marketing strategy & communications design implications
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Obviously

Individual customers & organisational customers buy goods & services They are stimulated & prompted to buy

Marketers

are interested in their decision behaviour try to stimulate & influence this behaviour to get better responses from the customer
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Marketers, actors & roles in buying

marketing concept "satisfy consumer needs for profit/value" so....

to segment, target & construct our marketing mix & promotions well, we must understand consumers & their behaviour we can study actual purchases then find ways to encourage them to consider buying & then buy !!! buying may involve

Who is important in the buying decision? What do they buy & how much ? When do they buy & where ? How do they buy? What choice criteria do they use? How do they respond to the efforts we use?

many steps many people

the actual purchase is but one part of the process

Actors and roles the same person can play multiple roles consumers opinion formers marketers public policy actors
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Buyer Behaviour Model

Needs - wants, stimuli Product, price, place, promotion etc

Buyer responses

Environmental (PEST) factors

buyers black box

Choices of product brand dealer timing price Buy more, less, stay loyal etc
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How we buy (a rational view)

functional emotional ? current vs desired situation relative importance need inhibitors
Need recognition, problem-awareness Information search Evaluate alternatives are they aware of need ? can we mediate need inhibitors? can we stimulate awareness & action

internal search (memory) external search (personal sources, commercial sources third party reports (e.g. Which) personal observation/testing

Window-shop simmering interests

Shape desire, want

Information search

Evoked set

Evaluate alternatives (against evoked set) Buy Post-purchase evaluation

Buy Post-purchase evaluation

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Operant (or instrumental) conditioning

Learning based upon the consequences of behaviour the chance of a specific behaviour goes or thru +ve or -ve reinforcement each time the behaviour happens we associate the pleasure or displeasure of the reinforcement with the behaviour

Consequences of responding that increase behaviour are reinforcers Marketers want to know the reinforcers

Responses are reinforced, punished, or extinguished 1

Reinforcement is a consequence that more frequent behaviour Positive reinforcement

a behaviour (response) a favourable stimulus (commonly pleasant) increasing the frequency of the behaviour
a behaviour (response) lessening of an aversive stimulus (commonly unpleasant) increasing that behaviours frequency
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Negative reinforcement

Responses are reinforced, punished, or extinguished 2

Punishment

a consequence that causes a behaviour to occur less often

Positive punishment ("P. by contingent stimulation") a behaviour (response) an aversive stimulus a decrease in the behaviour. Negative punishment ("P. by contingent withdrawal") a behaviour (response) removal of a favourable stimulus e.g. taking away a naughty child's toy, resulting in less of that behaviour
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Responses are reinforced, punished, or extinguished 3

Avoidance learning a behaviour r ending of an aversive stimulus e.g. we no longer contact someone & so avoid their unpleasantness.
Extinction a behaviour (response) that had previously been reinforced is no longer effective the lack of any consequence following a behaviour
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Roles in the decision process

after Blackwell/Miniard/Engel, 2007 Consumer Behaviour, 10th Ed, Thomson

each role can be acted by parent, children or other members of the buying centre.
Each actor may display multiple roles when buying a toy purchase a house a washing machine an armoured vehicle a sound system computer software Influencing Strategies

Who is initiator influencer decider buyer user

1. expert influencing 2. subtle (incl. use of rewards 3. emotional 4. combination

Infants, teenagers, working women, husbands?

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What is the Relative Influence of Husbands vs. Wives in Decision Making?

How is this changing?

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Influences on Consumer Behaviour

Cultural

Personal

broadest & deepest influence cultures & subculture social classes

Social

Family Social roles and status (multiple) Reference groups

Age Life cycle stage Occupation Economic circumstances Lifestyle Personality

Self-concept

Membership - primary vs. secondary Aspirational vs. dissociative

Psychological

Motivation Perception Learning Beliefs Attitudes

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Personal influences
Perception

"mind" processes - selection, association, organisation & interpretation. We

what motivates us what we believe in

real knowledge, opinion or faith

only note some things (selective) i.e. what grabs attention + distortion & retention associate & categorise information into meaningful wholes interpret/make inferences
good news or bad news first ? accentuate the positives, eliminate the negatives

Our attitudes
relatively consistent evaluations, feelings, tendencies towards something

information framing e.g.

Three components
cognitive (belief), affective (feeling), conative (behavioural)

Learning

classical & operant conditioning cognitive learning

by rote vicarious (from others) reasoning

personality self-concept, lifestyle & life cycle stages

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Perceptual, conceptual & related capacities

Perceptual - Sensing, measuring, judging

Colour, sound, texture, smell. Interpreting smells, noises, signals Monitoring sounds, vibrations, data, information Frames of reference what is your vantage point associating, abstracting, formulating, calculating, inferring understanding processes in the abstract deriving ideas & predicting from associated, comparative information depends on knowledge and know-how (range & level) dealing with symbolic information + its associations need for achievement, power, affiliation sensitivity & empathy, identification & association, objective-subjective, attitudes & values Storage, access, processing & transmission capacity, security, privacy
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Conceptual

Relating - Ego + alter-ego oriented:

Physical

Culture a socially constructed complex of values, ideas, attitudes, institutions, meanings & symbols that shape and are shaped by behaviour & maybe passed on thru generations Social Class relatively permanent divisions in a society into which individuals or families may be categorized based on perceived status & prestige. Sub- or Micro-culture a sub-group with its own distinguishing modes of behaviour. Role Behaviours, rights, duties expected of an individual in a group by other members

Concepts in socio-cultural examination

Reference groups structures & standards influence behaviour. Membership groups we actually belong to Aspirational We wish to associate with this group. Disassociative We do not want to be identified with this group. Power studies how roles, groups & norms influence individual behaviour.
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Opinion formers

Trendsetters

influential people in a group who

purchase new products early serve as information sources for others

The Media

TV, newspapers, magazines, Internet communication commentators the media need "stories" "seeding" the media. Pay media producers for product placement in "publication channels" From a Fashion house to Primark Advertising, promotions & incentives Word-of-mouth - viral

Sellers & Marketers

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Personality & self concept

extroversion-introversion self-confidence, dominance sociability autonomy defensiveness adaptability aggressiveness

Levi Jeans ? Swaferga ?

Towards a brand personality: the brand & Me

sincerity

down to earth, honest, wholesome, cheerful daring, spirited, imaginative, up-todate reliable, intelligent, successful higher class, charming outdoors, tough

excitement

competence

sophistication

Branston baked beans? Chicken jalfrazi ? Top Gear ?

Yesterday Channel Lands End?

ruggedness

e.g. Take care of pennies & will take care of themselves

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Components of Attitude
A persons enduring favourable or unfavourable evaluation of some object or idea

Cognitive (knowledge & beliefs about a subject/object) Affective (overall feelings or emotive reactions)

Attitude (overall orientation toward object or idea)

Behavioural (how we tend to behave)

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Choice criteria
Technical

attributes & variables a reliability durability consumer uses when performance evaluating products & style/looks services comfort different members of delivery convenience buying centre obviously taste may use different criteria Economic e.g. a teenager or a WAG price, VfM (self-image), a parent (for running costs residual the baby), an OAP (price value or risk reduction)
life cycle costs

Social status social belonging fashion Personal self-image risk reduction morals emotion

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Consumer Problem-Solving Categories

Routinised (habitual) repeat buys. Advertising may influence a change also promotions (2 for 1), branding to keep product in customers mind Limited problem solving (LPS) buyer has some experience, may check prices etc. Buyers can advertise to stimulate & compare or reduce risk of brand switching Extended problem solving (EPS)
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Extended problem-solving
Research all choice alternatives + examine solutions alternatives are differentiated & numerous high deliberation & involvement time personally relevant (risks) high potential for cognitive dissonance

self-image risks social factors

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Cigarette advertising

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Cognitive dissonance
(after Festinger)

discomfort when facing logical inconsistencies in our thinking (cognitions) e.g. a belief in animal rights may be seen as inconsistent with eating meat or wearing fur. We may feel anxiety assoc. with bad decisions: guilt, shame, anger, embarrassment, stress or other. This can lead to rationalisation: justifications to support our choices or change in attitudes, beliefs & behaviours. When ideas are consistent harmony or consonance. If cognitions are unrelated, they are "irrelevant" not dissonant.

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Aesop's "The Fox and the Grapes" A fox sees some tasty, grapes high on the vine but can't think how to reach them. He concludes that the grapes are probably not worth eating anyway (not yet ripe, too sour). Nb. dissonance in the desire for something unattainable & so the fox irrationally decides that the "thing" must be flawed (Sour Grapes).
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Smoking

we know that cigarettes cause lung cancer we want to live a long and healthy life we can

quit smoking & reduce the tension between the contradictory ideas or deny conclusions about lung cancer or justify our smoking

Only a few smokers become ill". "It only happens to very heavy smokers. "If smoking does not kill me, something else will." "I am a smart, reasonable person who makes good decisions." Easier to make excuses than to change behaviour. Humans are rationalizing and not always rational.
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Social classes

Upper Uppers Lower Uppers Upper Middles Middle Class Working Class Upper Lowers Lower Lowers

Chavs slang (UK) for a subcultural stereotype Aspirants who want to be in a "class" above their actual class. spend on fashion for upward social mobility. fixated on fashion 'designer' clothing, handbags, gold jewelery e.g. Burberry, trying to adopt lifestyle of admired, referent class but not seen as successful. considered to be in poor taste, ignorant, labelled as "trying too hard, not worthy enough".
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VALS2 psychographic groups

Actualizers Fulfilleds Achievers Experiencers Believers Strivers Makers Strugglers

How do you see each category behaving as buyers?

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Forrester Technographics customer segments by motivation, desire & ability to invest in technology

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Start here Explain the customer behaviour appeals being used by each of the following

a selected product group within e.g. Gillette a company within the earth-moving equipment industry e.g. JCB, Caterpillar, Komatsu etc A group within the hotel sector including: Hilton, Accor, Travelodge, Townhouse HMV

What common or different customer behaviour appeals are being used by http://www.wickes.co.uk/ http://www.screwfix.com http://www.diy.com/ 31 http://www.homebase.co.uk

Explain the following in terms of consumer behaviour debate

fitting rooms return of goods policies e.g. B&Q, Next on-line 2-for-1, 20% bigger interest free for

3 months (over 300) 3-years (DFS)

"Never knowingly undersold" - John Lewis Partnership free delivery over 15 (Amazon) main dealer trade in values, old car-new car easy financing terms free insurance mobile phone automatic new model + cheaper contract + extras home deliveries e.g. Tesco 15 (21 days in advance), 26 (7 days), 55 with on-line booking Travelodge 4x Tesco Club Card points value for Cafe Rouge vouchers (8 = 32)
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Post-purchase evaluation

We want customer to have positive experiences from purchase but they may experience

Cognitive Dissonance
Pre-purchase, purchase or post-purchase

attitudes & behaviour should be consistent with one another. If you buy a car & your friend thinks that it is rubbish ..

uncertainty "Have I made the right decision?" feel anxiety, disappointment, remorse discrepancy between expectation & experience reflect on opportunity cost and lost - difficult decision, many alternatives irrevocable decision neurotic customer (impulse buy) post-purchase remorse

What can marketer & seller do?

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Post-purchase Behaviour

expectations are compared to performance post-purchase satisfaction influences future behaviour

future purchasing behaviour word-of-mouth communication

Marketers try to influence post-purchase behaviour. How ?

Post-purchase communication to reduce dissonance, returns & order cancellations Talk with customers:

discover new uses for existing products

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etc

Evaluate Harley-Davidson Consumer Behaviour

Hells Angels ? Burly, leathers, bikers, rebels New breed:

Customer types from HD research

older more affluent better educated rubbies (rich urbans)

Showrooms + sales approaches

adventure-loving traditionalists sensitive pragmatists stylish status seekers laid-back campers classy capitalists cool-headed loners cocky misfits
independence, freedom, power more than a machine part of self-expression classic look, throaty sound American legend

all loved their Harleys because

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Scope of B2B Market

Agriculture Mining Construction Manufacturing Transport Wholesale & retail Finance, insurance, property Government Non-profit & voluntary organisations

different needs & buying patterns e.g. medical from rubber gloves vs body scanner buy raw materials/inputs to make other goods/services e.g. sugar & flavouring as inputs for Pepsi sell on to other business users or consumers e.g. Argos use purchases to conduct business e.g. stationery, legal services, IT/systems consultancy, marketing services

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Purchasing decisions in B2B Markets

Buying is less frequent. new task buy

buying decision not been made before bought before but this time change spec. or new supplier routine purchase made many times before

modified rebuy

straight rebuy

One-off, a batch or steady flow (JIT) Long, complex negotiation Service & consistency of quality & supply are vital

Buying centre Buying often a group process. Who is in the buying group? Users use the product e.g. trucks Influencers (direct or indirect) Tech know-how, budget etc Deciders Make the actual decision: purchasing officer, manager, product/service user Gatekeepers Control flow of information Buyers Select suppliers & negotiate terms
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Choice criteria

Organisational buying
Can we assume that B2B buying motives are rational, Need methodicalrecognition, & objective problem-awareness
Performance feedback & relationships, evaluation

quantity continuity quality price financing life cycle costs prody maintenance residual values risks politics personal

competition legal steps Motivators include Search for sources, financing Integrate partner Cost & profit-related benefits research & approve systems JIT Incentives & promotional support logistics conflict Supply alliances for expansion & proposals & analyse Receive Finalise contract & synergy + outsourcingimprove share costs, order routines productivity etc
Evaluate, negotiate, select
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Personal factors incl: Determine specification & quantity self advancement

Relationship Marketing
establishing & developing successful exchanges with customers.

Influences
global competition & defensive strategies. Growth in services (direct relationships). Focus on the value chain + the value proposition incl offering specific competencies

Customer relationship management (CRM)

maximise customer retention & share of customers business past behaviour is important

The future involves

increased WWW use direct marketing & personalisation costs of servicing unprofitable customers focus on better servicing of other customers

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