Customer Analysis.docx

CUSTOMER ANALYSIS

Consumer buyer behaviour refers to the buying behaviour of final consumer-individuals and households that buy goods and services for final consumption.

Model of Consumer behaviour Consumers make many buying decisions every-day and buying decision is the focal point of the marketer’s effort. Most large companies research consumer buying decisions in great detail to answer questions about consumer buys, where they buy & how much & how they buy, when they & why they buy- the answers are often locked u deep inside the consumer’s mind. Often consumers themselves don’t know exactly what influences their purchase. The central question for marketers is this: How do consumers’ respond to various marketing efforts the company might use? The starting point is the stimulus-response model of buyer behaviour.

The figure shows that marketing and other stimuli enter the “black box” and produce certain responses. Marketers must figure out what is in buyer’s black box. Marketing stimuli consist of the for Ps: Product, price, place and promotion. Other stimuli major forces and events in the buyers environmentaleconomic, technological, social and cultural. All these inputs enter the black box, where they are turned into a set of buyer responses. Marketers want to understand how the stimuli are changed into responses inside the consumer’s black box, which

has two parts: First, the buyer’s characteristics influence how he or she perceives and reacts to the stimulus. Second, the buyer’s decision process itself affects his or her behaviour.

Factors influencing consumer buying behaviour: 1. Cultural factors: a) Culture Culture is the most basic cause of a person’s wants and behaviour. Human behaviour is largely learned. Growing up in a society, a child learns basic values, perceptions, wants, and behaviours from his or her family and other important institutions. A child in the United States normally learns or is exposed to the following values: achievement and success, individualism, freedom, hard work, activity and involvement, efficiency and practicality, material comfort, youthfulness, and fitness and health. Every group or society has a culture, and cultural influence on buying behaviour may vary greatly from both country and country to country. Marketers are always trying to spot cultural shifts so as to discover new products hat might to be wanted. For example, the cultural shifts toward greater concern about health and fitness have created a higher industry for health-fitness services, exercise equipment and clothing, organic foods, and a variety of diets. b) Sub-Culture Each culture contains smaller subcultures, or groups of people with shared value systems based on common life experiences and situations. Subculture includes nationalities, religions, racial groups, and geographic regions. A sub-culture is an identifiable and distinct group that has unique characteristics. The sub-culture exists within large society. A sub-culture is a psychological, religious, soil and geographical source of group identification. Thus, a person living in Kolkata would feel that he is different from the one living in Bihar. Many subcultures make up important market segments and marketers often design products and marketing programs tailored to their needs. c) Social-class Development of social class is a common thing in any society. The society inhibits some social class which is homogeneous and relatively permanent. The divided social class might bring out individualsfamilies having similar values, interest, behaviour and lifestyle. Social class is not determined by a single factor, such as income, but is measured as a combination of occupation, income, education, wealth, and other variables. Marketers are interested in social class because people within a given social class tend to exhibit similar buying behaviour.

2) Social factors: Social factors such as economic conditions of the family and role & status of family exert a powerful influence on buying decision. The buying pattern of a rich family will be totally different from that of a poor family. A status conscious person will visit a prestige store for making purchase whereas an ordinary person will go to an economy store. Consumers’ durable goods such as fridge, colour T.V., air conditioner, and music system are meant for higher income groups who treat these things as status symbols. a) Family A person’s world starts with the family in which he/she is born. The family has major influence on the behaviour of its members. The emergence of working women also affects the consumption pattern of the concerned family. b) Reference group A group means interaction of two or more persons to realize common goals. A reference group consists of groups(s) that has (have) immediate/remote, direct/indirect influence on the forming of individual and group values, attitudes and behaviour. For example, a person might switch on to a different brand of shirts on the advice of members of a reference group. In general, there are three types of reference group- membership, aspirational and dissociative. A membership reference group is one to which an individual actually belongs. An aspirational reference group is a group to which one aspires to belong. A group that a person not wishes to be associated with is a dissociative reference group. A reference group may serve as an individual point of comparison and source of information. The reference group member who provides information about a specific sphere that interest member of the group is called an opinion leader. c) Roles & Status An individual has many roles to play. Consider the various roles working mother plays. In her company, she may play the role of a brand manager in her family, she plays the role of wife & mother, at her favorite sporting events, and she plays the role of an avid fan. As a brand manager, she will buy the kind of clothing that reflects her role & status in her company. At the game, he may wear clothing supporting her favorite team.

3) Personal factors: a) Age & Life-Cycle stage A person’s age is important decider of his needs. Small children require milk, baby foods, toys, soft drinks etc. Young adults require trendy clothes, recreational facilities.

b) Occupation The person’s occupation affects the goods and services bought. Blue-collar workers tend to buy more rugged work clothes, whereas executive buy more business suits. c) Economic condition A person’s economic condition will affect his or her store and product choices. Income, saving, asset, borrowing power etc. decide the economic condition capacity of the consumer to buy a product. d) Life-style People coming from the same subculture, social class & occupation may have quite different lifestyles. Lifestyle is a person’s pattern of living as expressed in his or her psychographics. It involves measuring consumers major AIO dimensions-activities (work, hobbies, hopping, sports, social events), interest (food, fashion and family), opinions (about themselves, social, issues, business, products). e) Personality Each person’s distinct personality influences his or her buying behaviour. Personality refers to unique psychological characteristics that distinguish a person or group. Personality can be useful in analyzing consumer behaviour for certain product or brand choices. The idea is that brands also have personalities & consumers are likely to choose brands with personalities that match their own. A brand personality is the specific mix of human traits that may be attributes to a particular brand. One researcher identifies brand personality traits. Sincerity (down-to-earth, honest, wholesome &cheerful) Excitement (daring, spirited, imaginative, up-to-date) Competence (reliable, intelligent &successful) Sophistication (upper class & charming) Ruggedness (outdoorsy & tough) Your personality will determine what you consume, what TV shows you watch, what products you buy. Most well-known brands are strongly associated with one particular trait: Gucci with “class” & “sophistication”.

4) Psychological factors: A consumer calculates at mental level to determine choices for buying the products. The psychological processes include motivation, perception, learning, beliefs and attitudes. These factors are discussed below: a) Motivation Marketing executives are greatly interested in both the “why” & “how” of consumer motivation. A person has many needs at any given time. Some are biological, arising from states of tension such as hunger, thirst or discomfort. Others are psychological, arising from the need for recognition, esteem, or belonging. A need becomes a motive when it is aroused to a sufficient level of intensity. A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction. Maslow’s Need Hierarchy Theory Abraham Maslow proposed a hierarchy of five types of needs which are discussed below: i) Physiological needs: The need for food, clothing etc. ii) Safety & Security needs: The need for protection against danger, threat, deprivation & the need for job security iii) Social needs: The need for belonging, for association, for acceptance, for friendship & for love iv) Esteem & ego needs: The need for self-confidence, for independence, for achievement, for status & for recognition. v) Self-actualization needs: The need to realize one’s own potentialities to experience continued selfdevelopment to be creative. b) Perception Perception is the process by which people select, organize & interpret information to form a meaningful picture of the world. People can form different perceptions of the same stimulus because of three perceptual processes: i) Selective attention People are exposed to a great amount of stimuli every-day. For example- people are exposed to an estimated 3,000 to 5,000 ads messages every-day. It is impossible for a person to pay attention to all these stimuli. Selective attention – the tendency for people to screen out most of the information to which they are exposed-means that marketer must wok especially hard to attract customer’s retention.

ii) Selective distortion Even noticed stimuli do not always come across in the intended way. Each person fits incoming information into an existing mind-set. Selective distortion describes the tendency people to interpret information in a way that will support that they already believe. iii) Selective retention People will also forget much of what they learn. They tend to retain information that supports their attitudes &beliefs. Selective retention means that consumer are likely to remember good points made about a brand they favour & forget good points made about competing brands. c) Learning When people act, they learn. Learning describes changes in an individual’s behaviour arising from experience. Suppose, the consumer buys Nikon camera. If the experience will probably use the camera more & more & his/her response will be reinforced. Then next time he/she shops for camera or for binoculars or some similar product, the probability is higher that he/she will buy a Nikon product. d) Beliefs & Attitudes Through doing & learning, people acquire beliefs & attitudes. This, in turn, influence consumer’s buying behaviour. A belief is a descriptive thought that a person has about something. Thus, a customer might hold the view that PC jewelers keep jewellery sets worth Rs. 50,000 and above. Or that the goods sold at pavements are always inferior quality. Attitudes are difficult to change. People have attitudes regarding religion, politics clothes, music, food & almost everything else. Attitude describes a person’s relatively consistent evaluations, feelings &tendencies toward an object or idea.

Buyer Decision Process a) Need recognition The buying process starts with need recognition- the buyer recognizes a problem or need. The need can be triggered by internal stimuli when one of the person’s normal needs- for example thirst or hunger. A need can also be triggered by external stimuli- an advertisement or discussion with a friend might get you thinking about a product. b) Information search An interested consumer may or may not search for more information. If the consumer drive is strong and a satisfying product is near at hand, he or he is likely to buy it them. If not, the consumer may store the need in memory or undertake an information search related to the need. For example, once you have decided you need a new car at the least, you will probably pay more attention to car ads, cars

owned by friends & car conversations or you may actively search the web, talk with friends & gather information in many ways. Consumers can obtain information from any of the several sources: i) Personal sources: family, friends, neighbors, acquaintances ii) Commercial sources: advertisement, salespeople, displays iii) Public: mass media, online searches, peer reviews iv) Experiential: handling, using the product

c) Evaluation of alternatives We have seen how consumers use information to arrive at a set of final choices. Next, marketers need to know about alternative evaluation, that is, how consumer process information to choose among alternative brands. Suppose you have narrowed your car choices to three brands and suppose that you are primarily interested in four attributes- price, style, operating economy and warranty. By this time, you have formed belief about how much each brand rates on each attribute. Clearly, if one car rated best on all the attributes, the marketer could predict that you would choose it. However, the brands will no doubt vary in appeal. You might base your buying decision mostly on one attribute, and your choice would be easy to predict. If you wanted style above everything else, you would buy the car that you think has the most style. d) Purchase decision In the evaluation stage, the consumer ranks brands and forms purchase intentions. Generally, the consumer’s purchase decision will be to buy the most preferred brand, but two factors can come in between the purchase intention and purchase decision. The first factor is the attitudes of others. If someone important to you think that you should buy the lowest-prices car, then the chanced of you buy a more expensive car are reduced. The second factor is unexpected situational factors. The consumer may fir a purchase intention based on factors such as expected income, expected price, and expected product benefits. However unexpected events, say change the purchase intention. For example the economy might take a turn for the worse; a close competitor might drop its price. Thus, preferences and even purchase intention do not always result in an actual purchase choice. e) Post purchase behaviour After purchasing a product, the consumer will be satisfies or dissatisfied & will engage in post-purchase behaviour of interest to the marketer. What determined whether the buyer is satisfied or dissatisfied with a purchase? The answer lies in the relationship between consumer expectations & product’s

perceived performance. If the product falls short of expectation, the consumer is disappointed, if its meets expectations, the consumer is satisfied, if it exceeds expectations, the consumer is delighted. The larger the gap between expectations and performance, the greater the consumer’s dissatisfaction. This suggests that sellers should promise only what their brands can deliver so that buyer are satisfied. References: Principles of Marketing- By Philip Kotler, Pearson