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Definition: The behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs Need for consumer Behavior study:
The study of consumer behavior provides companies with valuable information about its consumers and prospects, including probable likes and dislikes, spending patterns and motivators to purchase. This information helps companies time product launches and sales promotions, schedule customer service staff and more.
Impact of Digital Technologies Consumers have more power and access to information Marketers can gather more information about consumers The exchange between marketer and customers is interactive and instantaneous and goes beyond the PC. Marketers must offer more products and services
Marketing Strategy Consumer research allows companies to market more effectively by including images and text designed to resonate with a target demographic and by scheduling those ads during certain shows or time slots. As well, understanding behavior may lead to changes in the design of a pilot product, a product's packaging or its position within the store. Understanding why customers buy what they do also helps a company create campaigns to encourage repeat purchase and referrals. Find a Competitive Edge-
Types of Buying Decision Behavior Complex Highly involved, significant brand differences Example computer Dissonance-reducing Highly involved, little brand differences Example carpet Habitual Low involvement, little brand differences Example salt Variety-seeking Low involvement, significant perceived brand differences Example cookies
Consumers make decisions for different reasons, such as price, style, durability and taste. These reasons differ across categories and even within categories across time. By being aware of consumers' current behavior, a company has an opportunity to create a competitive edge and to steal business from the competition. This can include strategically timed sales, new designs, improved customer service or even a new channel. For example, many companies found a competitive edge and experienced tremendous growth by offering enhanced service or shipping discounts when online shopping became commonplace. Stay in Business-Periods of time, such as the great recession of 2008, show another fundamental reason why companies need consumer behavior research. Knowing when a turnaround is going to begin can be crucial for production schedules. But, even more important, knowing that a recession is beginning---and that it's not just a slow month or two---can mean the difference between making quick changes to meet new consumer needs and the potential failure of a business. Be Better Consumers-By studying and understanding consumer behavior, we can all become better consumers. When you know that hardware stores always have paint on sale on Memorial Day weekend, you may decide to delay a project by a few weeks or even to stock up at that time. Such awareness can also pay dividends at the grocery store. Many items are typically cheaper (per ounce, pound, etc.) in the larger size. However, some consumers may be surprised to know that this is not always the case. Knowing this fact can lead some people to begin always checking the unit price. Successful Relationships Customer Value-Defined as the ratio between the customers perceived benefits and the resources used to obtain those benefits Perceived value is relative and subjective Developing a value proposition is critical Customer Satisfaction-The individual's perception of the performance of the product or service in relation to his or her expectations. Customers identified based on loyalty include loyalists, apostles, defectors, terrorists, hostages, and mercenaries LOYALISTS Who keep purchasing APOSTLES Whose experiences exceed their expectations & spread +ve WOM. DEFECTORS- who are merely satisfied & are likely to stop doing business with co. TERRORISTS who have ve experiences and spread ve WOM. HOSTAGES who are unhappy but stick due to low prices and make frequent complaints. MERCENARIES very satisfied but are not very loyal and may defect for a low price. Customer Retention-
Stages of the Buying Decision Process Ways to find out the buying decision process by marketers: 1) 2) 3) 4) Introspective Method: they would think how they would behave Retrospective Method: Ask people to recall their buying decision process Prospective process: Ask prospective customers to think aloud Prescriptive process: Ask customers the ideal way to buy the product
Problem Recognition
Purchase Decision
Postpurchase Behaviour
Consumer behavior refers to the selection, purchase and consumption of goods and services for the satisfaction of their wants. There are different processes involved in the consumer behavior. Initially the consumer tries to find what commodities he would like to consume, then he selects only those commodities that promise greater utility. After selecting the commodities, the consumer makes an estimate of the available money which he can spend. Lastly, the consumer analyzes the prevailing prices of commodities and takes the decision about the commodities he should consume. Meanwhile, there are various other factors influencing the purchases of consumer such as social, cultural, personal and psychological. The explanation of these factors is given below. 1. Cultural Factors Consumer behavior is deeply influenced by cultural factors such as: buyer culture, subculture, and social class. Culture Basically, culture is the part of every society and is the important cause of person wants and behavior. The influence of culture on buying behavior varies from country to country therefore marketers have to be very careful in analyzing the culture of different groups, regions or even countries. Subculture
Sources of information for the customer: Personal Sources: family, friends Commercial sources: Ads, sales people Public sources: Mass media Experimental sources: Handling, examining
Successive sets involved in consumer Buyin decision process: Evaluation of IDEAS The consumer is tryin to satisfy his needs , get some benefits and finally look at the product as a bundle of benefits. The consumer wud give weightages to the various attributes to the product and find out the total points to the product. Some methods which can help change the consumers perception of the product 1) 2) 3) Real repositioning: redesign the product Psychological repositioning: Alter the belief of the brand Competitive repositioning: Alter belief about the competitors brand
Each culture contains different subcultures such as religions, nationalities, geographic regions, racial groups etc. Marketers can use these groups by segmenting the market into various small portions. For example marketers can design products according to the needs of a particular geographic group. Social Class Every society possesses some form of social class which is important to the marketers because the buying behavior of people in a given social class is similar. In this way marketing activities could be tailored according to different social classes. Here we should note that social class is not only determined by income but there are various other factors as well such as: wealth, education, occupation etc. 2. Social Factors Social factors also impact the buying behavior of consumers. The important social factors are: reference groups, family, role and status. Reference Groups Reference groups have potential in forming a person attitude or behavior. The impact of reference groups varies across products and brands. For example if the product is visible such as dress, shoes, car etc then the influence of reference groups will be high. Reference groups also include opinion leader (a person who influences other because of his special skill, knowledge or other characteristics). Family Buyer behavior is strongly influenced by the member of a family. Therefore marketers are trying to find the roles and influence of the husband, wife and children. If the buying decision of a particular product is influenced by wife then the marketers will try to target the women in their advertisement. Here we should note that buying roles change with change in consumer lifestyles. Roles and Status Each person possesses different roles and status in the society depending upon the groups, clubs, family, organization etc. to which he belongs. For example a woman is working in an organization as finance manager. Now
Purchase Decision After a comprehensive review of solutions and specific products and services, the consumer makes a purchase decision. At this point in the buying process, supporting information needs to be provided to reinforce the decision to buy. Depending on your product or service, you may need to provide different payment options or billing terms Postpurchae behaviour: Postpurchase Satisfaction: the customer may either be satisfied, delighted or dissatisfied after the purchase. these feelings make a lot of difference to the customers perception and behaviour towards the company. Postpurchase actions: the customer may take different actions depending upon his satisfaction level. The dissatisfied customer may stop buying ( exit opition) or the customer may be tell his friends not to buy the product ( voice option) Postpurchase use and disposal: Marketers need to monitor what the consumer does with the product after purchase and how it is disposed off to maintain environmental friendliness of the product.
Customer possesses specific belief and attitude towards various products. Sin and attitudes make up brand image and affect consumer buying behavior there are interested in them. Marketers can change the beliefs and attitudes of launching special campaigns in this Model of consumer behaviour
4. Esteem Needs (self-esteem, recognition, status) 3. Social Needs (Sense of belonging, love) 2. Safety Needs (security, protection) 1. Physiological Needs (food, water, shelter)
The degree of relevance or involvement determines the consu motivation to search for knowledge about a product or service This theory postulates that individuals seek to satisfy lower level need needs emerge. The lowest level of chronically unsatisfied need th experiences serves to motivate his or her behavior. when that nee satisfied, a new (and higher) need emerges that the individual is motiv
Physiological Needs These are the most basic level of human needs. These needs which are required to sustain biological life, include food, water, air, shelter, clothing.
Safety Needs These needs are concerned not only with physical safety but also include order, stability, familiarity, and control over ones life and environment. Health and the availability of health care are important safety concern.
Saving accounts, insurance policies, education and vocational training are all means by which individuals satisfy the need for security Social Needs Includes such needs as love, affection, belonging, and acceptance. People seek warm and satisfying human relationships with other people and are motivated by love, for their families.
Because of the importance of social motives in our society, advertiser of many product categories emphasize this appeal in their advertisements Egoistic Needs-
Self Actualization This need refer to an individuals desire to fulfill his or her potential-to become everything he or she is capable of becoming. A young man may desire to be a Olympic star and work single mindedly for years to become best in his sports. An artist must express herself on canvas A researcher scientist may strive to find a new drug that eradicates cancer. PERCEPTION is the process by which an individual selects, organizes and interprets information inputs to create a meaningful picture of the world. 1. 2. 3. Selective Attention Selective Distortion Selective retention
Major Factors influencing Buying Behaviour Cultural Factors Culture : values, perceptions, preferences and behaviours. Subculture : nationalities, religions, racial grps & geographic regions. Social Class : homogeneous & enduring divisions, hierarchically ordered, members share common values. Indicated by occupation, income, education, etc.
1. Selective Attention: a person cannot possibly attend to all (1500 ads), most stimuli will be screened out- a process called selective attention. People are likely to notice stimuli that relate to a current need. People are more likely to notice stimuli that they anticipate. People are more likely to notice stimuli whose deviations are large in relation to normal size of the stimuli. Selective Distortion: Selective Distortion is the tendency to interpret information in a way that will fit our preconceptions. consumer will often distort information to be consistent with prior brand and product belief. Selective Retention: People will fail to register much information to which they are exposed in memory, but will tend to retain information that supports their attitudes and beliefs. Because of Selective retention we are likely to remember good points about a product we like and forget good points about competing products. Learningit involves changes in an individuals behavior arising from experience. It is produced through the interplay of drives, stimuli, cues, responses and reinforcement. Drive:
Social Factors Reference Groups : all groups that have a direct (membership groups) or indirect influence on attitudes or behavior. These groups 1. expose us to new behaviors & lifestyles 2. influence attitudes & self concept 3. create pressures for conformity that influence brand choice Family : Most important & influential primary reference grou Family of orientation parents & siblings Family of procreation spouse & children
Roles and Statuses A person participates in many groups family, clubs, and organizations. The persons position in each group can be defined in terms of role and status. A role consists of the activities that a person is expected to perform. Each role carries a status. People choose products that communicate their role and status in society. Thus CEOs drive Mercedes, etc. Marketers are aware of the status symbol potential of products and brands.
PERSONAL FACTORS A buyers decisions are also influenced by personal characteristics. These include the buyers age and stage in the life cycle, occupation, economic circumstances, lifestyle and personality and self-concept. Age and stage in the life cycle People buy different goods and services over a lifetime.
Some recent work has identified psychological life cycle stages. Adults experience certain passages or transformations as they go through life. Marketers pay close attention to changing life circumstances divorce, widowhood, remarriage and their effect on consumption behavior. Occupation & economic circumstances Occupation also influences a consumption pattern. A company can even specialize its products for certain occupational groups. Product choice is greatly affected by economic circumstances: spendable income (level, stability, time pattern), savings and assets (including the % that is liquid), debts, borrowing power, and attitude towards spending Vs saving. Marketers of income-sensitive goods pay constant attention to trends in personal income, savings and interest rates. If economic indicators point to a recession, marketers can take steps to redesign, reposition, and re price their products so they continue to offer value to target customers. Stages in the Family Life Cycle 1. Bachelor stage: young, single not living at home Few financial burdens Fashion opinion leaders Recreation oriented. Buy:basic home equipment, furniture, cars, vacations 2. Newly married Couple: Young no children Highest purchase rate & highest average purchase of durables Cars, appliances, furniture, vacations 3.Full nest I: youngest child under 6 Home purchasing at peak. Liquid assets low Interested in new products, advertised products Buy: washers, dryers, TV, baby food, vitamins, dolls, 3. Full Nest II: youngest child 6 or over Financial position better Less influenced by advertisements Buy larger sized packages, multiple unit deals Buy: cleaning material, bicycles, piano 5. Full Nest III: older married couple with dependent children Financial position still better Less influenced by advertising High average purchase of durables Auto, boats, dental services, magazines 6. Empty Nest I: older married couple, no children living with them, head of house in labor force Home ownership at peak Interested in travel, recreation, self education Not interested in new products Buy: vacations, luxuries, home improvements 7. Empty Nest II: older married couple, no children living with them, head of house retired Drastic cut in income Keep home Buy: medical appliances, medical care products 8. Solitary survivor: in labor force Income still good but likely to sell home 9. Solitary survivor: retired Same medical and product needs as other retired group Drastic cut in income Special need for attention, affection, security 2. Psychological Factors: 4 major psychological factors that influence a persons buying choices:
5. Self Actualization Needs (Self Development and realization) 4. Esteem Needs (self-esteem, recognition, status) 3. Social Needs (Sense of belonging, love)
H e r 2. z Safety Needs (security, protection) b e r 1. Physiological Needs (food, water, shelter) g s T heory: Two-factor theory Dissatisfiers Factors that cause dissatisfaction. Satisfiers Factors that cause satisfaction. The Seller should do his best to avoid dissatisfiers. The manufacturers should identify the major satisfiers or motivators of purchase in the market and then supply them. Perception: How a motivated person acts is influenced by his or her perception Perception is the process by which an individual selects organizes and interprets information inputs to create a meaningful picture of the world. iii.
3.
4.
Buying behavior: Complex buying behavior three-step process develops belief about the product, attitude about the product and then makes a thoughtful choice. Dissonance reducing buying behavior consumer is highly involved in a purchase but sees little difference in brands. Marketing communication should supply beliefs and evaluations that help the consumer feel good about his/her brand choice. Habitual buying behavior bought under conditions of low involvement and absence of significant brand differences. Variety seeking buying behavior characterized by low involvement but significant brand differences.
Social Class: has a strong influence on preference in cars clothing home furnishing, leisure activities reading habits and retailers. The taste of social class can change with years. Psychographic segmentation: Buyers are divided into different groups based on personality and values. People within the same demographic group can exhibit very different psychographic profiles. Lifestyle: people generally exhibit more lifestyle than are suggested by social classes generally the goods they consume express their lifestyle such as cosmetics, alcoholic beverages, furniture etc. Personality: Marketers can use personality variables to segment markets. They endow their products with brand personalities that correspond to consumer personalities. Values: some marketers segment by core values, the belief systems that underlie consumer attitudes and behaviours. Core values go much deeper than behaviour or attitude and determine at a basic level peoples choices and desires over long term. Marketers who segment by values believe that by appealing to peoples inner selves it is possible to influence their outer selves- their purchase behaviour. Behavioral Segmentation Buyers are divided into groups on the basis of their knowledge of, attitude toward, use of, or response to a product.
High Involvement Significant differences between brands Few differences between brands Complex behavior buying
Habitual behavior
buying
MARKET SEGMENTATIONMarket Segmentation consists of taking the total heterogeneous market for a product and dividing it into several sub-markets each of which tends to be homogeneous in all significant aspect.
Brand loyal markets high % of hard-core brand loyal buyers Buyer readiness stage: A market consists of people in different stages if readiness to buy a product. Stages of readiness: Attitude: Five attitude groups can be found in the market: Enthusiastic Positive Indifferent Negative Hostile Aware of product Informed about product Interested in product Desirous of buying the product Intention to buy product
FAMILY DECISION MAKING 1. Influencers: Those family members who provide information and advice and thus influence the purchase.
Family influences Family Influence on consumer bahavior Family is the most influential group for the consumer. From parents a person acquires an orientation toward religion, politics, and economics and a sense of personal ambition, selfworth, and love. The other is the family of procreation-the buyers spouse and children-exert a more direct influence on everyday buying behaviour. Family Life Cycle A series of Predictable Stages A progression of stages through which many Family members pass It is a composite variable created by systematically combining demographic variables as Marital Status, Size of Family, Age of Family members & Employment Status Helps to understand the behavior of consumers at various stages of their lives so as to effectively design the right Marketing Strategy The housewife tells her family about the new eatery that has opened in the neighborhood and her favorable description about it influences her husband and teenaged children to also patronize the restaurant. Family member(s) who provide information to other members about a product or service. 2. Gatekeepers: Those family members who control the flow of information about a product/service thus influencing the decisions of other family members. The teenaged son who wants a racing bicycle, may withhold from his father much of the relevant information on all brands except the one that he fancies, thereby influencing his fathers decision in favour of his preferred brand. Family member(s) who control the flow of information about a product or service into the family. 3. Deciders: Family members who have the power to unilaterally or jointly decide whether or not to buy a product or service. The husband and wife may jointly decide about the purchase of a new refrigerator. Family member(s) with the power to determine unilaterally or jointly whether to shop for, purchase, use, consume, or dispose of a specific product or service.
Personal influence The influence that friends , neighbors, acquaintances, coworkers and others have on individuals consumption behavior. Personal influence is best described as the effect or change in persons attitude or behavior as a result of communication with others Opinion leaders are the ones to whom others look for advice. Features of opinion leadership Credibility Positive and Negative product information Information and price Diffusion of innovationDiffusion of Innovations is a theory that seeks to explain how, why, and at what rate new ideas and technology spread through cultures. Everett Rogers, a professor of rural sociology, popularized the theory in his 1962 book Diffusion of Innovations. He said diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system. The framework for exploring consumer acceptance of new products is drawn from the area of research known as the diffusion of innovations An innovation is an idea, practice, or product perceived to be new by the relevant individual or group. The manner by which a new product spreads through a market is basically a group phenomenon. New products can be placed on a continuum from no change to radical change, depending on the markets perception. Elements
These may be seen as a contrast to nuclear families and are seen as pretty basic as well. An extended family is several generations of the same family living in the same household or in near vicinity or neighborhood. Extended Families may include aunts, uncles, grandparents, parents, grandchildren, children, etc. Extended families are seen as a little more closely knit than other types of families. This may be because of their wants to be near each other or live under the same roof. Some may see this as signs of showing care, love and compassion for their family members. Extended families are common in countries like Mexico, India and Africa. Single-parent families Single-parent families have the same definition as their name, one parent living with one or more children. They must basically bring up their children themselves, considering they have no spouse. Many factors can provoke the creation of single-parent families, including a death of a spouse, divorce between the two spouses, etc. It is said that children living with one parent may be a little off balance as opposed to children living with both parents. No father for a son or mother for a daughter may have side effects on the childrens morale, behavior and possibly health. The single mother or father will be forced to work long hours to provide, causing them to miss out on quality time with their children. Even the long hours may cause financial problems in the family, not only stressing the mother but consequently affecting the children. Divorced spouses often let their children visit both parents; this may help the childrens morale Factors affecting family purchase decision Culture Sub-culture Social class Reference group Geographical Children Personal Influence The influence that friends , neighbors, acquaintances, coworkers and others have on individuals consumption behavior.
The key elements in diffusion research are: Element Definition Rogers defines an innovation as "an idea, practice, or object that is perceived as new by an individual or other unit of adoption". A communication channel is "the means by which messages get from one individual to another". "The innovation-decision period is the length of time required to pass through the innovation-decision process"."Rate of adoption is the relative speed with which an innovation is adopted by members of a social system". "A social system is defined as a set of interrelated units that are engaged in joint problem solving to accomplish a common goal".[
Innovation
Communication channels
Time
Social system
Rate of AdoptionThe rate of adoption is defined as: the relative speed with which members of a social system adopt an innovation. It is usually measured by the length of time required for a certain percentage of the members of a social system to adopt an innovation . The rates of adoption for innovations are determined by an individuals adopter category. In general individuals who first adopt an innovation require a shorter adoption period (adoption process) than late adopters.
Observability
Categories of innovation Continuous Innovation Adoption of this type of innovation requires relatively minor changes in behavior(s) that are unimportant to the consumer. Dynamically continuous Innovation Adoption of this type of innovation requires a moderate change in an important behavior or a major change in a behavior of low or moderate importance to the individual. Discontinuous Innovation Adoption of this type of innovation requires major changes in behavior of significant Innovators are the first individuals to adopt an innovation. Innovators are willing to take risks, youngest in age, have the highest social class, have great financial lucidity, very social Innovators and have closest contact to scientific sources and interaction with other innovators. Risk tolerance has them adopting technologies which may ultimately fail. Financial resources help absorb these failures. This is the second fastest category of individuals who adopt an innovation. These individuals have the highest degree of opinion leadership among the other adopter categories. Early adopters are typically younger in age, have a higher social status, have more financial lucidity, advanced education, and are more socially forward than late adopters. More discrete in adoption choices than innovators. Realize judicious choice of adoption will help them maintain central communication position Individuals in this category adopt an innovation after a varying degree of time. This time of adoption is significantly longer than the innovators and early adopters. Early Majority tend to be slower in the adoption process, have above average social status, contact with early adopters, and seldom hold positions of opinion leadership in a system. Individuals in this category will adopt an innovation after the average member of the society. These individuals approach an innovation with a high degree of skepticism and after the majority of society has adopted the innovation. Late Majority are typically skeptical about an innovation, have below average social status, very little financial lucidity, in contact with others in late majority and early majority, very little
Early Adopters
Early Majority
Late Majority