Buyer Behaviour

Definitions and Classifications

Learning Outcomes

Know the different types of customers

Difference between Buyer and
Consumer
Behavioural pattern of a typical
purchase
Consumer buying process
Consumer Behaviour

Consumer behaviour is the study of individuals, groups, or organizations and the

processes they use to select, secure, and dispose of products, services, experiences, or
ideas to satisfy needs and the impacts that these processes have on the consumer and
society.
It blends elements from psychology, sociology, social anthropology and economics
It attempts to understand the decision-making processes of buyers, both individually and
in groups. It studies characteristics of individual consumers such as demographics 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 Behavoiur

Customer behaviour study is based on consumer buying behaviour, with the customer playing the
three distinct roles of user, payer and buyer. Research has shown that consumer behaviour is
difficult to predict, even for experts in the field.
Relationship marketing is an influential asset for customer behaviour analysis as it has a keen
interest in the re-discovery of the true meaning of marketing through the re-affirmation of the
importance of the customer or buyer. A greater importance is also placed on consumer retention,
customer relationship management, personalisation, customisation and one-to-one marketing.
Social functions can be categorized into social choice and welfare functions.
Consumer Behaviour

A consumer does not buy the same products or services at 20 or 70 years. His
lifestyle, values, environment, activities, hobbies and consumer habits evolve
throughout his life.
For example, during his life, a consumer could change his diet from unhealthy
products (fast food, ready meals, etc..) to a healthier diet, during mid-life with
family before needing to follow a little later a low cholesterol diet to avoid
health problems.
The factors influencing the buying decision process may also change. For
example, the social value of a brand generally play a more important role in
the decision for a consumer at 25 than at 65 years.
Consumer Behaviour

The purchasing power of an individual will have, of course, a decisive

influence on his behavior and purchasing decisions based on his income and
his capital.
This obviously affects what he can afford, his perspective on money and the
level of importance of price in his purchasing decisions. But it also plays a role
in the kind of retailers where he goes or the kind of brands he buys.
As for social status, some consumers may also look for the social value of
products they buy in order to show external indications of their incomes and
their level of purchasing power..
Consumer Behaviour

Personality is the set of traits and specific characteristics of each individual. It is the product of the
interaction of psychological and physiological characteristics of the individual and results in constant
behaviors.
It materializes into some traits such as confidence, sociability, autonomy, charisma, ambition,
openness to others, shyness, curiosity, adaptability, etc..
While the self-concept is the image that the individual has or would like to have of him and he
conveys to his entourage. These two concepts greatly influence the individual in his choices and his
way of being in everyday life. And therefore also his shopping behavior and purchasing habits as
consumer.
In order to attract more customers, many brands are trying to develop an image and a personality
that conveys the traits and values - real or desired of consumers they are targeting.
Buyer

A buyer is a customer---he is an individual or business that makes

a purchase from a seller. Regardless of the scenario, the buyer is
the party that gives or transfers money to the seller to secure a
product. A teenager getting a video game from a store at the mall
is a buyer as is a distribution company that purchases raw
materials from a manufacturer on credit.
Consumer

On the other hand, a consumer is a person who uses a product or

service. The consumer is often called an "end user" because he is
the last stop and does not usually transfer or sell the item to
another party. A buyer can be a consumer, as in the example of a
teenager buying and using a video game. At the same time, a
consumer is not necessarily the buyer---for instance, if a mother
purchases cereal for herself and her family, each family member is
a consumer of the product
B2C vs B2B

The difference between a buyer and consumer comes into play

when a company is evaluating its overall business plan. A
company usually falls into one, or both, of two categories---B2B
(business to business) or B2C (business to consumer). As the
name "business to business" suggests, this is a scenario where
two commercial entities enter into a purchasing agreement. The
purchasing business is simply a buyer when it plans to resell the
items purchased, but it is a consumer when it uses them (as in the
case of buying office supplies). A business to consumer
arrangement is between a commercial entity and the end user
Considerations

When marketing a product or service a company has to identify

the needs of both the buyer and the consumer. For example, a
publisher who sells textbooks must market to both the distributor
who will sell the textbooks and the professors who will order them
for class. The requirements of a buyer may be different from the
consumer, if they are two separate people, but in many cases the
buyer's decision is strongly influenced by the consumer's needs
 CULTURAL FACTORS
SOCIAL FACTORS
Culture
Subculture Reference groups
Social class Family
Roles & Status

BUYING DECISION PROCESS

PROBLEM RECOGNITION

INFORMATION SEARCH

IDENTIFICATION AND
EVALUATION OF ALTERNATIVES

PURCHASE DECISION

PERSONAL FACTORS
POST PURCHASE BEHAVIOUR PSYCHOLOGICAL FACTOR
Age
Occupation Motivation
Lifestyle Perception
Personality Attitude
Repeat Customers

Lifetime value is the total value of a customers business over the lifetime of their
relationship with your company. The more a customer purchases from you and the
longer they stay with your, the more valuable that customer is to your business
Josh Kauffman
Repeat Customers

That is how you turn a 100 sale into 1200 then 12000 etc at no extra
cost! Maximising the lifetime value of each customer.

Every successful business owner will tell you that the secret to
business growth is repeat sales to repeat customers. Repeat sales are
the single easiest way of increasing your business revenues.

Imagine what your business would look like if you retained all the
clients you worked so hard to get? The less people drop off your radar,
the quicker youll be able to accelerate your business growth
Repeat Customers

1. Be devoted to your customers

You are in business because you offer a solution to your customers problems. The more
committed you are to seeing them solve their problems the more committed they will be to
you as their provider of choice.
Repeat Customers

2. Encourage and Reward loyalty and repeat business

This is an effective way of encouraging repeat business. Let the customers doing repeat
business know that you appreciate their custom. It shouldnt always come in the form of a
discount (how long can you keep reducing your prices) but it can come in the form of a gift
or something that would be of immerse value to the customer and would generate word of
mouth referrals. E.g. How many things have you not heard the story of someone being
unexpected upgraded to first class or gotten a free products due to amassed loyal points
Repeat Customers

3. Be positive and encourage positivity

People like being around positive, cheerful and optimistic people. It is less tiring. Even
though you may not be in the motivational business, always seek the opportunity to
contribute positively to the mental well being of your customers. Learn to offer kind words
as you go about your business. Your customers will be grateful for that. A thank you or
smile goes a long way
Repeat Customers

4. Create an active community

An active community provides extra support to your customer retention activities. The
more interactive and engaging the community is, the better it is for all involved. You could
have a mix of free or paid versions of such communities to suite all budgets and peoples
needs. Social media has made this relatively easy to implement. Pick a platform and make
it easy for people to join in
Repeat Customers

5.Be accessible

People are short of time. In the struggle to get more done, they make themselves less
available to their customers and all customer facing work is delegate to the most junior
and inexperienced member. This is ok for managing resources but if Im paying you loads
of money and have been a customer for a couple of years, then I expect something better. I
want to know that I can get a senior person on the phone if I need to. Be the company
whose clients know they can reach out to you when things are tough. Your senior support
team or even yourself will be there to help
Repeat Customer

6. Follow up

This is something that youve probably heard and read a lot on already but there is no
substitute for a good follow up strategy. Leaving your clients and prospects cold is not only
a bad thing but it will affect your ability to grow your business. Emails are a cheap and free
way of following up
Repeat Customers

7. Be transparent and honest

People like to do business with people they like and trust. So when things go wrong,
(which they will from time to time) be honest and own up to your faults. You are less likely
to alienate your customers when you are truthful and admit you got it wrong. People can
be quite forgiving if they like you
Repeat Customers

8.Create a system and work the system

The key to implementing these ideas is to fine-tune it all into a system that works for you.
Make it part of your business DNA. You and your staff should seek every opportunity not
only to make a sale but also to create and encourage loyalty and devotion to your brand.

What is better in business than a constant flow of customers who come back time and
time again
Loyal Customer

What is Customer Loyalty?

Customer loyalty is all about attracting the right customer, getting them to buy, buy often,
buy in higher quantities and bring you even more customers
loyal CUSTOMER

You build loyalty by

keeping in touch with customers using email marketing, thank you cards and more.
treating your team well so they treat your customers well.
showing that you care and remembering what they like and dont like.
You build it by rewarding them for choosing you over your competitors.
You build it by truly giving a damn about them and figuring out how to make them more
successful, happy and joyful
In short, you build customer loyalty by treating people how they want to be treated. Does
your marketing plan include strategies and tactics for customer loyalty & customer
retention?
Rational Customer

In economics a rational consumer is defined as the people who act

in a rational way and make rational choices, namely spending their
money wisely
Rational Customer

One of the underlying reasons as to why human beings are not rational is the fact that
some do not live on the margin, thus they have more than enough money to buy everything
they need and want

The lack of knowledge that surrounds individuals is evident through the products we buy
at a ridiculous price when we could buy them somewhere else at a much cheaper price

Therefore, instead of taking the time to evaluate and compare the different prices of the
same product we chose to buy it the first time we see it, thus making it an irrational
decision

In order to be a rational consumer people must understand that a need is something that
you need to survive, whereas a want isnt a vital necessity needed to survive
Lapsed Customer

In any direct marketing business, it is a foundational problem when previous buyers stop
engaging with the retailer or brand. Sometimes referred to as the leaky bucket problem
in direct marketing, customer attrition impacts all areas of the business. It impairs the
overall value of the house file and puts added pressure on new customer acquisition.
Lapsed Customer

1. Define lapsed customers

One mistake marketers often make is to not create rules that define lapsed customers.
You dont just want to let attrition happen without recognizing it and dealing with it quickly.
Different businesses will have different definitions. Even within a business, different rules
or definitions may apply. For example, email accounts from lead generation programs that
generate triggered emails might be considered lapsed with no response or interaction after
the initial 30 or 60 day contact stream. At the same time, someone who has been a good
customer and purchased for several years, may not be considered a lapsed customer after
months of non patronage.
Lapsed Customer

2. Track and report their performance

Once you define lapsed customers, youll want to gain as much visibility and measurement
of their performance as possible. In addition to tracking and reporting the typical email
metrics delivered email, contacts, opens, click throughs, orders, sales value, etc. youll
also want to measure reactivation rates and even lifetime value of a reactivated customer.
It will help you not only understand the potential value of these names, but also measure
and understand the impact of various strategies and tactics that were deployed
Lapsed Customer

3. Segment the lapsed customer list and target messages

appropriately

As described in the previous slide, there are different profiles of lapsed customers. Some
had been long-term customers, while others are new prospects that never converted.
Some have been lapsed for years, others stopped buying or engaging recently. Each of
these groups need to be spoken to differently, with different frequency, through targeted
mailings, Calls and special offers.
Summary

Not all buyers are consumers,

Companies thrive on repeat business or Repeat customers

Repetition leads to customer loyalty and the creation of new customers through
word of mouth

Most purchases are made irrationally. Rational customers are the ones who spend
their money wisely

In every company customers will fall by or become lapsed. Companies must reach
out and re-activate them through appropriate communication.