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Consumer
BUYER
Behaviour
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Consumer Buying Behaviour refers to
the buying behaviour of final consumers(individuals & households) who buygoods and services for personal
consumption.
We Study consumer behaviour toanswer:
How do consumers respond tomarketing efforts the company might
use?
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Who Buys and Uses the Products
Initiator -who identifies the need forproduct
Influencer -who has informational or
preference input to the decision Deciderwho makes the final decision
through budget authorization
Purchaserwho makes the actualpurchase
User
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Simplified Model
MarketingStimuli
TargetAudienceResponse
BlackBox
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Expanding the Black Box
Intra-Personal,psychologicalInfluences
Inter-Personal,socialInfluences
Decision Process
Motives, perceptions,.. Culture, social class,..
Mediated by
audiencecharacteristics:
Gender,age,
SituationalInfluencesOccasion,usage
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Why Study Consumer Behavior?
To implement the Marketing Concept . . aplan to influence buyer seller exchanges tomeet consumer & organizational goals
To understand complex influences on
consumption processes. To know the whyof consumer behaviour.
To increase a managers confidence to
predict consumer responses to theirmarketing strategy
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Multiple Stimuli BlackBox
MarketingMix
EnvironmentalEvents
Product
Price
Place
Promotion
Economic
Technology
Political
Cultural
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Consumer Benefits People do not buy products or services,
they buy benefits
Hence we make purchases not for theproducts themselves, but for thebenefits of the problems they solve orthe opportunities they offer
e.g., always late so a watch helps solveproblem; has stopwatch feature so nowcan keep track of work out times
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Consumer Benefits Consumers seek bundles of types of
benefits:
Tangible benefits:e.g., a watchkeeps good time; has leather band
Intangible benefits: e.g., the
reliability reputation of the watchmanufacturer; the image of the
watch wearer
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The Consumer Decision-
Making ProcessA consumer decision model is
a means of describing theprocesses that consumers gothrough before, during, andafter making a purchase(choice).
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Factors Influencing BuyerBehaviour
CulturalCulture
Subcult
ure
SocialClass
Social
ReferenceGroups
Family
Roles &
Status
Personal
Age &lifecycle
stageOccupation
Economiccircumstanc
e
Lifestyle
Personality
and Self-
Psychological
Motivation
Perception
Learning
BeliefsandAttitudes
B
U
Y
E
R
www.mba4career.com
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Consumer Decision Making
Process
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Major Causes of ProblemRecognition or Opportunity
Science and Technology Advancements
new products
new informationChanging Consumer Circumstances &
Expectations
improved education family life cycle changes
income adjustments
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Step 2 he information search stage
An internal search involves thescanning of one's memory to recall previousexperiences or knowledge concerningsolutions to the problem-- often sufficient forfrequently purchased products.
An external search may be necessarywhen past experience or knowledge isinsufficient, the risk of making a wrongpurchase decision is high, and/or the cost ofgathering information is low.
Personalsources
(friends andfamily)
Public sources(rating serviceslike Consumer
Reports)
Marketer-
dominatedsources(advertising orsales people)
The evoked set: agroup of brands fromwhich the buyer canchoose
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Information Sources
. Internal Sources (Psychological)
Experience (first preference)
memory storage/retrieval mental processing
External Sources (Social)
- Family (word of mouth)- friends
- professionals
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Information Sources
Public Sources government studies
product testing magazines
media stories
Commercial Sources
advertising (least preference)
sales people
product pamphlets
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Picking Physicians
Surveyed consumers said the mostfrequent sources for selecting a doctor are:
Referral from friend
Referral from another doctor
Referral from family member
General word of mouth
24%
14%
10%
9%
Applied
Marketing
WSJ, Sect.2, pg.37, 24June 1986.
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Influences on Intensity ofInformation Search
Personal factors -ability to process productinformation, physical energy and mobility to search
out alternative information .. Shopping propensity -
special sales, return policies. Social factors - social pressures for right
choice, time pressure on the purchase
Environmental Factors - availability of productsubstitutes, supplier alternatives and resources tosearch, Product life (long or short?)
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Information GapsExamples of DellsCustomer Feedback
- Wheres the power button?
- Wont work after I washed
the keyboard- Wheres the any key?
(Click any key to continue)
- fax wont work
- I refuse to read manual
Applied
Marketing
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Step 3 Evaluation of alternatives
Other people often influence aconsumers purchase decision. Themarketer needs to know whichpeople are involved in the buying
decision and what role each personplays, so that marketing strategiescan also be aimed at these people.
(Kotler et al, 1994).s
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Major Evaluation Criteria
Economic: cost/performance
Behavioural: prestige/status/. sociological: peer influence, lifestyle
Societal
: product externalities
environmental effectssocietys long run welfare
e
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Evaluation Criteria
Principle: Evaluation criteria changeover time and among market segments.
Promotions frame certainproduct attributes (evaluation
criteria) to influence theirperceived relative importance
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Evaluation criteria are the basis ofproduct attitudes
Product Attributes- Price (value),
- Quality,- style, etc.
+ relativeimportance (utility)
= Attitude towardProduct
Retailer Attributes- location,
- credit terms,- return policies,etc.
+ relativeimportance (utility)
= Attitude towardRetailer (Image)
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Buying Process
PurchaseDecision(s)
WHO BUYS?
WHAT?
WHEN?WHERE?
AND WHY?
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Consumer decision makingProblem Solving
Extensive: problem solving occurswhen buyers purchase more
expensive, less frequentlypurchased products in anunfamiliar product category
requiring information search &evaluation
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Limited: problem solving occurs whenbuyers are confronted with an unfamiliarbrand in a familiar product category
Routine: response behaviour occurswhen buyers purchase low cost, low risk,brand loyal, frequently purchased, lowpersonal identification or relevance,items with which they are familiar.
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Three Levels of Problem Solving
2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
RoutinizedResponseBehavior
Low involvement
Frequently purchasedInexpensiveLittle riskLittle information
LimitedProblemSolving
ExtensiveProblemSolving
High involvement
Infrequently purchasedExpensive
High riskMuch information
desired
Low involvement High involvement
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Decision Processm
Involvement
LowInvolvement High
Involvement
Weak attitude
Strong attitude
Social Visibility
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Factors affectingConsumer involvement
Previous experience: low level involvement
Interest: high involvement
Perceived risk of negative consequences:
high
involvement
Social visibility: involvement increaseswith product visibility high
involvement
s
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Buying Process
Cognitive dissonance:post-purchase tension .
Post-PurchaseBehavior
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Postpurchase Behavior
EffectiveCommunication
Follow-upGuarantees
WarrantiesUnderpromise &
overdeliver
CognitiveDissonance
?Did I make a good decision?Did I buy the right product?
Did I get a good value?
The Buyer Decision Process
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The Buyer Decision ProcessStep 5. Postpurchase Behavior
Consumers Expectations ofProducts Performance
DissatisfiedCustomer
SatisfiedCustomer!
Products Perceived
Performance
Cognitive Dissonance
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Cognitive Dissonance
psychological discomfortcaused by inconsistenciesamong a persons beliefs,
attitudes, and actions
varies in intensity based on
importance of issue and degreeof inconsistency
:
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Post Purchase Behavior
Principle: Dissatisfied customerscommunicate more negative word
of mouth than satisfied customers
communicating positive word of
mouth FORD says happy customerstell 8 people while unhappy people
tell 22 people.
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Cognitive Dissonance
Causes: Perceived Risk Performance risk
Physical risk (wear-out)
High financial commitment
High involvement level
High social visibility
Discrepant information
Information Overload
insufficient time to evaluate
Characteristics Affecting Consumer Behavior
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Characteristics Affecting Consumer Behavior
Buyer
Psychological
Personal
SocialCulture
Factors Affecting Consumer Behavior:
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Factors Affecting Consumer Behavior:
Social
GroupsMembership
Reference
FamilyHusband, wife, kids
Influencer, buyer, user
Roles and Status
Social Factors
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Stages in the Adoption
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Stages in the Adoption
Process
Awareness
Interest
Evaluation
Trial
Adoption
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Adoption of Innovations
innovators
Early Adapters
Late Majority
Early Majority
Laggards
2.5%
13.5%
34%
34%
16%
Influences on the Rate of
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Influences on the Rate of
Adoption of New Products
Divisibility Compatibility
Complexity
RelativeAdvantage
Communicabiliy
ProductCharacteristics
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WantsWants
NeedsNeeds
2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Psychological Influences within
an Individual
Drives
Consumers seek benefits to matchneeds and wants!
Drives
Maslows Hierarchy of Needs
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Maslow s Hierarchy of Needs
Esteem Needs(self-esteem, status)
Social Needs(sense of belonging, love)
Safety Needs(security, protection)
Physiological Needs(hunger, thirst)
Self
Actualization(Self-development)
P i D i Wh
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Selective
Exposure
Selective
Perception
Selective
Exposure
Selective
Perception
2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Perception Determines What
Consumers See and Feel
Selective
Retention
O t C diti i (L i )
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DriveDrive
CuesCues
ResponseResponse
Operant Conditioning (Learning)
2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Reinforcement
Cl i l C diti i (L i )
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UnconditionedStimulus
Unconditioned
Response
Classical Conditioning (Learning)
2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Conditioned
Stimuluse
Conditioned
Response
I di id l A Aff t d b
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Purchase Reason
Time Available
Purchase
Reason
TimeAvailable
Individuals Are Affected by
the Purchase Situation
2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
PhysicalSurroundi
ngs
Purchase Decesion
Differences Between Organizational
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Forlani, MKTG MGT, UCDHSC 50
Differences Between Organizationaland Consumer Markets
Demand CharacteristicsThe demand for industrial goods and services is:
1. Derived from the demand for consumer goods
and services.2.Relatively inelasticprice changes in the
short run are not likely to significantly affect
demand.
3. More erratic because small increases ordecreases in consumer demand can, over time,
strongly affect the demand for manufacturing
plants and equipment.
4. M r li l.
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Forlani, MKTG MGT, UCDHSC 51
Compared to Consumers, Organizational buyers
are:1. Fewer in number.2. Larger in size.
3. Geographically concentrated.
Differences Between Organizational andConsumer Markets (2 of 3)
Market Demographics
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Forlani, MKTG MGT, UCDHSC 52
Differences Between Organizational andConsumer Markets (3 of 3)
Characteristics of Buyer BehaviorCompared with markets for Consumer goods,
Organizational markets are characterized by:
1. The use of professional buyingspecialists following prescribed
procedures.
2. Closer buyerseller relationships.3. Presence of multiple individuals in the
buying process (Relevant Others).
More apt to buy on specification than
rice.
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CustomerSatisfactionand Customer
Delight
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Scott Smith
Marketing is not
selling products.It is satisfying
wants
Meaning of Satisfaction &
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Meaning of Satisfaction &
Benefit
Benefit:
Enhance well being
To be helpful or advantageous
To improve or gain advantage
Satisfaction:
To gratify the need, desire or
expectation
To fulfill a need or desire
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What is Customer Satisfaction?
Customer satisfaction not onlyinvolves assuring the quality of
the product or serviceprovided, but also meeting the
consumer's need as anindividual.
Importance of Customer
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Importance of Customer
Satisfaction
Business is made up of thelargest group of volunteers in
the world......customers!
Impact of Dissatisfied
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Impact of DissatisfiedCustomers
Deming proved that a dissatisfiedcustomer tells 16 other people but a
satisfied person only 8 others.
Negative word-of-mouth has blocked
close to 4 million from purchasing
atain product in the .
.
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Impact of Customer Dissatisfaction
No initial sale of the product
No repeat purchase of the product
Negative word-of-mouth advertising
Less referral business
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Impact of Customer
Dissatisfaction Higher employee turnover &
absenteeism
Lower staff moraleLower compliance with instructions
More malpractice suits
Lower profitability
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Satisfaction reflects the total
interactions a customer has witha company and its products
It starts the moment a
customer thinks of yourproduct
It does not end until thecustomer is completelysatisfied with it
Maximizing the Customer
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g
Experience
Addresses 3 QuestionsHow welldo youmeetcustomer
needs?
Howsmoothly doyou solve
yourcustomersrpoblems?
How quickly doyou anticipatewhat theyllwant next?
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Customer satisfaction with any product or survey
reflects the evaluation of the product, service,
company, and environment.
Customer satisfaction is critical to any product or
service because customer satisfaction is a strong
predictor of customer loyalty and productrepurchase.
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Customer Delight
Not Customer
Satisfaction, but...
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Adequate Is Not Acceptable Most of what we do is
adequate
People talk about Customer
Delight People talk about bad service
People dont talk aboutadequate service
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The Truth About Customers
Ten times more expensive toacquire a new customer than
to keep a current customer- Bain & Company Research
Customers are lost primarilydue to indifference (66%)versus dissatisfaction (14%) -WSJ
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The Best
Woo the ability to win others over
Empathy the ability to understand the moodof others
Discipline the ability to work systematicallyand consistently
Command the ability to control a situation
through communication Responsibility the ability to own a problem
until it is solvedGallup Survey of Best Customer Service Representatives
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ActuallyCustomer expectations are typically not
very high
Your job is to surprise themCustomer Delight is doing what theyhavent even imagined
What will cause them to say WOW!
You know what you can do - they dont
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Cusromer Value
The difference between all the benefitsderived from a total product and all the
costs of acquiring those benefits.
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Customer Value
a customer can evaluate a company'svalue-proposition on two broad dimensions
with multiple subsets:
relative performance: what the customergets from the vendor relative to a
competitor's offering;
price: which consists of the payment thecustomer makes to acquire the product or
service; plus the access cost