Consumer Behaviour

The customer is the companys only true profit centre!

The cornerstone of a well-conceived marketing orientation is strong consumer relationships

Dont think the customer is an idiot. She is your wife!

Organizational charts

What is consumer behavior

Consumer behaviour is the study of how individuals, groups and organizations select, buy, use and dispose of goods, services, ideas or experiences to satisfy their needs and wants

Determinants of customer-delivered value

Total customer value Customerdelivered value

Product value

Personal value

Total customer cost

Monetary cost

Energy cost

Implications
Seller must assess total customer value and total customer cost of competitors offer to know how his offer rates in buyers mind
Seller who is at customer perceived value disadvantage has two alternatives:
Increase total customer value Decrease total customer cost

Customer satisfaction
Satisfaction is feelings of pleasure or disappointment resulting from comparing a products perceived performance in relation to expectations
Performance = Expectations SATISFIED Performance < Expectations DISSATISFACTION Performance > Expectations DELIGHT

Expectations
How do buyers form their expectations? From past buying, others advice, marketers information & promises etc., If marketers raise expectations too high, the buyer is likely to be disappointed
If marketers set expectations too low, it wont attract enough buyers!

Measuring satisfaction
Periodic surveys

Customer loss rate

Mystery shoppers Monitor competitive performance

Brand loyalty

A deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior

Forming strong customer bonds

Add financial benefits

Add social benefits Add structural ties

Consumer: Consuming in the real world

Family
Social class

Values

Object Meaning Rituals

Community

Gender Society

Culture Race / Ethnicity

Reference Groups

Factors affecting consumer decision making

REFERENCE GROUPS

VALUES / ATTITUDES

CULTURE

SITUATIONAL FACTORS

NEEDS
PLEASURE GENDER

EDUCATION

CONSUMER DECISIONS
MARKETERCONTROLLED STIMULI
PAST EXPERIENCE

PERSONALITY

FAMILY
NEWS MAGAZINES RADIO TELEVISION DIRECT MEDIA

MEDIA

SOCIAL CLASS

PRICE PACKAGING ADVERTISING PROMOTION PERSONAL SELLING

LIFE-STYLE

SUBCULTURES

What influences consumer behaviour?

1. Cultural factors

2. Social factors

3. Personal factors

1. Cultural factors

Culture: The fundamental determinant of a persons wants and behaviors acquired through socialization processes with family and other key institutions

Subcultures
Nationalities

Religions
Racial groups

Geographic regions
Special interests

2. Social factors

Reference groups

Family

Social roles

Statuses

Reference groups
Membership groups

Primary groups
Secondary groups

Aspirational groups
Dissociative groups

Family

Family of Orientation
Religion Politics Economics

Family of Procreation
Everyday buying behavior

Roles and statuses

What degree of status is associated with various occupational roles?

3. Personal factors
Age Selfconcept Life cycle stage

Lifestyle
Values

Occupation
Wealth Personality

Brand personality

Sincerity
Excitement Competence

Sophistication
Ruggedness

Lifestyle influences

Multi-tasking

Time-starved
Money-constrained

Model of consumer behaviour

Key psychological processes

Motivation

Perception

Learning

Memory

Motivation

Freuds Theory
Behavior is guided by subconscious motivations

Maslows Hierarchy of Needs

Behavior is driven by lowest, unmet need

Herzbergs Two-Factor Theory

Behavior is guided by motivating and hygiene factors

Maslows hierarchy of needs

Herzbergs two-factor theory

Perception
Perception is the process by which an individual selects, organizes and interprets information to create a meaningful picture of the world
Perceptions can vary widely among individuals exposed to the same reality In marketing, perceptions are more important than the reality!

Perception

Selective attention Selective retention

Selective distortion Subliminal Perception

Consumer buying process

Problem recognition

Information search
Evaluation

Purchase decision Post-purchase behaviour

Problem recognition
Buying process starts when the buyer recognizes a problem or need
The need can be triggered by internal or external stimuli Marketers need to identify circumstances that trigger a particular need

Sources of information

Personal

Commercial

Public

Experiential

Successive sets

Evaluation of alternatives
No single process is used by consumers in buying situations Some basic concepts will help us understand consumer evaluation process
Consumer is trying to satisfy a need Consumer is looking for certain benefits from the product solutions Consumer sees each product as a bundle of attributes with varying abilities for delivering the benefits sought to satisfy the need

Consumers prefer attributes that deliver sought-after benefits

Market for a product can often be segmented according to attributes that are important to different consumer groups

Purchase decisions
In executing a purchase intention, the consumer can make up to 5 sub-decisions
Brand Dealer Quantity Timing Payment method

Stages between evaluation of alternatives & purchase

Post-purchase behaviour
The marketers job does not end with the purchase
In many instances, its just the beginning!

Need to reinforce consumers choice and help them feel good about their brand

Case Study 4

Case study details

You have been assigned by Odyssey book store chain to suggest a robust system that:
Constantly monitors consumer behaviour Captures key decision variables Measures customer satisfaction Forges strong customer bonds