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1. JM602 Consumer Behaviour Lecture 7 – Post-purchase processes, customer satisfaction and consumer loyalty
3. In-Store Influences that Impact on Evaluation of Alternatives, and Purchase It is not uncommon for shoppers to enter a retail store with the intention of purchasing a particular brand and leave with a different brand or additional items.
Thus, we will now examine the influence of displays, price reductions, store layout, stockouts and sales personnel on the shopper while in the store. (See page 164.)
It is not uncommon for shoppers to enter a retail store with the intention of purchasing a particular brand and leave with a different brand or additional items.
Thus, we will now examine the influence of displays, price reductions, store layout, stockouts and sales personnel on the shopper while in the store. (See page 164.)
4. In-store Influences that Alter Brand Choices The nature of unplanned purchases:
Function of processing information in store, or
Completely unplanned decision
Reminder purchases or
Impulse purchases
See page 165 for definitions.See page 165 for definitions.
5. Point of purchase displays Considerable impact
POP expenditure is estimated at around $3m
Is generally a strong increase in sales when displays are used (POPAI 1995)
POP displays combined with advertising can have a synergetic effect
6. Price reductions and promotional deals Are almost always accompanied by use of some POP materials
In-store price reductions do appear to affect brand decisions
Sharp increase in sales when price is first reduced, followed by return to near-normal sales over time or after price reduction ends (Ehrenberg, Hammond and Goodhardt, 1994)
7. Price reductions Sales increases from price reductions come from:
Brand users stockpiling ahead of time (and using more)
Users of competing brands switching
Non-product category buyers – because the brand now has superior value to the substitute
Customers who do not normally come to the store
Source: (Melila, Jedidi and Bowman, 1996)
8. Store layout Physical location of items in the store
Typically, the more visible the product the more likely is purchase
9. Store Atmosphere and Shopper Behaviour See page 168 for discussion.See page 168 for discussion.
10. Stock- outs: Shopper Behaviour in Response to Frequent Stock-outs A stockout occurs when a store is temporarily out of a particular brand or item. The consumer must decide between buying the same brand at another store, switching brands, delaying the purchase and buying the desired brand on the next trip to the store, or going without the purchase altogether.
The following longer-term responses are likely if the tendency for stockouts continues (next slide).
(See pages 169–170.)
A stockout occurs when a store is temporarily out of a particular brand or item. The consumer must decide between buying the same brand at another store, switching brands, delaying the purchase and buying the desired brand on the next trip to the store, or going without the purchase altogether.
The following longer-term responses are likely if the tendency for stockouts continues (next slide).
(See pages 169–170.)
11. Impact of Stockout Situation See page 170.See page 170.
12. Additional in-store influences Sales personnel:
Salesperson’s knowledge, skills & authority
Nature of customer’s buying task
Customer-sales person relationship
Purchase:
Businesses need to simplify the purchase process
First and last impressions are important
13. Next… Postpurchase Processes, Customer Satisfaction and Consumer Loyalty
14. Lecture overview What is the postpurchase process?
What is postpurchase dissonance?
Why is product use is important to marketers?
Why is product disposal is important to consumers?
What do we mean by ‘customer satisfaction’?
What is ‘consumer loyalty’?
In this lecture we examine the postpurchase process as the ‘after sale’ period. In some ways it is more important than the actual lead-up to the sale. If postpurchase is not managed correctly then subsequent sales may not take place.
It is important that marketers know how consumers are using products, as this can lead to important marketing decisions.
In this ‘throw-away society’ we are being encouraged to think beyond the product purchase and use stage. Some consumers are thinking this way already and their needs must be considered.
Finally we will discuss the importance of customer satisfaction and consumer loyalty.In this lecture we examine the postpurchase process as the ‘after sale’ period. In some ways it is more important than the actual lead-up to the sale. If postpurchase is not managed correctly then subsequent sales may not take place.
It is important that marketers know how consumers are using products, as this can lead to important marketing decisions.
In this ‘throw-away society’ we are being encouraged to think beyond the product purchase and use stage. Some consumers are thinking this way already and their needs must be considered.
Finally we will discuss the importance of customer satisfaction and consumer loyalty.
15. Postpurchase Consumer Behaviour This chart provides an overview of the relevant stages.
The marketer must realise that each stage is important for the consumer.
We look at each stage in detail.
If complaint behaviour is not managed to the satisfaction of the consumer, then it may result in low satisfaction, subsequent brand-switching and possible discontinued use of the product.
This chart provides an overview of the relevant stages.
The marketer must realise that each stage is important for the consumer.
We look at each stage in detail.
If complaint behaviour is not managed to the satisfaction of the consumer, then it may result in low satisfaction, subsequent brand-switching and possible discontinued use of the product.
16. Postpurchase Dissonance Some purchases are followed by postpurchase dissonance
Probability of postpurchase dissonance, and the magnitude of dissonance, is a function of the:
degree of commitment and/or whether the decision can be revoked
importance of the decision to the consumer
difficulty of choosing among the alternatives
individual’s tendency to experience anxiety Following some purchases, some consumers experience doubts or anxiety about the wisdom of the purchase. This is known as postpurchase dissonance. It is most likely to occur:
among individuals with a tendency to experience anxiety;
after an irrevocable purchase;
when the purchase was important to the consumer; and
when the purchase involves a difficult choice between two or more alternatives.
Postpurchase dissonance is important to the marketing manager because, if not resolved, it can result in a returned product or a negative evaluation of the purchase. (See page 186.)Following some purchases, some consumers experience doubts or anxiety about the wisdom of the purchase. This is known as postpurchase dissonance. It is most likely to occur:
among individuals with a tendency to experience anxiety;
after an irrevocable purchase;
when the purchase was important to the consumer; and
when the purchase involves a difficult choice between two or more alternatives.
Postpurchase dissonance is important to the marketing manager because, if not resolved, it can result in a returned product or a negative evaluation of the purchase. (See page 186.)
17. Product Use and Non-Use Product use
use innovativeness
regional variations
multiple vs single use
Packaging Most purchases are followed by product use. This use may be by the purchaser or by some other member of the purchasing unit. Marketing managers are interested in product use for a variety of reasons. The main reason is that consumers use a product to fulfil certain needs. If the product does not fulfil these needs, a negative evaluation may result. Therefore, managers must be aware of how products perform in use. Monitoring product usage can indicate new uses for existing products, needed product modifications, appropriate advertising themes, and opportunities for new products. Product liability laws have made it increasingly important for marketing managers to be aware of all potential uses of their products. (See pages 186–187.)Most purchases are followed by product use. This use may be by the purchaser or by some other member of the purchasing unit. Marketing managers are interested in product use for a variety of reasons. The main reason is that consumers use a product to fulfil certain needs. If the product does not fulfil these needs, a negative evaluation may result. Therefore, managers must be aware of how products perform in use. Monitoring product usage can indicate new uses for existing products, needed product modifications, appropriate advertising themes, and opportunities for new products. Product liability laws have made it increasingly important for marketing managers to be aware of all potential uses of their products. (See pages 186–187.)
18. Unique Packaging for Competitive Advantage See page 188.See page 188.
19. Defective products/Product Recalls - The Incidence of Product Recalls 1998–2003 See pages 188–187.See pages 188–187.
20. Product Disposal and Marketing Strategy Recycling
product
package
Trade-ins
to motivate replacement
Second-hand markets
e.g. textbooks, clothes
‘Cash Converters’ Disposal of the product or its package may occur before, during or after product use. Understanding disposal behaviour has become increasingly important to marketing managers, because of the ecological concerns of many consumers, the costs and scarcity of raw materials, and the changing laws; for example, laws in the EU make manufacturers responsible for package disposal. The ease of recycling or re-using a product’s container is an important product attribute for many consumers. These consumers, sometimes referred to as ‘socially-conscious’ consumers, are an important market segment not only because of their purchases, but also because of their social and political influence.
Product disposal is important to marketing strategy because disposal sometimes must precede product use due to financial or space limitations; certain disposal strategies may give rise to a used or rebuilt market; and difficult or unsatisfactory disposal alternatives may cause some consumers to avoid purchase of a particular item.
Disposal of the product or its package may occur before, during or after product use. Understanding disposal behaviour has become increasingly important to marketing managers, because of the ecological concerns of many consumers, the costs and scarcity of raw materials, and the changing laws; for example, laws in the EU make manufacturers responsible for package disposal. The ease of recycling or re-using a product’s container is an important product attribute for many consumers. These consumers, sometimes referred to as ‘socially-conscious’ consumers, are an important market segment not only because of their purchases, but also because of their social and political influence.
Product disposal is important to marketing strategy because disposal sometimes must precede product use due to financial or space limitations; certain disposal strategies may give rise to a used or rebuilt market; and difficult or unsatisfactory disposal alternatives may cause some consumers to avoid purchase of a particular item.
21. Product-Disposal Alternatives Marketing managers are concerned with product disposal because the product disposal decision often affects the purchase decisions of both the individual making the decision and other individuals in the market for that product category. Disposal sometimes occurs before the acquisition of a replacement (trade-in). Second, frequent decisions by consumers to seel, trade or give-away products may result in a large used-product market which can reduce market for new sales. Australian societies are not ‘throw-away’ societies; we are generally concerned with waste. Environmentally sound disposal decisions benefit society as a whole.Marketing managers are concerned with product disposal because the product disposal decision often affects the purchase decisions of both the individual making the decision and other individuals in the market for that product category. Disposal sometimes occurs before the acquisition of a replacement (trade-in). Second, frequent decisions by consumers to seel, trade or give-away products may result in a large used-product market which can reduce market for new sales. Australian societies are not ‘throw-away’ societies; we are generally concerned with waste. Environmentally sound disposal decisions benefit society as a whole.
22. Purchase Evaluation Evaluation of a purchase is influenced by:
expectations
perceived performance Basically, consumers develop certain expectations about the ability of the product to fulfil instrumental and symbolic needs. To the extent that the product meets these needs, satisfaction is likely to result. When expectations are not met, dissatisfaction is the likely result. (See page 193.)
Basically, consumers develop certain expectations about the ability of the product to fulfil instrumental and symbolic needs. To the extent that the product meets these needs, satisfaction is likely to result. When expectations are not met, dissatisfaction is the likely result. (See page 193.)
23. Disconfirmation of expectations (Oliver 1980) Much of the early service quality theory draws from research into how disconfirmed expectations affect product perceptions. That is, if our expectations are not met we change our perception and attitude toward a product. Many early models of satisfaction are based on the disconfirmation model used in the physical goods literature (Oliver 1977).
The disconfirmation of expectations model shown in figure 4.1 was developed from the seminal work of Oliver (1980). This model proposes three determinants of customer (dis)satisfaction: expectations, perceptions and (dis)confirmation. Using adaptation level theory as a basis, Oliver (1980) claims that customers form expectations before the purchase of a product or service, with expectations acting as a standard or frame of reference against which the service performance is judged. Within this conceptualisation, expectations form a baseline for consumers’ satisfaction levels. The higher the expectation in relation to actual performance, the greater the degree of disconfirmation and the lower the level of satisfaction to be achieved.
The model also implies that if customer expectations for a service are relatively low, then they may be satisfied with a service experience even if the performance is poor. For example, if a restaurant has a reputation for very inexpensive meals, customers will probably expect to wait or queue for a table and may not expect a high degree of personal service.
Much of the early service quality theory draws from research into how disconfirmed expectations affect product perceptions. That is, if our expectations are not met we change our perception and attitude toward a product. Many early models of satisfaction are based on the disconfirmation model used in the physical goods literature (Oliver 1977).
The disconfirmation of expectations model shown in figure 4.1 was developed from the seminal work of Oliver (1980). This model proposes three determinants of customer (dis)satisfaction: expectations, perceptions and (dis)confirmation. Using adaptation level theory as a basis, Oliver (1980) claims that customers form expectations before the purchase of a product or service, with expectations acting as a standard or frame of reference against which the service performance is judged. Within this conceptualisation, expectations form a baseline for consumers’ satisfaction levels. The higher the expectation in relation to actual performance, the greater the degree of disconfirmation and the lower the level of satisfaction to be achieved.
The model also implies that if customer expectations for a service are relatively low, then they may be satisfied with a service experience even if the performance is poor. For example, if a restaurant has a reputation for very inexpensive meals, customers will probably expect to wait or queue for a table and may not expect a high degree of personal service.
24. Dissatisfaction Responses Possible outcomes of a negative purchase evaluation:
Taking no action
Switching brands, products or stores
Warning friends and colleagues Taking no action, switching brands, products or stores, and warning friends are all common reactions to a negative purchase evaluation. Marketing managers should generally encourage dissatisfied consumers to complain directly to the firm, and to no-one else. This will alert the firm to problems and provide it with an opportunity to make amends. Unfortunately, only a fairly small, unique set of consumers tend to complain. Developing such strategies as consumer hotlines could increase the percentage of dissatisfied consumers who complain to the firm. (See page 196.)
Taking no action, switching brands, products or stores, and warning friends are all common reactions to a negative purchase evaluation. Marketing managers should generally encourage dissatisfied consumers to complain directly to the firm, and to no-one else. This will alert the firm to problems and provide it with an opportunity to make amends. Unfortunately, only a fairly small, unique set of consumers tend to complain. Developing such strategies as consumer hotlines could increase the percentage of dissatisfied consumers who complain to the firm. (See page 196.)
25. Actions Taken by Consumers in Response to Product Dissatisfaction See pages 196–197.See pages 196–197.
26. Marketing Strategy and Dissatisfied Consumers Marketers need to satisfy consumer expectations by:
creating reasonable expectations through promotional efforts
maintaining consistent quality so that these reasonable expectations are fulfilled Marketers should avoid creating dissatisfied customers, and this can be managed by anticipating their reactions. Communicating with present and potential customers is one strategy.
Maintaining consistent quality standards will also ensure that customers’ expectations are satisfied. Marketers should avoid creating dissatisfied customers, and this can be managed by anticipating their reactions. Communicating with present and potential customers is one strategy.
Maintaining consistent quality standards will also ensure that customers’ expectations are satisfied.
27. Repeat Purchase Behaviour Note the difference between:
Brand loyalty
implies a psychological commitment to the brand
and
Repeat purchase behaviour
simply involves the frequent repurchase of the brand After the evaluation process, and, where applicable, the complaint process, consumers have some degree of repurchase motivation. There may be a strong motive to avoid the brand, a willingness to repurchase it some of the time, a willingness to repurchase it all of the time, or some level of brand loyalty (a willingness to repurchase coupled with a psychological commitment to the brand).
After the evaluation process, and, where applicable, the complaint process, consumers have some degree of repurchase motivation. There may be a strong motive to avoid the brand, a willingness to repurchase it some of the time, a willingness to repurchase it all of the time, or some level of brand loyalty (a willingness to repurchase coupled with a psychological commitment to the brand).
28. Brand Loyalty is… biased
a behavioural response
expressed over time
where a consumer selects a brand over alternative brands
a function of psychological processes Some brand managers have an aim of converting customers to brand loyals, where they are biased towards the brand and, given the opportunity, choose it frequently over alternative brands.
In some markets it may be very time-consuming and expensive to convert and maintain customers’ brand-loyalty status. It might be far more opportune to attract other consumer groups, to at least increase their purchasing frequency.Some brand managers have an aim of converting customers to brand loyals, where they are biased towards the brand and, given the opportunity, choose it frequently over alternative brands.
In some markets it may be very time-consuming and expensive to convert and maintain customers’ brand-loyalty status. It might be far more opportune to attract other consumer groups, to at least increase their purchasing frequency.
29. Relationship Marketing is a philosophy of doing business that focuses on keeping and improving current customers
does not necessarily emphasize acquiring new customers
is usually cheaper (for the firm)--to keep a current customer costs less than to attract a new one
goal = to build and maintain a base of committed customers who are profitable for the organization
thus, the focus is on the attraction, retention, and enhancement of customer relationships
30. Customer Goals of Relationship Marketing
31. Relationship Marketing The five key elements:
1. Developing a core product/service on which to build
2. Customising the relationship to the individual customer
3. Augmenting the core product/service with extra benefits
4. Pricing in a manner that encourages loyalty
5. Marketing to employees so that they perform well for customers See pages 202–203 for discussion.See pages 202–203 for discussion.
32. A Loyal Customer is One Who... Ziethaml & Bitner (2005) Services Marketing (3rd ed.) Shows Behavioral Commitment
buys from only one supplier, even though other options exist
increasingly buys more and more from a particular supplier
provides constructive feedback/suggestions
Exhibits Psychological Commitment
wouldn’t consider terminating the relationship--psychological commitment
has a positive attitude about the supplier
says good things about the supplier
33. Benefits to the Organization of Customer Loyalty loyal customers tend to spend more with the organization over time
on average costs of relationship maintenance are lower than new customer costs
employee retention is more likely with a stable customer base
lifetime value of a customer can be very high
34. Benefits to the Customer inherent benefits in getting good value
economic, social, and continuity benefits
contribution to sense of well-being and quality of life and other psychological benefits
avoidance of change
simplified decision making
social support and friendships
special deals
36. Value of Customer Loyalty Increased purchases of the existing product
Cross-purchases of your other products
Price premium due to their appreciation of your added-value services
Reduced operating cost because of familiarity with your service system
Positive word-of-mouth which refers other customers to your firm Despite the fact that loyal customers may be expensive to attract and retain, there are many benefits for the firm.
They are more likely to purchase more from your firm, are less price-sensitive, are less expensive to service as they are familiar with ‘how things work’, and they are more likely to sell the merits of your products to their acquaintances. (See page 203.)Despite the fact that loyal customers may be expensive to attract and retain, there are many benefits for the firm.
They are more likely to purchase more from your firm, are less price-sensitive, are less expensive to service as they are familiar with ‘how things work’, and they are more likely to sell the merits of your products to their acquaintances. (See page 203.)
37. “Loyal customers expect a good price, but they crave value most of all.”
(Palmer, 1996) As Adrian Palmer, one of the noted authors in services marketing, pointed out: value is often more important than price.As Adrian Palmer, one of the noted authors in services marketing, pointed out: value is often more important than price.
38. Measuring Customer Satisfaction Qualitative measurement techniques
Focus groups
Monitoring surveys It is very difficult to improve customer satisfaction if it is not measured in some way. Many firms constantly monitor their standing with customers through surveys and customer focus groups. It is very difficult to improve customer satisfaction if it is not measured in some way. Many firms constantly monitor their standing with customers through surveys and customer focus groups.
39. A model of consumer behaviour
40. Model of consumer behaviour Successful marketing decisions require a thorough knowledge of consumer behaviour
The consumer behaviour model is conceptual and organisational:
Provides logical way of organising the many variables which influence consumers and their decision making processes
41. A model of consumer behaviour – the consumer decision process (Neal et al p. 19) Consumers have specific problems that require specific solutions, hence, the existing situation must always be the framework within which the decision process is viewed.Consumers have specific problems that require specific solutions, hence, the existing situation must always be the framework within which the decision process is viewed.
42. Situational influence All those factors particular to a time and place of observation which do not follow from a knowledge of personal (intra-individual) and stimulus (choice-alternative) attributes and which have a demonstrable and systematic effect on current behaviour
43. Types of situations Communication situation
Purchase situation
Usage situation
Disposal situation
44. What are the five dimensions of situational influence? Physical surroundings
Social surroundings
Temporal perspectives
Task definition
Antecedent states A useful classification scheme was developed by R.W. Belk based on 5 objectively-measured situations. These include Physical and Social surroundings, Temporal perspective, Task definition, Antecedent states.
Marketers can use this information when determining whether a situation has an effect on a consumer’s purchase behaviour. (See Exhibit 2.2, page 40.)A useful classification scheme was developed by R.W. Belk based on 5 objectively-measured situations. These include Physical and Social surroundings, Temporal perspective, Task definition, Antecedent states.
Marketers can use this information when determining whether a situation has an effect on a consumer’s purchase behaviour. (See Exhibit 2.2, page 40.)
45. Marketing applications How do situations affect consumer behaviour?
Pervasive
Impact on all areas of marketing decision making
Marketers need to consider the impact of situation in the development of the full range of marketing strategies
46. Problem recognition Consumers’ decision processes change with their level of purchase involvement
Problem recognition is the first stage in the decision process
Marketers:
Need to know what problems consumers are facing
Need to develop the marketing mix to solve consumers’ problems
Activate problem recognition, and
Suppress problem recognition
47. Information Search Marketers want to know:
How consumers seek information & what sources they use
Active versus passive/low level learning
Internal versus external
What factors affect the amount of information search:
Market, product, & consumer characteristics
Situational influence
Cost of information search
48. Information search & marketing strategy Sound marketing strategy takes into account the nature of information search in which the target market engages:
Level of search (h,l,e)
Brand’s position inside or outside evoked set
Potential information strategies: maintenance, disrupt, capture, intercept, preference and acceptance
49. Evaluative criteria & selection Various features a consumer looks for in response to a problem
The performance level or characteristics consumers use to compare different brands in the light of their problem
The number, type and importance of evaluative criteria used differ across consumers and product categories
50. How do we measure evaluative criteria? Marketers need to establish:
Which evaluative criteria are used by consumers
How consumers perceive alternative products in terms of each criterion
The relative importance of each criterion
51. Decision Rules Used by Consumers (cont.) See page 134ff for discussion.See page 134ff for discussion.
52. Marketing applications of decision rules – Understanding target buyers’ decision rules to achieve product positioning Different decision rules require different marketing strategies.Different decision rules require different marketing strategies.
53. Outlet selection and choice Decision sequence is important
Factors affecting retail outlet selection:
Store
Store’s image
Amount of retail advertising
Outlet location and size
Consumer characteristics:
Shopping orientation
Risk orientation
In-store influences:
POP displays, price reductions, store layout, sales personnel, stock-outs
54. Post purchase processes Postpurchase dissonance, product usage and disposal are potential influences on purchase evaluation process
Customer satisfaction
Relationship marketing
Next week – Influences on consumers
57. Next Lecture…
Perception
Own notesOwn notes
