Customer Buying Behavior

JAMIA HAMDARD UNIVERSITY NEW DELHI

COURSE:

MBA – GENERAL

SUBJECT:

MARKETING MANAGEMENT

ASSIGNMENT:

CUSTOMER BUYING BEHAVIOR

Submitted By:

Submitted To:

Mr. John J. Kundi Mr. Faisal Khan Mr. Mousin Mahir

Prof. Shahnawaz Abdin Department of management Section – A, 1st Semester. Date: 16th September, 2008

CONTENTS:

Executive Summary…………………………………………........ 3 Introduction ……………………………………………………… 4 PART 1 Consumer Buying Behavior In Brief …………………………… 6 Consumer Buying Process ………………………………………. 8 PART 2 Case Study ……………………………………………………….. 12

References ……………………………………………………….. 17

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EXECUTIVE SUMMARY This assignment is concerned about Consumer behavior and Consumer Buying Process. Throughout the assignment the following points are going to be discussed. 1. The Consumer buying behavior in general with examples. 2. The Consumer buying process with aid of examples. 3. A case study to ascertain the customer purchase decision process and postpurchase satisfaction / dissatisfaction with a mobile communication service provider in Delhi / NCR

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INTRODUCTION Before business can develop marketing strategies, they must understand what factors influence buyers behavior and how they make purchase decisions to satisfy their needs and wants. Buyers are moved by a complex set of deep and subtle emotions. Their behavior result from deeply held values and attitudes; their perception of the world and their place in it, from common sense, impulse or just plain whimsy. There are also several stages through which the consumer exhibit before deciding to purchase goods or services. These includes 5 steps which are: problem or need recognition, information search, alternative evaluation, purchase and post-purchase evaluation.

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PART ONE.

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CONSUMER BUYING BEHAVIOR Definition: Consumer behavior refers to the mental and emotional process and the observable behavior of consumers during searching, purchasing and post consumption of a product or service. Consumer behavior involves study of how people buy, what they buy, when they buy and why they buy. It blends the elements from psychology, sociology, sociopsychology, anthropology and economics. It also tries to assess the influence on the consumer from groups such as family, friends, reference groups and society in general. Buyer behavior has two aspects: the final purchase activity visible to any observer and the detailed or short decision process that may involve the interplay of a number of complex variables not visible to anyone.

Factors Affecting Consumer Buying Behavior Consumer buying behavior is influenced by the major three factors: 1. Social Factors 2. Psychological Factors 3. Personal Factors. A. Social Factors Social factors refer to forces that other people exert and which affect consumers’ purchase behavior. These social factors can include culture and subculture, roles and family, social class and reference groups. Example: By taking into consideration Reference group, these can influence/ affect the consumer buying behavior. Reference group refers to a group with whom an individual identifies herself/ himself and the extent to which that person assumes many values, attitudes or behavior of group members. Reference groups can be family, school or college, work group, club membership, citizenship etc. Reference groups serve as one of the primary agents of consumer socialization and learning and can be influential enough to induce not only socially acceptable consumer behavior but also socially unacceptable and even personal

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destructive behavior. For example, if fresher student joins a college / university, he/she will meet different people and form a group, in that group there can be behavior patterns of values, for example style of clothing, handsets which most of group member prefer or even destructive behavior such as excessive consumption of alcohol, use of harmful and addictive drugs etc. So, according to how an individual references him / herself to that particular reference group, this will influence and change his/her buying behavior. B. Psychological Factors These are internal to an individual and generate forces within that influence her/his purchase behavior. The major forces include motives, perception, learning, attitude and personality. Example: Attitude, is an enduring organization of motivational, emotional, perceptual and cognitive processes with respect to some aspect of our environment. Consumer form attitude towards a brand on the basis of their beliefs about the brand. For example, consumers of Sony products might have the belief that the products offered by Sony are durable; this will influence those customers to buy Sony products due to this attitude towards the brand. C. Personal Factors These include those aspects that are unique to a person and influence purchase behavior. These factors include demographic factors, lifestyle, and situational factors. Example: Lifestyle is an indicator of how people live and express themselves on the basis of their activities, interests, and opinions. Lifestyle dimension provide a broader view of people about how they spend their time the importance of things in their surroundings and their beliefs on broad issues associated with life and living and themselves. This is influenced by demographic factors and personality. E.g. A CEO or Manager is likely to buy more formal clothes, ties and shoes or PDAs and less informal clothes like jeans as compared to a Mechanic or Civil engineer. So according to their lifestyle and profession, the buying behavior of people differ from one another.

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CONSUMER BUYING DECISION PROCESS

Definition: Consumer buying decision process is the processes undertaken by consumer in regard to a potential market transaction before, during and after the purchase of a product or service.

Consumer decision making process generally involves five stages:

Problem Recognition

Information Search

Alternative Evaluation

Purchase Action

Postpurchase Actions

Problem Recognition Purchase decision making process begins when a buyer becomes aware of an unsatisfied need or problem. This is the vital stage in buying decision process, because without recognizing the need or want, an individual would not seek to buy goods or service. There are several situations that can cause problem recognition, these include: •

Depletion of stock

•

Dissatisfaction with goods in stock

•

Environmental Changes

•

Change in Financial Situation

•

Marketer Initiated Activities

Example:

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Its when a person recognizes that she can not make a call from her mobile phone that’s when she recognizes that her phone has been damaged i.e. the phone has hardware problems and needs to be repaired or buying a new piece.

Information Search After the consumer has recognized the need, he / she will trying to find the means to solve that need. First he will recall how he used to solve such kind of a problem in the past, this is called nominal decision making. Secondly, a consumer will try to solve the problem by asking a friend or goes to the market to seek advice for which product will best serve his need, this is called limited decision making. Sources of information include: •

Personal sources

•

Commercial Sources

•

Public sources

•

Personal experience

Example: (continuing from previous…) The user of the phone after recognizing that her phone is damaged, she will eventually try to find out how she can repair her phone. If she cannot repair it herself she will ask a friend to help out, if the friend can not solve the problem she will go to mobile repair shop, if they also can not repair it then she will try to find which mobile phone is good and that can serve her need. In this process of information collection it will yield awareness of set of brands of mobile phones she can buy.

Alternatives evaluation Consumers’ evaluates criteria refer to various dimension; features, characteristics and benefits that a consumer desires to solve a certain problem. Product features and its benefit is what influence consumer to prefer that particular product. The consumer will decide which product to buy from a set of alternative products depending on each unique feature that the product offers and the benefit he / she can get out of that feature. Example: (continuing from previous…)

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When that user got enough information concerning the different brands of mobile phones available in the market, she will decide which kind of a mobile phone and brand she’s going to buy depending upon her need for that particular mobile, either a mobile for multimedia and entertainment, smartphone or classic phone.

Purchase Action This stage involves selection of brand and the retail outlet to purchase such a product. Retail outlet image and its location are important. Consumer usually prefers a nearby retail outlet for minor shopping and they can willingly go to a far away store when they purchase items which are of higher values and which involve higher sensitive purchase decision. After selecting where to buy and what to buy, the consumer completes the final step of transaction by either cash or credit. Example: (continuing from previous…) After selecting brand of the phone and model from different alternatives of mobile phones, she will make a final decision of where to buying that phone and make the final transaction procedures.

Post-purchase Actions Consumer favorable post-purchase evaluation leads to satisfaction. Satisfaction with the purchase is basically a function of the initial performance level expectation and perceived performance relative to those expectations. Consumer tends to evaluate their wisdom on the purchase of that particular product. This can result to consumer experiencing post purchase dissatisfaction. If the consumer’s perceived performance level is below expectation and fail to meet satisfaction this will eventually cause dissatisfaction, and so the brand and/ or the outlet will not be considered by the consumer in the future purchases. This might cause the consumer to initiate complaint behavior and spread negative word-of-mouth concerning that particular product. Example: (continuing from previous…) If she decided to buy a multimedia phone she will try to compare the quality of music it provides and pictures taken if they meet her expectations. If she will find that her 10

expectation are meet she will be satisfied, if she found that there are more additional features that she did not expect this mobile phone to have, she will be delighted, otherwise she will be dissatisfied.

PART TWO

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CASE STUDY Introduction: The this research we are going to ascertain the customers decision process and post purchase satisfaction / dissatisfaction with a mobile communication service provider in Delhi, especially students from Jamia Hamdard University. How the Research Was Conducted: In this research we used the method of Questionnaire and Interviewing. Questionnaire papers were given and filled by the student, and some of the students were interviewed to clarify some of the issues. The sample format of the questionnaire is as follows: JAMIA HAMDARD Name: Age: Designation: Address: 1. Which Mobile Connection are you using these days? Airtel

Vodafone

Idea

Tata

Reliance

Others

2. Since how long are you using this connection? Less than 3 months Less than 6 months Less than 12 months (1 year) More than 12 months(1 year) 3. Are you Satisfied with the connection you are using?

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Yes

No

Can’t say

4. If yes then which feature of the service of your service provider makes you feel Comfortable? Lower call rates Good connectivity New offers and special tariff plans Good customer service All of the above 5. If no then which feature of the service of your service provider makes your feel dissatisfied? High call rates Bad connectivity No good offers Bad customer service All of the above 6. had you used any connection before started using this connection? Yes

No

7. If yes which among the two you find much better? Existing Connection

Previous Connection

8. In general, Rate the satisfaction level of your existing connection Dissatisfying 1

2

Satisfying 3

4

5

6

very satisfying 7

8

9

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9. what feature or services would you like to be changed or improved in the near future? ………………………………………………………………………………………. ………………………………………………………………………………………. ………………………………………………………………………………………. 10. Do you want to give any suggestion to your network provider. If yes, what are your suggestions? …………………………………………………………………………………..

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………………………………………………………………………………….. …………………………………………………………………………………..

DATA COLLECTION AND ANALYSIS: The following data was collected during the survey process: 1. Provider – population table: This table shows the number of customers in each mobile communication provider. PROVIDER-POPULATION TABLE Provider AIRTEL IDEA RELIANCE TATA VODAFONE OTHERS

Frequency 10 14 3 2 5 1

Proder-Population Chart

VODAFONE 14%

OTHERS 3%

AIRTEL 29%

TATA 6%

RELIANCE 9%

AIRTEL IDEA IDEA 39%

RELIANCE TATA VODAFONE OTHERS

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2. Customer Satisfaction level table: This table shows the level of satisfaction of customer in each mobile communication provider (i.e. 1-highly dissatisfied increasing as 10 –highly satisfied ) CUSTOMER SATISFACTION LEVEL Level AIRTEL IDEA RELIANCE TATA VODAFONE

1

2 0 0 1 0 0

3 1 1 0 1 1

4 0 0 0 0 0

5 0 0 0 0 0

6 0 1 0 0 0

7 0 0 0 0 0

8 3 0 0 0 0

9 4 2 1 0 1

10 2 8 1 1 3

0 2 0 0 0

No. Of Customers

Customer Satisfaction Level 9 8 7 6 5 4 3 2 1 0

AIRTEL 1

2

3

4

5

6

7

8

Satisfaction Level

9

10

IDEA RELIANCE TATA VODAFONE

So, as shown in the graphs, high number of customers are generally satisfied with the general operation of each mobile communication provider.

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3. Suggestions on Improvement or changes: SUGGESTION FROM CUSTOMERS TO PROVIDERS PROVIDER SUGGESTIONS AIRTEL 1. STD calls at rs. 1/ min 2. free local messages 3. hide networking areas 4. free internet 5. e-mail and voice messaging IDEA

6. improvement in connectivity 1. Improve connectivity 2. improve customer care 3. special schemes for students 4. reduce monthly rental of hello tune 5. reduce STD call rates

TATA RELIANCE

6. Free roaming 1. better handsets 1. Improve network connectivity 2. low call rates for other service providers

VODAFONE

3. increase availability of tariff , recharge and SMS offer 1. improve customer care and connectivity 2. Lower call rates, special tariff for students 3. Free talk time for night users.

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REFERENCES Marketing Management Text And Cases, S H H Kazmi. http://en.wikipedia.org/wiki/Consumer_behaviour http://en.wikipedia.org/wiki/Buyer_decision_processes

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