BA 7102 – BUYER /CONSUMER

BEHAVIOR
UNIT IV
 Consumer and Customer

• Customer is the person takes the buying

decision and he may consume the product
too.
• Consumer is an individual or organization who
may consume the product not necessarily
involved in the buying decision.
• Both are important for the marketers.
 Consumer Behavior

• 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 to analyze consumer behavior
 What, Where, When & How – Marketing Mix.
 Helps predict how consumers will respond to
marketing strategies.
 Great impact on the success of firms marketing
strategy.
Types of consumer buying behavior
 Routine Response/Programmed Behavior
 Limited Decision Making
 Extensive Decision Making
 Impulse Buying
Routine Response / Programmed
Behavior
 Frequently purchased low cost items.

 Low involvement required.

 Little search and decision effort

 Purchased almost automatically.

Examples- routine response
Limited Decision Making
 Occasional buying.
 When information is needed for a unfamiliar brand in
a familiar product category.
 Requires a moderate amount of time for information
gathering.
 Loyalty to a brand
Examples- limited decision
Extensive Decision Making
 Complex process- requires high involvement
 unfamiliar, expensive, infrequently bought products.
 High degree of economic/performance/psychological
risk.
 Lot of time spent seeking information and deciding.
Examples- extensive decision
Impulse Buying
 Basis - purchase of the same product does not always
elicit the same Buying Behavior.

 Reason determines the extent of decision-making.

Examples- impulse buying

THIS or THIS
??
going for the dinner- reason can be an anniversary
celebration, or a meal with a couple of friends.
 Two Consumer Entities

Organizational
Personal Consumer
Consumer
• The individual who •A business,
buys goods and government agency,
services for his or her or other institution
own use, for (profit or nonprofit)
household use, for that buys the goods,
the use of a family services, and/or
member, or for a equipment necessary
friend. for the organization to
function.

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 Successful Relationships
Value, Satisfaction, • The objective of providing
Trust, and Retention value is to retain highly
satisfied customers.
• Customer Value
• Loyal customers are key
• Customer
Satisfaction – They buy more products
• Customer Trust – They are less price
sensitive
• Customer
Retention – Servicing them is
cheaper
– They spread positive
word of mouth
 Consumer Behavior Is
Interdisciplinary

Psychology

Economics Sociology

Social
Anthropology
psychology

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 DISCIPLINE COMPRISING OF OR
GOVERNED BY
Economics Demand, supply, income,
purchasing power

Psychology ( Study of mind and Needs and motivation,

its processing ) personality, perception,
learning, attitudes
Sociology ( Study of groups ) Society, social class, power,
esteem, status
Socio psychology ( Human Group behaviour, group
individual operates in a group ) influences, role leader

Anthropology (How human Values, belief, caste system,

being behave) joint family system

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SIMPLE MODEL FOR CONSUMER
BEHAVIOUR

Motives
Attitudes

Needs Consumer
Purchase
Business

Family
Decision Learning
Perception

Personality

Economic
Model of Consumer Behavior
Product Marketing and Economic
Other Stimuli
Price Technological
Place Political
Promotion Cultural

Buyer’s Characteristics
Decision Affecting
Process Consumer
Behavior

Product Choice Purchase

Buyer’s Response Timing
Brand Choice
Purchase
Dealer Choice Amount
A Simple Model of Consumer Decision Making -
Dimensions/Factors/Characteristics
Affecting Consumer Behavior
Culture
Social
Personal
Psychological
Buyer
 Factors Affecting Consumer Behavior:
Culture
• Most basic cause of a person's wants and
behavior.
• Values
• Perceptions
Subculture Social Class
• Groups of people with shared • People within a social class
value systems based on common tend to exhibit similar buying
life experiences. behavior.
• North Indian Consumers • Occupation
• African American Consumers • Income
• Asian American Consumers • Education
• Mature Consumers • Wealth
Munif Ahmad
 Factors Affecting Consumer Behavior:
Social
Groups
•Membership
•Reference

Family
•Husband, wife, kids Social Factors
•Influencer, buyer, user

Roles and Status

 5-24
Factors Affecting Consumer Behavior:
Psychological

Motivation

Beliefs and Psychological

Factors Perception
Attitudes

Learning
 Factors Affecting Consumer Behavior:
Personal
Personal Influences

Age and Family Life Cycle

Occupation
Stage

Economic Situation Personality & Self-Concept

Lifestyle Identification

Activities Opinions

Interests
VALS 2
Actualizers Abundant Resources

Principle Oriented Status Oriented Action Oriented

Fulfillers Achievers Experiencers

Believers Strivers Makers

Strugglers
Minimal Resources
Types of Buying Decisions

High Low
Involvement Involvement
Significant Complex Variety-
differences Buying Seeking
between
brands
Behavior Behavior
Few Dissonance- Habitual
differences Reducing Buying
between
Buying
brands Behavior Behavior
Buyer Behavior Models
 Need Recognition

Information Search

5 Stage Model of
the Consumer Evaluation of Alternatives
Buying Process

Purchase Decision

Post-purchase Behavior
Need Recognition (awareness of need)

• The buying process starts when the buyer

recognizes a problem or need.
• The need can be triggered by internal
,external, marketing stimuli.
• Ex.- person’s normal needs-hunger/ thrust
–rises to threshold level and becomes a
drive.
 Information search

• An aroused consumer will be inclined to

search for more information
• Internal search- memory.
• External search- if he needs more information.
• Friends and relatives (word of mouth);
Marketer dominated sources; comparison
shopping; public sources etc.
The Buyer Decision Process
- Information Search

Personal Sources •Family, friends, neighbors

•Most influential source of
information

Commercial Sources •Advertising, salespeople

•Receives most information
from these sources

Public Sources •Mass Media

•Consumer-rating groups

•Handling the product

Experiential Sources •Examining the product
•Using the product
 Contd..

• Helps buyer find possible alternatives- i.e- the

evoked set.
 Evoked set – Alternative products that will be a seriously
considered.
 Inert set – alternatives that the consumer is neutral
 Inept set – alternatives that consumer will reject

• Hungry- want to go out and eat,

evoked set is
 Chinese food
 Indian food etc.
 Evaluation of Alternatives-
• Competitor brand information
• Consumer evaluation process
1. The consumer is trying to satisfy the needs.
2. The consumer is looking for certain benefits
from the product solution.
3. The consumer sees each product as a bundle
of attributes for delivering the benefits
sought to satisfy these needs
 Contd..

• Attributes of interests to buyer :

Cameras : picture, sharpness, size ,price
Hotels: Location ,cleanliness, atmosphere,
price

• If not satisfied with your choice then return to

the search phase.
 Purchase decision-

• In evaluation stage the consumer form

preferences among the brands
• In this phase-Choose buying alternative
• includes product, package, store, method of
purchase , Incentives offered, out of stock,
budget etc.
Consumer
 Post-Purchase Evaluation-
outcome:
• Satisfaction or Dissatisfaction.
• Have you made the right decision?
• This can be reduced by warranties, after sales
communication etc.

• Ex: After eating an Indian meal, may think

that really you wanted a Chinese meal instead
of Indian.
Model of Consumer Behavior
Product Marketing and Economic
Other Stimuli
Price Technological
Place Political
Promotion Cultural

Buyer’s Characteristics
Decision Affecting
Process Consumer
Behavior

Product Choice Purchase

Buyer’s Response Timing
Brand Choice
Purchase
Dealer Choice Amount
 Why consumers decision making process is
important to marketers

• Marketer can influence the consumer

behavior in different stages
• Can reduce cognitive Dissonance by way of
reinforcing information
• Marketer can direct various communications
at each stage the consumer goes through
 The Marketing Concept
Embracing the Marketing
Concept
• Consumer Research • The process and tools
• Segmentation used to study consumer
• Market Targeting behavior
• Positioning
 The Marketing Concept
Implementing the
Marketing Concept
• Consumer Research • Process of dividing the
• Segmentation market into subsets of
• Market Targeting consumers with
common needs or
• Positioning characteristics
 The Marketing Concept
Implementing the
Marketing Concept
• Consumer Research The selection of one or
• Segmentation more of the segments
• Market Targeting identified to pursue
• Positioning
 The Marketing Concept
Implementing the
Marketing Concept
• Consumer Research • Developing a distinct image for
the product in the mind of the
• Segmentation consumer
• Market Targeting • Successful positioning includes:
• Positioning – Communicating the benefits
of the product
– Communicating a unique
selling proposition
 The Marketing Mix

Product Price

Marketing
Mix

Place Promotion

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Customer Value, Satisfaction, Trust,
and Retention

Successful Relationships
High level Strong
Customer of sense of Customer
value customer customer retention
satisfaction trust

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 Successful Relationships
Value, Satisfaction,
• Defined as the ratio between
Trust, and Retention the customer’s perceived
• Customer Value benefits and the resources
• Customer used to obtain those
Satisfaction benefits
• Customer Trust • Perceived value is relative
and subjective
• Customer
Retention • Developing a value
proposition is critical
 Successful Relationships
Value, Satisfaction,
Trust, and Retention
• The individual's perception
• Customer of the performance of the
Value product or service in
• Customer relation to his or her
Satisfaction expectations.
• Customer Trust
• Customer
Retention
 What is
Customer Relationship Management?

CRM is the process of carefully managing

detailed information about individual
customers and all customer touch points
to maximize customer loyalty.
 Framework for CRM

• Identify prospects and customers

• Differentiate customers by needs and value to
company
• Interact to improve knowledge
• Customize for each customer
 Attracting and
Retaining Customers
• Reduce the rate of defection
• Increase longevity
• Enhance share of wallet
• Terminate low-profit customers
• Focus more effort on high-profit customers
 Database Key Concepts
• Customer database • Business database
• Database marketing • Data warehouse
• Mailing list • Data mining
 Using the Database

• To identify prospects
• To target offers
• To deepen loyalty
• To reactivate customers
• To avoid mistakes
 Definition of Customer Retention
• Customer Retention is the activity that a
selling organization undertakes in order to
reduce customer defections.
 Facts about CR

Leaky CRM is Lessening

Bucket part of Customer the
Theory CR complaint Defection
rate

Cost of Customer
acquiring satisfacti Why
a new on V/S Customer
customer CR switch?
 Advantages of CR

Zero
Customer Improve
Defection profitability

Customer
churn Customer
Minimised delight
 Customer retention is increasingly
becoming more and more important .

Most firms offer loyal customer rewards for

their loyalty. Customer
Retention
However many rewards program are
plans
misunderstood and often wrongly applied.

Customer portfolio analysis, customer

retaining mareting mix, reorganisation for
Customer retention.
 Customer Portfolio Analysis

Purchasing Design of a Portfolio

history portfolio segment

Optimal
Reduce
balance in
defector by
customer
10%
portfolio
 Capturing Educating
customers the
Customers

Companies
are Rewards
adopting it