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Discussion Slide

Consumer Buying Behavior

• Consumer purchase process • Consumer buying environment • Traditional factors affecting consumer buying • Recent trends in consumer behavior

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BUYER BEHAVIOR
At the end of this module, the learning outcomes are: • Understand the buying decision-making process • Learn how attitudes and values influence buyer behaviors. • Discuss how traditional factors and new trends affect purchasing decisions

BUYER BEHAVIOR
Suggested readings: Integrated advertising, promotion and Marketing communications by Clow and Black, Chapter 3, 9th edition.

CONSUMER BUYING BEHAVIOR
India Airlines • Monopoly for a long time • Competition in 90’s • Bought new aircrafts • Modern aircrafts • Modern airport terminals • Still losing market share • What went wrong
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Launch of Aarey Milk based drink
• • • • Milk based products Full of nutrients Launched as ‘Health Drink’ Targeted on children

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Launch of Aarey Milk based drink
• • • • • • Children not enthused Poor sales Relaunched as ‘Fun Drink’ Children drinking on Picnics, Birthdays Children enthused Sales picked up

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Consumer Decision-Making Process

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Information Search
 Internal search  Evoked set  External search

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BUYER BEHAVIOR
Internal search • What he can think • Eliminate bad experiences • How to become part of consumer alternatives • Price, communication • Make first and best choice

External Search
 Ability to search  Motivation
 Level of involvement  Need for cognition  Shopping enthusiasm

 Perceived cost  Perceived benefit

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BUYER BEHAVIOR
If uncertain from internal resources External sources • Variety of sources • Friends, relatives • Time depends on three factors • Ability • Motivation • Costs and benefits

BUYER BEHAVIOR
Motivation • Determined by consumer’s • Level of involvement • Need for cognition • Level of shopping enthusiasm

BUYER BEHAVIOR
Involvement • How far task is relevant to consumer needs • Soap versus Car

BUYER BEHAVIOR
Need for cognition • Personality characteristic • Enjoy mental activities • High need for cognition • Gather more information and search thoroughly

BUYER BEHAVIOR
Shopping enthusiasm

• How keen are you as a shopper • Domino’s versus Pizza Hut

BUYER BEHAVIOR
Costs and Benefits • Higher perceived benefits increase the need of search. • How to reduce risk • Higher perceived risk means looking for additional information

BUYER BEHAVIOR
Three factors important in the information search process • Attitudes • Values • Cognitive mapping

BUYER BEHAVIOR
Attitudes • Can be influenced by marketing communication • Mental position taken towards a topic • Can drive consumer purchase decisions • Cadbury’s Dairy Milk Choclate

BUYER BEHAVIOR
Values • Strongly held beliefs • Build attitudes • Tend to be enduring and normally from during childhood

BUYER BEHAVIOR
Tata Tea • Voting issue Sahara • Patriotism • Bharat Hai Hamara Hum Hai Sahara

BUYER BEHAVIOR
Cognitive Mapping • How information is stored Coca Cola • Thanda Matlab Coca Cola • Short memory • Repetition

BUYER BEHAVIOR
Evaluation of alternatives • Evoked Set Method • The Multiattribute Approach • Affect Referral

BUYER BEHAVIOR
Evoked Set Method • Brands considered in a purchase situation Two sets • Inept set • Inert set

BUYER BEHAVIOR
Inept set • Brands • Not considered • Negative feelings

BUYER BEHAVIOR
Inert set • Aware • Neither negative or positive feelings

BUYER BEHAVIOR
Goal of marketing Communication • Help place the brand in the evoked set • Fiat’s attempt

BUYER BEHAVIOR
The Multiattribute Approach • Promoting high-involvement products • Consumer attitude towards a brand is determined by • Brand’s performance on attributes • Importance of each attribute to consumer Maruti’s approach • Kitna Datee Hai

BUYER BEHAVIOR
Affect Referral • Consumers choose brands that they like the best or the ones • Have developed emotional connections • Not on attributes but feelings • Coke with happiness • The most successful brand are those that establish emotional bonds with consumers.

BUYER BEHAVIOR
• • • • • Bonds lead to Brand loyalty Brand equity Reduces brand parity This means consumers do not have to evaluate alternatives because of their bond with the brand.

BUYER BEHAVIOR
Trends in the consumer buying environment • Age Complexity • Gender Complexity • Individualism • Active, busy lifestyles • Cocooning • Pleasure Pursuits • Health Emphasis

BUYER BEHAVIOR
Age Complexity • Growth of children • Young age • Even middle age people want to look young

BUYER BEHAVIOR
Gender Complexity • Roles are blurred • Single, divorced, late marriage • Marketing communication aims at women buying Scooty • Hero Pleasure

BUYER BEHAVIOR
Individualism • Divorces • Customers want products to be developed for them • Nike asking consumer to design their own shoes

BUYER BEHAVIOR
Active, busy lifestyles • Giving up materialism for vacation • Use of microwave • Increasing trend of replace • One-stop shopping outlets

BUYER BEHAVIOR
Cocooning • Busy and hectic lifestyles • Retreat and cocoon in their homes • Gadgets • Divorcees, remarried • Tend to shop sitting at home • Amazon.com

BUYER BEHAVIOR
Pleasure Pursuits • Stressful lives • Go for expensive holiday • Indulgence • Sale of luxury holidays

BUYER BEHAVIOR
Health emphasis • Health awareness Saffola • Talking about health benefits • Not alienate existing customers • Coke, Diet Coke

Industrial Buying Decision Process
 Marketers must study this for developing effective marketing strategy.  In Consumer Marketing, Household / Individual consumer / Buyer makes buying decisions based on certain mental stages like (i) Problem (Need) Recognition, (ii) Information Search (iii) Evaluation (iv) Purchase decision (v) Post Purchase Behavior  In Industrial Marketing, Buying Decision making process is observable, involving many people in buying firm & includes sequential activities / stages / phases, as follows:
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Decision Making in B2B Situations
Unique characteristics of Organisational Procurement: • Multiple Influencers: Design Engineers, Production, Finance, middle and upper management • Technical Sophistication: buyers are expert have detailed knowledge of manufacturing processes, design specifications, and are skilled in negotiation • Value Analysis: use systematised techniques for reducing costs and improving performance value of materials, components, and manufacturing processes.

Decision Making in B2B Situations
Unique characteristics of Governmental Procurement: • Widely dispersed markets: multiple organisations and agencies that buy on behalf of the govt • Complicated procurement laws • Understanding govt contracts • Political considerations often outweigh commercial ones.

Decision Making in B2B Situations
Unique characteristics of Procurement by Resellers: • Considerations are primarily on the expected contribution toward increased sales volume and profits • Products and policies should strengthen reseller’s ability to match, beat, or avoid competition.

Decision Making in B2B Situations
Unique characteristics of Institutional Procurement: • Practices lie somewhere between those of Commercial Enterprises and Government.

PHASES IN INDUSTRIAL BUYING DECISION MAKING PROCESS / BUYPHASES
 PHASE –1 :- Recognising A problem / need.  PHASE – 2 :- Determining Characteristics &

Quantity of needed product / Service*.  PHASE – 3 :- Developing specifications of the product*.  PHASE – 4 :- Searching & Qualifying Suppliers.  PHASE – 5 :- Obtaining & Analyzing suppliers’ offers*  PHASE – 6 :- Evaluating & Selecting Suppliers.  (shown on next slide)  PHASE – 7 :- Selecting an order routine  PHASE – 8 :- Post – Purchase evaluation * These are in addition to five stages of consumer buying decision process.
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SUPPLIER EVALUATION SYSTEM
ATTRIBUTE/ FACTOR PRICE QUALITY DELIVERY WEIGHT/ IMPORTANCE 15 30 25 SUPPLIER’S PERFORMANCE 0.5 0.7 0.6 SUPPLIER’S RATING SCORE 07.5 21.0 15.0

SERVICE
FLEXIBILIY TOTAL

20
10 100

0.7
0.4

14.0
04.0 61.5

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Buying Situations / Buyclasses
3 Common types of purchases / buying situations i. New Task / New Purchase : Here, buyers have limited knowledge and experience of the new product/service. Hence, more information is obtained, more people are involved, risks are more, and decisions take longer time. ii. Modified Rebuy / Change in supplier : This situation occurs when the firm is not satisfied with the performance of existing suppliers, or there is a change in product specs. Hence, the need for searching alternate suppliers. iii.Straight Rebuy / Repeat purchase : Here, the buying firm places repeat orders on suppliers who are currently supplying certain products/services. Such decisions are routine, with less risks and less information needs, and can be taken by junior executives.
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Buygrid Framework
BUYPHASES New Task 1. Problem Recognition 2. Characteristics of Product 3. Product Specification 4. Supplier Search Yes Yes Yes Yes BUYCLASSES Modified Rebuy May Be May Be May Be Yes Straight Rebuy No No No No

5. Analyzing Supplier Offers
6. Supplier Selection 7. Order – Routine Selection 8. Post Purchase Review

Yes
Yes Yes Yes

Yes
Yes Yes Yes

May Be
No May Be Yes
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Cognitive Map for Ruby Tuesday’s

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Principles concerning processing of information and cognitive mapping.
• Cognitive mapping enhances movement of messages from short-term memory to long-term memory. • Most persuasive messages reinforce current linkages. • Repetition is necessary to establish new linkages. • Difficult to modify or create new linkages.

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Postpurchase Evaluation
 Evaluation of product performance.  Cognitive dissonance.  Impacts future purchases.  Impacts word-of-mouth communications.

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Common Reasons Purchases Are Made
• • • • • • Products/services provide utility To satisfy physical needs To satisfy psychological needs To satisfy social needs To satisfy emotional needs To satisfy epistemic needs

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Diffusion Process
• The process by which the acceptance of an innovation is spread by communication to members of social system over a period of time.

OPINION LEADERSHIP & INNOVATION

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Adoption Process
• The stages through which an individual consumer passes in arriving at a decision to try (or not to try), to continue using (or discontinue using) a new product.

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Elements of the Diffusion Process
• • • • The Innovation The Channels of Communication The Social System Time

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Factors Affecting the Spread of Innovations
Low risk
High observability Low complexity Easy trial Change-prone target market

Rapid diffusion

Individual adoption decision Extensive marketing effort

Large relative advantage

High compatibility

Strong felt need

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Time and Diffusion
• Purchase Time • Adopter Categories • Rate of Adoption

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Adopter Categories
• A sequence of categories that describes how early (or late) a consumer adopts a new product in relation to other adopters.

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Adopter Categories

Early Adopters 13.5% Innovators 2.5%

Laggards

Early Majority 34%

Late Majority 34%

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Percentage of Adopters by Category Sequence
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Stages in Adoption Process
• • • • • Awareness Interest Evaluation Trial Adoption

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Stages in Adoption Process
• Awareness – Consumer is first exposed to the product innovation. • Interest – Consumer is interested in the product and searches for additional information. • Evaluation – Consumer decides whether or not to believe that this product or service will satisfy the need--a kind of “mental trial.” • Trial – Consumer uses the product on a limited basis • Adoption – If trial is favorable, consumer decides to use the product on a full, rather than a limited basis--if unfavorable, the consumer decides to reject it.

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Adoption Process & Extended Decision Making

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