This action might not be possible to undo. Are you sure you want to continue?
Analyzing Consumer Market & Buyer Behavior
PRESENTED BY: TEJAS SACHALA JIGNESH GAMIT PARESH SIDHDHAPURA DIGESH SHAH CHANDRAJIT KHANIYA KARTIK PATEL
FMS, BARODA Page 1
The aim of marketing is to meet and satisfy target customers’ needs & wants better than competitors Studying consumers provides clues for developing marketing activities Marketers are always looking for emerging trends that suggest new marketing opportunities
CONSUMER BEHAVIOR Definition of consumer behaviour :
“Consumer behaviour is the study of when, why, how, and where people do or do not buy products”. Conceptual Background: It blends elements from psychology, sociology, social anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Customer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer. Relationship marketing is an influential asset for customer behaviour analysis as it has a keen interest in the re-discovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer. A greater importance is also placed on consumer retention, customer relationship management, personalisation, customisation and one-to-one marketing. Social functions can be categorized into social choice and welfare functions. Each method for vote counting is assumed as a social function but if Arrow’s possibility theorem is used for a social function, social welfare function is achieved. No social choice function meets these requirements in an ordinal scale simultaneously. The most important characteristic of a social function is identification of the interactive effect of alternatives and creating a logical relation with the ranks. Marketing provides services in order to satisfy customers. With that in mind, the productive system is considered from its beginning at the production level, to the end of the cycle, the consumer.
Belch and Belch define consumer behaviour as 'the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires'.'
STANDARD MODEL FOR CONSUMER BEHAVIOR : BLACK BOX MODEL:
The black box model shows the interaction of stimuli, consumer characteristics, decision process and consumer responses. It can be distinguished between interpersonal stimuli (between people) or intrapersonal stimuli (within people). The black box model is related to the black box theory of behaviourism, where the focus is not set on the processes inside a consumer, but the relation between the stimuli and the response of the consumer. The marketing stimuli are planned and processed by the companies, whereas the environmental stimulus are given by social factors, based on the economical, political and cultural circumstances of a society. The buyers black box contains the buyer characteristics and the decision process, which determines the buyers response. The black box model considers the buyers response as a result of a conscious, rational decision process, in which it is assumed that the buyer has recognized the problem. However, in reality many decisions are not made in awareness of a determined problem by the consumer. ENVIRONMENTAL FACTORS Marketing Stimuli Environmental Stimuli BUYER'S BLACK BOX Buyer Characteristics BUYER'S RESPONSE Decision Process
Product Price Place Promotion
Economic Technological Political Cultural Demographic Natural
Attitudes Motivation Perceptions Personality Lifestyle Knowledge
Problem recognition Information Product choice search Brand choice Alternative Dealer choice evaluation Purchase timing Purchase decision Purchase amount Post-purchase behaviour
PROCESS ACCORDING TO BLACKBOX MODEL :
FMS, BARODA Page 3
Information search Once the consumer has recognised a problem, they search for information on products and services that can solve that problem. Sources of information include:
Personal sources Commercial sources Public sources Personal experience
The relevant internal psychological process that is associated with information search is perception. Perception is defined as 'the process by which an individual receives, selects, organises, and interprets information to create a meaningful picture of the world'
The selective perception process Stage Description - Selective exposure consumers select which promotional messages they will expose themselves to. - Selective attention consumers select which promotional messages they will pay attention to - Selective comprehension consumer interpret messages in line with their beliefs, attitudes, motives and experiences - Selective retention consumers remember messages that are more meaningful or important to them The implications of this process help develop an effective promotional strategy, and select which sources of information are more effective for the brand.
Information evaluation At this time the consumer compares the brands and products that are in their evoked set. How can the marketing organization increase the likelihood that their brand is part of the consumer's evoked (consideration) set? Consumers evaluate alternatives in terms of the functional and psychological benefits that they offer. The marketing organization needs to understand what benefits consumers are seeking and therefore which attributes are most important in terms of making a decision.
Purchase decision Once the alternatives have been evaluated, the consumer is ready to make a purchase decision. Sometimes purchase intention does not result in an actual purchase. The marketing organization must facilitate the consumer to act on their purchase intention. The provision of credit or payment terms may encourage purchase, or a sales promotion such as the opportunity to receive a premium or enter a competition may provide an incentive to buy now. The relevant internal psychological process that is associated with purchase decision is integration.
Postpurchase evaluation It is common for customers to experience concerns after making a purchase decision. This arises from a concept that is known as “cognitive dissonance”. The customer, having bought a product, may feel that an alternative would have been preferable. In these circumstances that customer will not repurchase immediately, but is likely to switch brands next time. To manage the post-purchase stage, it is the job of the marketing team to persuade the potential customer that the product will satisfy his or her needs. Then after having made a purchase, the customer should be encouraged that he or she has made the right decision.it is not effected by advertisement.
Internal influences Consumer behaviour is influenced by: demographics, psychographics (lifestyle), personality, motivation, knowledge, attitudes, beliefs, and feelings. consumer behaviour concern with consumer need consumer actions in the direction of satisfying needs leads to his behaviour of every individuals depend on thinking process
External influences Consumer behaviour is influenced by: culture,sub-culture, locality, royalty, ethnicity, family, social class, reference groups, lifestyle, and market mix factors.
WHAT INFLUENCES CONSUMER BEHAVIOR?
• • • •
Cultural factors Social factors Personal factors Psychological factors
Cultural factors Culture, Subculture and Social class are particularly important influences on consumer buying behavior Culture is the fundamental determinant of a person’s wants and behavior Each culture consists of smaller subcultures that provide more specific identification and socialization for their members Subcultures include nationalities, religions, racial groups and geographic regions Social classes are relatively homogeneous and enduring divisions in a society, which are hierarchically ordered and whose members share similar values, interests and behavior Social classes reflect not only income, but other indicators such as occupation, education and area of residence Culture: Culture is the set of basic value, perception, wants and behaviours learned by a member of society from family and other institution. Culture is the most basic cause of a person’s wants and behaviour. Every group or society has a cultural influence on buying behaviour.
FMS, BARODA Page 6
Subculture: Each culture contains smaller subcultures. Subculture is a group of people with shared value system based on common life experiences and situations. Subcultures include nationalities, religions, racial groups, and geographic regions. For example of important subcultures include Hispanic, African American, Asian and Mature consumers. Example: Kellogg India When Kellogg launched its cornflakes in the Indian market, the response from the consumers was not very encouraging. The company conducted a market research and discovered that Indians prefer hot milk with cornflakes whereas the ‘Crispiness’ benefit that it was claiming could be delivered only when the cornflakes were mixed with cold milk
Reference Groups Humans are inherently social animals, and individuals greatly influence each other. A useful framework of analysis of group influence on the individual is the so called reference group—the term comes about because an individual uses a relevant group as a standard of reference against which oneself is compared. Reference groups come in several different forms.
The aspirational reference group refers to those others against whom one would like to compare oneself. For example, many firms use athletes as spokespeople, and these represent what many people would ideally like to be.
Associative reference groups include people who more realistically represent the individuals’ current equals or near-equals—e.g., coworkers, neighbors, or members of churches, clubs, and organizations. Paco Underhill, a former anthropologist turned retail consultant and author of the book Why We Buy has performed research suggesting that among many teenagers, the process of clothes buying is a two stage process. In the first stage, the teenagers go on a "reconnaissance" mission with their friends to find out what is available and what is "cool." This is often a lengthy process. In the later phase, parents—who will need to pay for the purchases—are brought. This stage is typically much briefer. Finally, the dissociative reference group includes people that the individual would not like to be like. For example, the store literally named The Gap came about because many younger people wanted to actively dissociate from parents and other older and "uncool" people. The Quality Paperback Book Club specifically suggests in its advertising that its members are "a breed apart" from conventional readers of popular books.
Reference groups come with various degrees of influence. Primary reference groups come with a great deal of influence—e.g., members of a fraternity/sorority. Secondary reference groups tend to have somewhat less influence—e.g., members of a boating club that one encounters only during week-ends are likely to have their influence limited to consumption during that time period.
A person’s reference groups consist of all groups that have a direct or indirect influence on the person’s attitudes or behavior Groups having a direct influence on a person are called membership groups
Marketers try to identify target customers’ reference groups An Opinion leader is the person in informal, product-related communications who offers advice or information about specific product such as which of several brands is best or how a particular product may be used Marketers try to reach opinion leaders by identifying demographic and psychographic characteristics associated with opinion leadership
FMS, BARODA Page 8
EXAMPLE: NESTLE Prior to the launch of its KitKat Kubes, a variant of the popular KitKat brand, Nestle hired an agency to create a buzz among opinion leaders in the age 16 to 25 market A database of about 20,000 was sent text messages and then this database was whittled down to 100 opinion leaders by a phone questionnaire The opinion leaders were sent a large box of KitKat Kubes
Family Family member can strongly influence consumer’s behavior. Husband- wife involvement varies widely by product category and by stage in the buying process. In the United States, the wife traditionally has been the main purchasing agent for the family, especially in the areas of food, household products, and clothing. Children may also have strong influence on family buying decision. For example children as young as age six may influence on the family car purchase decision. “By six, they know the names of cars,” says an industry analyst. Chevrolet recognizes this influence in marketing its Chevy Venture minivan.
It is the most influential group on any person’s attitudes The members of the family play different roles such as influencer, decider, purchaser and user in the buying process of any product A person’s orientation towards religion, politics and economics are all based on the values acquired from the parents and family members For example: Husband dominant: Life insurance, automobiles, television Wife dominant: Washing machines, carpets, kitchen-ware Equal dominance: Housing, Vacation tour, outside entertainment
Roles and Statuses A person participates in many groups- family, clubs, organizations A person’s position in each group can be defined in terms of role and status
A role consists of the activities a person is expected to perform. Each role carries a status Eg. A Supreme court justice has more status than a sales manager and a sales manager has more status than office clerk People choose products that communicate their role and status in society Company presidents often drive Mercedes, wear expensive suits, and drink Chivas Regal scotch
PERSONAL FACTORS • • • • Age & stage in life cycle Occupation & economic circumstan ces Personality & self concept Life style & Value
Age & Stage in the Life cycle People buy different goods, fund services over a life time. Taste in food, clothes, furniture and recreation is often age related.
Marketers should also consider critical life events or transitions-marriage, childbirth,
illness, relocation, etc.-as giving rise to new needs.
Occupation & Economics Circumstances Product choice is greatly affected by economic circumstances: spendable income, savings & assets, debts, borrowing power, and attitudes towards spending and saving. If economic indicators point to a recession, marketers can take steps to redesign, reposition and reprice their products or introduce or increase the emphasis on discount brands so that they can continue to offer value to target customers.
Personality & Self-Concept A set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli is called Personality.
FMS, BARODA Page 10
Personality is often described as self-confidence, dominance, autonomy, sociability, defensive & adaptability. Brand Personality is the specific mix of human traits that may be attributed to a particular brand.
Outside marketing stimuli and the ultimate purchase decisions. Four key psychological processes : 1. motivation, 2. perception, 3. learning, and 4. memory – fundamentally influence consumer behavior.
A person has many needs at any given time Some needs are biogenic; they arise from physiological states of tension such as hunger, thirst, or discomfort Other needs are psychogenic; they arise from psychological states of tensions such as the need for recognition, esteem, or belonging A need becomes a motive when it aroused to a sufficient level of intensity Three of the best-known theories of human motivation1) Abraham Maslow 2) Fredrick Herzberg
1) Abrahm Maslow:
Abrham maslow sought to explain why people are driven by particular needs at particular times. His answer his that human needs are arranged in a hierarchy from most to least pressing-physiological needs, safety needs, social needs, esteem needs, and self-actualisation needs. People will try to satisfy their most important needs first. When a person succeeds in satisfying an important need, he will then then try to satisfy the next-most-important need.
2) Frederick Herzberg:
Two-factor theory distinguishes between: Motivators (e.g., challenging work, recognition, responsibility) that give positive satisfaction, arising from intrinsic conditions of the job itself, such as recognition, achievement, or personal growth, and
Hygiene factors (e.g. status, job security, salary and fringe benefits) that do not give positive satisfaction, though dissatisfaction results from their absence. These are extrinsic to the work itself, and include aspects such as company policies, supervisory practices, or wages/salary.
Essentially, hygiene factors are needed to ensure an employee is not dissatisfied. Motivation factors are needed to motivate an employee to higher performance, Herzberg also further classified our actions and how and why we do them, for example, if you perform a work related action because you have to then that is classed as movement, but if you perform a work related action because you want to then that is classed as motivation. Unlike Maslow, who offered little data to support his ideas, Herzberg and others have presented considerable empirical evidence to confirm the motivation-hygiene theory. Their work, however, has been criticized on methodological grounds. Nevertheless, Herzberg and his associates have rendered a valuable service to science and to management through their efforts to apply scientific methods to understanding complex motivational problems at work and have stimulated others to continue the search.
A motivated person is ready to act. How the motivated person actually acts is influenced by his or her view or perception of the situation In marketing perception are more important than the reality, as it is perceptions that will affect consumers’ actual behavior
There are three perceptual process 1) Selective Attention: Average person may be exposed to over 50 to 100 brand communication a day. Because a person cannot possibly attend to all these, most stimuli will be screened out- a process called selective attention. 2) Selective Distortion: Selective distortion is the tendency to interpret information in a way that will fit out perception. Consumer will often distort information to be consistent with prior brand and product beliefs. 3) Selective Retention: People will fail to register much information to which they are exposed in memory, but tend to retain information that supports their attitudes and beliefs
Learning induces changes in our behavior arising from experience. Most human behavior is learned, although much learning is incidental. Learning is theorists believe that learning is produced through the interplay of drives, stimuli, cues, responses and reinforcement. Two popular approaches to learning are classical conditioning and operant conditioning.
All the information and experiences we encounter as we go through life can end up in our long-term memory. Cognitive psychologists distinguish between short-term memory- a temporary and limited repository of information-and long term memory- a memory permanent, essentially unlimited repository.
CONSUMER DECISION-MAKING PROCESS
Difference between the desired state and the actual condition.
By seeing a commercial for a new pair of shoes, stimulates your recognition that you need a new pair of shoes.
Hunger stimulates your need to eat.
Consumer Problems and Recognition
Consumer problem: Discrepancy between ideal and actual state--e.g., consumer:
– – –
has insufficient hair is hungry has run out of ink in his or her inkjet cartridge
Problems can be solved in several ways--e.g., stress reduction <----- vacation,
movie, hot bath, medication
2. INFORMATION SEARCH
--- Memory External Search: --- Friends and Relatives --- From outside Environment
A successful information search leaves a buyer with possible alternatives, the evoked set. Example: Hungry, want to go out and eat, evoked set is Chinese food Indian food Burger king
The information search stage An internal search involves the scanning of one's memory to recall previous experiences or knowledge concerning solutions to the problem-- often sufficient for frequently purchased products. An external search may be necessary when past experience or knowledge is insufficient, the risk of making a wrong purchase decision is high, and/or the cost of gathering information is low. Determinants of External Search
3. EVALUATION OF ALTERNATIVES
Need to establish criteria for evaluation, features the buyer wants or does not want. Rank/weight alternatives. Example: If you want to eat something spicy, then Indian food gets the highest rank etc…
Buyer Behavior Other people often influence a consumer’s purchase decision. The marketer needs to know which people are involved in the buying decision and what role each person plays, so that marketing strategies can also be aimed at these people. • • • • • Initiator: the person who first suggests or thinks of the idea of buying a particular product or service. Influencer: a person whose views or advice carry weight in making the final buying decision Decider: the person who ultimately makes the final buying decision or any part of it Buyer: the person who makes the actual purchase User: the person who consumes the product or service
Types of decisions – – –
Routinized response (e.g., gas, sodas) Limited problem solving (e.g., car service, fast food) Extended problem solving (e.g., new car, computer, medical procedures)
Type of evaluation:
Compensatory: Decision based on overall value of alternatives (good attribute can outweigh bad ones) Non-compensatory: Absolutely must meet at least one important criterion (e.g., car must have automatic transmission)
4. PURCHASE DECISION :
Choose buying alternative, includes product, package, store, method of purchase etc. May differ from decision, time lapse between purchase decision and the actual purchase, product availability.
Consumer decision making varies with the level of involvement in the purchasing decision
Extensive: problem solving occurs when buyers purchase more expensive, less frequently purchased products in an unfamiliar product category requiring information search & evaluation; may experience cognitive dissonance. Limited: problem solving occurs when buyers are confronted with an unfamiliar brand in a familiar product category Routine: response behavior occurs
When buyers purchase low cost, low risk, brand loyal, frequently purchased, low personal identification or relevance, items with which they are familiar.
5. POST-PURCHASE EVALUATION :
It is the outcome, Satisfaction or Dissatisfaction. This can be reduced by warranties, after sales communication etc. Example: After eating an Indian meal, you may think that really you wanted a Chinese meal instead.
TYPES OF CONSUMER BUYING BEHAVIOR:
There are four types of consumer buying behavior, they are: 1. 2. 3. 4. Routine Response/Programmed Behavior Limited Decision Making Extensive Decision Making Impulse buying
1. ROUTINE RESPONSE/PROGRAMMED BEHAVIOR
Buying low involvement, frequently purchased, low cost items. Examples : Soft drinks, snack foods, milk etc.
2. LIMITED DECISION MAKING
Buying product occasionally. That is when you need to obtain information about unfamiliar brand in a familiar product category. Example: Clothes--know product class but not the brand.
3. EXTENSIVE DECISION MAKING : Complex high involvement, unfamiliar, expensive and infrequently bought products. Spend a lot of time seeking information and deciding. High degree of risk. Example:
FMS, BARODA Page 22
Cars, homes, computers, education.
4. IMPULSE BUYING :
No conscious planning. The purchase of the same product does not always elicit the same Buying Behavior. Product can shift from one category to the next. For example: Going out for dinner for one person may be extensive decision making (for someone that does not go out often at all), but limited decision making for someone else. The reason for the dinner, whether it is an anniversary celebration, or a meal with a couple of friends will also determine the extent of the decision making.
1. 2. 3.
www.scribd.com http://en.wikipedia.org/wiki/consumer_behaviour http://marketingpr.suite101.com/article.cfm
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.