Unit-4Relationship Marketing, Consumer Behavior

8/2/2019 Unit-4Relationship Marketing, Consumer Behavior

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Consumer Behaviour for

Services

Unit-4


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Consumer Buying Process


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Evaluation of Alternatives

Purchase Decision

Post-purchase Behavior

5 Stage Model of

the ConsumerBuying Process

Need Recognition

Information Search


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Need Recognition (awareness of need)

The buying process starts when the buyer

recognizes a problem or need.

The need can be triggered by internal

,external, marketing stimuli.

Ex.- persons normal needs-hunger/ thrust

rises to threshold level and becomes a

drive.


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Information search

An aroused consumer will be inclined to

search for more information

Internal search- memory. External search- if he needs more information.

Friends and relatives (word of mouth);

Marketer dominated sources; comparisonshopping; public sources etc.


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Contd..

Helps buyer find possible alternatives- i.e- theevoked set. ( brands that a buyer is aware of, and thinkswell of, when considering a purchase ; also called the

Consideration Set).

Hungry- want to go out and eat,

evoked set is

Chinese food Indian food etc.


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Evaluation of Alternatives-

Competitor brand information

Consumer evaluation process

1. The consumer is trying to satisfy the needs.

2. The consumer is looking for certain benefitsfrom the product solution.

3. The consumer sees each product as a bundle

of attributes for delivering the benefitssought to satisfy these needs


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Contd..

Attributes of interests to buyer :

Cameras : picture, sharpness, size ,price

Hotels: Location ,cleanliness, atmosphere,

price

If not satisfied with your choice then return to

the search phase.


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Purchase decision-

In evaluation stage the consumer form

preferences among the brands

In this phase-Choose buying alternative

includes product, package, store, method of

purchase , Incentives offered, out of stock,

budget etc.


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Consumer


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Post-Purchase Evaluation-outcome:

Satisfaction or Dissatisfaction.

Have you made the right decision?

This can be reduced by warranties, after salescommunication etc.

Ex: After eating an Indian meal, may think

that really you wanted a Chinese meal instead

of Indian.


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Consumer Behaviour Service Differences

Intangibility problem

Consumer involvement

Perceived Risk

Sources of Information


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Consumer Evaluation Processes for Services

Search Qualities

attributes a consumer can determine prior to

purchase of a product

Experience Qualities

attributes a consumer can determine after

purchase (or during consumption) of a product

Credence Qualities(Trustworthiness)

characteristics that may be impossible to evaluate

even after purchase and consumption


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Continuum of Evaluation for

Different Types of Products

Difficult to evaluateEasy to evaluate

High in searchqualities

High in experiencequalities

High in credencequalities

MostGoods

MostServices


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Services - Decision Making Process

Needawareness

Information search

Evaluation ofservicesuppliers

Request service

Service delivery

Evaluation

Future Intentions

MemoryMemory


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Categories in Consumer Decision-Making and Evaluation ofServices

InformationSearch

Evaluation ofAlternatives

Purchase andConsumption

Post-PurchaseEvaluation

Use of personal sources Perceived risk Evoked set Emotion and mood

Service provision as drama Service roles and scripts Compatibility of customers

Attribution of dissatisfaction Innovation diffusion Brand loyalty


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Consumer Categories in Decision-Making and Evaluation of Services

Information Search Evaluation ofAlternatives

Purchase andConsumption

Post - PurchaseEvaluation

Use of personal sources Perceived risk

Evoked set Emotion and mood

Service provision as drama Service roles and scripts Compatibility of customers

Attribution of dissatisfactionInnovation diffusionBrand loyalty

Culture Values and attitudes

Manners and customs Material culture Aesthetics

Educational and socialinstitutions


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Key Issues for Decision Making

Who is involved in the decision making process?

How long does the process take?

What is the set of competing services from which

consumers make their choice?What is the relative importance attached by

decision makers to different elements of the serviceoffer?

What sources of information are used in evaluatingcompeting service offers?


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Maslows Hierarchy of Needs

Self-actualisation

Esteem

Love

Safety

Physiological

E.g -Meals

Experiment withethnic cuisine

A meal at the best

restaurant in town

Social meal withfriends andfamily

Safe food from a

reputable sourceFood from anyuncontaminatedsource

InternalSatisfaction

The respect ofothers

Action for andfrom others

Survival

Satisfaction ofbasic hunger


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Information Sources

Previous personal experience

Word of Mouth recommendation (WOM)

Reference groupsMedia communications

Internet sources


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Evaluation of Alternatives

A process of choice reduction.

Rules based approaches used.

Critical attributes, average score of allattributes, or weighted attributes.


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Perceived Risk

Factors affecting perceived risk:

The level of tangible evidence

Buyer involvement

New purchase

Personal risk tolerance

Situational factors

Legal safeguards


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Authenticity

Caring

Control Courtesy

Formality

Friendliness

Personalization

Promptness

Discussculturaldifferenceswith thefollowing..


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Relationship marketing


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Relationship marketing

Marketing designed to create, maintain, and

enhance strong relationships with customers

and other stakeholders.


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Why is it important?

It costs five times as much to attract a new customer

as it does to keep a current one satisfied.

It is claimed that a 5% improvement in customer

retention can cause an increase in profitability ofbetween 25 and 85 percent depending on the

industry.

Likewise, it is easier to deliver additional products

and services to an existing customer than to a first-

time buyer.


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Six types of markets

1. internal markets

2. supplier markets

3. recruitment markets4. referral markets

5. influence markets

6. customer markets


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Customer Lifetime Value

Losing an existing customer means losing the

entire revenue stream that customer

represents not just that single encounter or

sale.


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Attracting, retaining and

growing customers

Customer delivered value the difference

between total customer value and total

customer cost.

Value includes product, services, personnel and

image value.

Cost includes monetary, time, energy and psychic

costs.


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Customer satisfaction

The extent to which a product or services

perceived performance matches a buyersexpectations.

What are expectations based on? Past buying experiences

Friends, family and other associates

Information about the competition Promises made in marketing materials (your

brand)


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Customer loyalty & retention

Highly satisfied customers are:

Less price sensitive

More likely to talk favorably about you

More likely to refer you to others

Remain loyal for longer


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Growing share of customer

Increasing the share of the customers

purchasing in your product category.

Best way is through cross-selling

Getting more business from current customers by

selling them additional or complementary services


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Managing your customers

Relationship marketing is designed to create,

maintain, and enhance strong relationships

with profitable customers and other

stakeholders.

First need to define what your profit is on

specific services

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Unit-4Relationship Marketing, Consumer Behavior

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