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Consumer behavior

Consumer behavior. ICRI, Mumbai. What is Consumer Behaviour ?. Those activities directly involved in obtaining , consuming and disposing of products and services, including the decision processes that precede and follow these actions. CUSTOMER VS. CONSUMER BEHAVIOR.

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Consumer behavior

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  1. Consumer behavior ICRI, Mumbai

  2. What is Consumer Behaviour? • Those activities directly involved in obtaining , consuming and disposing of products and services, including the decision processes that precede and follow these actions

  3. CUSTOMER VS. CONSUMER BEHAVIOR • Customer behavior: a broad term that covers both individual consumers who buy goods and services for their own use and organizational buyers who purchase business products • Consumer behavior: the process through which the ultimate buyer makes purchase decisions

  4. Consumer Buying Behavior • Consumer Buying Behavior refers to the buying behavior of final consumers -individuals & households who buy goods and services for personal consumption. • All these consumers make up the consumer market. • The central question for marketers is: • “How do consumers respond to various marketing efforts the company might use?”

  5. Model of Buyer Behavior Buyer Responses Product Choice Brand Choice Dealer Choice Purchase Timing Purchase Amount Marketing and Other Stimuli Marketing Product Price Place Promotion Other Economic Technological Political Cultural Buyer’s Black Box Buyer Characteristics Buyer Decision Process • R

  6. 1. Culture 2. Sub- culture 3. Social class Cultural Factors Influencing Consumer Behavior Social 1. Reference groups 2. Family 3. Roles and status Personal 1. Age and life-cycle 2. Occupation 3. Economic situation 4. Lifestyle 5. Personality and self-concept Psycho- logical 1. Motivation 2. Perception 3. Learning, Beliefs and attitudes Buyer

  7. Factors Affecting Consumer Behavior: Culture • Culture is the Most Basic Cause of a Person's Wants and Behavior. • Subculture • Group of people with shared value systems based on common life experiences. • Hispanic Consumers • African American Consumers • Asian American Consumers • Mature Consumers

  8. Factors Affecting Consumer Behavior: Culture • Culture is the Set of Values, Perceptions, Wants & Behavior Learned by a Member of Society from Family. • Social Class • Society’s relatively permanent & ordered divisions whose members share similar values, interests, and behaviors. • Measured by: Occupation, Income, Education, Wealth and Other Variables.

  9. HISPANIC • Tend to buy more branded, higher quality products • Shopping – a family affair • Children have a big say • Brand loyal – show interest in those company who show interest in them • Companies – P&G targeted marketing efforts - Spanish language ads / Hispanic version of products

  10. Factors Affecting Consumer Behavior: Social • Groups • Membership • Reference • Family (most important) • Husband, wife, kids • Influencer, buyer, user Social Factors Roles and Status

  11. SOCIAL CLASSES • LOWER • Lower lower (7%) • Upper lower (9%) • WORKING - (38%) • MIDDLE • Middle – (32%) • Upper middle – (12%) • UPPER • Lower upper – (2%) • Upper upper – (1%)

  12. OPINION LEADERS • People within a reference group who because of special skills, knowledge, personality, exert social influence on others • Influential / leading adopters • Drive trends, influence mass opinion and sell a great many products • Often use their big circle • BUZZ MARKETING

  13. ONLINE SOCIAL NETWORKING • Blogs • Social networking sites • Personal connections- forged through words, pictures, videos, audio posted just for the heck of it • Marketers to promote their products and build relationships with customers through these media

  14. FAMILY • Most important influential group • Most extensively researched

  15. Personal Influences Age and Life Cycle Stage Occupation Economic Situation Personality & Self-Concept Lifestyle Identification Activities Interests Opinions Factors Affecting Consumer Behavior: Personal

  16. Factors Affecting Consumer Behavior: Psychological Motivation Psychological Factors Affecting Buyers Choices Beliefs and Attitudes Perception Learning

  17. Self Actualization (Self-development) Esteem Needs (self-esteem) Social Needs (sense of belonging, love) Safety Needs (security, protection) Physiological Needs (hunger, thirst) Maslow’s Hierarchy of Needs

  18. High Involvement Low Involvement Significant differences between brands Few differences between brands Types of Buying Decision Behavior Complex Buying Behavior Variety- Seeking Behavior Habitual Buying Behavior Dissonance- Reducing Buying Behavior

  19. Buyer Decision Process (Fig. 5.6) Purchase Decision Evaluation of Alternatives Post purchase Behavior Information Search Need Recognition

  20. Step 1. Need Recognition Buyer Recognizes a Problem or a Need. Needs Arising From: Internal Stimuli – Hunger External Stimuli- Friends State Where the Buyer’s Needs are Fulfilled and the Buyer is Satisfied.

  21. Personal Sources Step 2. Information Search Commercial Sources Public Sources • Family, friends, neighbors • Most effective source of • information • Advertising, salespeople • Receives most information from • these sources Experiential Sources • Mass Media • Consumer-rating groups • Handling the product • Examining the product • Using the product

  22. Step 3. Evaluation of Alternatives Consumer May Use Careful Calculations & Logical Thinking Consumers May Buy on Impulse and Rely on Intuition Consumers May Make Buying Decisions on Their Own. Consumers May Make Buying Decisions Only After Consulting Others. Marketers Must Study Buyers to Find Out How They Evaluate Brand Alternatives

  23. Unexpected Situational Factors Attitudes of Others Step 4. Purchase Decision • Purchase Intention • Desire to buy the most preferred brand • Purchase Decision

  24. EXPECTANCY VALUE MODEL (compensatory model) • An attribute evaluation procedure • Develop a set of beliefs about where each brand stands on each attribute • Consumers evaluate products and services by combining their brand beliefs- positive & negative – according to importance • Example – laptop with attributes • Memory/ graphics/ size & weight/ price • Most buyers consider several attributes

  25. Consumer’s Brand beliefs

  26. Perceived value • Know the weight attached to each value – 40/30/20/10 • A= 0.4(10)+ 0.3 (8)+ 0.2 (6) + 0.1 (4) = 8.0 • B= 0.4(8)+ 0.3(9)+ 0.2(8) + 0.1(3) = 7.8 • C= 0.4(6)+ 0.3 (8) + 0.2(10) + 0.1 (5) = 7.3 • D = 0.4(4) + 0.3 (3)+ 0.2 (7) + 0.1 (8) = 4.7

  27. ACTIONS BY THE MANUFATURER shift the buyer’s ideals – persuade buyer to change their ideal levels for one or more attributes Redesign computer – Real Repositioning B Call attention to neglected attributes – styling/ processing speed Alter beliefs about the brand – psychological repositioning Alter the importance weights – persuade buyers to attach more weight to its attributes Alter belief about competitor’s brand – competitive depositioning

  28. PURCHASE DECISION • Buyer forms preferences among the brands in choice sets • Five sub decisions • Brand (brand 1) • Dealer (dealer 2) • Quantity ( one computer) • Timing (week end) • Payment method (credit card) • Purchases of everyday products need fewer decisions & less deliberation

  29. NON COMPENSATORY MODEL • Consumers may not invest so much time in evaluation • Mental shortcuts – simplifying choice heuristics • Conjunctive heuristics- sets a minimum acceptable cut off level for each attribute • Lexicographic heuristics – chooses best brand based on most perceived most important attribute • Elimination-by-aspect heuristics – to compare brands on attributes selected probabilistically

  30. APPLYING CUSTOMER VALUE ANALYSIS • Assumption – “customer chooses between brand offerings on the basis of which delivers most customer value • Customer Value = Customer Benefits- Customer Cost • Product benefits/ service/ image • Purchase price – acquisition cost/ usage cost/ maintenance cost/ ownership cost/ disposal cost • Suppose – customer judges the values of 3 brands (A,B,C)as 150/ 140/ 135

  31. CUSTOMER VALUE ANALYSIS

  32. MARKETERS’ ANALYSIS IDENTIFY VARIOUS ATTRIBUTES WHICH CUSTOMERS VALUE ASSESS QUANTITATIVE IMPORTANCE OF DIFFERENT ATTRIBUTES ASSESS COMPANY’S & COMPETITORS’ PERFORMANCES ON DIFFERENT CUSTOEMR VALUES AGAINST THEIR RATED IMPROTANCE EXAMINE HOW CUSTOERS IN A SPECIFIC SEGMENT RATE THE COMPANY’S PERFORMANCE AGAINST COMPETITOR ON ATTRIBUTE – BY- ATTRIBUTE BASIS MONITOR CUSTOMER VALUES OVERTIME

  33. Cognitive Dissonance Step 5. Post Purchase Behavior Satisfied Customer! • Consumer’s • Expectations of Product’s Performance. • Product’s Perceived • Performance. Dissatisfied Customer

  34. POST PURCHASE ACTIONS • “Best advertisement is a satisfied customer” • A satisfied customer is normally a repeat buyer • Dissatisfied customer may abandon/ return the product • Seek additional information to confirm its high value • Take public action by complaining • Exit option – stop purchasing from that company • Voice option – warn friends • Post purchase communication by company – fewer product returns

  35. Discussion Connections • Form small groups to discuss a specific major purchase that one of you has made recently. • What type of buying decision was it? • Discuss the Buyer Decision Process and what major factors influenced your decisions.

  36. Thank You

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