Customer Analysis

CUSTOMER ANALYSIS BUYING BEHAVIOR OF CONSUMERS ORGANIZATIONAL BUYER BEHAVIOR

Learning Objectives •Learn the consumer market and construct model of consumer buyer behavior •Know the four factors that influence buyer behavior •Understand the types of buying decision behavior and stages in the process •Understanding of organisational buyers

RISE OF CONSUMER DEMOCRACY There has been a seismic change in the consumer markets in the past two decades which has been aptly described as the “rise of consumer democracy”. Suddenly, due to a number of factors, most notably technology and the development of global markets, consumers have more choices than ever before. So marketers have to work harder to make sure that consumer choose their products.

STUDY OF CONSUMER BEHAVIOUR The marketer should approach the study of a new market by asking 4 questions : 1. What does the market buy ? Purchase

Objects Of

2. Why does it buy ? Objectives of purchase 3. Who buys ? Organization of purchase 4. How does it buy ? Operations of purchasing organization ( FOUR Os OF A MARKET )

6 Os OF A MARKET The 4 Os of a market (Objects, Objectives, Organization and Operations) should be grasped before one contemplates the 4 Ps of the marketing mix. Two further questions of a more descriptive nature can also be asked of a market : 5.When does it buy ? Occasions for purchase 6. Where does it buy ? Outlets for purchase

CONSUMER MARKET Consumer Market is the market for products and services that are purchased or hired by individuals and households for personal (nonbusiness) use. Consumer Products : Products purchased for personal use.

CLASSIFICATION OF CONSUMER PRODUCTS (A.) On the basis of their rate of consumption and tangibility : DURABLE GOODS (Tangible goods which normally survive many uses, frequency of purchase is less) NON-DURABLE GOODS (Tangible goods normally are consumed in one or few uses, frequency of purchase is more) SERVICES (Intangibles, Activities, benefits or satisfactions which are offered for sale )

CLASSIFICATION OF CONSUMER PRODUCTS (B.) On the basis of consumers’ shopping habits : CONVENIENCE GOODS (Which the

customers usually purchase more frequently, immediately and with the minimum of efforts in comparing and buying) SHOPPING GOODS (Which the customers, in the process of selection and purchase characteristically compares on such basis as suitability, price and style, quality , durability SPECIALITY GOODS (Goods with unique characteristics and/or brand identification for which buyers are willing to make a special purchasing effort)

Stimulus-Response Model of Consumer Behavior Stimuli 4P’s Other characteristics economic technological political cultural

Buyer’s Black Box

Buyer Response

Buyer characteristics Buyer decision process

Product choice Brand choice Dealer choice Purchase timing Purchase amount

MODEL OF BUYER BEHAVIOUR Inferences Marketing Stimuli

PRODUCT

PRICE

Other Stimuli ECONOMICAL

GEOGRAP HICAL

Buyer’s Buyer’s Decision Characteristics Process

CULTURAL

PROBLEM RECOGNITION BRAND CHOICE INFORMATION

SOCIAL

SEARCH PLACE

TECHNOLO GICAL

PROMOTION

Buyer’s Decisions

PERSONAL PSYCHOLOGICAL

DEALER CHOICE

EVALUATION DECISION POST PURCHASE BEHAVIOUR

PURCHASE AMOUNT

BUYER’S BLACK BOX

INPUT

PROCESS

OUTPUT

FACTORS INFLUENCING BUYER’S BEHAVIOUR

CULTURAL SOCIAL CULTURE

PERSONAL

REFERENCE GROUPS AGE,GENDER,LIFE SUB-CULTURE FAMILY CYCLE STAGE, OCCUPATION, ROLES AND INCOME, PERSONALITY STATUS SOCIAL CLASS

PSYCHOLOGICAL MOTIVATION,PERCEPTION,LEARNING, BELIEF & ATTITUDE

Buyer

(A.) CULTURAL FACTORS CULTURE: All aspects of society. It includes Values, Customs, Arts and Skills. Transmitted from generation to generation. SUB-CULTURE: Each culture contains smaller groups of sub-cultures- Nationality, Religion, Race, Geographical location. SOCIAL CLASS: In every society there is inequality in social status among different people and the people are categorized into different social classes.

B) Social Factors Reference Group- Aspirational, dissociate FamilyFamily of Orientation (One’s parents, brothers and sisters) Family of Procreation (One’s spouse and children)

ROLES AND STATUS: (Role of a manager carries more status than role of clerk and his status).

(C.) PERSONAL FACTORS AGE GENDER LIFE CYCLE STAGE *** OCCUPATION INCOME LIFE STYLE PERSONALITY etc.

(D.) Psychological Factors Motivation A motive is a need that is sufficiently pressing to direct the person to seek satisfaction Motivation research is based on Freud; Looks for hidden and subconscious motivation Maslow ordered needs based on how pressing they are to the consumer

Psychological Factors- Perception Perception is the process by which people select, organize, and interpret information Perception Includes: 

Selective attention Consumers screen out information



Selective distortion People interpret to support beliefs



Selective retention People retain points to support attitudes

Psychological Factors- Learning Learning describes changes in an individual’s behavior arising from experience Learning occurs through: 

Drives Internal stimulus that calls for action



Stimuli Objects that move drive to motive



Cues Minor stimuli that affect response



Reinforcement Feedback on action

Psychological Factors- Beliefs and Attitudes Belief  

a descriptive thought about a brand or service may be based on real knowledge, opinion, or faith

Attitude 



describes a person’s evaluations, feelings and tendencies toward an object or idea They are difficult to change

THE BUYING DECISION PROCESS Marketers have to go beyond the various influences on buyers and develop an understanding of how consumers actually make their buying decisions. Specifically, marketers must identify who makes the buying decision (buying roles), the types of buying decisions (buying behavior / buying situations) and the steps in buying process ( stages in the buying decision process).

FOUR TYPES OF BUYING BEHAVIOR (BUYING SITUATIONS)

High Involvement Significant Differences between Brands Few Differences between Brands

Low Involvement

Complex buying behavior (Extensive Problem Solving)

Variety-seeking buying behavior

Dissonance reducing buying behavior (Limited Problem Solving)

Habitual buying behavior (Routinized Response Behavior)

FIVE STAGE MODEL OF THE CONSUMER BUYING PROCESS

Problem recognition

Information search

Post-purchase behavior

Evaluation of alternatives

Purchase decision

The Buyer Decision Process Need Recognition Needs can be triggered by:  Internal stimuli Normal needs become strong enough to drive behavior  External stimuli Advertisements Friends of friends

Information Search Consumers exhibit heightened attention or actively search for information. •Sources of information: Personal Commercial Public Experiential •Word-of-mouth

The Buyer Decision Process Evaluation of alternatives

Evaluation procedure depends on the consumer and the buying situation. Most buyers evaluate multiple attributes, each of which is weighted differently. At the end of the evaluation stage, purchase intentions are formed.

Purchase Decision Two factors intercede between purchase intentions and the actual decision: •Attitudes of others •Unexpected situational factors

STEPS BETWEEN EVALUATION OF ALTERNATIVES AND A PURCHASE DECISION

Attitude of others Evaluation of alternatives

Purchase intention

Unanticipated situational factors

Purchase Decision

The Buyer Decision Process Post-purchase Behaviour Satisfaction is important:  Delighted consumers engage in positive word-of-mouth.  Unhappy customers tell on average 11 other people.  It costs more to attract a new customer than it does to retain an existing customer. Cognitive dissonance is common

THE NATURE OF ORGANIZATIONAL BUYING Organization buying is in some ways similar to consumer buying since it is not “organizations” making the buying decisions but people within those organizations. But there are significant differences that must be understood by marketers in order to succeed in the organizational market.

Organizational Buyers Versus Final Consumers The major variations are observed in : - Market structure and demand - Buyer characteristics and - Decision processes and Buying patterns

MARKET STRUCTURE AND DEMAND 1.Geographical Concentration 2.Buyers’ Sizes 3.Vertical or Horizontal Markets 4.Derived Demand 5. Inelastic Demand 6. Fluctuating Demand

BUYER CHARACTERISTICS (a) Group Involvement : Products purchased by organizational buyers are often costly and complex, a group of individuals may be involved in the decision. (b) Technical Knowledge : Generally technically competent individuals are involved in purchase decisions. (c) Rational Motivations : Organizational buyers are often strongly directed by rational motivations, costs and benefits are carefully weighed. (Sometimes organizational buyers are also influenced by emotional motivations, but these are difficult to assess)

DECISION PROCESS AND BUYING PATTERNS (a) Formality (greater formalities) (b) Complexity (decision making is much complex) (c) Lengthy Negotiation (d) Multiple Suppliers (e) Large Orders (f) Infrequent Purchase (some items are purchased only once, some annually, some quarterly, and some monthly- based on their requirements and costs etc.) (g) Direct Buying (h) Reciprocity (two organizations agree to purchase from each other ; for example, an auto company may buy steel from one supplier and that supplier buys trucks from the automotive firm) (i) Importance of Service

Types of Decision Situations 1.New Task Situation 2. Modified Rebuy Situation 3. Straight Rebuy Situation

The Organizational Buyer’s Decision Process 1.Problem Recognition 2. Need Description 3. Product Specification 4. Vendor Search 5. Proposal Request 6. Vendor Selection 7. Purchase Routine Selection 8. Post-purchase Evaluation

ATTRIBUTES USED TO EVALUATE SUPPLIERS 1. Overall reputation of the supplier 2. Financing terms 3. Supplier’s flexibility in adjusting to your company’s needs 4. Experience with the supplier in analogous situations 5. Technical service offered 6. Confidence in the sales people 7. Convenience of placing the order 8. Data on reliability of the product

ATTRIBUTES USED TO EVALUATE SUPPLIERS 9. Price 10. Technical specifications 11. Ease of operation or use 12. Preferences of principal user of the product 13. Training offered by the supplier 14. Training time required 15. Reliability of delivery date promised 16. Ease of maintenance 17. Sales service expected after date of purchase