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Topic 1: Introduction to customer behaviourTopic 2: Determinants of customer behaviourTopic 3: The customer’s mind setTopic 4: Customer decision-makingTopic 5: Customer focused marketing
CUSTOMER BEHAVIOUR
TOPIC 1
INTRODUCTION
INTRODUCTION
Definitions:
Study of individuals, groups or organisations and the processes they use to select, secure, use and dispose of products, services, experiences, or ideas to satisfy needs
The mental and physical activities undertaken by household and business customers that result in decisions and action to pay for, purchase, and use products and services
• Mental activities - includes feelings about a product, previous experience with the brand
• Physical activities - include visiting a store, comparing different products, buying products/services
MENTAL AND PHYSICAL ACTIVITIES
Types of customers: Households Business markets
Roles of customers: Buyers Users Payers
TYPES AND ROLES OF CUSTOMERS
Customer satisfaction
The marketing concept
Customer focus
Customer retention
Focus on needs
Serve needs of society
Long-term survival
IMPORTANCE OF CUSTOMER BEHAVIOUR
OutcomesIndividual
OrganisationSociety
OutcomesIndividual
OrganisationSociety
Customer decisionCustomer decision
Marketing strategyMarketing strategy
Market segmentationMarket segmentation Market analysisOrganisationCompetitorsEnvironmentCustomers
Market analysisOrganisationCompetitorsEnvironmentCustomers
MARKETING STRATEGY AND CUSTOMER BEHAVIOUR
CREATING VALUE FOR THE CUSTOMER
Three meanings of value:
Pricing value
Customer value
Strategic value
Determine expected value [Benchmarking]• Use a Customer Satisfaction Index• Determine value as perceived by customers
Prepare strategy• Convince staff of Customer Value Management• Devise an action plan
Measure how well value was delivered• Use a Balanced scorecard• Determine market share, customer acquisition, retention, and customer
satisfaction Investigate and adapt
• Investigate deviations and adapt the strategy
HOW TO MEASURE VALUE?
MARKET SEGMENTATION
Bases of market segmentation:
Geographic
Demographic
Psychographic
Behaviouristic
Needs/benefit
Market value
OVERALL MODEL OF CUSTOMER BEHAVIOUR
Decision-makingIndividual
OrganisationalFamily
Decision-makingIndividual
OrganisationalFamily
CustomerCustomer
Personal characteristicsRace
GenderAge
Personal characteristicsRace
GenderAge
Internal influencesPerceptionLearning
MotivationLifestyleAttitudes
PersonalitySelf-concept
Internal influencesPerceptionLearning
MotivationLifestyleAttitudes
PersonalitySelf-concept
External influencesCulture
SubcultureReference group
Social classFamily
Marketing activities
External influencesCulture
SubcultureReference group
Social classFamily
Marketing activities
Market characteristicsClimate
EconomyGovernmentTechnology
Market characteristicsClimate
EconomyGovernmentTechnology
TOPIC 2
EXTERNAL FACTORS INFLUENCING CUSTOMER BEHAVIOUR
The meaning of Culture
“…“…the sum total of learned beliefs, values, and customs the sum total of learned beliefs, values, and customs that serve to direct the consumer behaviour of members of that serve to direct the consumer behaviour of members of a particular societya particular society.” .”
SubcultureSubculture“… “… a distinct cultural group that exists as an identifiable a distinct cultural group that exists as an identifiable segment within a larger, more complex society” segment within a larger, more complex society” Subcultures include nationalities, religions, racial groups, Subcultures include nationalities, religions, racial groups, and geographic regionsand geographic regions
CULTURE AND SUBCULTURE
Formal Learning adults and older siblings teach a young family member "how to behave.“.
Informal learning a child learns primarily by imitating the behaviour of selected others.
Technical learning teachers instruct the child in an educational environment as to what, how,
and why it should be done.
CULTURE IS LEARNT THROUGH
TRANSMISSION OF CULTURAL ELEMENTS
Social institutions Family--the primary agent for enculturation teaches consumer-
related values and skills. Educational institutions--charged with imparting basic learning
skills, history, patriotism, citizenship, and technical training. Houses of worship--provide religious consciousness, spiritual
guidance, and moral training. Mass media--disseminates information about products, ideas,
and causes.
MARKETING IMPLICATIONS OF CULTURES
Cultural relevance. Understanding a sub-culture’s values, customs, and aspirations and pr
esenting products and promotions in light of these unique characteristics.
Avoiding symbols, icons, and heroes that are meaninglessto a sub-culture.
DO YOU FIND THE FOLLOWING OFFENSIVE?
REFERENCE GROUPS
Any person or group that serves as a point of comparison/reference for an individual customer in forming certain values, attitudes and
behaviour patterns
TYPES OF REFERENCE GROUPS
Formal and informal Primary and secondary Membership and non-membership Aspirational and dissociative reference groups
AN INDIVIDUAL AS A REFERENCE GROUP
TOPIC 3
INTERNAL FACTORS INFLUENCING CUSTOMER BEHAVIOUR
PERSONAL CHARACTERISTICS
Race Gender Age
Pay special attention to the changing roles of women!
THE CUSTOMER’S MINDSET
Customer perception and learning
Perceptual process
The Nature of Perception
Perception is the way buyers interpret the world surrounding them
Exposure to stimulus- Only small number of stimuli noticed
Paying attention to it- Stimuli often not processed objectively
Interpreting its meaning to respond- Meaning of stimulus in terms of needs and
experiences
LEARNING
Learning is a process by which individuals acquire buying and consumption knowledge and experience which they apply to future-related behaviour
Elements of learning
Stimulus – Products, size, quality stimulate consumer– Must be motivated to seek object– The stronger motivation, the quicker one learns
LEARNING…cont
ResponseIs any action as result of stimulus– Cues provide direction– Marketer should provide consistent cues
Reinforcement– Satisfaction from successful behaviour– Causes person to repeat behaviour– Factors in reinforcement
• Repetition• Participation
MOTIVATION
Motivation links needs and objectives Needs – refer to something body needs Motivation – driving force that impels us to action Need arousal
– There are different types of arousal:
• Physiological
• Emotional
• Cognitive
• Environmental
CUSTOMER ATTITUDES
Attitude is a learned predisposition to behave in a consistently favourable or unfavourable way toward market-related objects
It is the way we think feel and act toward stimuli Important facets of attitude:
– Attitudes are learned– Attitudes tend to be consistent
Direct experience Influence of family and friends Exposure to mass media
SOURCES OF INFLUENCE ON ATTITUDE FORMATION
Cognitive component Consists of customer’s beliefs about object Also customer’s knowledge about object There are two types of beliefs:
- Informational beliefs – associated with product
attributes
- Evaluative beliefs – associated with product benefits Affective component
Involves our feelings and emotions toward objectMay also be result of several evaluations of performanceProducts are evaluated in context of specific situation
COMPONENTS OF ATTITUDES
Behavioural componentThis component represents outcome of cognitive and affective componentsDoes customer buy or not?
Component consistencyThree components tend to be consistentChange in one components affects others
COMPONENTS OF ATTITUDES…cont.
Changing the affective component• Classical conditioning• Positive effect• Mere exposure
Changing the behavioural component Changing the cognitive component
• Changing beliefs• Shifting performance• Adding beliefs• Changing the ideal
CHANGING CUSTOMER ATTITUDES
CHANGING THE AFFECTIVE COMPONENT BY MEANS OF A POSITIVE EFFECT
Changing the product Packaging Change of services Change of properties Attitude of sales person
Perceptual change New information Promotion
Strength of the attitude Market segmentation
CHANGING CUSTOMER ATTITUDES….cont
Personality reflects individual differences
Personality is consistent and enduring
Personality is partially created and influenced by the environment
Personality can change
CHARACTERISTICS OF PERSONALITY
Those inner psychological characteristics that both determine and reflect how a person responds to their environment
PERSONALITY IS IMPORTANT TO MARKETERS
Customers tend to purchase products that reflect their personality
Customers prefer advertisements that appeal to their personality
Actual self - How we actually perceive ourselves Ideal self - How we would like to see ourselves Social self - This is how we think others perceive
us Expected self - Somewhere between actual self
and ideal self Situational self - Our self image in a specific
situation Extended self - Our self concept that includes the
effect of personal possessions Possible selves - This is what we would like to
become
TYPES OF SELF IMAGE
TOPIC 4
CUSTOMER DECISION MAKING
Stages in the decision-making process
Problem recognitionProblem recognition
Search for informationSearch for information
Evaluation of alternativesEvaluation of alternatives
BuyingBuying
Post-buying evaluationPost-buying evaluation
CUSTOMER DECISION-MAKING
Influencer Gatekeeper Deciders Buyers Preparers Users Maintainers Disposers
FAMILY DECISION-MAKING
Stage
1. Bachelorhood2. Honeymooners3. Parenthood4. Post-parenthood5. Dissolution
THE FAMILY LIFE-CYCLE
At-home singles Starting-out singles Mature singles Young couples New parents Mature parents Single parents Golden nests Left alones
MODIFIED TO THE FAMILY LIFE-CYCLE
ORGANISATIONAL BUYING BEHAVIOUR
Types of buying decisions New task buying
– Buying something that was never bought before
Straight rebuy
– Buying more of the same products bought before
Modified rebuy
– Product specifications, prices, terms or suppliers are modified
TOPIC 5
CUSTOMER-FOCUSSED
MARKETING
CUSTOMER LOYALTY
What is branding: Branding distinguishes one product from similar ones so that
they can be marketed separately. A brand is a name, symbol, or set of characteristics that
enables customers to identify the goods and services of one seller from that of competitors.
Customers attach value to brands based on their product/brand experience and perception of quality.
Customers use brands as a form of security, for quick decision-making, as predictive cues for product performance.
REPEAT BUYING, BRAND LOYALTY AND VARIETY SEEKING
Repeat buying involves buying the same brand often (possibly based on availability or price).
Repeat buying of a brand does not imply brand loyalty towards it. For brand loyalty to exist, there must be psychological commitment to the
brand. Hence, repeat buying behaviour refers to customers buying the same
brand over time but brand loyalty includes psychological and evaluative processes.
Brand loyalty is the opposite of variety-seeking behaviour. Variety seeking is the cognitive commitment to purchasing different
brands. Variety seeking arises out of the desire to try new things, curiosity,
novelty, creativity or the need to overcome boredom with the same choice.
BRAND PREFERENCE
Brand preference is the tendency to select a brand/product from among a set of known available brands.
When faced with a choice of brand, the customer is more positive towards one brand than to others.
Brand preference reflects the knowledge-attitude-behaviour (KAB) model of customer behaviour.
The model emphasizes that customers have knowledge (K) of several brands and holds positive attitudes (A) towards a few of them, which will result in behaviour (B), reflected in the act of purchasing the most preferred brand.
Brand preference may change as a result of marketing efforts eg. Price reductions, product changes, promotional strategies.
BRAND PREFERENCE AND BRAND SWITCHING
A change in brand preference is called brand switching.
Brand switching is a result of customers having problems or experiencing dissatisfaction with a product or service.
The aim is to get rid of the problems experienced in the previous purchase.
FORMATION OF BRAND LOYALTY
People become brand loyal in different ways eg. by trying different brands until they find one that optimally satisfies them.
Hence, becoming brand loyal is a learning process which takes place over a period of time.
Brand loyalty occurs as a result of:-- Exposure to information concerning the brand.- Favourable experience in buying and using the brand.- The extent of its use by peers and social/reference groups.
The degree of brand loyalty is influenced by numerous factors. Brand loyalty is lower when:-
- More brands are available for customers to choose from.- More products are bought of greater value.- Prices are rather active amongst competing brands.- Customers use a number of brands at the same time.
BRAND LOYALTY AND VULNERABILITY
One may distinguish between brand loyal customers and vulnerable customers.
Brand loyal customers like and buy the brand. Vulnerable customers are those who buy a brand but like other brands
equally well or better and hence, are vulnerable to these other brands and may buy them.
Brand loyalty and vulnerability are therefore, based on the interrelationship between:-
- the buying pattern of a particular brand.- the attitude toward the brand.
Brand loyal customers are not vulnerable because they consistently buy the same brand, hold strong beliefs about the quality of that brand, are devoted to the brand and resist competitors’ efforts to persuade them to buy other brands.
STAGES OF BRAND LOYALTY
Brand awareness Brand trial Brand preference Brand habit Brand loyalty
SOUTH AFRICA AS A BRAND
RELATIONSHIP-BASED BUYING
Motivators that drive relationship buying– Search costs– Risk reduction– Switching costs– Value-add benefits– Socio-cultural factors
Outcomes of relationship-based buying– Supplier loyalty– Willing to pay more– Proactive word-of-mouth– Good will
THE VALUE OF E-COMMERCE IN CUSTOMER BEHAVIOUR
Online customer behaviour
Questions
THE END
