Understanding customers & markets

• Learning outcome

• Understand the factors that influence consumer decision process

• Know the different stages in the buying decision process and understand how the process relates to different types of buying decisions

• Know why it is important for marketers to attempt to understand buyer behaviour.

• List some key differences between organisation and consumer buying behaviour

Consumer behaviour and the marketing concept

• The relationship between the marketing concept and consumer behaviour is that marketers have to understand markets before marketing strategies can be developed.

• Buyer behaviour is the decision making process and acts of individuals or organisations involved in buying and using products or services

Four influencing factors in the decision making process

• Individual influences• Group influences• Situational influences• Marketing influences

Situational influences

• Part of the process of understanding consumer behaviour involves appreciating the context in which consumers make their purchase decision

• Situational variable includes: -Time -Mood -Location

Major Marketing Influence on Consumer Behaviour

• The marketing mix• The corporate image and reputation of the organisation• The economic nature of the product - necessity or luxury• Media editorial content

• Most of the above can mainly affect ‘ impulse purchase’ (cheap consumer goods). Other types of purchases are influenced by inter personal determinants of CULTURAL, SOCIAL, PERSONAL & ENVIRONMENTAL factors

Major factors influencing consumer behaviour

• Cultural factors

• Culture

• Subculture

• Social class

• Social factors

• Reference groups

• Family

• Role & status

• Personality factors• Age & lifecycle stage • Occupation Economic

circumstances• Lifestyle • Personality & self perception

• Psychological factors• Motivation

• Perception

• Learning

• Belief and attitudes

Models of consumer behaviour

• Initiator : who first suggest buying the product or service• Influencer: whose comments affects the decision made• Decider: who makes all or part of the buying decision• Buyer: who physically make the purchase • User : who consumes the product or service

• Marketers need to identify the other buying participants,

their buying criteria and their influences on the buyer.

Involvement and Decision Making

• High Involvement

Low Involvement

Extended Problem Solvingeg buying a car, computer

Limited Problem Solvingeg buying clothes

Habitual Decision Makingeg buying Fizzy drinks

Stages in the Buying Decision Process

• Problem recognition – difference between actual state and desired state

• Information search - both internal and external including sources controlled by the marketer

• Information evaluation – different process for every consumer, involves weighing product attributes and their ability to deliver benefits

• Purchase decision – form a preference and intention to buy. Actual purchase can be influenced further by attitudes of others and unanticipated situational factos

• Post-purchase evaluation – post purchase satisfaction, post purchase action, post purchase use and disposal

Some ways in which marketers can ‘help’ the consumer at each stage in the decision-making

process• Problem recognition – eg advertising demonstrating a problem, its effects,

and how the product or service can solve it• Information search – where appropriate, ensure that the consumer can easily

access detailed information through leaflets and brochures, websites, advertising & point of sale materials. Ensure that sales staff have product knowledge, its benefits & advantages

• Information evaluation – the consumer needs a meaningful, relevant & sound reason to buy this particular product instead of a competing one

• Purchase decision – ensure product availability in the kinds of outlets where consumers will want to find it. Persuasive and appealing on pack information. Ensure ease and security of ordering system if using on-line ordering

• Post-purchase evaluation- for fmcg, reinforcement ads can reassure the consumer that they have made a wise choice. For bigger purchases, follow-up personal customer care calls can also reassure & be used to dispel any lingering doubt

Organisation Buying Process

• Is the decision-making process and purchase habits of producers, resellers, government units and institutions.

• Participants in the business buying process• Initiators

• Users

• Influencers

• Deciders

• Approvers

• Buyers

• gatekeepers

Organisation buying situation

• Straight rebuy – re-orders goods on a routine basis• Modified rebuy – product specification, prices, delivery

requirements, or other terms may be modified• New task buying – a purchaser but a product or service

for the first time with major sub decisions involved in the buying decision

Major influences on Business Buyers

• Environmental factors – level of demand, economic outlook, interest rate

• Organisational factors – objectives, policies, procedures, structures, systems

• Interpersonal factors – everyone in the buying centre has differing interest, authority, status, empathy & persuasiveness

• Individual factors – every business buyer is an individual

Differences between consumer and organisational marketing

• Consumer marketing• Purchase goods & services to meet

individual or family needs

• needs emphasis on psychological benefits

• buy on impulse or with minimal processes

• purchase as individuals or as a family unit

• buy small quantities & buy frequently

• are content with a standardised product

• purchase from intermediaries

• justify an emphasis on mass media communication

• Organisational marketing

• Purchase goods and services that meet specific business needs

• need emphasis on economic benefits

• use formalised, lengthy purchasing policies and processes

• involve large groups in purchasing decisions

• buy large quantity and buy infrequently

• want a customised product package

• negotiate price

• purchase directly from suppliers

• justify an emphasis on personal selling

Conclusion

• Marketers must try to understand consumer behaviour so that they can offer consumers greater satisfaction. An understanding of who and why individuals or groups buy products and services helps marketers design more appealing marketing programmes

• If an organisation is able to determine what satisfies customers, the organisation can implement the marketing concept and better predict how consumers will respond to different marketing programmes