Focus on customers to increase sales marketing tips

Dr. Stephanie J. Morgan Marketing Principles and Practices Customer focus: The psychology of buyer behaviour www.bizface.co.uk

Aims and Objectives
Aims:
Outline theory and methods used in understanding consumer and organizational buyer behaviour
Provide an understanding of links between decision making and buying decisions
Objectives
Assess the usefulness of theory and methods in understanding purchasing behaviour
Outline characteristics and dimensions of organizational purchasing processes
Identify some choice criteria and personal/social influences on buyer behaviour

2 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Marketing Concept The achievement of corporate goals through meeting and exceeding customer needs better than the competition The Marketing Concept Customer orientation Corporate activities are focused upon providing customer satisfaction Integrated effort All staff accept the responsibility for creating customer satisfaction Goal achievement The belief that corporate goals can be achieved through customer satisfaction Marketing concept The achievement of corporate goals through meeting and exceeding customer needs better than the competition Customer orientation Corporate activities are focused upon providing customer satisfaction Integrated effort All staff accept the responsibility for creating customer satisfaction Goal achievement The belief that corporate goals can be achieved through customer satisfaction

2 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Understanding customers How do they buy? What are their choice criteria? Customers Who is important? Where do they buy? When do they buy?

Why is it important to understand customers?
Fundamental marketing decision – choice of customer.
Vital to enable segmentation, positioning and targeting.
Informs priorities for product design, distribution, support.
Even in mass marketing, important for targeting and communications.

Consumer Buying Centres
Initiator – begins process, gathers information.
Influencer – persuades others, gathers information.
Decider – power and/or financial authority.
Buyer – conducts the transaction.
User – actual consumer.
Similarities in organizational/industrial sales.
Changing contexts must be considered e.g. women d.i.y.

The Consumer Decision-Making Process Need recognition/problem awareness D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill 9 Relative Importance? Need inhibitors? Stimulation? Internal, external, Awareness Set Impact Internet Evoked Set Level of Involvement? Context, situation, Ease, Cognitive Dissonance, Confirmation Seeking Remorse? Disposal? Issues: Rational? Simplistic? How determine? Information search Evaluation Of alternatives Purchase Post-purchase evaluation of alternatives

The Consumer Decision-Making Process and Level of Purchase Involvement 10 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Stage Need recognition Problem awareness Information Search Evaluation of alternatives Post-purchase Evaluation Minor Limited Few alternatives Considered Many alternatives And choice criteria Extensive Major personality important Low Involvement High Involvement Limited evaluation Extensive evaluation

3 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Evaluation and purchase models Normative beliefs Personal beliefs Purchase intentions Purchase Attitudes Subjective norms High involvement: the Fishbein and Ajzen model of reasoned action Trial Awareness Repeat Purchase Low involvement: the Ehrenberg and Goodhart repeat purchase model ‘ Attitude-Behaviour Problem’

Other models of buying decision process:
Health Model, Stages of Change (DiClemente & Prochaska):
Precontemplation Contemplation Preparation Action Maintenance
Customer Activity Cycle Model (Vandermerwe)
Plot on cycle x product Pre: Deciding what to do During: Doing it process Post: Keeping it going…

Choice Criteria Used When Evaluating Alternatives 5 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Technical- Reliability Durability Performance Style/looks Comfort Delivery Convenience Taste Economic- Price Value for money Running costs Residual value Life style costs Social- Status Social belonging Convention Fashion Personal- Self-image Morals Emotions

7 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Influences on consumer purchasing behaviour
information processing
motivation
beliefs and attitudes
personality
lifestyle
lifecycle
culture
social class
geodemo-graphics
reference groups
Personal influences Social influences Consumer The buying situation

8 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Determinants of the extent of problem solving Self-image Perceived risk Social factors Hedonism Differentiation and number of alternatives Level of involvement Time pressure Extent of problem solving

Psychological influences
Information processing
1. Perception – selective attention, selective distortion, information framing, selective retention.
2. Learning – classical and operant conditioning, shaping, rote and vicarious learning, reasoning.
Motivation.
Beliefs and attitudes.
Personality.
Life-style (psychographics) links beliefs, activities, values and demographics.

Theories of Motivation Freud: Hidden Unconscious Esteem Social Safety Physiological Self- Actualization Dis-satisfiers Satisfiers Herzberg: Issues: Sample Method Empirical Support? Maslow

13 D Jobber, Principles and Practice of Marketing, © 1998 McGraw-Hill Life cycle stages At home single Young couple no children Young parents Middle-aged parents Empty nester married working Empty nester married retired Solitary retired Young divorced no children On own young Young divorced with children M-aged divorced no dep’nt children M-aged divorced with children Middle-aged married no children Middle-aged divorced no children On own middle-aged

Social Influences
Culture – traditions, taboos, values of society
Social Class – discriminates consumption patterns
Geodemographics – postcode clustering
Reference Groups – friends, family, work colleagues, clubs and societies
Note – no one classification system works across all product fields and sometimes best to supplement or use a variety.

Consumer or Organisational Products Why was the product Purchased ?
For personal or household use
For use in the operation of a business or organisation.
To manufacture other products
For resale to others
ORGANISATIONAL PRODUCT CONSUMER PRODUCT 2 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill

4 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Characteristics of Organisational Buying Derived demand Negotiations Risks Reciprocal buying Nature and size of customers Complexity of buying Economic and technical choice criteria Buying to specific requirements Organisational Purchases

Implications for Marketing
Sales force skills, team efforts, multi-level negotiation, account management to develop relationships.
Risk analysis, withdrawal from bids,
Increased likelihood of design for specific customers.
Marketing mix may vary for each party in a DMU

Changing Organizations…
Increase of Just in Time buying
Growth in centralised purchasing
Increased use of technology, e-commerce, electronic B2B
Switch to ‘strategic partnerships’, supply-chain integration
Reverse marketing

The Buying Centre – DMU’s Buyer Decider (Decision Maker) User Gatekeeper 5 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Users actually use the product. They may be the one who initiates the purchase process and may develop the product specification. Influencers supply information and advice. Outsiders such as consultants sometimes perform the role. Gatekeepers control the flow of information to the buying centre. Purchasing department Staff frequently fill the role but it could be any member of the organisation. Buyers choose suppliers and negotiate purchase terms often reducing the actual purchase to a clerical task. Deciders (Decision Makers) have the authority to approve the purchase.

Government/Institutional market Schools, hospitals, prisons etc. Tensions include Cost vs. quality Low Budget Complex Buy Processes Captive Clientele Continual Change and public scrutiny

6 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Buy phases: the organizational decision-making process Recognition of a problem (need) Determination of specification and quantity of needed item Search for and qualification of potential sources Acquisition and analysis of proposals Evaluation of proposals and selection of supplier(s) Selection of an order routine Performance feedback and evaluation

Major influences on buying behaviour Environmental: Demand Economic outlook Interest rates Rate of Tech change Political Competitive Developments Social Responsibility Organizational: Objectives Policies Procedures Structures Systems Politics Interpersonal: Interests Authority Status Empathy Persuasiveness Nationality Individual: Age Income Education Position Personality Risk attitudes

Management styles in the European Community, US and Japan 6 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Group Individual Leadership Organic Systematic Organisation Source: Mole, J. (1990) Mind Your Manners Italy Portugal Greece Netherlands Spain France Germany USA Ireland Belgium Luxembourg Denmark UK

Buying Situation Implications Time taken for decision No of people involved in buying centre Straight Rebuy New Task Modified Rebuy 10 D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill

Types of Purchasing process
Routine products (low value, low risk). Focus on price and routine, simplicity of purchase.
Leverage products (high value and cost, little risk). Need to show can minimize total cost.
Strategic products (high value and cost, high risk). Well-known and trusted supplier. Seek strategic alliances, co-development etc.
Bottleneck products: (low value and cost, invovle some risk). Need a guarantee of steady supply. Propose standard parts and tracking system, on-demand call-off and help desk.

16 D Jobber, Principles and Practice of Marketing, © 1998 McGraw-Hill Development of buyer–seller relationships in long-term stable markets Pre-relationship stage Evaluation of a new potential supplier Early stage Negotiation of a trial delivery Development stage Contract signed or delivery built up Long term stage Several major purchases or large-scale deliveries have been made Final stage Established patterns of trading in long-term stable markets

Building Organizational Relationships Customer Services: Technical, expertise, resource, etc. Past, Present, Future - Expectation Management Competitive Awareness: Setting requirements Planning and Strategic moves Account Management: Understanding and developing DMU

Psychology of Organizational Relationships Individual personality, role set, motivation, cognition, learning, decision making Emotions Group: Contagion, Conformity, Polarization Conflict Inter-personal: interactions, tactics, Exchange/equity, influence processes Trust Societal: Culture, norms, Stereotyping, Prejudice… Discourses Stories

Ethical Considerations
Issues with targeting vulnerable groups
Manipulation
Intrusive selling or direct marketing
Deception by salespeople or Account Managers
Hard selling
Bribery
Confidentiality

Evaluating Usefulness
Will vary by product type.
Should be aware of weaknesses of each form of categorisation and main theories.
Often descriptive or prescriptive, always consider variety in cases/processes.
Often based on small samples and limited timescales.
However – most are useful tools to help you think through the customer experience and requirements, and design your marketing mix in the most appropriate manner.

Additional Readings
Katona – Rational Behavior and Economic Behavior
Howard & Seth – A Theory of Buyer Behavior
Webster & Wind – A General Model for Understanding Organizational Buying Behavior.
See also Holbrook & Hirschman ‘The Experiential Aspects of Consumption: Consumer Fantasies, Feelings, and Fun; and Belk ‘Situational Variables and Consumer Behavior’
Numerous journal articles! (plus see handout Web, Webster & Krepapa, 2000, Journal of Business Research)

Aims and Objectives Achieved?
Aims:
Outline theory and methods used in understanding consumer and organizational buyer behaviour
Provide an understanding of links between decision making and buying decisions
Objectives
Assess the usefulness of theory and methods in understanding purchasing behaviour
Outline characteristics and dimensions of organizational purchasing processes
Identify some choice criteria and personal/social influences on buyer behaviour

Winters Company – Jobber (2001) p. 116
Organizational decision processes and Account Management – identify DMU, choice criteria, why different and issues in real-life situations.
Objectives:
Enable discussion and clarification of issues in identifying business decision-making units
Provide appreciation of types of choice criteria different players use
Case Study

Case Study Objectives
Present details of the case decision-making unit, the roles played, the different choice criteria of each player and the reasoning behind these.
Discuss issues around identifying business decision-making units in a real-world situation.

Winters, Choice and Performance Criteria
Jones, decider and buyer: Low cost, convenience, maintenance of authority (Performance criteria = cost saving)
Smith, influencer and initiator: Technical assistance (Performance criteria = technical competence)
Scott, influencer and user: Reliable delivery (Performance criteria = production flow)
Could be gatekeepers and other users involved here, we don’t have enough information…
Important point is to be aware there are different roles and need to target these in different ways (and make sure you are not missing out an important person within the decision-making-unit)

Real Life Difficulties
Accessing the information
Understanding the choice criteria
Personality clashes
Politics
Secrecy
Etc!
Always try to understand and don’t be stuck with one part of DMU. Remember can be similar processes with internal company negotiations.
How was your group in terms of strong influencers, decision – makers etc?

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Focus on customers to increase sales marketing tips

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Focus on customers to increase sales marketing tips — Presentation Transcript