TOPIC 2 CONSUMER BEHAVIOUR

Agenda
Concept
5 Step buyer decision process Characteristics of consumer & organisational markets

 A customer is the most important visitor on our

premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so. Mahatma Gandhi

Concept
The aim of marketing is to satisfy target customers

needs & wants better than competitors Consumer behaviour is the study of how individuals,groups & organisations select,buy,use and dispose of goods,services ,ideas, or experiences to satisfy their needs & wants Studying consumers provides clues for improving or introducing products or services, setting prices, devising channels, and developing marketing activities.

Concept
What influences consumer behaviour? 1.Culture factors Culture Subcultures

When Kellogg launched its cornflakes in the Indian market,the response from the customers was not very encouraging.The company conducted a market research and discovered that Indians prefer hot milk with cornflakes whereas the Crspiness benefit that it was claiming could be delivered only when the cornflakes are mixed with cold milk

Concept
What influences consumer behaviour? Social classes Social class is indicated by different variables:income,occupation,education,value orientation etc Those within each class tend to behave more alike than persons from two different classes. Social classes differ in dress,speech patterns etc Persons are perceived as occupying inferior or superior positions according to social class Individuals can move up or down the social class ladder during their lifetimes SOCIAL CLASSES SHOW DISTINCT PRODUCT & BRAND PREFERENCES

Concept
What influences consumer behaviour? 2.Social Factors Reference Groups: All groups that have direct or indirect influence on a persons behaviour Direct Influence:Membership groups Membership groups: Primary groups:family,friends,neighbours,co-workers & those with whom a person interacts fairly continuously & informally Secondary Groups:religious,professional which are more formal interactions and are not continuous

Concept
Indirect Influence: Influence by groups the person does not belong to: Aspirational groups:A person hopes to join Dissociative groups:whose values and behaviour an individual rejects Opinion Leaders: One project manager at Nestle said it only takes 50 people to make a craze.. But of course it has to be the right 50 people.

Concept
Family :

Family of opinion : Parents & siblings Family of procreation : Spouse & children Decision maker: Joint families Nuclear families
Role & Status

People choose products that reflect their role & actual or desired status in society

Concept
3.Personal Factors Age & stage in the life cycle Family Life Cycle: Delayed marraiges , children moving abroad, tendancy to buy assets in early age Critical Life Events: First Job , Job switch , Marriage,Children,Switching locations,retirement
Lifestyle & values

Marketers search for the match between their products and consumer lifestyles.

Concept
Personality & self concept

Stanfords Jennifer Aaker conducted research into brand personalities and identified the following five traits Sincerity (down to earth,simple) Excitement (Spirited,Imaginative) Competence (Reliable,intelligent,successful) Sophistication (Upper class,charming) Ruggedness (outdoorsy,tough) Consumers often choose & use brands that have a brand personality consistent with their self concept In some cases match may be based on ideal self concept

Concept
Model of consumer behaviour
Marketing Stimuli
Products Services Distribution Communication Other Stimuli Consumer Psychology Motivation Perception Learning Memory Buying decision process Prob.Recognition Info search Alter Evaln Purchase Decn Post purchase behv.

Economic Technological Political Cultural

Consumer Characteristics
Cultural Social Personal

Concept
Consumer Psychology Key psychological factors Motivation Perception Learning Memory These psychological factors decide consumers response to the marketing stimuli

Concept
Motivation

A need becomes motive when it is aroused to a sufficient level of intensity Three theories of motivation 1.Sigmund Freud: Psychological forces shaping peoples behaviour are largely unconscious and a person cannot fully understand his or her own motivations. Motivation researchers often conduct in-depth interviews with a few dozen cosumers to uncover deeper motives triggered by a product/service.

Concept
Motivation

2.Maslows theory

Concept
Preception:

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Concept
Preception:

People can emerge with different perceptions of the same object because of three processes 1.Selective attention: People are more likely to notice stimuli that relate to their current need that they anticipate Whose deviations are large in relation to the normal size of the stimuli

Concept
Preception:

2.Selective distortion: Consumers will often distort information to be consistent with prior brand or product belief.
X no of consumers were given 2 soft drinks to taste. 50% liked soft drink A & 50% soft drink B Then same drinks were offered to them disclosing brands 65% prefered A , 23% prefered B,remaining found no difference.

Concept
Preception:

3.Selective retention: Because of selective retention we are likely to remember good points about a product we like & forget good points of other product. Producers have to give repetitive messages to consumers.

Concept
Learning:

GeneralisationYou buy a shampoo of company X,& your experience is rewarding. Company X comes up with hair gel.You tend to buy it. You Generalise your response to shampoo & company X.
DiscriminationPerson has learned to recognize differences in similar stimuli.

Concept
A new company can enter the market using same drives of a leading brand because people may shift their loyalty to similar stimuli.Generalisation OR The company may offer different drive and give strong cues to pull customers to swith..Differentiation

Concept
Memory:

Successfull recall of a brand does not only depend on the initial strength of the information Three factors are important. 1.Presence of other product information in the memory can produce interference 2.Time since expoure to information affects the association. Though,psychologists believe that memory is very durable & association decays slowly. 3.Information may be available in the memory but not accessible.This needs proper retrival clues or reminders

Five stage buying decision process

Problem Recognition Information search Evaluation of Alternatives Purchase decision Post Purchase behaviour

Five stage buying decision process

Problem Recognition

Buyer recognises problem or need Need can be triggered by internal/external stimuli

Information search

References Media Experience Company should accordingly plan information sharing

Five stage buying decision process

Information Search
Total Set
IBM Apple Dell Hewlett-Packard Toshiba Compaq NEC Tandy

Awareness Set
IBM Apple Dell Hewlett-Packard Toshiba Compaq

Consideration Set
IBM Apple Dell Hewlett-Packard

Choice Set
IBM Apple Dell

Decision

. . .

Five stage buying decision process

Evaluation of alternatives

Based on Suitability to purpose Availability Price Culture Status Durability Service Influences Fashion

Five stage buying decision process

Evaluation of alternatives

Expectancy-Value Model
Computer Memory Capacity (Wgt:40%) A B C D 10 8 6 4 Attribute Graphics Size & Price Weighted capability weight Rating (Wgt:30%) (Wgt : 10%) (Wgt:20%) 8 9 8 3 6 8 10 7 4 3 5 8 7.8 7.3 6.8 4.8

A,B,C rated on 1 to 10 (1:Lowest Level) D rated on 1 to 10 (1:Highest price & lowest preference)

Five stage buying decision process

Purchase Decisions

After making out preferences among the brands,the final purchase decision may depend upon Brand Dealer Quantity Timing Payment Method

Five stage buying decision process

Purchase Decisions

According to expectancy model,customer might have purchased Computer A. But customer may have different preferences Conjunctive Heuristic:Consumer sets minimum acceptable level for all the factors Eg:he decides to purchase a brand which will have minimum 5 score in all the characteristics.i.e.C Lexicographic Heuistic:best brand on customers most prefer attribute.eg:Graphic capabilitythen B

Five stage buying decision process

Purchase Decisions

Intervening Factors: 1.Attitude of others a.Negativity of the attitude b.Consumers motivation to comply with that person 2.Unanticipated situational factors a.Loss of job of chief wage earner b.Preference may change

Five stage buying decision process

Purchase Decisions

Perceived risks by the consumer 1) Functional risk 2) Physical Risk 3) Financial Risk 4) Social risk 5) Time Risk

Five stage buying decision process

Post Purchase Behaviour

Basically depends on satisfaction Satisfied consumer Repeat purchaser Positive publicity May purchase other products/services of the same producer Dissatisfied consumer Public Action:Complaint to company,Complaint against company to consumer court,news paper Private Action:decision not to buy again,negative publicity

Five stage buying decision process

Post Purchase Behaviour

Post purchase communication with the consumer Letter of congratulations/welcome to family Telephone call Courtesy calls Service calls-Assistance Satisfaction survey Communication of new varieties,new products/services

Five stage buying decision process

Post Purchase Behaviour

Post purchase use & disposal: If consumers throw the product away after usage,the marketer needs to know how they dispose it especially if it can harm the individuals handling it or the environment (nickel cadmium batteries,beverages containers,perfume containers ..). MICO Bosch: Collect used fuel filters Clean and recirculated in the market. Go Green.

Business vs consumer market

B:Fewer,larger markets B:Closer supplier-customer relationship B:Professional purchasing:Expert purchasers,pusrchase goal B:Several buying influences:lot of people influence buying decision B:Multiple sales calls to close sales B:Derived demand:Demand for business goods is derived by the demand for consumer goods.

Business vs consumer market

B:Inelastic demand:Shoe manufacturers will not buy

more leather just because of lower price & also will not purchase less leather than required because of increase in prices A small change in demand of consumer product reflects in relatively larger change in derived demand.