Consumer behavior

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Consumer behavior

  1. 1. Major Factors Influencing Buying Behavior Culture Culture Subculture Social class Social reference grp family role and status
  2. 2. Major Factors Influencing Buying Behavior Personal Age and life cycle Occupation Economic circumstances Life style Personality and Self concepts Psychological motivation perception Learning beliefs & attitude
  3. 3. THE BUYING ROLES • • • • • Initiator Influencer Decider Buyer User
  4. 4. • 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
  5. 5. Buying Behavior 1. 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.
  6. 6. Buying Behavior 3. 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.
  7. 7. THE BUYING PROCESS • Problem recognition Magnitude of discrepancy between desired and present situation Relative importance of the problem Need inhibitors have to be overcome
  8. 8. 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
  9. 9. 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 set Involvement: Degree of perceived relevance and personal importance for particular purchase decision Differences in low and high involvement decision making
  10. 10. 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
  11. 11. PERSONAL INFLUENCES • Perception Selective attention Selective distortion Selective retention • Learning Classical conditioning Operant conditioning Cognitive learning Modeling/Vicarious learning Reasoning
  12. 12. Personal Influences (Contd.) • Motivation Maslow’s theory of motivation • Belief and attitude • Personality • Lifestyle • Life cycle
  13. 13. SOCIAL INFLUENCES • Culture • Social class • Reference groups
  14. 14. 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
  15. 15. 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
  16. 16. CUSTOMER PORTFOLIO MANAGEMENT
  17. 17. 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
  18. 18. CUSTOMER RELATIONSHIP MANAGEMENT • Create a customer strategy before implementing CRM • Before CRM technology is installed, a customerfocused 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
  19. 19. RELATIONSHIP MARKETING • • • • Identifying the customers Differentiating the customers Interacting with customers Customizing the company’s behavior
  20. 20. Organizational Buying It 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.
  21. 21. Characteristics of Business Market 1. Fewer Buyer 2. Large Quantity Buyer 3. Close supplier and customer relationship 4. Geographically close buyers 5. Derived Demand 6. Inelastic demand 7. Professional purchasing 8. Direct purchasing 9. Reciprocity 10.Leasing
  22. 22. Buying Situation 1. Straight rebuy 2. Modifed rebuy 3. New task
  23. 23. Buying Roles 1. 2. 3. 4. 5. 6. 7. Initiator User Influencer Decider Approvers Buyer Gate keeper
  24. 24. Purchasing Process 1. 2. 3. 4. 5. 6. 7. 8. 9. Problem recognition Need description Product specification Supplier search Supplier invitation Supplier selection Negotiation Order Performance review
  25. 25. Factors influencing buying Environmental 1. Demand 2. Interest rate 3. Rate of technology 4. Political and regulatory development 5. Social responsibility
  26. 26. Factors influencing buying Organizational 1. Objectives 2. Policies 3. Procedures 4. Structure 5. system
  27. 27. Factors influencing buying interpersonal 1. Interest 2. Authority 3. Status 4. Empathy 5. Persuasiveness
  28. 28. Factors influencing buying Individual 1. Age 2. Income 3. Education 4. Personality 5. Risk attitude 6. Culture 7. Job Position
  29. 29. Factors influencing buying Environmental 1. Demand 2. Interest rate 3. Rate of technology 4. Political and regulatory development 5. Social responsibility
  30. 30. Factors influencing buying Environmental 1. Demand 2. Interest rate 3. Rate of technology 4. Political and regulatory development 5. Social responsibility

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