Approaches to Customer Analysis

Understanding Buyer’s Behavior

• Irrespective of whether the marketing planner is operating in a consumer, industrial or organizational market, there are eight questions which underpin any understanding of buyer behavior:1. Who is in the market? their power in contrast to organization?2. What do they buy?3. Why do they buy?4. Who is involved in the buying?5. How do they buy?6. When do they buy?7. Where do they buy?8. What are the customers’ ‘hot’ and ‘cold’ spots?

GROUP ACTIVITY

THE BUYING DECISION PROCESS

The five buying roles

• People differ greatly in their readiness to try new products.• We divide the customers into 5 roles based on their

readiness to buy a new product– Innovators —they try new ideas at some risk. – Early adopters —they are opinion leaders in their communities

and adopt new ideas early but carefully. – The early majority — although they rarely are leaders, they

adopt new ideas before the average person. – The late majority —they adopt an innovation only after a

majority of people have tried it. – Laggards —they are suspicious of changes and adopt the

innovation only when it has become something of a tradition itself.

Product Adoption and Product Lifecycle

innovating firm should research the characteristicsof innovators and early adopters in their product categories and direct marketingefforts toward them.

Different types of buying behaviour

• Buying behavior differs greatly for a tube of toothpaste, an iPhone, financial services, and a new car. More complex decisions usually involve more buying participants and more buyer deliberation.

Buying PC/Smart Phone

Buying Cookies, Shampoos etc

Home Furnishings, AC

Soap, Salt, Spices, Socks

The Buyer Decision Process

• The process begins with the consumer’s recognition of a problem, or perhaps more commonly, a want. –an internal stimulus (hunger or thirst) –an external stimulus in the form of an

advertisement or a colleague’s comment.

Need Recognition

• Personal sources, such as family, friends, colleagues and neighbours

• Public sources, such as the mass media and consumer organizations

• Commercial sources, such as advertising, sales staff and brochures

• Experimental sources, such as handling or trying the product.

The relative importance of each of these varies greatly from person to person and product to product.

Information Search

Evaluation of Alternatives

Evaluation of Alternatives

• The product’s attributes, such as its price, performance, quality and styling

• Their relative importance to the consumer• The consumer’s perception of each brand’s

image• The consumer’s utility function for each of the

attributes.

Modifying Product Offers • Changing the physical product by, for example, adding

features (real repositioning)• Changing beliefs about the product by giving greater

emphasis to particular attributes (psychological repositioning)

• Changing beliefs about competitors’ products by comparative advertising and ‘knocking copy’ (competitive depositioning)

• Changing the relative importance of particular attributes • Emphasizing product features that previously have been

largely ignored• Changing buyers’ expectations.

ORGANIZATIONAL BUYING BEHAVIOUR

The three types of buying decision

Straight RebuyStraight Rebuy

New Task BuyingNew Task Buying

Modified RebuyModified Rebuy

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Participants in the Business Buying Process: The Buying Center

Buying Center

Buying Center

UsersGatekeepers

Deciders Influencers

Buyers

The principal influences on industrial buyers

How do industrial buyers arrive at their decisions?

Relationship marketing

• The costs of gaining a new customer, particularly in mature and slowly-declining markets, are often high.

• The marketing planner needs to ensure that the existing customer base is managed as effectively as possible

• Thus a need for relationship building as opposed to transactional focus

Benefits of Relationship Marketing

• The price premium that loyal customers are or may be willing to pay

• Customer referrals• A reduction in marketing costs• The value of a greater number of purchases.

Developing the relationship strategy (pre-req)

• Identify the key customers• Determine which customers want a

relationship• categorize customers in terms of their current

or future potential– Potential Vs Focus of effort

Developing the relationship strategy (pre-req)

• Examine expectations of each segment• Identify how, potential and efforts can be

matched in a cost-effective and profitable way.• In the case of relationships in the commercial

sector, appoint a relationship manager• Start with a series of small wins• Recognize that different customers have very

different expectations

Developing the relationship strategy

• Analyze the gap• Identify what needs to be done to close the

gap• Formulate a program of benefits that satisfy

customers’ needs in order of importance of each within the segment

• communications plan• Monitoring performance