Buyer Behaviour

Buyer Behaviour

Stages in Buying Decision

Need recognition.

Information search.

Evaluation of alternatives.

Attitude

Legitimisation

Trial

Purchase decision.

Post-purchase behaviour.

Factors Influencing Buying Behavior

Cultural Factors.

Social Factors.

Personal Factors.

Psychological Factors.

Cultural Factors

Divided into 3 sub factors:

Cultural-The set of basic values perceptions, wants, and behaviours learned by a member of society from family and other important institutions.Ex: Cigarattes and woman.

Cultural Factors

Sub-Cultural-Each culture contains smaller sub cultures a group of people with shared value system based on common life experiences and situations.

Sub culture includes nationalities, religions, racial group and geographic regions.

Many sub culture make up important market segments and marketers often design products.

Ex: Mc Donalds.

Cultural Factors

Social Class- social classes are society’s relatively permanent and ordered divisions whose members share similar values, interests and behaviour.

Ex: Branded products and Upper class.

Social Factors

Reference Groups- consist of all the groups that have direct or indirect influence on the person's attitude.

Membership group- direct influence. Further divided into- Primary group and secondary group.Ex: Family and friends.

Opinion leaders- people who have strong influence on the buying behaviour of the individuals.Ex: Wife relating to household purchase.

Social Factors

Family members can strongly influence buyer behavior

The family is the most important consumer buying organization society and it has been researched extensively.

Marketers are interested in the roles, and influence of the husband, wife and children on the purchase of different products and services.

Why women are shown in most of the ad?

Social Factors

Roles and Status: A role consists of the activities a person is expected to perform. Each role carries a status.

Marketers must be aware of the status-symbol potential of products and brands.

Ex: this factor influences in buying products like car, house, dress, shoes etc.

Personal Factors

Age and stage in the life cycle: people buy different goods and services over a lifetime.

Consumption is shaped by the family life cycle. Ex: Bachelor spend more on fashion and recreation oriented activities.

Marketers choose life-cycle groups as their target market.

Personal Factors

Occupation and Economic circumstances: A person’s occupation affects the goods and

services bought. Blue collar workers tend to buy more rugged work clothes, whereas white-collar workers buy more business suits. A Co. can even specialize in making products needed by a given occupational group.

Ex: Software companies.

The economic circumstances like spendable income, savings, debts, borrowing power etc affects the sale of income-sensitive goods. Ex: Luxury goods.

Personal Factors

Lifestyle: a lifestyle is a person's pattern of living in the world as expressed in activities, interests and opinions.

This concept can help marketers understand changing consumer values and how they affect buying behavior.

EX: alcohol ad.

Personal Factors

Personality and Self-concept: Personality refers to a set of distinguishing human psychological traits such as self-confidence, dominance, autonomy, sociability etc.

Ex: Scooty ad showing freedom.

Self- concept: actual self-concept, ideal self-concept and others self-concept.Ex: personal care product.

Psychological factors

Motivation: A motive is a need that is sufficiently pressing to drive the person to act.

Maslow's theory-Physiological, safety, social, esteem and self-actualisation need.

Ex: insurance company sell products on safety needs.


Perception- The process by which people select, Organize, and interpret information to form a meaningful picture of the world.

Selective attention- marketers have to work hard to attract attention.

Selective distortion- tendency of the people to interpret information in a way that will support what they already believe.EX: if we distrust any company, any honest ad of that company we will not trust.

Selective retention- remember good points mentioned about a product we like and forget good points mentioned about competing brands.


Learning- involves changes in an individual's behavior arising from experience.

Ex: if experience of the consumer is good with samsung refrigerator, then next time whenever he/she plans to buy electronic item they give first preference for samsung.


Beliefs and attitudes- a belief is a descriptive thought that people holds about something.

Ex: People's belief about Infosys.

Attitude- person's relatively consistent evaluations, feelings and tendencies toward an object or idea.

Ex: oil ad.

Market Segmentation

Markets are heterogeneous.

The act of disintegrating a market into number of sub-markets, each with relatively more homogenous characteristics is known as market segmentation.

Ex: passenger car market.

Consumers are segmented not product or price.

Bases for segmentation

Geographic.

Demographic.

Psychographics.

Buying behaviour.

Geographic segmentation

Segmentation based on factors like climate, region, state, district, country, etc.

Used by companies whose product or service vary based on place.

Ex: warm clothes.

Demographic Segmentation

Based on factors such as age, gender, family life cycle, income, occupation etc.

Age. Ex: Levis jeans.

Family life cycle. Ex: Appliances targeted to newly wed.

Gender. Ex: Adidas.

Income. Ex: HCL.

Psychographic segmentation

Based on factors such as lifestyle, personality.

Lifestyle.Ex: Coffee day.

Personality. Ex: Levis shows youthful, rebellious, rugged,etc

Behavioural segmentation.

Based on factors such as occasions, benefits, user status, usage rate, loyalty status, etc.

Occasions. Ex: festival offers.

Benefits. Ex: Gym.

User status.Ex: Blood banks.

Usage rate. Ex: food products.

Loyalty status. Ex: Kirana shops.

A market can and must be segmented using several

bases.

Target Marketing

Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments.

Target Marketing Strategies

Single segment concentration.

Selective specialisation.

Product specialization.

Market specialisation.

Full market coverage.

Single segment concentration

Concentrated market- only one segment.

Strong market knowledge, strong market presence and specialised promotion strategy.

High risk.

Ex: Rolex watches.

Selective Specialisation

Different product for different segments.

Diversifying the firms risk.

Difficult to maintain product distinctiveness.

Ex: Radio channels.

Product specialisation

The firm makes a certain product and sells it to different segments.

Builds strong reputation for a product area.

Product risk.

Ex: hotel.

Market specialisation

The firm concentrates on serving many needs of a particular customer group.

Strong reputation in serving one customer group.

Customer risk.

Ex: Kids shop.

Full market coverage

Serves all customer groups with all kind of products.

Only suited for large firms.

Ex: ITC

Market positioning

Positioning is the act of designing the company's offering and image to occupy a distinctive place in the mind of the target market.

Market positioning

Position by features. Ex: laptop.

Positioning by benefits. Ex: medicine.

Positioning for user category. Ex: Pepsi generation next.

Positioning against competitors. Ex: Rin.

Airtel Positioning and Repositioning

the target customer was clearly defined: elite, upmarket professionals and entrepreneurs.

Airtel was on a power trip: the logo was black, uppercase bold lettering; and the baseline was "the power to keep in touch". "From day one, it was decided that the brand should always connote leadership - be it in network, innovations, offerings or services,"


It incorporates two solid rectangular forms whose counter form creates a doorway.

A- leadership position.

Red dot on I- Innovation.


Power to keep in touch(1995)

Touch Tomorrow(1999)

Live Every Moment(2002)

Express Yourself(2003)

Product Life Cycle

Sales andProfits ($)

Losses/Investments ($

ProductDevelop-

ment

Introduction Growth Maturity Decline

Introduction Stage of the PLC

SalesSalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

Low sales Low sales

High cost per customerHigh cost per customer

NegativeNegative

Create product awareness and trialCreate product awareness and trial

Offer a basic productOffer a basic product

Use cost-plus Use cost-plus

DistributionDistribution Build selective distributionBuild selective distribution

AdvertisingAdvertising Build product awareness among early adopters and dealersBuild product awareness among early adopters and dealers

Growth Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits


ProductProduct

PricePrice

Rapidly rising sales Rapidly rising sales

Average cost per customerAverage cost per customer

Rising profitsRising profits

Maximize market shareMaximize market share

Offer product extensions, service, warrantyOffer product extensions, service, warranty

Price to penetrate marketPrice to penetrate market

DistributionDistribution Build intensive distributionBuild intensive distribution

AdvertisingAdvertising Build awareness and interest in the mass marketBuild awareness and interest in the mass market

Maturity Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits


ProductProduct

PricePrice

Peak salesPeak sales

Low cost per customerLow cost per customer

High profitsHigh profits

Maximize profit while defending market shareMaximize profit while defending market share

Diversify brand and modelsDiversify brand and models

Price to match or best competitorsPrice to match or best competitors

DistributionDistribution Build more intensive distributionBuild more intensive distribution

AdvertisingAdvertising Stress brand differences and benefitsStress brand differences and benefits

Decline Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits


ProductProduct

PricePrice

Declining salesDeclining sales

Low cost per customerLow cost per customer

Declining profitsDeclining profits

Reduce expenditure and milk the brandReduce expenditure and milk the brand

Phase out weak itemsPhase out weak items

Cut priceCut price

DistributionDistribution Go selective: phase out unprofitable outletsGo selective: phase out unprofitable outlets

AdvertisingAdvertising Reduce to level needed to retain hard-core loyal customers

Reduce to level needed to retain hard-core loyal customers

PLC Of Scissors Introduction stage-

Introduced in 1912.

It was new form of smoking pleasure for Indians.

Promoted concept cigarette than Brand Scissors.

Promotion and distribution was costly. Sold through sales person.

Price was low.

Profit was negative

Growth Stage-

1920,1930,1940.

Product was largely accepted.

Price was increased by small percentage but kept low as part of penetration strategy.

Promotion was maintained at high.

Distribution widened to urban and rural areas.

Competition increased. Hence shifted from concept promotion to brand promotion.

Maturity stage-

End of 1940.

Sales were stagnant.

High competition from Panama.

Consumers felt high price.

Ad and promotion became outdated.

Market share started to decline.

Decline stage-

1948

Sales declined from 234 million to 213 million.

Taken several measures to save but failed.

Ad was changed but gave wrong message.

Price was decreased by reducing cost through cheaper tobacco and reduced length of stick-spoiled the entire brand image.

Revival -

1961

Improved product quality.

Introduction of new pack.

Action satisfaction theme in ad.

Lessons Learnt

ITC correctly identified the problems associated with each of the stage of PLC.

The way product, price, promotion were managed in the days of the launch and growth of the brand could no more hold good in the stages of maturity.

ITC proved revival of brand is possible through appropriate modifications in strategies.

Causes of New Product Failures

• Overestimation of Market Size

• Product Design Problems

• Product Incorrectly Positioned, Priced or Advertised

• Costs of Product Development

• Competitive Actions

• To create successful new products, the company must:– understand it’s customers, markets and competitors

– develop products that deliver superior value to customers.

New Product Development Process

•Idea Generation and Screening

•Concept Development and Testing

•Marketing Strategy

•Business Analysis

•Product Development

•Test Marketing

•Commercialization

New Product Development ProcessStep 1. Idea Generation

Systematic Search for New Product Ideas

Internal sources

Customers

Competitors

Distributors

Suppliers

New Product Development ProcessStep 2. Idea Screening

Process to spot good ideas and drop poor onesCriteria

Market Size Product Price Development Time & Costs Manufacturing Costs Rate of Return

New Product Development ProcessStep 3. Concept Development & Testing

Develop product ideas into alternative product concept.

Test the product concept with the group of target consumers.

Choose the best one.

New Product Development ProcessStep 4. Marketing Strategy Development

New Product Development ProcessStep 4. Marketing Strategy Development

Part Two - Short-Term:Product’s Planned PriceDistributionMarketing Budget

Part Two - Short-Term:Product’s Planned PriceDistributionMarketing Budget

Part Three - Long-Term:Sales & Profit GoalsMarketing Mix Strategy

Part Three - Long-Term:Sales & Profit GoalsMarketing Mix Strategy

Marketing Strategy Statement Formulation

Part One - Overall:Target MarketPlanned Product PositioningSales & Profit Goals Market Share

Part One - Overall:Target MarketPlanned Product PositioningSales & Profit Goals Market Share

New Product Development ProcessStep 5. Business AnalysisStep 6. Product Development

Review of product cost, sales and profit projections, to see if it meets the company objectives.

If yes, Move to product development

If no, Eliminate product concept.

New Product Development ProcessStep 7. Test Marketing

New Product Development ProcessStep 7. Test Marketing

StandardTest Market

Full marketing campaignin a small number of representative cities.

StandardTest Market

Full marketing campaignin a small number of representative cities.

SimulatedTest Market

Test in a simulated shopping environmentto a sample of consumers.

SimulatedTest Market

Test in a simulated shopping environmentto a sample of consumers.

Controlled Test Market

A few stores that have agreed to carry newproducts for a fee.

Controlled Test Market

A few stores that have agreed to carry newproducts for a fee.

New Product Development ProcessStep 8. Commercialisation

Take decisions on-

When(timing)

Where(Geographic location)

To whom( Target market prospects)

Product Mix and Product Line Product mix is the set of all products and items

that a particular seller offers for sale.

Product line is a group of closely related products. The product mix of a company is composed of all the product line it carries.

Width of product mix- no.of product lines it carries.

Length of product line- number of products in the line.

Depth of product line- total no.of items under each brand in terms of variants, size, color etc.

HUL

Bath Soap Fabric Wash Beverages

Product Mix Width

DoveLiril

PearsRexonaLifebuoyHamam

SurfRin

WheelSunlight

501

BruRed label

Lipton3 RosesTajmahal

Super Dust

Product Line

length

Product line analysis Sales and Profits- 4 types of product that yield

different margin, on sales volume and promotion.

Core product- high sales, high promotion, low margin as undifferentiated product.

Staples- low sales, no promotion, high margin.Ex: Memory card

Specialties- low sales, high promotion, high margin.

Convenience- high sales, low promotion, high margin.

Product line analysis

Market profile- the Product line manager must review how the line is positioned against competitors' lines.

It must be seen that company's own products should not be the competitors against each other.

Product line length

Reasons for influencing product line length:

To induce upselling. Ex: BMW 5 series to 7 series.

To facilitate cross selling. Ex: computer & printer.

Protect against economic ups and downs.

Seeking high market share.

Product line length

Company can lengthen its product line in 2 ways:

Line stretching.

Line filling.

Line stretching

The aim is to enter a new price slot and a new market segment which is not covered by the existing offers of the firm.

Upmarket stretch- A company which was initially positioned its product for the lower end markets, decide to make higher priced product for the top slots. Ex: Philips- music player.

Downmarket stretch- a company which was selling products at high price might begin to offer at lower price slot. Ex: Ariel.

Line Filling

It refers to adding more items within the present range of product line. But each item should possess a just noticeable difference.

Ex: Videocon introduced 14 inch Private for modern youngsters, Bazooka for top end and Turbo tough for middle level.

Branding

A name, term, sign, symbol or design or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.-AMA

Branding Decisions

1.To Brand or not to brand.

2.Brand sponsor decision: Private labels.

3.Brand name decisions: Individual names, family name, Corporate Name.

4.Brand strategy decisions:

Line extension: brand name extended to new flavors. Ex: Lux.

Brand extension: extended to new product category. Ex: Dettol soap, handwash.

Multi brands: different brand name for same product category Ex: HUL.

Packaging

All the activities of designing and producing the container for a product.

Decisions on packaging:

Package materials- wood, metal, plastic, paper.

Package aesthetics-design and shape.

Handling convenience- Ex:Harpic

Package size.

Price

The amount of money charged for a product or service- Price

Procedure for setting price:

Selecting the pricing objectives- survival, maximum current profit, maximum market share, maximum market skimming, product quality leadership.

Determining demand- to know how responsive, or elastic demand would be to change in price.

Price

Estimating Costs-Fixed and Variable cost.

Analyzing competitors' costs, prices and offers.

Selecting a pricing method-

Mark up Pricing-

Markup price= unit cost/ (1- desired return on sales)

Target return pricing= Unit cost+ (desired return x invested capital/unit sales)

Documents

Buyer Behaviour