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Assistant Professor, MarketingPlease ensure all electronic devices are in “silent
mode”, “vibrate mode” or “turned off”
Anthony Francescucci
MKT 100-021WEEK 7– UNDERSTANDING
BUYER BEHAVIOUR
Welcome to
AGENDA
Understanding Buyer Behaviour & Market Research
Metrics Mastery 5
3
MODULE 4
Understanding Buyer Behaviour & Market
Research
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CONSIDER THIS SCENARIO• YOU HAVE JUST START YOUR
UNIVERSITY DEGREE AND YOU REALIZE THAT HAVING A COMPUTER WOULD HELP YOU EXCEL IN YOUR STUDIES. THINK ABOUT THE PROCESS THAT YOU WENT THROUGH TO BUY A COMPUTER. BEGIN THINKING ABOUT THIS PROCESS WHILE YOU WERE STILL IN HIGH SCHOOL.What are the steps you when
through?
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CONSUMER BUYING DECISION (CBD) PROCESS
Need Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Post-purchase behaviour
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CBD PROCESS – HABITUAL SHOPPING
Need Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Post-purchase behaviour
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WHY DOES CBD CHANGE WITH HABITUAL PURCHASES?
What has worked in the past (rewarded us) is likely to work again (reward us again) in the future
Habits allow us to save time making decisions and be thinking of other things as we do them
Routine can often be executed more efficiently than new behaviours
Provides a sense of discipline, order and control in our lives
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CBD PROCESS – RECREATIONAL SHOPPING
Need Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Post-purchase behaviour
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CBD PROCESS – COMPLEX SHOPPING
Need Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Post-purchase behaviour
FIELD OF BUYER BEHAVIOR
Study of the processes involved when individuals, groups, or companies select,
purchase, use or dispose of products, services, ideas or experiences to satisfy
needs and desires.
• Who consumes?• What?• Why?• Where and how?• What can we do once we know?
Knowledge is Power 10
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A MODEL OF CONSUMER BEHAVIOR
Their needs and processes are under the influence of cultural, social, personal, factors.
Their behavior represents a process of problem solving in stages from need recognition to feelings of (dis)satisfaction.
Consumer Behavior is reasoned and purposive. Consumers enter the marketplace in order to satisfy needs, acquire meanings and produce themselves.
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WHAT INFLUENCES CONSUMER BEHAVIOUR?
Cultural FactorsCultural Factors
Social FactorsSocial Factors
Personal FactorsPersonal Factors
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CULTURE
The fundamental determinant of a person’s wants and behaviours
acquired through socializationprocesses with family
and other key institutions
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SUBCULTURES
Nationalities Nationalities
ReligionsReligions
Racial groupsRacial groups
Geographic regionsGeographic regions
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EXAMPLE OF CULTURAL DIFFERENCES• Differences Between Cultures
– “A house should be dusted and polished three times a week.”
Numbers shown are percentages agreeing with statement
16Numbers shown are percentages agreeing with statement
EXAMPLE OF CULTURAL DIFFERENCES• Differences Between Cultures
– “Everyone should use deodorant.”
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MKT100
Numbers shown are percentages agreeing with statement
EXAMPLE OF CULTURAL DIFFERENCES• Differences Between Cultures
– “My children are the most important thing in my life.”
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SOCIAL FACTORS
Referencegroups
Social roles
Statuses
Family
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PERSONAL FACTORS
Age
Values
Life cyclestage
Occupation
Personality
Self-concept
Wealth
Lifestyle
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PROFESSIONAL OR BUSINESS BUYING BEHAVIOUR
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THE BUSINESS BUYING PROCESSPr
oble
m
Reco
gniti
on
Gen
eral
nee
d de
scrip
tion
Prod
uct
Spec
ifica
tion
Supp
lier
Sea
rch
Prop
osal
So
licita
tion
Supp
lier
Sele
ction
Ord
er-r
outin
e sp
ecifi
catio
n
Perf
orm
ance
Re
view
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BUYING SITUATION
Straight rebuyStraight rebuy
Modified rebuyModified rebuy
New taskNew task
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DEPENDS ON BUYING SITUATIONBuying Stage New Task Modified
RebuyStraight Rebuy
1 Problem recognition Yes Maybe No
2 General need description Yes Maybe No
3 Product specification Yes Yes Yes
4 Supplier search Yes Maybe no
5 Proposal solicitation Yes Maybe No
6 Supplier selection Yes Maybe No
7 Order-routine specification Yes Maybe No
8 Performance review Yes Yes Yes
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MARKET RESEARCH
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THE MARKETING RESEARCH PROCESS
Define the
problem
Develop & design research
plan
Collectdata
Analyze information
Present findings
Make decision
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1. DEFINE THE PROBLEMNot too broadly Not too narrowly
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Start by identifying the decisions
What decisions will need to be made
from the researching findings
Then work backwards to develop research objectives that will
answer the questions
RESEARCH OBJECTIVES TO ADDRESS PROBLEM
Whether to launch new product X ?• Determine Interest in product X• Determine Willingness to pay for product X• Best Price point to maximize revenue• Where would customer purchase
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2. DEVELOPING THE RESEARCH PLAN
Data Sources
Research approaches
Sampling Plan
Research Instrument
Contact Method
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• Fresh, for a specific purposePrimary
• Already exists, collected for another purposeSecondary
2. DEVELOP THE RESEARCH PLANData sources
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2. DEVELOP THE RESEARCH PLAN
Type of Research
• is undertaken when the problem or research question is still fuzzy & management wants additional information before undertaking further research.
Exploratory
• is used to describe customers, either small numbers of customers in-depth (qualitative research), or large numbers by survey research (quantitative research).
Descriptive
• Used to explore the question “Does X cause Y?” Cause-and-
effect
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2. DEVELOP THE RESEARCH PLAN
Type of Research
• sample of customers at a specific point in time
Cross-sectional
• Repeated measurement of the same customer over a period of time
Longitudinal
DES
CRIP
TIV
E R
ESEA
RCH
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2. DEVELOP THE RESEARCH PLAN
Research approaches
Observational Research
Focus Group Research
Survey Research
Behavioural Data
Experimental Research
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Research instruments
2. DEVELOP THE RESEARCH PLAN
Quantitative -Questionnaires
Qualitative
QUALITATIVE RESEARCH
Advantages
• deep understanding• quick, cheap• flexible, fluid, open,
suggestive• able to tap deep,
important, enduring meanings
Disadvantages
• Can’t generalize• requires expertise• ‘subjective’
interpretations• subjective to the
selective perception of manager or analyst
QUANTITATIVE RESEARCH
Advantages
• power of numbers/science
• ‘objective’• can generalize• useful for forecasting
Disadvantages
• superficial/ structured• not innovative• dishonesty/reluctance• non-response• artificiality of control
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2. DEVELOP THE RESEARCH PLANSampling Plan
Sampling Unit• Who to survey
Sample Size• How many to survey
Sampling procedure• probability vs non-probability
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2. DEVELOP THE RESEARCH PLAN
Contact Methods
Mail questionnaire
Telephone interview
Personal interview
On-line interview
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ON-LINE RESEARCH
Advantages
• Reduced errors• Reduced cost• Increased speed• Richer Response
(open-ended)• Richer multimedia
experience
Disadvantage
• Not representative of population
• Dishonesty / reluctance
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3. INFORMATION COLLECTION IS;
Most expensive & error prone step
Respondent
unavailable uncooperative biased or dishonest
Interviewer
biased or dishonest
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5. PRESENT THE FINDINGS
4. ANALYZE THE INFORMATION
6. MAKE THE DECISION
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ANY QUESTIONS
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METRIC 5:MARKUP & MARGIN
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MARK-UP VERSUS MARGIN
• Is always a % based on the cost of a product or service
• It is the amount you want to add to the cost to determine the selling price
Mark-up
• Is always a % based on the price of a product or service
• It is the amount of the selling rice that is available to cover fixed costs (remember contribution margin)
Margin
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MARGINS AND MARK-UPS
PriceCost $10
Margin $ Mark-up $ $5Margin %33.3% 100
$15
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MARGINS AND MARK-UPS
PriceCost
Margin $ Mark-up $ $5Mark-up %50.0% 100
$15$10
MARKUP OR MARGIN?
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RELATIONSHIP BETWEEN MARGINS & MARKUPS
Price Cost Margin Markup
$10 $9.00 $1 = 10% on Price
$1+ 11% on Cost
$10 $7.50 25% 33%
$10 $6.67 33.3% 50%
$10 $5.00 50% 100%
$10 $4.00 60% 150%
$10 $3.33 66.7% 200%
$10 $2.50 75% 300%
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EXAMPLE – PART 1You are a manufacturer of widgets. Your cost to manufacture and package your widget is $10/unit. You decide to sell the product to your wholesaler for $19/unit. You have marked-up the product $9, which will cover your operating expenses and provide for a nice profit.
Cost = $10
Markup $ / Margin $= $9Price = Wholesale Cost = Cost + Markup = $10 + $9 = $19Markup (%) =Margin (%) =
Markup $ / Cost * 100% = $9 / $10 = 90%Margin $ / Price * 100% = $9 / $19 = 47.4%
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EXAMPLE – PART 2Let’s continue: you find a distributor willing to carry and move your product for a 25% margin.
Wholesale Cost = $19 Wholesale Margin (%) = 25%
Wholesale Price =
Wholesale Markup =
Wholesale Markup (%)=
Wholesale Price - Wholesale Cost= $25.33 - $19 = $6.33
Wholesale Markup / Wholesale Cost*100%= $6.33 / $19 * 100% = 33.3%
= Wholesale Cost / (100% - Wholesale Margin)= $19 / (100% - 25%) = $25.33
Cost = Price x (1- Margin %)
EXAMPLE – PART 3
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Finally, the wholesaler is able to sell the product to the retailer. In this industry, it is standard for products of this type to be marked-up by the retailer 50%.
Retailer Cost = $25.33Retail Markup (%) = 50%Retail Markup =
Retail Margin (%) = Retail Markup / Retail Price= $12.67 / $38 = 33.3%
= $25.33 * 50% = $12.67
= $25.33 + 12.67 = $38Retail Price = Retailer Cost + Retail Markup
Retailer Cost * Retail Markup (%)
$10• Manu
f. Cost
$9• Manuf.
Margin
6.33• Wholesale
Margin
$12.67• Retailer
Margin
$38• Retail Price
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LET’S COMPLETE THE WORKSHEET
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BEFORE YOU LEAVE TODAY
name cards
Front of the Class
Hand In:
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SEE YOU NEXT WEEK
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