Lecture 2: The Customer

- We want our customers to like us and have a good image of the company
- However, at times marketing goes too far, for instance harassing customers by calling
them even when their number is on the do not call list
- We as a marketer can probably get a customer to buy our product once, but what we
want are lifetime customers, since they are more profitable
- Loyal customers would need less convincing to use a product from a familiar company
and would still use the product even if the prices increased over time (e.g. Tide)
- Loyal customers would also refer products to their friends and family and increase the
amount they buy over time as they build a family
- When trying to understand customers, it’s easier to observe the behaviour than to
understand why it happens; to understand consumer behaviour we need to use
psychology

Influences on Consumer Behaviour (market mix)

- Product: the product must exist in order for the customer to buy it
- Place: depending on where marketing is, it is more likely that the customer would buy it
- Price: cheaper prices may influence a person to buy a product
- Promotion: need to market in order for customer to know the product is there

Customer purchase decision process:

- Recognize there is a need (e.g. my computer is too old, and incompatible for a lot of files
vs I see an ad on the new Macbook, I should maybe get a new computer)
- Think about what your criteria are (e.g. I want at least 16 RAM, with 1 TB hard disk
space, at least 15 -inch screen), and get research from external sources (friends, online
sources, etc.) or from own experiences, the level of involvement of searching
information is dependent on the product
- Once you have the attributes you need the most on a product (e.g. laptop), you can find
candidates that fit the criteria and evaluate the choices
- Multiply the importance of each category to each score from each brand and add up the
categories, then choose the one with the highest score
- Then, depending on whether your expectations and the performance meets or not and
as a customer they may become a loyal customer
- People usually try to like the choice they made (cognitive dissonance), since they don’t
like the conflicting thoughts in their heads, resulting in very few people having buyer’s
remorse

Situational influences

- Purchase task: depending on the purpose of the purchase (gift vs own use)
- Social surroundings: depending on who we are with, we are more likely to purchase
from a certain business (e.g. hanging out with friends who like Tims, even though the
Starbucks is closer, goes to Tims)
 - Physical surroundings: the stores usually place things in way you would walk by and end
up buying things they didn’t go to the store for (e.g. grocery stores, eggs and milk are
usually the most distance from the entrance and people usually turn right and lots of
things are placed before you get to the item you want to buy), the butt brush effect, an
experiment in which someone lightly brushes by people’s butts and they found people
usually leave the store after it happened and not buy anything, if interviewed they
would make an excuse, like not enough time or line is too long
- Temporal effect: people don’t do certain things during certain times (e.g. people don’t
buy PCs after noon usually)
- Antecedent states: emotions usually change someone’s behaviour (e.g. when going to
the US, you get cut off and become very angry and left earlier than planned)

Sociocultural influences

- Reference: when you want to embrace a certain group (e.g. U of T sweaters) or

distinguish self from the group (e.g. getting contacts, because glasses are for nerds)
- Family: influences how someone behaves through socialization (e.g. eating beef stew on
Christmas eve, because your family did it every Christmas eve), people at different
stages in their lives would need and want different products

Psychological influences

- Motivation: what is the goal behind the purchase, is it to establish an image or have
more space in your car (e.g. for a SUV)
- Personality: introvert vs extrovert, and what personality traits do you have that make
you want to buy a certain product (e.g. I am short so I want a larger car to show my
presence)
- Perception: for practical reasons/for your senses (e.g. to be higher up to see the road
more clearly)
- Learning: by realizing the benefits or rewards associated with product (e.g. someone
saw another man get a lot of attention from women because of their SUV)
- Values: what the customer believes (e.g. a man believes a SUV is safer for his children)
- Lifestyle: how a product fits with someone’s life (e.g. a SUV would give me space to put
my skis)
- Freud would say you want to buy a product because we have unconscious thoughts and
motives (e.g. someone feels sad about their relationship with their mom, and buys a
SUV)
- Hierarchy of needs: people are motivated to satisfy a basic need
o Physiological needs: basic needs (food, sleep, water, etc.)
o Safety needs: once the basic needs are satisfied, we need to be safe from harm
(e.g. insurance)
o Social needs: need to interact with others, marketing can play on our social
needs
 o Personal needs: everyone needs status, respect from others once other needs
are satisfied (e.g. donating blood to feel like you are contributing to society)
o Self-actualization: meaningful life (e.g. ads from universities)

- Schema: the brand and what the customer thinks about when they think of the brand
(brainstorm)
- Script: Procedural thoughts and expectations of the process to get a product/service
(order); if the procedure is changed it may change how the consumer perceives the
product
- Violation of scripts can work very well at times (e.g. cards against humanity selling for $5
more than original price on black Friday)
- What do consumers think? Marketers are also people and they would guess from their
own position first and then do some research through surveys and external sources;
however, they may make many mistakes when trying to think from consumers’
thoughts, therefore, marketers would ask, “how do consumers think?” instead
- Consumers usually think with a bounded rationality, where they want to make rational
decisions, but they are humans and would make not rational decisions at times
- Prospect theory value function: where you start matters (e.g. if you had nothing and got
$50, you are happy; if you had $50 and got $5, you are not as happy); also if you lose
something it makes you unhappier than does gaining something make you feel happy
- In marketing, a price increase hurts more than a price decrease makes consumers happy