Marketing Management Topic 3: Know Your Customer - Understanding Buyer Behaviour

Social Factors

Because we live in social communities, we take much of the cues for our behaviour from others with whom we associate. These 'others' include reference groups such as celebrities and sports players, and family - 'the most influential primary reference group' (Kotler et al. 2013, p. 190). Celebrities endorse a great range of products that appeal to consumers who want to be identified with that particular person, and marketers use this influence in advertisements. Families influence purchasing behaviour the world over, even though these influences vary significantly from country to country. Marketers are interested in the roles and relative influence of the different family members on a buyer's purchase decision.

Part 2: The Buying Decision Process

Even though we know that people engage in different types of buying, from routine to complex, there is a notional decision process that comes into play even for the most routine product. For example, in buying a packet of chewing gum, there is first the problem that we discover we need some. Then, we must find a place to buy what we need, which means we need information, and then we can make the purchase. If we find the gum is old or has some defect, then we suffer dissonance and return the gum for a fresh packet or to get our money back. This simple process is similar for most products, but complex ones require more intensive searching and evaluation of alternatives.

Part 1: What influences consumer behaviour?

Four factors have significant influence on buying behaviour - cultural, social, personal and psychological.

B2B Different from B2C

The business market is characterised by: - fewer, larger buyers, e.g. a few carmakers - close supplier-customer relationships - professional purchasing by purchasing managers - multiple buying influences - multiple sales calls - derived demand (derived from end-consumer demand) - inelastic demand (e.g. shoemakers won't buy more leather if it is cheap, but price can still be an important consideration) - fluctuating demand (is an effect of inventories in chain) - geographically concentrated buyers, e.g. in capital cities - direct purchasing (from the manufacturer).

The Five Stage Model

The five stages in the consumer buying decision process are: 1. Problem recognition - resulting from the difference between our actual state and desired state. This can be triggered by internal or external stimuli. 2. Information search - a consumer will seek out information from 'personal, commercial, public, [and/or] experiential' sources (Kotler 2013, p. 206). A consumer's knowledge (or lack of knowledge) and awareness of the available brand alternatives can facilitate the ease of information search and subsequent choice. The textbook shows that various sets of brands occupy the consumer's mind in terms of their awareness, consideration, and choice (Kotler et al. 2013, p. 206). Imagine the difficulties if your product is not even within the initial awareness set. Consequently, the marketer needs to determine which brands are in each set and to ensure that the company brand is highly prominent. 3. Evaluation of alternatives - this means weighing up product attributes and their ability to deliver benefits. These evaluations are strongly influenced by our attitudes and beliefs about people and products. These preconceived notions tend to entrench people's product preferences and often prevent people from trialling new products. The Expectancy-Value model helps us to see how attitudes and beliefs work by showing comparative evaluations of products using ratings of the value people attach to different attributes based on those beliefs. 4. Purchase decision - the consumer forms a preference and intention to buy. At this stage a good purchase experience can create a satisfied customer, can set the foundation for customer loyalty, and can reduce the potential for post purchase dissonance. However, a lot can happen between the evaluation stage and the purchase decision stage of the process. A consumer can change his or her mind; other factors can intervene; procrastination can take hold, new information might arise, someone's attitude might persuade against the purchase and so on. What can a marketer do to ensure the sale goes ahead? Firstly, don't ignore the consumer. Secondly, provide necessary reassurance to lessen any perceived dissonance, and thirdly, make information available from supportive sources such as past customer testimonials and expert opinions that allow the consumer to feel psychologically comfortable with the purchase. 5. Post-purchase behaviour which refers to consumers' experience of satisfaction or dissatisfaction after purchasing the product. Finally, marketers must also remain aware, for environmental reasons, of the need to monitor how consumers discard or dispose of products after purchase.

Culture

The textbook suggests that cultural values, perceptions, and preferences are the most 'fundamental determinant of a person's wants and behaviour', acquired through one's family 'and other key institutions' (Kotler et al. 2013, p. 188). You need to be conscious of the influence of three important factors - culture, subculture and social class. Every country has its unique cultural values handed down and learned by successive generations of children. Sub-cultures include different 'nationalities, religions, racial groups' and so on, and these are also the source of a variety of needs that require specific products, advertising approaches, and so on (Kotler et al. 2013, p. 188). Our social class also has a big influence on our choice of product, the level of quality and rice, the place where we feel comfortable buying, and the type of advertising appeals that we respond to.

Psychological Processes

There are five major psychological factors that influence a person's buying choices: Motivation - the needs that motivate people to buy. Maslow's (1970, cited in Kotler et al. 2013, p. 197) hierarchy, as shown in the text, remains a useful way to conceptualise motivations. Nowadays, many people are at the higher end of the diagram looking for self-actualising experiences and this is a significant source of influence on purchase behaviour. Perception - how people 'see' or make sense of their surroundings and experiences. Buyers often perceive things in life selectively which creates difficulty for marketers and advertisers when people selectivity screen out advertising messages that are often targeted at them. Learning - 'changes in ... behaviour arising from experience' (Kotler et al. 2013, p. 200). Emotions -consumers' less rational responses in a form of different feelings, which advertisers typically try to evoke when planning a marketing communications campaign. Memory - recollections of past experiences, brands and products that influence a consumer in their purchase choices.

Know Your Customer: Understanding Buyer Behaviour Overview

Understanding your customers' buying behaviour is one of the many factors that can help your business succeed. The buying decision process is encapsulated in five basic stages: problem recognition, information search, evaluation of alternatives, purchase decision, and post purchase behaviour. A good strategic marketing planner has to cover all these bases in order to ensure they capture their target market. Generally, the 4Ps of marketing stimulate the buyer who responds by choosing specific products, brands and so on. The consumer's response depends on: the type of person they are, social and cultural influences on them, and how they make their purchase decision. These provide clues as to how to reach and serve buyers more effectively. This topic will cover the following parts: - What influences consumer behaviour? - The buying decision process: the five-stage model - Business-to-business (B2B) buying behaviour

Part 3: Business-to-Business (B2B) Buying Behaviour

You should understand that there is a difference between the types of processes that organisations use to purchase and those used by consumers. One very significant difference is the amount of emotion involved in the process. Emotions, in the form of attitudes and reference group influence, run strongly through the consumer purchase process, whereas there is often little, if any, emotion in a B2B purchase. In this part, we will look briefly at the differences and then discuss B2B buying situations.