case assignment

Learning outcomes

1. Understand the importance of consumer behaviour to marketers. 2. Articulate each of the stages in the consumer decision-making process. 3. Understand the role of involvement, problem-solving types, and loyalty

in the consumer decision-making process. 4. Identify the types/factors of influences on consumer behaviour. 5. Understand the differences and similarities between business buying

behaviour and consumer behaviour and the decision-making processes. 6. Appreciate the contemporary changes to the consumption process due

to megatrends.

Scope of buyer behaviour

Buyer behaviour

Consumer behaviour

(more focus today)

Business buyer behaviour

The marketing mix – The 4 Ps The study of consumer behaviour is concerned with:

Who are the consumers? What do they buy? Why do they buy? How do they buy? When do they buy?

Marketing management is concerned with:

Who are the target customers? What do they buy? Why do they buy? How do they buy? When do they buy?

In B2B markets, the focus is on businesses as customers.

“Consumer” vs. “customer” vs. “buyer” vs. “client”

Often, these terms are used interchangeably and are understood as generally the same thing. However, it gets complicated: • Consumer – directly consumes the product but may not directly buy the product

themselves. • Customer – may not necessarily be a consumer and a customer can be an

individual person or an entity. • Buyer – may not necessarily be a consumer, can resell or on-sell the product, and

can be an individual person or an entity. • Client – directly consumes a service

“Consumer market” – a market that consists of all the individuals and households who buy or acquire products for personal consumption.

The consumption process

Acquire Consume Dispose

Simple Quick

Habitual

Complex Time-intensive

Extended

Consumer decision-making process

Why do we buy things?

Consumers are motivated to purchase by their needs and wants.

BUT Consumers don’t always know what they need or want. Marketing shapes that.

Need (functional need) • Fuelled by the feeling of

deprivation of basic necessities. • E.g., food, shelter.

Want (psychological need) • Fuelled by the feeling of desire

that is shaped by a person's knowledge, culture, personality, and other external influences.

• E.g., specific brands, luxuries.

Consumer decision-making process (EKB Model: Engel-Kollat-Blackwell, 1968)

Pre-purchase • Identify need/want • Search possible solution • Build consideration set

Purchase • Narrow consideration set • Decide on retail channel

Post-purchase • Evaluate (e.g., satisfaction, repeat purchase, WOM)

Need/want recognition

Information search

Evaluation of alternatives/options

Purchase

Post-purchase evaluation

At which stage of the process do marketers have influence?

Stage 1: Need/want recognition

Actual state Desired state

How do influencers impact need/want recognition?

Stage 2: Information search

Internal search

• Existing knowledge (memory)

• Previous experience • Vicarious experiences

(learning through observation of others)

External search

• Personal sources (WOM) • Online reviews (eWOM) • Marketer-created sources

(ads and websites) • Public sources (neutral

sources)

How do you search for information when thinking about buying a product?

Stage 3: Evaluation of alternatives/options

Universal set

Retrieval set

Evoked set (consideration

set)

Universal set All possible brands, products, stores for a given product category.

Retrieval set Brands, products, stores readily brought forth from memory.

Evoked set/consideration set Brands, products, stores the consumer would consider purchasing.

Unawareness set Brands, products, stores the consumer is not aware of.

Inept set Brands, products, stores the consumer would avoid purchasing.

Take 10 brands that you can think of and place them in the categories above. Why did you place them there?

Stage 3: Evaluative criteria

A set of salient or important attributes and benefits about a particular offering (product or service). • Attribute – specific characteristics or features of an offering that resides in

the offering. • Benefit – abstract feelings or experiences that reside in the consumer.

Determinant attributes – offering features that are important to the buyer and on which competing brands or stores are perceived to differ.

Attributes

Mint flavor Added fluoride

Cavity protection

Benefits

Fresh breath Stronger enamel Healthier teeth

Stage 4: Purchase

At this stage, the decision is one of two: 1. To purchase 2. Not to purchase (abandon decision)

Factors that impact decision to purchase: • Make it easier to purchase (e.g., payment type, location of POS, finance

options). • Have offering in stock/available. • Reduce wait time. • Create urgency (e.g., time pressure or perception of scarcity). • Friendly service.

Stage 5: Post-purchase evaluation

Stage 5: Post-purchase evaluation

Comes from consumption/use of the product/service.

Factors that impact post-purchase satisfaction: • Demonstrating correct usage • Building realistic expectations • Providing insurance and money back guarantee • Encouraging feedback AND acting on it • Periodically checking in with customers (if high value

offering)

Stage 5: Post-purchase evaluation

Commonly known as ‘buyer’s remorse’ or ‘cognitive dissonance’.

Reducing cognitive dissonance requires reinforcing the decision through: • Follow-up contact • Congratulation letters • Advertising • Social reinforcement via brand communities • Having a ‘cool’ brand

Interesting read: https://www.ama.org/2019/08/07/10-characteristics- of-brand-coolness-and-how-to-engineer-them/

Stage 5: Post-purchase evaluation

Want to encourage repeat purchase and foster loyalty.

Loyalty is engendered through: • Loyalty schemes and programmes • Customer engagement • Repeat purchase discounts • Satisfactory product performance (i.e., high quality)

Involvement

The degree of importance associated with a product or service.

Directly impacted by perceived risk in four categories: 1. Financial (associated with perceived ROI) 2. Performance/functional (associated with product) 3. Physical (associated with safety) 4. Social/psychological (associated with social perception)

Note: Involvement is idiosyncratic. Consumers may have different levels of involvement for the same type of product.

Involvement and problem-solving types

Need/want recognition

Information search

Evaluation of alternatives/options

Purchase

Post-purchase evaluation

Low involvement

Habitual decision making

High involvement

Extended decision making

Need/want recognition

Purchase

Need/want recognition

Information search Evaluation of

alternatives/options

Purchase

Post-purchase evaluation

Limited involvement

Limited decision making

No involvement

Impulse purchase

Purchase

Involvement to loyalty and engagement

Extra for experts: https://www.mckinsey.com/business- functions/marketing-and-sales/our-insights/the- consumer-decision-journey

Influences on consumer behaviour and decision-making

Marketing Mix

Product Price Place Promotion

Situational factors

Physical • Store atmospherics • Weather Social • Crowds • Salespeople • Other shoppers Time • Time pressure or restrictions

Motivational • Special event • Special reason Mood – person’s mood at time of purchase • Any mood state

Individual factors Personal characteristics – relatively stable Psychological characteristics – shapes

thinking, aspirations, expectations • Demographics

• Age (generation) • Gender • Ethnicity • Income • Education • Occupation • Physical location

• Lifestyle – how people spend time and money, who they spend it with

• Personality – unique characteristics

• Motivation – internal drive to satisfy unfulfilled needs or achieve unmet goals

• Perception – psychological process of filtering, organising, and attributing meaning to the world

• Beliefs and attitudes • Beliefs – descriptive and evaluative

thoughts about something • Attitudes – enduring evaluation of

something (positive vs. negative vs. neutral)

• Learning – process of acquiring new knowledge

Group factors Cultural – large social groupings Social – wider group influences • Culture – defining system of

knowledge, beliefs, values, rituals, and artefacts of a given society

• Subculture – differ from broader culture on certain influential dimensions

• Social class – hierarchical social ranking in society, heavily influenced by socioeconomic status

• Reference groups – group individual looks to for guidance on appropriate values, attitudes, behaviours (linked with social risk)

• Family – important for early learning; stage of family lifecycle

• Roles and status • Play multiple roles • Status within group

Business buying behaviour

Distinctive characteristics that make B2B different from B2C.

Business buyers are: • Generally less fickle than consumers (one bad interaction won’t drive a

buyer away) • Generally rational – formal assessment (less prone to advertising, price

discounts, will consider long-term benefits more) • Generally loyal and valuable (regular repeat purchases of high-value)

Business buying behaviour is also impacted by internal and external environmental factors.

Demand characteristics

Derived demand

• Business market demand impacted by knock-on effects from the consumer market.

• Very prone to fluctuations

Joint demand

• Interdependent demand for multiple products.

Inelastic demand

• Insensitive to price changes.

Business decision-making process New task purchase

Straight rebuy

Modified rebuy

B2B and B2C

Consumer market

Business market

The contemporary consumption process

Acquire Consume Dispose

What are the implications for companies and marketers? Think about this from both B2B and

B2C contexts.

Summary

1. Consumer behaviour is the study of behaviour of individuals and households who buy goods and services for personal consumption.

2. Consumers are motivated to purchase by their needs and wants, and their needs and wants are shaped by marketers.

3. Consumption involves processes associated with acquisition, consumption, and disposal.

4. There are five stages of the consumer decision-making process and marketers can influence every stage.

5. Involvement is the consumer’s degree of interest in the product or service and is impacted by perceived risk associated with the purchase.

6. There are four types of influences on consumer behaviour (including the marketing mix).

7. Business buying behaviour is unique and different to consumer behaviour but also shares similarities, because ultimately, all decisions involve people.

8. Mega-trends in consumption have altered the traditional consumption process and this has significant implications for marketers.