Consumer Behaviour

Concepts and

Applications

Not a simple picture !!!

1

To consider

influences on consumer buying processes

problem-solving: pleasure seeking (irrational) vs. rational views of buying

how we construe our buying/spending: perceptions, attitudes & motivations pre-exchange, in the exchange itself & post exchange

categories of influence: environmental and cultural

individual and reference groups

Insights from learning theory

B2C and B2B organisational buying behaviours

marketing strategy & communications design implications

2 2

Obviously

Individual customers & organisational

customers buy goods & services

They are stimulated & prompted to buy

Marketers

are interested in their decision behaviour

try to stimulate & influence this behaviour to

get better responses from the customer

3 3

Marketers, actors & roles in buying

marketing concept …"satisfy consumer needs for profit/value" so....

to segment, target & construct our marketing mix & promotions well, we must understand consumers & their behaviour

we can study actual purchases then find ways to encourage them to consider buying & then buy !!!

buying may involve many steps

many people

the actual purchase is but one part of the process

Actors and roles

the same person can play

multiple roles

•consumers

•opinion formers

•marketers

•public policy actors

Who is important in the buying

decision?

What do they buy & how much ?

When do they buy & where ?

How do they buy?

What choice criteria do they use?

How do they respond to the efforts

we use?

4

Buyer Behaviour Model

4

buyer’s

black

box

Needs - wants, stimuli

Product, price, place,

promotion etc

Environmental (PEST)

factors

Buyer

responses

Choices of

•product

•brand

•dealer

•timing

•price

Buy more, less,

stay loyal etc

5 5

Information search

How we buy (a rational view)

Need recognition,

problem-awareness

Evaluate alternatives

Information search

Buy

Post-purchase

evaluation

Shape desire, want

Evaluate alternatives (against evoked set)

Window-shop – simmering interests

Buy

Post-purchase

evaluation

• functional

• emotional ?

• current vs desired situation

• relative importance

• need inhibitors

• are they aware of need ?

• can we mediate need inhibitors?

• can we stimulate awareness &

action

• internal search (memory)

• external search (personal

sources, commercial sources

• third party reports (e.g. Which)

• personal observation/testing

Evoked

set

Operant (or instrumental) conditioning

Learning based upon the consequences of

behaviour

the chance of a specific behaviour goes or

thru +ve or -ve reinforcement each time the

behaviour happens

we associate the pleasure or displeasure of the

reinforcement with the behaviour

Consequences of responding that increase

behaviour are “reinforcers”

Marketers want to know the “reinforcers” 6

Responses are reinforced, punished,

or extinguished 1

Reinforcement is …

a consequence that more frequent behaviour

Positive reinforcement

a behaviour (response) a favourable stimulus

(commonly pleasant) increasing the frequency

of the behaviour

Negative reinforcement

a behaviour (response) lessening of an aversive

stimulus (commonly unpleasant) increasing that

behaviours frequency

7

Responses are reinforced, punished,

or extinguished 2

Punishment

a consequence that causes a behaviour to occur less

often

Positive punishment ("P. by contingent stimulation")

a behaviour (response) an aversive stimulus

a decrease in the behaviour.

Negative punishment ("P. by contingent withdrawal")

a behaviour (response) removal of a favourable

stimulus e.g. taking away a naughty child's toy, resulting

in less of that behaviour

8

Responses are reinforced,

punished, or extinguished 3 Avoidance learning

a behaviour r ending of an aversive

stimulus e.g. we no longer contact someone &

so avoid their unpleasantness.

Extinction

a behaviour (response) that had previously been

reinforced is no longer effective

the lack of any consequence following a

behaviour 9

10 10

Roles in the decision process after Blackwell/Miniard/Engel, 2007 Consumer Behaviour, 10th Ed, Thomson

each role can be acted by parent, children or other

members of the buying centre.

Each actor may display

multiple roles when buying

•a toy purchase

•a house

•a washing machine

•an armoured vehicle

•a sound system

•computer software

Infants, teenagers, working

women, husbands?

Influencing Strategies

1. expert influencing

2. subtle (incl. use of

rewards

3. emotional

4. combination

Who is

initiator

influencer

decider

buyer

user

11

What is the Relative Influence of Husbands

vs. Wives in Decision Making?

How is this changing?

12 12

Influences on Consumer

Behaviour

Cultural broadest & deepest influence

cultures & subculture

social classes

Social Family

Social roles and status (multiple)

Reference groups

Membership - primary vs. secondary

Aspirational vs. dissociative

Personal Age

Life cycle stage

Occupation

Economic circumstances

Lifestyle

Personality

Self-concept

Psychological Motivation

Perception

Learning

Beliefs

Attitudes

13 13

Personal influences Perception "mind" processes - selection, association,

organisation & interpretation. We

only note some things (selective) i.e. what grabs attention + distortion & retention

associate & categorise information into meaningful wholes

interpret/make inferences

information framing e.g.

good news or bad news first ?

accentuate the positives, eliminate the negatives

Learning classical & operant conditioning

cognitive learning

by rote

vicarious (from others)

reasoning

what motivates us

what we believe in real knowledge, opinion or

faith

Our attitudes relatively consistent

evaluations, feelings, tendencies towards something

Three components

cognitive (belief),

affective (feeling),

conative (behavioural)

personality

self-concept, lifestyle & life cycle stages

14

Perceptual, conceptual & related capacities

Perceptual - Sensing, measuring, judging

Colour, sound, texture, smell. Interpreting smells, noises, signals

Monitoring sounds, vibrations, data, information

Frames of reference – what is your “vantage point”

Conceptual

associating, abstracting, formulating, calculating, inferring

understanding processes in the abstract

deriving ideas & predicting from associated, comparative information

depends on knowledge and know-how (range & level)

dealing with symbolic information + its associations

Relating - Ego + alter-ego oriented:

need for achievement, power, affiliation

sensitivity & empathy, identification & association, objective-subjective, attitudes & values

Physical

Storage, access, processing & transmission capacity, security, privacy

15

Concepts in socio-cultural

examination Culture

a socially constructed complex of values, ideas, attitudes, institutions, meanings & symbols that shape and are shaped by behaviour & maybe passed on thru generations

Social Class

relatively permanent divisions in a society into which individuals or families may be categorized

based on perceived status & prestige.

Sub- or Micro-culture

a sub-group with its own distinguishing modes of behaviour.

Role

Behaviours, rights, duties expected of an individual in a group by other members

Reference groups

structures & standards influence behaviour.

Membership

groups we actually belong to

Aspirational

We wish to associate with this group.

Disassociative

We do not want to be identified with this group.

Power studies

how roles, groups & norms influence individual behaviour.

16

Opinion formers

Trendsetters

influential people in a group who

purchase new products early

serve as information sources for others

The Media

TV, newspapers, magazines, Internet communication

commentators

the media need "stories"

Sellers & Marketers

"seeding" the media. Pay media producers for product

placement in "publication channels"

From a Fashion house to Primark

Advertising, promotions & incentives

Word-of-mouth - viral

19

Personality & self concept

extroversion-introversion

self-confidence, dominance

sociability

autonomy

defensiveness

adaptability

aggressiveness

Towards a brand personality:

“the brand & Me”

sincerity

down to earth, honest, wholesome, cheerful

excitement

daring, spirited, imaginative, up-to-date

competence

reliable, intelligent, successful

sophistication

higher class, charming

ruggedness

outdoors, tough

e.g. Take care of pennies & £ will take care of themselves

Levi Jeans ?

Swaferga ?

Branston baked beans? Chicken jalfrazi ?

Top Gear ?

Yesterday Channel ?

Lands End?

20

Components of Attitude

Attitude

(overall orientation

toward object or idea)

Cognitive

(knowledge & beliefs

about a subject/object)

Affective

(overall feelings or

emotive reactions)

Behavioural

(how we tend to behave)

A person’s enduring

favourable or

unfavourable evaluation

of some object or idea

21

Choice criteria

attributes & variables a

consumer uses when

evaluating products &

services

different members of

buying centre obviously

may use different criteria

e.g. a teenager or a WAG

(self-image), a parent (for

the baby), an OAP (price

or risk reduction)

Social

status

social

belonging

fashion

Personal self-image

risk reduction

morals

emotion

Technical

reliability

durability

performance

style/looks

comfort

delivery

convenience

taste

Economic

price, VfM

running costs

residual

value

life cycle

costs

22

Consumer Problem-Solving

Categories

Routinised (habitual)

repeat buys.

Advertising may influence a change – also

promotions (2 for 1), branding to keep product in

customer’s mind

Limited problem solving (LPS)

buyer has some experience, may check prices

etc. Buyers can advertise to stimulate & compare

or reduce risk of brand switching

Extended problem solving (EPS)

23

Extended problem-solving

Research all choice

alternatives + examine

solutions

alternatives are

differentiated &

numerous

high deliberation &

involvement time

personally relevant

(risks)

high potential for

cognitive dissonance

self-image

risks

social

factors

24

Cigarette advertising

Cognitive dissonance (after Festinger)

discomfort when facing logical inconsistencies in our

thinking (cognitions) e.g. a belief in animal rights may be

seen as inconsistent with eating meat or wearing fur.

We may feel anxiety assoc. with bad decisions: guilt,

shame, anger, embarrassment, stress or other. This can

lead to rationalisation: justifications to support our

choices or change in attitudes, beliefs & behaviours.

When ideas are consistent … harmony or consonance.

If cognitions are unrelated, they are "irrelevant" not

dissonant.

25

Aesop's "The Fox and the Grapes"

A fox sees some tasty, grapes high on the

vine but can't think how to reach them. He

concludes that the grapes are probably not

worth eating anyway (not yet ripe, too

sour).

Nb. dissonance in the desire for something

unattainable & so the fox irrationally

decides that the "thing" must be flawed

(Sour Grapes).

26

Smoking

we know that cigarettes cause lung cancer

we want to live a long and healthy life

we can

quit smoking & reduce the tension between the contradictory

ideas or

deny conclusions about lung cancer or justify our smoking

“Only a few smokers become ill". "It only happens to very

heavy smokers“. "If smoking does not kill me, something

else will." "I am a smart, reasonable person who makes

good decisions." Easier to make excuses than to change

behaviour. Humans are rationalizing and not always

rational.

27

28

Social classes

Upper Uppers

Lower Uppers

Upper Middles

Middle Class

Working Class

Upper Lowers

Lower Lowers

Chavs

• slang (UK) for a subcultural stereotype

• Aspirants who want to be in a "class"

above their actual class.

• spend on fashion for upward social

mobility.

• fixated on fashion 'designer' clothing,

handbags, gold jewelery e.g.

Burberry,

• trying to adopt lifestyle of admired,

referent class but not seen as

successful.

• considered to be in poor taste,

ignorant,

• labelled as "trying too hard, not worthy

enough".

29

VALS2 psychographic groups

Actualizers

Fulfilleds

Achievers

Experiencers

Believers

Strivers

Makers

Strugglers

How do you see each category behaving as buyers?

30

Forrester Technographics

customer segments by motivation, desire & ability to

invest in technology

30

31

Start here

Explain the customer behaviour appeals being

used by … each of the following …

a selected product group within e.g. Gillette

a company within the earth-moving equipment industry e.g. JCB, Caterpillar, Komatsu etc

A group within the hotel sector including: Hilton, Accor, Travelodge, Townhouse

HMV

What common or different customer behaviour appeals are being used by

http://www.wickes.co.uk/

http://www.screwfix.com

http://www.diy.com/

http://www.homebase.co.uk

32

Explain the following in terms of consumer

behaviour debate

fitting rooms

return of goods policies e.g. B&Q, Next on-line

2-for-1, 20% bigger

interest free for 3 months (over £300)

3-years (DFS)

"Never knowingly undersold" - John Lewis Partnership

free delivery over £15 (Amazon)

main dealer trade in values, old car-new car

easy financing terms

free insurance

mobile phone automatic new model + cheaper contract + extras

home deliveries e.g. Tesco

£15 (21 days in advance), £26 (7 days), £55 – with on-line booking - Travelodge

4x Tesco Club Card points value for Cafe Rouge vouchers (£8 = £32)

33

Post-purchase evaluation

We want customer to have positive experiences from purchase but they may experience

Cognitive Dissonance Pre-purchase, purchase or post-purchase

attitudes & behaviour should be consistent with one another. If you buy a car & your friend thinks that it is rubbish …..

uncertainty – "Have I made the right decision?"

feel anxiety, disappointment, remorse

discrepancy between expectation & experience

reflect on opportunity cost and lost - difficult decision, many alternatives

irrevocable decision

neurotic customer (impulse buy)

post-purchase remorse

What can

marketer &

seller do?

34

Post-purchase Behaviour

expectations are compared to performance

post-purchase satisfaction influences future behaviour future purchasing behaviour

word-of-mouth communication

Marketers try to influence post-purchase behaviour. How ? Post-purchase communication to reduce dissonance,

returns & order cancellations

Talk with customers: discover new uses for existing products

etc

35

Evaluate Harley-Davidson Consumer Behaviour

Hells Angels ? Burly, leathers, bikers, rebels

New breed: older

more affluent

better educated

rubbies (rich urbans)

Showrooms + sales approaches

Customer types from HD

research

adventure-loving traditionalists

sensitive pragmatists

stylish status seekers

laid-back campers

classy capitalists

cool-headed loners

cocky misfits

all loved their Harleys because

independence, freedom, power

more than a machine – part of

self-expression

classic look, throaty sound

American legend

36

Scope of B2B Market

Agriculture

Mining

Construction

Manufacturing

Transport

Wholesale & retail

Finance, insurance, property

Government

Non-profit & voluntary organisations

different needs & buying patterns e.g. medical from rubber gloves vs body scanner

buy raw materials/inputs to make other goods/services e.g. sugar & flavouring as inputs for Pepsi

sell on to other business users or consumers e.g. Argos

use purchases to conduct business e.g. stationery, legal services, IT/systems consultancy, marketing services

37

Purchasing decisions in B2B Markets

Buying is less frequent.

new task buy

buying decision not been made before

modified rebuy

bought before but this time change spec. or new supplier

straight rebuy

routine purchase made many times before

One-off, a batch or steady flow (JIT)

Long, complex negotiation

Service & consistency of quality & supply are vital

Buying centre

Buying often a group process. Who is in the buying group?

Users

use the product e.g. trucks

Influencers (direct or indirect)

Tech know-how, budget etc

Deciders

Make the actual decision: purchasing officer, manager, product/service user

Gatekeepers

Control flow of information

Buyers

Select suppliers & negotiate terms

38

Organisational buying

Need recognition,

problem-awareness

Evaluate, negotiate,

select

Search for sources,

research & approve

Finalise contract &

order routines

Performance feedback &

evaluation

Determine specification &

quantity

Receive proposals & analyse

Integrate partner

systems

competition

legal steps

financing

JIT

logistics

conflict

outsourcing

quantity

continuity

quality

price

financing

life cycle costs

prody

maintenance

residual values

risks

politics

personal

Choice criteria

Can we assume that B2B buying motives are rational, methodical & objective

Personal factors incl: relationships, self advancement

Motivators include

Cost & profit-related benefits

Incentives & promotional support

Supply alliances for expansion & synergy + share costs, improve productivity etc

39

Relationship Marketing establishing & developing successful exchanges with customers.

Influences global competition & defensive strategies. Growth in services (direct relationships). Focus on the ‘value chain’ + the ‘value proposition’ incl offering specific competencies

Customer relationship management (CRM) maximise customer retention & share of customer’s business

past behaviour is important

The future involves increased WWW use – direct marketing & personalisation

costs of servicing unprofitable customers

focus on better servicing of other customers