Consumer behavior

Major Factors Influencing Buying Behavior

Culture SocialCulture reference grpSubculture familySocial class role and

status

Major Factors Influencing Buying Behavior

PersonalPsychological

Age and life cycle motivationOccupation perceptionEconomic circumstances LearningLife style beliefs &

attitudePersonality and Self concepts

THE BUYING ROLES

• Initiator • Influencer • Decider • Buyer • User

• One person may assume multiple roles in the decision making process

• Roles differ according to the product type being bought

• As roles change within households, so do purchasing activities

• High involvement products usually involve more people in the decision making process

• Expert influence and emotional influences are used by members to sway other members

Buying Behavior1. Complex Buying Behavior: when they are

highly involved in purchase, aware of differences among brands. E.g. cars product inculdes risk and is of self expressive nature.

2. Dissonance Reducing Behavior: Highly involved in purchase, but sees little difference in brands. Purchase is expensive, infrequent, risky but still buys quickly. E.g. gold.

Buying Behavior3. Habitual Buying: Low consumer involvement

and absence of significant brand difference. E.g. salt

4. Variety seeking: Low consumer involvement but significant brand difference. E.g. choclates, cold drinks.

THE BUYING PROCESS

• Problem recognition

Magnitude of discrepancy between desired and present situation

Relative importance of the problem

Need inhibitors have to be overcome

The Buying Process (Contd.)

• Information search Consumer first conducts an internal search If internal search is insufficient, the

consumer goes in for external search Third party reports provide unbiased information Personal experience with the product

unsubstitutable Objective of information search to build up awareness set Advertising stimulates information search

The Buying Process (Contd.)

• Evaluation of alternatives and purchase Formation of evolved set or the

consideration set Consumers use various types of rules to

arrive at consideration setInvolvement: Degree of perceived

relevance and personal importance for particular purchase decision

Differences in low and high involvement decision making

The Buying Process (Contd.)

• Purchase and Post purchase evaluation of decision

Place and mode of purchase Payment terms and conditions Delivery of the product Installment Training for usage of the product

PERSONAL INFLUENCES • Perception

Selective attention Selective distortion Selective retention

• Learning Classical conditioning Operant conditioningCognitive learning Modeling/Vicarious learning Reasoning

Personal Influences (Contd.)

• Motivation Maslow’s theory of motivation

• Belief and attitude

• Personality

• Lifestyle

• Life cycle

SOCIAL INFLUENCES

• Culture

• Social class

• Reference groups

CUSTOMER LOYALTY AND PROFITABILITY

• Loyal customers not necessarily cheaper to serve

• Long-term customers consistently pay less than the newer customers do

• Customers who feel and talk positively about a company more likely to sell others on the company

• Scrutinize customer transaction data carefully in terms of profits they generate

Customer Loyalty And Profitability (Contd.)

• Categorize customers and treat them differently

• Finding ways to engender positive feelings about the company among loyal, satisfied customers

• Very difficult to convert profitable but transient customers into loyal ones by spending on them

• Customers whose size and volume of transactions are low can be of various types

CUSTOMER PORTFOLIO MANAGEMENT

EMOTIONAL ENGAGEMENT WITH CUSTOMERS

• Important to show that the company cares about loyal customers

• Treat customers with dignity especially when they are faltering on some of their commitments

• Subtle way to earn loyalty is to show that the company trusts its customers

CUSTOMER RELATIONSHIP MANAGEMENT

• Create a customer strategy before implementing CRM

• Before CRM technology is installed, a customer-focused organization has to be created

• Objectives of CRM can be fulfilled without installing a high-tech solution

• Wrong to try to build relationships with all the existing and potential customers

RELATIONSHIP MARKETING

• Identifying the customers • Differentiating the customers • Interacting with customers • Customizing the company’s behavior

Organizational BuyingIt is the decision making process by which formal

organization establishes a need for the product or service, then identify, evaluated and select among alternative brand or supplier.

Characteristics of Business Market1. Fewer Buyer2. Large Quantity Buyer3. Close supplier and customer relationship4. Geographically close buyers5. Derived Demand6. Inelastic demand7. Professional purchasing8. Direct purchasing9. Reciprocity10.Leasing

Buying Situation1. Straight rebuy2. Modifed rebuy3. New task

Buying Roles1. Initiator\2. User3. Influencer4. Decider5. Approvers6. Buyer7. Gate keeper

Purchasing Process1. Problem recognition2. Need description3. Product specification4. Supplier search5. Supplier invitation6. Supplier selection7. Negotiation8. Order9. Performance review

Factors influencing buyingEnvironmental1. Demand2. Interest rate3. Rate of technology4. Political and regulatory development5. Social responsibility

Factors influencing buyingOrganizational1. Objectives2. Policies3. Procedures4. Structure5. system

Factors influencing buyinginterpersonal1. Interest2. Authority3. Status4. Empathy5. Persuasiveness

Factors influencing buyingIndividual1. Age2. Income3. Education4. Personality5. Risk attitude6. Culture7. Job Position

Factors influencing buyingEnvironmental1. Demand2. Interest rate3. Rate of technology4. Political and regulatory development5. Social responsibility

Factors influencing buyingEnvironmental1. Demand2. Interest rate3. Rate of technology4. Political and regulatory development5. Social responsibility