BUYER BEHAVIOUR AND CONSUMERISM - …asonjude.tripod.com/.../buyerbehaviourandconsumerism.pdf.doc · Web viewGrowing up, children learn basic values, perception and wants from the

Buyer Behaviour and Consumerism

BUYER BEHAVIOUR AND CONSUMERISM

Dominant Family Purchase - Cozenza 1985

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http://en.wikipedia.org/wiki/Image:Interior_of_Bullring.jpg

http://en.wikipedia.org/wiki/Image:Birmingham_Selfridges_building.jpg


UK socioeconomic classification scheme

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CONTENT

Chapter 1: Introduction to the Study of Consumer Behaviour: What is Consumer Behaviour? Why we study Consumer Behaviour Why the field of Consumer Behaviour developed The role of Consumer Behaviour

Chapter 2: Consumer Research The Consumer Research process Developing the research objectives Collecting Secondary Data Designing Primary Research Data Collection Analysis and Report Preparation

Chapter 3: Analytical Segmentation System for consumers Who uses market segmentation? How marketers use market segmentation Bases for market segmentation including, social class, social status,

Family, Company size, Product usage and Location. Implementing Segmentation Strategies.

Chapter 4: Consumer Needs and Motivation Motivation Needs Goals Positive and Negative Motivation Dynamic Nature of Motivation including Frustration and Arousal of

Motives. Types and Systems of Needs. Motivation Research

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Chapter 5: Personality and Consumer Behaviour: What is personality? Theories of Personality Personality and Understanding Consumer Diversity.

Chapter 6: Consumer Perception: What is Perception? The dynamics of Perception Consumer Imagery

Chapter 7: Learning and Consumer Involvement What is Learning? Behavioural Learning Theories Cognitive Learning Theories Brand Loyalty and Brand Equity

Chapter 8: Nature of Consumer Attitudes: What are Attitudes? Structural Models of Attitudes Attitude Formation Attitude Change

Chapter 9: Group Dynamics and Consumer Reference Groups: Types of Groups Reference Groups and their application What is a Family? Functions of the Family? Family Decision Making The Family Life Cycle.

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Chapter 10: Social Class and Consumer Behaviour: What is Social Class? Measurement of Social Class Lifestyle profiles of the social class The Affluent Customer The Non-Affluent Customer.

Chapter 11: The Influence of Culture on Consumer Behaviour: What is Culture? Characteristics of Culture Measurement of Culture Core Values What is Sub-culture? Sub-cultural aspects of Consumer Behaviour

Chapter 12: Diffusion of Innovations The Diffusion process The Adoption process A profile of the customer innovator

Chapter 13: Consumer Decision Making: What is Decision Making? Four view of Consume Decision Making Models of Consumer Decision Making Opinion Leadership The interpersonal flow of communication

Reading List:Main text: Consumer Behaviour by: Schffman and Leslie Lazar Kanuk (Prentice Hall) Alternative Texts and Further Reading: Consumer Behaviour- Chris Rice (Butterworth/Heinemann)

CHAPTER SUMMARY

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Chapter 1:

This chapter makes the reader to have an understanding of what consumer behaviour is. It is very vital to know why we study consumer behaviour and how the field of consumer behaviour developed. This chapter explores these areas. It gives a thorough grounding on not just what consumer behaviour is, but the role it plays.

Chapter 2:

This chapter takes another perspective. It fully analyses consumer research, the research process and why research is important. In order to know how consumers behave, it is important to carry out consumer research. The reader will understand some of the research techniques and methods used in carrying out consumer research.

Chapter 3:

In this chapter, the reader will understand what segmentation is, how consumer market can be segmented and the importance of segmenting the consumer market. It is also essential to analyse the bases of segmenting the market. These areas will be fully analysed.

Chapter 4:

Another dimension is seen here.

Chapter 5:

pChapter 6:p

Chapter 7:p

Chapter 8:p

Chapter 9:p

Chapter 10:p

Chapter 11:p

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Chapter 12:p

Chapter 13:p

Chapter 1: Introduction to the study

Of Consumer Behaviour:

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Issues to look at: What is Consumer Behaviour? Why we study Consumer Behaviour Why the field of Consumer Behaviour developed The role of Consumer Behaviour

CHAPTER OBJECTIVES:

By the end of this chapter, you should be able to understand the following:

1. What consumer behaviour is2. The reasons why we study consumer behaviour3. Why the field of consumer behaviour developed 4. The role of consumer behaviour

THE DEFINITION AND SCOPE OF CONSUMER BEHAVIOUR

WHAT IS CONSUMER BEHAVIOUR?

Consumer behaviour is the behaviour that consumer display in searching for, purchasing, using, evaluating and disposing products and services that they expect will satisfy their needs.

Consumer behaviour focuses on how individuals make decisions to spend their available resources (time, money, effort) on consumption-related items. That includes what they buy, why they buy it, when they buy it, where there buy it, how often they buy it, how often they use it, how they evaluate it after the purchase and the impact of such evaluations on future purchases, and how they dispose of it.

Consumer Behaviour is the study of how people buy, what they buy, when they buy and why they buy. It is a subcategory of marketing that blends elements from psychology, sociology,sociopsychology, anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics, psychographics, and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general.

Consumer behaviour refers to the process that buyers go through when deciding whether or not to purchase goods or services. Buying behaviour can be influenced by a variety of external factors and motivations, including marketing activity.

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http://en.wikipedia.org/wiki/Psychographics

http://en.wikipedia.org/wiki/Demographics

http://en.wikipedia.org/wiki/Buyer_decision_processes

http://en.wikipedia.org/wiki/Buyer_decision_processes

http://en.wikipedia.org/wiki/Economics

http://en.wikipedia.org/wiki/Anthropology

http://en.wikipedia.org/wiki/Sociopsychology

http://en.wikipedia.org/wiki/Sociology

http://en.wikipedia.org/wiki/Psychology

http://en.wikipedia.org/wiki/Marketing


An important part of the marketing process is to understand why a customer or buyer makes a purchase.

Without such an understanding, businesses find it hard to respond to the customer’s needs and wants.

Marketing theory traditionally splits analysis of buyer or customer behaviour into two broad groups for analysis – Consumer Buyers and Industrial Buyers

Consumer buyers are those who purchase items for their personal consumption

Industrial buyers are those who purchase items on behalf of their business or organisation

Businesses now spend considerable sums trying to learn about what makes “customers tick”. The questions they try to understand are:

Who buys? How do they buy? When do they buy? Where do they buy? Why do they buy?

For a marketing manager, the challenge is to understand how customers might respond to the different elements of the marketing mix that are presented to them.

If management can understand these customer responses better than the competition, then it is a potentially significant source of competitive advantage.

Consumer behaviour is concerned with? Why consumers make the purchases that they make? What factors influence consumer purchases? Why people behave as they do? What are the mental processes involved? Who buys? What are their choice criteria? When do they buy? Where do they buy? How do they buy? Likely buyers reaction to a marketing strategy

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The field of consumer behaviour is rooted in the marketing concept, a business orientation that evolved in the 1950s through several alternatives approaches toward doing business referred to, respectively, as the production concept, the product concept, and the selling concept.

WHY IS BUYER BEHAVIOUR IMPORTANT – WHY WE STUDY CONSUMER BEHAVIOUR?

The Marketing concept stresses that firms should create marketing mix that satisfies customers.

Therefore firms needs to analyse what, where, when, why, and how customers buy. Understanding consumer behaviour is essential to the development of marketing

strategies- especially product, price, product, design, segmentation, targeting, positioning and promotion.

Understanding the way customers behave in very important for the short, medium and long term survival of an organisation.

To build a good relation with customers it is important to understand their behaviour. By understanding customers’ behaviour, businesses can tailor products to satisfy customers.

Buyer behaviour makes businesses to be able to plan and allocate resources in order to satisfy the needs and wants of customers.

Businesses that understand buyer behaviour and adapt its business to satisfy those needs and wants of customers will be able to have a greater competitive advantage.

Lack of understanding of buyer behaviour can seriously jeopardize business performance. Buyer behaviour is paramount in business strategic direction. To be more competitive, and to win the hearts and minds of customers more than other

competitors, it is crucial for businesses to understand the way buyers behave and try to satisfy the buyers.

A lack of understanding of buyer behaviour is detrimental to business survival and this can lead to business failure.

We study consumer behaviour in order to sought out what customers actually need and want.

Businesses want to satisfy customers profitably and efficiently that is why they have to study consumer behaviour

The survival of the business is partly in the hands of customers. The more demand, the more the business can realise an increase in profit and the lower the demand the lower the profit. Thus businesses are able to make profit because there are people available to buy. If there are no customers businesses will not survive. Therefore to continue to survive

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and make more profit, there need to understand the behaviour of those that makes them to exist and make some profit (customers).

W H Y T H E F I E L D O F C O N S U M E R

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B E H AV I O U R D E V E L O P E D ?

TH E RO L E OF C ON SU ME R

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BE HAVI OU R

1 . C o n s u m e r b e h a v i o u r h e l p s b u s i n e s s e s t o u n d e r s t a n d c u s t o m e r s .2 . I t m a k e s b u s i n e s s t o b e t t e r s a t i s f y c u s t o m e r s b y n o t o n l y

u n d e r s t a n d i n g t h e i r n e e d s b u t r e s p o n d i n g t o t h e s e n e e d s .3 . A m a r k e t i n g o r i e n t e d b u s i n e s s n e e d s t o s t u d y c o n s u m e r

b e h a v i o u r t o e f f i c i e n t l y a n d p r o f i t a b l y s a t i s f y c u s t o m e r s n e e d s a n d w a n t s .

4 . C o n s u m e r b e h a v i o u r h e l p s t h e b u s i n e s s t o p o s i t i o n i t s m a r k e t .5 . C u s t o m e r s a r e v e r y i m p o r t a n t s t a k e h o l d e r s , j u s t l i k e

s h a r e h o l d e r s , g o v e r n m e n t , s t a f f , e t c . T h e b u s i n e s s i s e x i s t i n g a n d m a k i n g m o n e y b e c a u s e t h e y a r e p e o p l e w h o p u r c h a s e t h e p r o d u c t s . T h e r e f o r e c o n s u m e r b e h a v i o u r h e l p s b u s i n e s s e s t o c a r r y o u t f u r t h e r i m p r o v e m e n t s i n t h e i r p r o d u c t s a i m e d a t s a t i s f y i n g c u s t o m e r s .

6 . C o n s u m e r b e h a v i o u r h a s l e d t o m o r e i n n o v a t i o n a n d t h e r e s e a r c h a n d d e v e l o p m e n t o f n e w t e c h n o l o g y.

7 . T h e s t u d y o f c o n s u m e r b e h a v i o u r h e l p s b u s i n e s s t o b e a b l e t o r e s p o n d q u i c k l y t o c u s t o m e r s c h a n g i n g f a s h i o n .

SUMMARYDISCUSSSION QUESTIONSEXERCISESKEY TERMSREFERENCES ASSIGNMENT

CHAPTER 2: CONSUMER RESEARCHIssues to look at:

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The Consumer Research process Developing the research objectives Collecting Secondary Data Designing Primary Research Data Collection Analysis and Report Preparation

CHAPTER OBJECTIVE


1. What is consumer research2. The consumer research process3. Consumer research methodologies4. Techniques of collecting primary and secondary information5. How to develop research objectives

INTRODUCTION TO CONSUMER RESEARCH

C o n s u m e r r e s e a r c h i s t h e g a t h e r i n g , r e c o r d i n g , a n a l y s i n g , r e p o r t i n g a n d u s a g e o f i n f o r m a t i o n a b o u t c o n s u m e r s s u c h a s a g e , i n c o m e , g e n d e r , m a r i t a l s t a t u s , s h o p p i n g h a b i t s , e t c i n o r d e r t o h e l p b u s i n e s s e s t o m a k e i m p o r t a n t d e c i s i o n s .

he field of consumer research developed as an extension of the field of marketing research. Just as the findings of marketing research were used to improve managerial decision making, so too were the findings of consumer research. Studying consumer

behaviour enables marketers to predict how consumers will react to promotional messages and to understand why they make the purchase decisions they do. Marketers realize that if they know more about the consumer decision-making process, they can design marketing strategies and promotional messages that will influence consumers more effectively. Recently marketers began to realize that customer research is a unique subset t of marketing research, which merits the utilization of specialized research methods that collect customer data and also enhance the company’s relationship with its customers.

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Consumer research is very important for businesses. Business that are marketing oriented, carry out customer research in order to find out about the following

Demographic issues such as age, gender, marital status, income, occupation Shopping Habits e.g. when they shop, where they shop, how they shop, how much they

spend when shopping, what they frequently buy, who makes the purchase decision, etc Perception about products

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Interests and motivations Psychology Motivations Needs and wants Buying behaviour and influencing factors Likes and dislikes about products Opinions and views about the company’s marketing mix: product, price, place,

promotion, people, physical evidence and process.etc.

THE ROLE OF CONSUMER RESEARCH

Consumer research is very important because it helps businesses to get information about customers.

Without researching about consumer buying behaviour, businesses will find it difficult to understand consumers.

It helps businesses in formulating marketing strategies.

THE CONSUMER RESEARCH PROCESS

The major steps in the consumer research process include:

1. Defining the objectives of the research2. Collecting and evaluating secondary data3. Designing a primary research study4. Collecting primary data5. Analysing the data

6. Preparing a report on the findings.

COLLECTING SECONDARY DATA

Sources of secondary data

Print Media (Newspapers, magazines, yellow pages, leaflets). Television Radio Internet Company’s Internal Record Other companies

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Government archives Suppliers & distributors Internal and external databases Library

DESIGNING PRIMARY RESEARCH

Types of primary research:

1. Qualitative2. Quantitative

Sources of primary research:

Interviews Group discussions Test marketing Hall testing Sampling Questionnaire Observation Experimentation Surveys.

SAMPLING AND DATA COLLECTION

Sampling

f

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PROBABILITY SAMPLE

Simple random sample Systematic random sample Stratified random sample Cluster (area sample)

NON PROBABILITY SAMPLE

Convenience sample Judgment sample Quota sample


Data Analysis and Reporting Research Findings:

CONDUCTING A RESEARCH STRATEGY:

SUMMARYDISCUSSSION QUESTIONSEXERCISESKEY TERMSREFERENCES ASSIGNMENT 2:

CH AP TE R 3: ANALYTICAL SEGMENTATION SYSTEM FOR CONSUMERS

I s s u e s t o l o o k a t :

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Who uses market segmentation? How marketers use market segmentation Bases for market segmentation including, social class, social status,

Family, Company size, Product usage and Location. Implementing Segmentation Strategies.

CHAPTER OBJECTIVEBy the end of this chapter you should be able to understand the following

1. The meaning of market segmentation2. How the market can be segmented (bases for segmenting the market)3. Criteria for segmenting the market4. The reasons why businesses segment the market5. How marketers use market segmentation.

SEGMENTATION, TARGETING AND POSITIONING

The focus of the marketing concept is consumer needs. At the same time, recognizing the high degree of diversity among us, consumer researchers seek to identify the many similarities –or constants-that exist among the peoples of the world. For example, we all have the same kind of biological needs, no matter where we are born- the needs for food, nourishment, water, air, and for shelter from the elements. We also acquire needs after we are born. These needs are shaped by the environment and the culture in which we live, by our education, and by our experiences. The interesting thing about acquired needs is that there are usually many people who develop the same needs. This commonality of need or interest constitutes a market segment, which enabling the marketer to target consumers with specifically designed products and/or promotional appeals that satisfy the needs of that segment. The marketer must also adapt the image of its products ( i.e.,’ position’ it), so that each market segment perceives the product as better fulfilling its specific needs than competitive products. The three elements of this strategic framework are market segmentation, targeting and positioning:

Market segmentation is the process of dividing a market into subsets of consumers with common needs or characteristics. Because most companies have limited resources, few companies can pursue all of the market segments identified.

Bases for market segmentation and their variables: Demographic Segmentation: according to age, gender, income, occupation, culture,

marital status, life cycle etc.

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Geographic Segmentation: according to regions, towns, cities, villages, counties, density, climate etc.

Psychographic Segmentation: according to social class, perception, etc Behaviour Segmentation: according to usage rate, usage status, benefit sought, usage

occasion, awareness state etc Geodemographic Segmentation: according to geography and demography Socio-economic Segmentation: according to social class, income & occupation.

Market SegmentationMarket Segmentation

Male

(0-5years)

Male ( 6-18years)

Male(19-45 years)

Male(45-65years)

Male(66+)

Female (0-5years)

Female(6-18years)

Female(19-45years)

The reasons why businesses segment their market: To profit from a Niche Market (small section of the market which competitors

are not yet focused on and which the business has greater competitive advantage over its competitors).

To take advantage of opportunities Because of the differences in the market in terms of age, gender, marital status,

income & occupation.

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Businesses want to avoid risk: that is why some businesses focus just on a segment to avoid going in for the entire market which may be risky to some extend.

Inadequate resources to go in for the entire market. The business may be a small scale one and it will want to avoid problems related

with targeting larger markets. Some businesses segment the market because they want to identify individual

needs in order to tailor products that satisfy the needs and wants of customers Businesses want to be market oriented – they want to satisfy customers as much

as possible. Some businesses segment the market because they want to concentrate on one or

two segments and offer just the best products.

Market segmentationMarket segmentation

Upper class

Middle class

Lower class

High income

Moderate income

Low income

Regions(West Midlands)

Africa

Cities

London

TownsDudley

Single

Dependent

Married

Segment 1

Segment 2

Segment 3

Segment 1

Segment 2

Segment 3

Segment 1

Segment 2

Segment 3

Market targeting is selecting one or more of the segments identified. Market targeting is selecting is selecting one or more of the segments identified for the company to pursue. The criteria for selecting the target market are

1. Identifiable2. Profitable3. Measurable4. Affordable5. Accessible6. Recognisable

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7. Substantial8. Differentiable9. Stable/reliable10.Actionable

Positioning is developing a distinct image for the product or service in the mind of the consumer, an image that will differentiate the offering from competing ones and squarely communicate to consumers that the particular product or service will fulfil their needs better than competing brands. Successful positioning centres around two key principles: first, communicating the benefits that the product will provide rather than the product’s features.

THE MARKETING MIX

The marketing mix consists of a company’s 7p’s namely; Product Price Place Promotion People Physical evidence Processes.

SUMMARYDISCUSSSION QUESTIONSEXERCISESKEY TERMSREFERENCES CHAPTER 4: Consumer Needs and Motivation

Issues to look at:

Motivation Needs Goals Positive and Negative Motivation

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Dynamic Nature of Motivation including Frustration and Arousal of Motives.

Types and Systems of Needs. Motivation Research

CH AP TE R OB JE C TI VE S

B y t h e e n d o f t h i s c h a p t e r, y o u s h o u l d b e a b l e t o u n d e r s t a n d t h e f o l l o w i n g :

1 . T h e m e a n i n g o f M o t i v a t i o n2 . C o n s u m e r n e e d s a n d m o t i v a t i o n3 . T h e d i f f e r e n c e b e t w e e n p o s i t i v e a n d n e g a t i v e m o t i v a t i o n4 . T h e d y n a m i c n a t u r e o f m o t i v a t i o n i n c l u d i n g F r u s t r a t i o n a n d

A r o u s a l o f M o t i v e s5 . T h e t y p e s a n d s y s t e m s o f n e e d s6 . M o t i v a t i o n r e s e a r c h

CHAPTER 5: I s s u e s t o l o o k a t :

What is personality? Theories of Personality Personality and Understanding Consumer Diversity.

CHAPTER OBJECTIVES

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By the end of this chapter, you should be able to understand the following:1. What is personality2. The theories of personality3. Consumer Diversity.

CHAPTER 6: CONSUMER PERCEPTION What is Perception? The dynamics of Perception Consumer Imagery

CHAPTER OBJECTIVES

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1. The meaning of perception2. The dynamics of perception

CHAPTER 7: LEARNING AND CONSUMER INVOLVEMENTI s s u e s t o l o o k a t :

What is Learning? Behavioural Learning Theories Cognitive Learning Theories

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Brand Loyalty and Brand Equity

CHAPTER OBJECTIVES


1. What is learning2. The behavioural learning theories3. The cognitive learning theories4. Brand loyalty and Brand Equity.

CHAPTER 8: NATURE OF CONSUMER ATTITUDES:Issues to look at:

What are Attitudes? Structural Models of Attitudes Attitude Formation Attitude Change

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C H A P T E R O B J E C T I V E S :


1 . T h e m e a n i n g o f a t t i t u d e2 . T h e s t r u c t u r a l M o d e l s o f A t t i t u d e s3 . A t t i t u d e F o r m a t i o n4 . A t t i t u d e C h a n g e .

CHAPTER 9: GROUP DYNAMICS AND CONSUMER REFERENCE GROUPS:

Issues to look at:

Types of Groups Reference Groups and their application What is a Family? Functions of the Family? Family Decision Making

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The Family Life Cycle.

C H A P T E R O B J E C T I V E S


1 . H o w r e f e r e n c e g r o u p s i n f l u e n c e c o n s u m e r s p e n d i n g2 . W h o m a k e u p t h e r e f e r e n c e g r o u p3 . W h a t i s a r e f e r e n c e g r o u p4 . T h e f a m i l y l i f e c y c l e5 . W h a t i s a F a m i l y6 . T h e f u n c t i o n s o f a F a m i l y

CHAPTER 10: SOCIAL CLASS AND CONSUMER BEHAVIOUR:

Issues to look at: What is Social Class? Measurement of Social Class Lifestyle profiles of the social class The Affluent Customer The Non-Affluent Customer.

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CHAPTER OBJECTIVES


1. What is social class2. How social class influences consumer behaviour.

CHAPTER 11: THE INFLUENCE OF CULTURE ON CONSUMER BEHAVIOUR

Issues to look at: What is Culture? Characteristics of Culture Measurement of Culture Core Values

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What is Sub-culture? Sub-cultural aspects of Consumer Behaviour

CHAPTER OBJECTIVES By the end of this chapter, you should be able to understand the following:

1. What is culture2. The characteristics of culture3. How culture influences consumer behaviour.

Buyer behaviour – cultural factorsCultural factors have a significant impact on customer behaviour.

Culture is the most basic cause of a person’s wants and behaviour. Growing up, children learn basic values, perception and wants from the family and other important groups.

Marketing are always trying to spot “cultural shifts” which might point to new products that might be wanted by customers or to increased demand. For example, the cultural shift towards greater concern about health and fitness has created opportunities (and now industries) servicing customers who wish to buy:

Low calorie foods Health club memberships Exercise equipment Activity or health-related holidays etc

Similarly the increased desire for “leisure time” has resulted in increased demand for convenience products and services such as microwave ovens, ready meals and direct marketing service businesses such as telephone banking and insurance.

Each culture contains “sub-cultures” – groups of people with share values. Sub-cultures can include nationalities, religions, racial groups, or groups of people sharing the same geographical location. Sometimes a sub-culture will create a substantial and distinctive market segment of its own.

For example, the “youth culture” or “club culture” has quite distinct values and buying characteristics from the much older “gray generation”

Similarly, differences in social class can create customer groups. In fact, the official six social classes in the UK are widely used to profile and predict different customer behaviour. In the UK’s socioeconomic classification scheme, social class is not just

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determined by income. It is measured as a combination of occupation, income, education, wealth and other variables:

Class name Social Status Occupational Head of Household % of UK

Population

A Upper middle Higher managerial, administrative or professional 3

B Middle Intermediate managerial, administrative or professional 14

C1 Lower middle Superiors or clerical, junior managerial, administrative or professional 27

C2 Skilled working Skilled manual workers 25D Working Semi-skilled and un-skilled manual workers 19

E Those at lowest level of subsistence

State pensioners or widows, casual or lower-grade workers 12

CHAPTER 12: DIFFUSION OF INNOVATIONS

Issues to look at: The Diffusion process The Adoption process A profile of the customer innovator

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CHAPTER OBJECTIVES

By the end of this chapter you should be able to understand the following:

1. The diffusion process2. The Adoption process

THE ADOPTION PROCESS

The “innovators” (those who adopt new products first) are usually relatively young, lively, intelligent, socially and geographically mobile. They are often of a high socioeconomic group (“AB’s”). Conversely, the “laggards” (those who adopt last, if at all) tend to be older, less intelligent, less well-off and lower on the socioeconomic scale.

It follows from the above model that when a business launches a new product or service, the customers who buy first are likely to be significantly different from those who buy the product much later. This needs to be borne in mind when developing the marketing mix.

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B u y e r b e h a v i o u r - s o c i a l f a c t o r s

Introduction

A customer’s buying behaviour is also influenced by social factors, such as the groups to which the customer belongs and social status.

In a group, several individuals may interact to influence the purchase decision. The typical roles in such a group decision can be summarised as follows:

Initiator

The person who first suggests or thinks of the idea of buying a particular product or service

Influencer

A person whose view or advice influences the buying decision

Decider

The individual with the power and/or financial authority to make the ultimate choice regarding which product to buy

Buyer

The person who concludes the transaction

User

The person (or persons) who actually use the product or service

The family unit is usually considered to be the most important “buying” organisation in society. It has been researched extensively. Marketers are particularly interested in the roles and relative influence of the husband, wife and children on the purchase of a large variety of products and services.

There is evidence that the traditional husband-wife buying roles are changing. Almost everywhere in the world, the wife is traditionally the main buyer for the family, especially in the areas of food, household products and clothing. However, with increasing numbers of women in full-time work and many men becoming “home workers” (or “telecommuting”) the traditional roles are reversing.

The challenge for a marketer is to understand how this might affect demand for products and services and how the promotional mix needs to be changed to attract male rather than female buyers.

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CHAPTER 13: CONSUMER DECISION MAKING:

Issues to look at: What is Decision Making? Four view of Consume Decision Making Models of Consumer Decision Making Opinion Leadership The interpersonal flow of communication

C H A P T E R O B J E C T I V E S


1 . W h a t i s D e c i s i o n M a k i n g ?2 . T h e d e c i s i o n m a k i n g p r o c e s s3 . M o d e l s o f c o n s u m e r b e h a v i o u r4 . F o u r v i e w o f C o n s u m e r D e c i s i o n M a k i n g

Buyer behaviour - decision-making Process

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Buyer decision processes are the decision making processes undertaken by consumers in regard to a potential market transaction before, during, and after the purchase of a product or service.

More generally, decision making is the cognitive process of selecting a course of action from among multiple alternatives. Common examples include shopping, deciding what to eat. Decision making is said to be a psychological construct. This means that although we can never "see" a decision, we can infer from observable behaviour that a decision has been made. Therefore we conclude that a psychological event that we call "decision making" has occurred. It is a construction that imputes commitment to action. That is, based on observable actions, we assume that people have made a commitment to effect the action.

How do customers buy?

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http://en.wikipedia.org/wiki/Shopping

http://en.wikipedia.org/wiki/Cognitive_process

http://en.wikipedia.org/wiki/Service

http://en.wikipedia.org/wiki/Product_(business)

http://en.wikipedia.org/wiki/Decision_making


Research suggests that customers go through a five-stage decision-making process in any purchase.

This model is important for anyone making marketing decisions. It forces the marketer to consider the whole buying process rather than just the purchase decision (when it may be too late for a business to influence the choice!)

The model implies that customers pass through all stages in every purchase. However, in more routine purchases, customers often skip or reverse some of the stages.

For example, a student buying a favourite hamburger would recognise the need (hunger) and go right to the purchase decision, skipping information search and evaluation. However, the model is very useful when it comes to understanding any purchase that requires some thought and deliberation.

The buying process starts with need recognition. At this stage, the buyer recognises a problem or need (e.g. I am hungry, we need a new sofa, I have a headache) or responds to a marketing stimulus (e.g. you pass Starbucks and are attracted by the aroma of coffee and chocolate muffins).

An “aroused” customer then needs to decide how much information (if any) is required. If the need is strong and there is a product or service that meets the need close to hand, then a purchase decision is likely to be made there and then. If not, then the process of information search begins.

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A customer can obtain information from several sources:

•Personal sources: family, friends, neighbours etc• Commercial sources: advertising; salespeople; retailers; dealers; packaging; point-of-sale displays• Public sources: newspapers, radio, television, consumer organisations; specialist magazines• Experiential sources: handling, examining, using the product

The usefulness and influence of these sources of information will vary by product and by customer. Research suggests that customers’ value and respect personal sources more than commercial sources (the influence of “word of mouth”). The challenge for the marketing team is to identify which information sources are most influential in their target markets.

In the evaluation stage, the customer must choose between the alternative brands, products and services.

How does the customer use the information obtained?

An important determinant of the extent of evaluation is whether the customer feels “involved” in the product. By involvement, we mean the degree of perceived relevance and personal importance that accompanies the choice.

Where a purchase is “highly involving”, the customer is likely to carry out extensive evaluation.

High-involvement purchases include those involving high expenditure or personal risk – for example buying a house, a car or making investments.

Low involvement purchases (e.g. buying a soft drink, choosing some breakfast cereals in the supermarket) have very simple evaluation processes.

Why should a marketer need to understand the customer evaluation process?

The answer lies in the kind of information that the marketing team needs to provide customers in different buying situations.

In high-involvement decisions, the marketer needs to provide a good deal of information about the positive consequences of buying. The sales force may need to stress the important attributes of the product, the advantages compared with the competition; and maybe even encourage “trial” or “sampling” of the product in the hope of securing the sale.

Post-purchase evaluation - Cognitive Dissonance

The final stage is the post-purchase evaluation of the decision. It is common for customers to experience concerns after making a purchase decision. This arises from a concept that is known as “cognitive dissonance”. The customer, having bought a product, may feel that an alternative

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would have been preferable. In these circumstances that customer will not repurchase immediately, but is likely to switch brands next time.

To manage the post-purchase stage, it is the job of the marketing team to persuade the potential customer that the product will satisfy his or her needs. Then after having made a purchase, the customer should be encouraged that he or she has made the right decision.

Buyer behaviour - new products

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Customer buying process for new products

How do customers approach the process of buying a new product? How does this differ from the process for buying a product which the customer has bought before? What is meant by a “new product”?

A new product can be defined as:

"A good, service or idea that is “perceived” by some potential customers as new. It may have been available for some time, but many potential customers have not yet adopted the product nor decided to become a regular user of the product"

Research suggests that customers go through five stages in the process of adopting a new product or service: these are summarised below:

(1) Awareness - the customer becomes aware of the new product, but lacks information about it

(2) Interest - the customer seeks information about the new product

(3) Evaluation - the customer considers whether trying the new product makes sense

(4) Trial - the customer tries the new product on a limited or small scale to assess the value of the product

(5) Adoption - the customer decides to make full and/or regular use of the new product

What is the role of marketing in the process of new-product adoption?

A marketing team looking to successfully introduce a new product or service should think about how to help customers move through the five stages.

For example, what kind of advertising or other promotional campaign can be employed to build customer awareness? If customers show a desire to trial or sample a product, how can this be arranged effectively?

Research also suggests that customers can be divided into groups according to the speed with which they adopt new products.

Rogers, in his influential work on the diffusion of innovations, suggested the following classification:

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The “innovators” (those who adopt new products first) are usually relatively young, lively, intelligent, socially and geographically mobile. They are often of a high socioeconomic group (“AB’s”). Conversely, the “laggards” (those who adopt last, if at all) tend to be older, less intelligent, less well-off and lower on the socioeconomic scale.

It follows from the above model that when a business launches a new product or service, the customers who buy first are likely to be significantly different from those who buy the product much later. This needs to be borne in mind when developing the marketing mix.

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B u y e r b e h a v i o u r - s o c i a l f a c t o r s

Introduction

A customer’s buying behaviour is also influenced by social factors, such as the groups to which the customer belongs and social status.

In a group, several individuals may interact to influence the purchase decision. The typical roles in such a group decision can be summarised as follows:

Initiator

The person who first suggests or thinks of the idea of buying a particular product or service

Influencer

A person whose view or advice influences the buying decision

Decider

The individual with the power and/or financial authority to make the ultimate choice regarding which product to buy

Buyer

The person who concludes the transaction

User

The person (or persons) who actually use the product or service

The family unit is usually considered to be the most important “buying” organisation in society. It has been researched extensively. Marketers are particularly interested in the roles and relative influence of the husband, wife and children on the purchase of a large variety of products and services.

There is evidence that the traditional husband-wife buying roles are changing. Almost everywhere in the world, the wife is traditionally the main buyer for the family, especially in the areas of food, household products and clothing. However, with increasing numbers of women in full-time work and many men becoming “home workers” (or “telecommuting”) the traditional roles are reversing.

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The challenge for a marketer is to understand how this might affect demand for products and services and how the promotional mix needs to be changed to attract male rather than female buyers.

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Bu ye r be ha v i ou r - s t i mu lu s - re s p on se m od e l

Introduction

A well-developed and tested model of buyer behaviour is known as the stimulus-response model, which is summarised in the diagram below:

In the above model, marketing and other stimuli enter the customers “black box” and produce certain responses.

Marketing management must try to work out what goes on the in the mind of the customer – the “black box”.

The Buyer’s characteristics influence how he or she perceives the stimuli; the decision-making process determines what buying behaviour is undertaken.

Characteristics that affect customer behaviour

The first stage of understanding buyer behaviour is to focus on the factors that determine the “buyer characteristics” in the “black box”. These can be summarised as follows:

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CASE STUDY I

B u y e r b e h a v i o u r - c a s e s t u d y : i n f l u e n c e o f c h i l d r e n o n b u y e r b e h a v i o u r

Research suggests that children are exerting more influence over family buying decisions. What are the implications of this for retailers, brands and marketers?

Children are an important part of the family buying process. But what roles do they play?

Marketing theory suggests five main roles in a family buying process:

-Initiator-Influencer-Decider-Buyer- User

Which roles do children play in addition to the obvious one – “the user”

Children certainly influence family buying decisions from cars to holidays. They are also the buyers of the future. Provide children with Penguin bars and McVitie's may be able to hold on to the adult due to brand awareness and brand loyalty formed at such an early age.

But how should businesses market to children? Are there conflicts with being seen to specifically target the child audience – can it alienate parents?

Products have to appeal to the conflicting agendas of child and parent, while fighting off increasing competition. A marketer of children’s foods was recently quoted as follows:

"Ten years ago children wouldn't have given a damn about cheese. It used to be just Dairylea, but now children's dairy products encompass everything from cheese to yogurts, and fromage frais. Our brands also face more intense competition than ever and it's not just from other chocolate biscuits - it's from products such as Dairylea Dunkers and Fruit Winders. These things didn't exist before."

Marketers also have to recognise that children are moving into new markets. Children as young as seven buy DVD's, and no teenage lifestyle is complete without a mobile phone. This has a knock-on effect. For example, the money children spend on mobile phone cards reduces the money they spend on snacks.

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Marketers also need to be sensitive to the peculiarities of children-related markets. It may be tempting to use a daring marketing campaign to make a product stand out. But a poorly thought-through campaign could result in the product and/or brand being attacked by ethical campaigners, outraged mothers, educationalists, health and safety organisations and others.

A good example of how things can go wrong is Sunny Delight. Sunny Delight enjoyed boom sales after its initial launch. However, the drink's popularity crashed when the media realised that it was sold from chiller cabinets purely as a marketing ploy to make it seem fresh and, therefore, healthy. The actual product formulation was far from healthy.

Retailers face a challenge to display products in a way that attracts children. Promotional displays have to be able to handle child usage (or abuse) and capture a child’s imagination and attention.Disney has a reputation as being particularly good at interactive promotional marketing. Many children also prefer Woolworth's to supermarkets because of features such as pick 'n' mix sweets. The Early Learning Centre succeeds by creating a playground which allows children to play with toys rather than leaving them wrapped in plastic.

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FACTORS AFFECTING CONSUMER BEHAVIOUR

1. Demographic Factors

• Age• Stage in family life cycle• Occupation• Economic circumstances• Lifestyle• social influence variables

• family background• reference groups• roles and status

2. Marketing Mix factors

Product Price Place Promotion People Physical evidence Processes

3. Personal factors4. Psychographic factors5. Environmental factors:

Political Economic Social-cultural Technological Ecological Legal

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DECEMBER 2005

BUYER BEHAVIOUR & CONSUMERISM

1. Identify the key issues you would associate with EACH stage of the adoption process. [20]

2. How can the study of models of consumer behaviour assist marketing managers in the development of marketing plans of action? [20]

3. Discuss the advantages and limitations of TWO motivation research techniques. [20]

4. Explain the major characteristics of trait personality theory and summarise its importance in understanding human behaviour.

[20]

5. What are the factors that will have a direct effect on the way consumers perceive products and services? [20]

6. You have been asked to explain the factors that are likely to influence the relationship between attitudes and behaviour. What information would you include in your explanations? [20]

7. Write notes on THREE of the following:a) Limited problem solvingb) Cognitive dissonancec) Psychographic segmentationd) Opinion leaders [20]

8. Explain TWO attitude measurement techniques that are widely used by behavioural scientists. [20]

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JUNE 2005


1. What is the value of opinion leaders to marketing management? [20]

2. Explain how Pavlov’s “classical conditioning” theory can be beneficial to the marketing process. [20]

3. Discuss the main behavioural influences that could affect organisational buying decisions. [20]

4. Examine Maslow’s classification of human needs and indicate how it might be applied to the marketing of holidays.

[20]

5. Summarise the benefits and limitations of the Howard-Sheth model of buyer behaviour. [20]

6. Outline the value of cognitive dissonance to the marketing of prestigious products and services. [20]

7. Write notes on THREE of the following: a) Word association tests b) Likert scale c) Trait theory d) Subliminal perception [20]

8. As a marketing manager, you are in the process of finalising the positioning of a new product within the market place. How can knowledge from behavioural sciences assist you? [20]

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SEPTEMBER 2005


1. Explain the theory of human motivation based on the notion of hierarchy of human needs developed by Abraham Maslow.

[20]

2. You have been asked to explain the following terms to a group of marketing students:a) Perceived Risk [10]b) Perceptual Mapping [10]What information would you include in your presentation?

3. How can the principle of classical conditioning theory be utilised during the development of marketing campaigns? [20]

4. Discuss the importance of using psychographic factors as a basis for market segmentation. [20]

5. What are the key factors that govern attention and how can they be used in the development of promotional campaigns? [20]

6. Outline TWO attitude quantification techniques and discuss the extent to which they provide a satisfactory measurement of attitudes. [20]

7. Write notes on THREE of the following:a) Celebrity Testimonialsb) Membership Groupsc) Opinion Leadersd) Cognitive Dissonance [20]

8. Show how the Howard-Sheth model of buyer behaviour can be used by a commercial organisation. [20]

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JUNE 2006


1. Identify the main external factors that govern attention and explain how they may be used in promotional campaigns. [20]

2. You have been asked to advise a group of students on the main influences on consumer buying behaviour. What information would you give them? [20]

3. Explain how the principles of classical conditioning theory can be considered in the development of marketing programmes. [20]

4. Distinguish between reference groups and membership groups and highlight their value in the development of a promotional campaign for a new range of fast foods. [20]

5. Discuss the main factors that can influence the diffusion of innovations. [20]

6. Explain the value of cognitive dissonance to marketing practitioners. [20]

7. Write notes on THREE of the following:a) Opinion Leadersb) Trait Personality Theoryc) Psychographicsd) Extensive Problem Solving [20]

8. What is the value of consumer behaviour models to the practice of marketing? [20]

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MARCH 2006

PUBLIC RELATIONS

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1. Identify the roles assumed by Public Relations within the marketing mix. [20]

2. Discuss the benefits of effective Internal Public Relations activities to

the overall performance of commercial organisations. [20]

3. Explain why, in your opinion, marketing orientated organisations should take their social responsibilities seriously.

[20]

4. What are the main benefits organisations could expect to derive from effective lobbying? [20]

5. Identify the evaluation criteria that can be used in selecting an external Public Relations consultant to advise a company on their overall PR efforts. [20]

6. Write notes on THREE of the following:a) Press Conferencesb) Sponsorshipc) Press Releasesd) Brand Image [20]

7. Identify the wide range of publics that a marketing orientated company may wish to reach. [20]

8. Explain what you understand by the term Marketing Public Relations (MPR) and summarise its importance during the launch of a new product. [20]

SEPTEMBER 2006


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1. Summarise the value of Maslow’s classification of human needs to the marketing of products and services. [20]

2. Discuss TWO personality theories and explain their practical value to marketing. [20]

3. Identify the main advantages and limitations associated with TWO motivation research techniques of your choice.

[20]

4. Explain what you understand by the term frustration and discuss the main characteristics of frustrated behaviour.

[20]

5. You have been asked to explain the importance of classical conditioning to a group of advertising students. What information would you include in your explanations? [20]

6. Identify the stages of the adoption process and summarise the key issues associated with EACH stage. [20]

7. Write notes on THREE of the following:a) Membership Groups b) Reference Groupsc) Psychographic Segmentationd) Cognitive Dissonance [20]

8. Discuss the main factors that will affect the way humans perceive things around them. [20]

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