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Marketing IntelligenceWeek 2-Lecture213/01/2014

Tayo AbinusawaMont Rose Colleget.abinusawa@mrcollege.ac.ukLO1:Customers and markets:

Learning OutcomesBy the end of this session, students will be able to understand :Buyer behaviour: influences on buyer behaviour; stimulus response model; models of purchase behaviour; diffusion and innovation; model unitary and decision-making unitsBuying motives: psychological factors, socio-psychological factors, sociological factors, economic factors and cultural factors influencing customer behaviour; lifestyle and life-cycle factors; customer and prospect profiling.3Introduction: Buying BehaviourStimulus response modelThis is simply a process of learning associated with changes based on external factors. It can be classical or operant conditioning. Classical: Largely involuntary; i.e many smokers associate smoking with coffee and cannot do one without the other or even a jingle. Operant: Wherein the consumer conducts a trial and error. After which a notion or pattern will be reinforced; i.e. if you buy a good product/service, you are more likely to buy it again.

Diffusion and innovationAdoption of new products/services in the markets cannot be predicted, as consumer behaviour changes continually; however, organisations need to introduce new products and service in order to avoid being left with an obsolete product portfolio. To avoid total failure new products and services many firms make minor increments rather than radical innovations. Diffusion is the process of adoption of an innovation throughout the market. Unitary and decision-making unitsUnitary decisions are decisions made with the interest of one individual over the interest of a group, and although rare it does happen. However, decision making units (DMUs) come into existence when individuals decide to collaboratively work together in making purchasing decisions. These might include dividing specific aspects of the purchasing process.Most DMUs contain 5 types of processes:Initiators: individuals who recognise the problemGatekeepers: individuals who control the flow of knowledge/information.Buyers: Individuals who make the actual purchaseDeciders: individuals who make the final decisionUsers (Endusers): individuals who use the product/service after it has been purchased. Influencers: Individuals with direct contact to the deciders. 15/20 minutes breakBuying MotivesBuying motives is described as the reason behind all purchase and purchasing behaviour. And although buying motives differ from one person to another they usually fall under the following: PsychologicalSocio-psychologicalSociologicalCulturalEconomical Psychological FactorsPsychology is the study of mental processes, and psychologists study the way people think. This includes understanding how people think about the products they buy. Psychological factors includes: Drive and Motivation: Drives are basic forces which make us want to do things. A drive is created when the desired state of the individual is different from the actual state; the greater the difference, the stronger the drive. A drive which has a definite target becomes a motivation. Personality and self-concept: Personality is the combination of various traits that determines who we are. The type of person we are dictates what we like and what we dislike. Perception: This is about the way we make sense of the world. Each of us has a particular view of the world (perceptual map) which enables us to make sense of what is happening around us. We assemble this map by taking in information through our senses and using it to develop an understanding of how the world works. Learning: Learning is the behavioural changes that result from experience. How we learn is critical to marketing communications, because marketers want people to remember the message and act upon them in ways which are favourable to the organisation. Attitude formation and change: Attitudes consists of knowledge, feelings and proposed behaviour. An attitude is a tendency to behave in a consistent manner towards a given stimulus; in other words people tend to react the same way every time towards something about which they have an attitude.Socio-Pyschological FactorsSocial psychology is a branch of psychology that studies individuals in the social context. In other words, it is the study of how and why people think, feel, and do the things they do depending upon the situation they are in. Social psychology is related to sociology in this regard, but instead of focusing on group factors such as race and socioeconomic classSociological FactorsSociology is the study of behaviour in a group context. Group behaviour is critical to human beings, and therefore it is important to understand what motivates people to buy specific brands and products.Peer and reference group: People identify groups which they would like to join, and also groups which they would prefer not to be associated with. Almost all such groups involve some type of consumption: clothing, things to use in group activities or shared consumptions.Family: The family is probably the most important reference group because it exerts the most influence on us. Families share consumption of many items (food, housing, energy, etc), and our upbringing also influences our behaviour in later years. Class and Culture: Culture is a set of beliefs and behaviours which distinguishes one group from another, and it includes religious beliefs, language, customs, class distinctions, and accepted norms of behaviour. Self image and role: Images we form of ourselves are almost entirely derived from feedback from other people. This feedback is derived in turn from the images we project as part of our roles in life. We perform many roles in our dealings with people (child, parent, student, colleague) and we judge ourselves by the feedbacks we get. People often define themselves by the products they consume. The products become an extension of the individual.

Class and Culture: Culture is a set of beliefs and behaviours which distinguishes one group from another, and it includes religious beliefs, language, customs, class distinctions, and accepted norms of behaviour. Self image and role: Images we form of ourselves are almost entirely derived from feedback from other people. This feedback is derived in turn from the images we project as part of our roles in life. We perform many roles in our dealings with people (child, parent, student, colleague) and we judge ourselves by the feedbacks we get. People often define themselves by the products they consume. The products become an extension of the individual.

Economic FactorsEconomics is the study of demand. Economists study demand in individual transactions, at the firm and customer level, and at the level of demand in economy. The former is called microeconomic whilst the later macro-economics. Economical factors includeSupply and demand: pricesEconomic choice: As a customer cannot spend money on something if he/she already spent the money somewhere elsePeople have portfolio of productsElasticity of demand: dependent of various factors other than price. Cultural FactorsCulture is the accumulation of values, knowledge, beliefs, customs, objects, and concepts that a society uses to cope with its environment and passes on to future generations. Cultural factors includes:Tangible items such as food, clothing, furniture, buildings, and tools Intangible concepts such as education, welfare, and lawsBecause cultural influences affect the ways people buy and use products, culture affects the development, promotion, distribution, and pricing of products. Different consumers in other regions of the world have different attitudes, values, and needs.

Lifestyle & Lifecycle Factors

Alifestyleis an individuals pattern of living expressed through activities, interests, and opinions.Lifestyle patterns include the way people spend time, extent of interaction with others, and general outlook on life and living.People partially determine their own lifestyle, but lifestyles are influenced by other factors such as personality and demographics.Lifestyles strongly impact the consumer buying decision process, including product needs.

Customer ProfilingCustomer profiling is the process of geting to know or having an idea of an organisations typical customer. These profiles describes one or more customers, but they are made on an individual basis. The general methods of creating a customer profile involves gathering two types of information: Descriptive: about the typical customerTransactional: how the customer buys: date, times and location if required, also actions and reactions can be considered. Thank You