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INFLUENCING CUSTOMERS’ DECISIONMAKING PROCESS BY UNDERSTANDINGHOW CUSTOMERS CHOOSE PRODUCTS                               ...
AGENDAPersonal        Cultural       Social                           PART I - Background Of The Research                 ...
PART IBackground Of The Research
Customers Decision Making         Process The primary objective of any firm that wants to remain  successful is to unders...
Customers Decision Making            Process Literature on Buyer Behaviour suggests that customers go  through a Five-sta...
Stimulus – Response Model of                     Buyer Behaviour        MARKETING                  OTHER         STIMULI  ...
Stimulus – Response Model of                      Buyer Behaviour        MARKETING                  OTHER         STIMULI ...
Stimulus – Response Model of                             Buyer Behaviour               MARKETING         OTHER            ...
Scope Of Research            Buying Behaviour in SupermarketsNote: By supermarkets we mean the stores consisting mainly of...
What Is The Need For This Research?                Small grocery shop of the Past                     Retail Outlets of th...
What Is The Need For This Research?                               SCENARIO                       CHALLENGE                ...
Objectives of the Research      To understand buyer behaviour      To identify information sources that customers      rel...
PART IIMethodology, Analysis and Findings
METHODOLOG            Y An online survey was conducted to understand the various  thoughts that go into the customers‟ de...
HYPOTHES            ISAge is a significant factor in influencing Purchasing Decision.Gender is a significant factor in inf...
SAMPLE A total of 254 people took the survey and the respondents  consisted of individuals from India, Singapore, China a...
Findings Based On   Nationality
Which Nationals are more Brand Conscious?                         N - 254         Nationality - Brand Consciousness       ...
Which is the Go-To Channel for new product                   information?                   N - 254                       ...
Which Information Source is the most trusted for           evaluating alternatives?                  N - 254              ...
What do customers expect when buying products from                  supermarkets?                    Value for Money
What do customers expect when buying products from                  supermarkets?Source: Nielsen_StoreChoice_ValueReport_D...
What do customers expect when buying products from                     supermarkets?           Value for Money            ...
What do customers expect when buying products from                  supermarkets?               Brand Reputation          ...
Buyer Involvement and Purchase DecisionHigh Involvement• Purchases that require extensive evaluationLow Involvement• Purch...
Few Differences Between Brands      High Involvement                                                               Low    ...
Significant Differences Between Brands       High Involvement                                                             ...
NATIONALITY-                                                     SUMMARY We found that irrespective of the nationality, r...
Findings Based On       Age
Which age group is more                      Brand Conscious?         N - 254                  Age - Brand Consciousness  ...
Which is the Go-To Channel for new product                information?                  N - 254                      Age -...
Findings Based On     Gender
Which is the Go-To Channel for new product               information?                    N - 254                   Gender ...
Which Information Source is the most trusted for evaluating alternatives?                                 Gender - Informa...
AGE AND GENDER-           SUMMARY   Around 80% of the respondents in the age group 26-40 are Brand    Conscious.    Word...
Suggestions
SCENARIO                 CHALLENGE                    SOLUTION                                                      Good ...
SCENARIO                 CHALLENGE                    SOLUTION                                                     Tradit...
SCENARI                  CHALLENGE                         SOLUTION   O                                        Loyalty Ca...
Create Positive Perceptions              Price               Promotion               Perception  Supermarkets should unde...
PART IIIAcademic and Commercial Benefits   Limitations of the Research Suggestions for Future Research
Academic BenefitsPersonal        Cultural                           This study provides students in       Social          ...
Commercial BenefitsPersonal        Cultural                           This study will help retailers understand:       Soc...
Personal        Cultural                            The findings cannot be generalized because:       Social             ...
Suggestions For FuturePersonal        Cultural         Research                               The current research focuse...
Recommendations For FuturePersonal        Cultural                                        Research                        ...
Understanding Customers' Decision Making Process
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Understanding Customers' Decision Making Process

The retail industry developed in the United States in the 18th century and was initially restricted to only general stores. Gradually specialty stores came into existence in areas that had a population of over 5000 people and when suburbs began to grow after World War II, Supermarkets started to flourish in the US and Canada (Watch).

In the last two decades the modern retail industry has boomed across the globe. The competition in the retail industry has never been greater. As a result of this competition some retailers have lost sight of what customers actually need and want. The demographic and lifestyle changes of customers have affected how, where and what they shop. As the range of choices in products has increased drastically in the last decade, the biggest challenge for the marketing teams is to understand the buyers’ behaviours. It is very important to have a strong understanding of buyers’ behaviours because it will give insights on what customers feel is important and the factors that influence their decision making when buying a product(Zambito). These insights can then be used to create marketing campaigns which will be of interest to customers. If marketing teams can understand how customers make decisions, it could improve their marketing strategy. Since every customer is different it is necessary to generalize customers buying process to an extent.

Customers usually obtain information about products from personal sources (family and friends) or commercial sources (advertising, sales men, dealers) or public sources (magazines, newspapers, televisions). The influence of these sources of information will vary depending on the product and customer. The primary goal of this research is to identify which information sources play an influential role in choosing a product. We are also going to find out how the personal, social and cultural characteristics of customers influence their decision making process in selecting their choice of product, brand, dealer, etc.
If retailers can get to know what customers go through in each of the five stages of the decision making process, the sources of information and customers’ characteristics, they can influence customers to buy their products.

The objectives of this study are:
 To understand buyer behaviour
 To identify information sources that customers rely on
 To assess the factors that influence customers
 To identify the stimuli that influence the decision making process
 To propose how customers decision making can be influenced

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Understanding Customers' Decision Making Process

  1. 1. INFLUENCING CUSTOMERS’ DECISIONMAKING PROCESS BY UNDERSTANDINGHOW CUSTOMERS CHOOSE PRODUCTS Decision Making Influencing Customer
  2. 2. AGENDAPersonal Cultural Social PART I - Background Of The Research PART II - Methodology, Analysis and Findings PART III - Academic and Commercial Benefits, Limitations of the Research, Suggestions for Future Research
  3. 3. PART IBackground Of The Research
  4. 4. Customers Decision Making Process The primary objective of any firm that wants to remain successful is to understand “How”, “Why” and “When” customers choose a particular product or service.
  5. 5. Customers Decision Making Process Literature on Buyer Behaviour suggests that customers go through a Five-stage Decision Making Process in any purchase. This model is important for anyone making Business decisions, be it Product Manufacturers or Retailers. It forces them to consider the whole buying process rather than just the purchase decision. Source: http://tutor2u.net/business/marketing/buying_decision_process.asp
  6. 6. Stimulus – Response Model of Buyer Behaviour MARKETING OTHER STIMULI STIMULI  Product  Economic  Price  Technological  Place  Political  Promotion  Cultural BUYER’S BUYER’S BUYER’SCHARACTERISTI DECISION DECISION CS MAKING PROCESS  Product Choice  Brand Choice Cultural  Problem Personal Recognition  Dealer Choice Social  Information search  Purchase timing Psychological  Evaluation of  Purchase Amount Alternatives  Purchase Decision  Post-Purchase Source: K6221 – Business Behaviour Notes Intelligence
  7. 7. Stimulus – Response Model of Buyer Behaviour MARKETING OTHER STIMULI STIMULI  Product  Economic  Price  Technological  Place  Political  Promotion  Cultural Scope of Research BUYER’S BUYER’S BUYER’SCHARACTERISTI DECISION DECISION CS MAKING PROCESS  Product Choice  Brand Choice Cultural  Problem Personal Recognition  Dealer Choice Social  Information search  Purchase timing Psychological  Evaluation of  Purchase Amount Alternatives  Purchase Decision  Post-Purchase Source: K6221 – Business Behaviour Notes Intelligence
  8. 8. Stimulus – Response Model of Buyer Behaviour MARKETING OTHER STIMULI STIMULI  Product  Economic  Price  Technological  Place  Political Focus of this research is to  Promotion  Cultural understand what exactly goes through buyer‟s mind at this point… CustomerIntelligence BUYER’S DECISION  Product Choice  Brand Choice  Dealer Choice  Purchase timing  Purchase Amount
  9. 9. Scope Of Research Buying Behaviour in SupermarketsNote: By supermarkets we mean the stores consisting mainly of groceries andlimited products on non food items such as toiletries, cosmetics, etc.
  10. 10. What Is The Need For This Research? Small grocery shop of the Past Retail Outlets of the Present  In the last two decades the modern retail industry has boomed across the globe. Singapore IndiaSupermarket Outlets Market Supermarket Outlets Share Food Bazaar/ Big Bazaar 700+NTUC FairPrice 240 Over 50% Reliance Fresh 680+ Cold Storage 43 Over 30% Spencer‟s 420+ Sheng Siong 25 Around 15% Business Monitor International (BMI) forecast  Business Monitor International (BMI) forecast that sales through Mass Grocery Retail outlets that sales through Mass Grocery Retail outlets to reach US$3.6 billion in 2012 and grow to reach to USD 27.67 billion by 2015 almost 28 percent to US$4.6 billion by 2016
  11. 11. What Is The Need For This Research? SCENARIO CHALLENGE What do customers expect from Changing Lifestyles and Tastes supermarkets? Demographic Changes Who are the customers? Increase in the number of Gaining/Retaining Customer supermarkets Loyalty Access to multiple media Which channels and information channels sources do they rely on?Demographic Changes If retailers can get to know what customers go through in each of the five stages of the decision making process, the sources of information and customers’ characteristics, they can influence customers to buy their products
  12. 12. Objectives of the Research To understand buyer behaviour To identify information sources that customers rely on To assess the factors that influence customers To propose how customers decision making can be influenced
  13. 13. PART IIMethodology, Analysis and Findings
  14. 14. METHODOLOG Y An online survey was conducted to understand the various thoughts that go into the customers‟ decision making process. The questions of the survey were framed such that we will get to know the customer‟s characteristics, customer‟s decision making process and marketing stimuli that influence the customer‟s decision of buying their choice of product/brand. The survey responses are analysed and suggestions are provided on how to influence customers‟ decision making In addition to the online survey, we observed the way people buy products in supermarkets
  15. 15. HYPOTHES ISAge is a significant factor in influencing Purchasing Decision.Gender is a significant factor in influencing Purchasing Decision.Nationality is a significant factor in influencing Purchasing Decision.
  16. 16. SAMPLE A total of 254 people took the survey and the respondents consisted of individuals from India, Singapore, China and a few other countries. Nationality Others, 13 PRC, 31 Singaporean, 53 Singaporean Indian PRC Others Indian, 157
  17. 17. Findings Based On Nationality
  18. 18. Which Nationals are more Brand Conscious? N - 254 Nationality - Brand Consciousness 69% 31% Nationality 77% 23 Yes 79% 21% No 75% 25% 0% 20% 40% 60% 80% 100% Response Percent 75% of the respondents from Singapore say that they are Brand Conscious 79% of the respondents from India say that they are Brand Conscious 77% of the respondents from China say that they are Brand ConsciousA recent poll has found consumers in Asia to be more brand-conscious than their counterparts inEurope and the USSource: http://www.cosmeticsbusiness.com/news/article_page/Asian_consumers_more_brandconscious_than_westerners/61951
  19. 19. Which is the Go-To Channel for new product information? N - 254 Nationality vs Channels 7 4 1 4 10 General Media (TV, Radio, Magazines) Promotional Events (Example: 16 9 12 11 14 Road Shows) Nationality Social Media (Example: Facebook, Twitter ) 123 24 42 34 91 Discussion Forums/ Reviews and Ratings 26 15 20 19 26 Word of mouth 0% 20% 40% 60% 80% 100% Response Percent Respondents from Singapore say that they are equally influenced by General Media and Word of Mouth Respondents from India say that they are mostly influenced by General Media, followed by Word of Mouth 39% of the respondents from China say that they are influenced by Social Media The number of Singaporeans (38%) who use Social Media to know about Products/Brands is increasing of lateAnd to the joy of advertisers and marketers, social media is twice as likely to influence Chinese buyingdecisions Source: http://www.fastcompany.com/magazine/152/the-socialist-networks.html
  20. 20. Which Information Source is the most trusted for evaluating alternatives? N - 254 Nationality vs Information Sources 10 12 1 3 Reviews/ Ratings 21 18 5 18Nationality Family and Friends 104 120 18 72 Sales Personnel 38 36 7 25 Advertisements 0% 20% 40% 60% 80% 100% Response Percent  71% of the respondents from Singapore say that they trust Reviews/Ratings  76% of the respondents from India say that they trust Family/Friends  58% of the respondents from China say that they trust AdvertisementsWith use of social media and interaction with fellow online consumers increasing, Singaporeans’trust in consumer opinions posted online is high. Online product reviews and discussion forumsare one of the most trusted sources of recommendations in purchase decision making Source: Nielsen Report - http://www.sg.nielsen.com/site/NewsReleaseJuly112011.shtml
  21. 21. What do customers expect when buying products from supermarkets? Value for Money
  22. 22. What do customers expect when buying products from supermarkets?Source: Nielsen_StoreChoice_ValueReport_Dec07- http://hu.nielsen.com/site/documents/Nielsen_StoreChoice_ValueReport_Dec07.pdfl
  23. 23. What do customers expect when buying products from supermarkets? Value for Money Price Global consumers vote “good value  According to Nielsen‟s latest annual for money” #1 influencer of Shopper Trends report, 62% of grocery store choice Singaporean shoppers claim they know the prices of most grocery Nielsen found that items and notice when price price, promotions and perceptions changes, making them the second are most influential in helping most price-sensitive shoppers in consumers define value. Southeast Asia after Malaysia Source: Nielsen_StoreChoice_ValueReport_Dec07- http://hu.nielsen.com/site/documents/Nielsen_StoreChoice_ValueReport_Dec07.pdfl
  24. 24. What do customers expect when buying products from supermarkets? Brand Reputation Quality  Today‟s shopper appears to be what retailing pundits aptly refer to as “The schizophrenic shopper”  On one hand, shoppers demand good value for their grocery dollar  On the other, they also expect retailers to stock a wide selection of high quality brands  This „dual demand‟ indicates that the same consumers want the „cheapest of the cheap‟ in some categories and the „best of the best‟ in othersSource: Nielsen_StoreChoice_ValueReport_Dec07- http://hu.nielsen.com/site/documents/Nielsen_StoreChoice_ValueReport_Dec07.pdfl
  25. 25. Buyer Involvement and Purchase DecisionHigh Involvement• Purchases that require extensive evaluationLow Involvement• Purchases that have a simple evaluation process Factors that Impact High/Low Involvement Purchase Decisions  Perception of Product Quality  Positive Belief about the brand  Lower Price  Sales Promotions  Product Features  Brand Reputation
  26. 26. Few Differences Between Brands High Involvement Low Nationality – Sales Involvement Nationality – Sales Promotions Promotions China 74% China 78% India 49% India 56% Agree AgreeSingapore 68% Singapore 77% 0% 50% 100% 0% 50% 100%  Customers prefer shopping in stores that run a lot of promotions irrespective of whether it is a High Involvement Purchase or Low Involvement PurchaseOver eighty-five percent of Malaysian and Singaporean shoppers said they shopped in stores whichoffered promotions and price discounts Source: Nielsen_StoreChoice_ValueReport_Dec07- http://hu.nielsen.com/site/documents/Nielsen_StoreChoice_ValueReport_Dec07.pdfl
  27. 27. Significant Differences Between Brands High Involvement Low Nationality – Brand Involvement Nationality – Brand Reputation Reputation China 35% China 29% India 38% India 40% Agree Agree Singapore 41% Singapore 45% 0% 20% 40% 60% 0% 20% 40% 60%  Customers prefer to buy products based on the reputation of the brand irrespective of whether it is a High Involvement Purchase or Low Involvement PurchaseNielsen’s Shopper Trends survey revealed that consumers are only inclined to buy promotional itemswhen they already like and trust a brand – price promotions and discounts are simply not enough toattract shoppers to a specific retailer in a highly competitive and concentrated retailer environment Source: Nielsen_StoreChoice_ValueReport_Dec07- http://hu.nielsen.com/site/documents/Nielsen_StoreChoice_ValueReport_Dec07.pdfl
  28. 28. NATIONALITY- SUMMARY We found that irrespective of the nationality, respondents are predominantly Brand Conscious Respondents from all the three countries still trust Traditional Media the most Among the three nationals, Chinese are more influenced by Social Media Reviews/Ratings and Family/Friends are the most trusted Information sources among all nationals. In general, respondents from all three countries are most likely to listen to word-of-mouth and friends who tell them where to get the best value Value for Money, Brand Reputation and Price influence customers in selection of the store So Supermarkets can employ the triple play strategy of Price, Promotions and Perceptions to attract consumers over other retailers.A recent study by Nielsen in Singapore says-“Social media enables consumers to obtain opinions and information from sources that were previously notpossible. As a result, consumers are flocking to popular social networks to help them make purchase decisionsand the platform has become one of the most influential forms of information available.”So the impact of social media in purchase decisions might increase among Singaporeans in the near future.
  29. 29. Findings Based On Age
  30. 30. Which age group is more Brand Conscious? N - 254 Age - Brand Consciousness ≥ 41 63.6% 36.4% Yes 79.6% 20.4%Ag 26-40 Noe ≤ 25 78.2% 21.8% 0% 20% 40% 60% 80% 100% Response Percent  Respondents in the age group 20-40 are more brand conscious The 26-40 age group are the most likely of the set to carry dependents and would therefore benefit from “back to school” type advertising. They are also very brand conscious and are more likely to have a preferred set of brands that they are loyal to. Source: http://www.bigonit.co.uk/services/wordpress/?cat=13
  31. 31. Which is the Go-To Channel for new product information? N - 254 Age - Channels ≥ 41 19 6 2 4 13 General Media (TV, Radio, Magazines) Promotional Events (Example: Road Shows)Ag Social Media (Example: Facebook, Twitter 26-40 68 28 33 33 64e ) Discussion Forums/ Reviews and Ratings Word of mouth ≤ 25 85 18 40 31 64 0% 20% 40% 60% 80% 100% Response Percent  General Media Advertising and Word of Mouth are the most influential of the channels among all age groups. Though social media has made a great impact in our day-to-day lives it is still far from influencing our purchasing decision 86% of people stated that TV advertising still has the most impact on their buying decisions. Word of mouth is the primary factor behind 20 to 50 percent of all purchasing decisions. Source: http://www.twistimage.com/blog/archives/what-type-of-advertising-has-the-most-influence/
  32. 32. Findings Based On Gender
  33. 33. Which is the Go-To Channel for new product information? N - 254 Gender - Channels Femal General Media 79 16 33 30 58 e (TV, Radio, Magazines) Promotional Events (Example: Road Shows) Gender Social Media (Example: Facebook, Twitter ) Discussion Forums/ Reviews Male 93 36 42 38 83 and Ratings Word of mouth 0% 20% 40% 60% 80% 100% Response Percent  73% of Women respondents are influenced by General Media  Women (31%) are early adopters of technology than men (28%) and are active in social media but their purchases have not been strongly influenced by social media Majority of the female respondents (75.7%) were of the opinion that they were influenced by TV commercials to purchase different types of products like food, clothing, cosmetics, stationeries and so on. Source: Impact of Television Advertisements on buying pattern of Women ( European Journal of Business and Management ) Vol 3, No.3
  34. 34. Which Information Source is the most trusted for evaluating alternatives? Gender - Information Sources N - 254 Female 74 81 10 51 Reviews/ Ratings Family and Friends Gender Sales Personnel Advertisements Male 99 105 21 67 0% 20% 40% 60% 80% 100% Response Percent  Reviews/Ratings and Family/Friends are the most trusted Information sources among men and women. 56% of women seek product trends, product reviews and recommendations online as part of their shopping process Source: A report from Total Beauty Media Group http://www.totalbeautymedia.com/tbm/insights/whitepapers/shopping-cart
  35. 35. AGE AND GENDER- SUMMARY Around 80% of the respondents in the age group 26-40 are Brand Conscious. Word of Mouth Advertising and General Media are the most influential channels among both genders and all age groups. Social media is still not the “Go-To” channel when it comes to Decision Making even among the 20-25 age group which is believed to dominate the social media sphere Reviews/Ratings and Family/Friends are the most trusted Information sources among both genders and all age groups The findings show that age, gender and nationality are all significant factors in influencing the purchase decision
  36. 36. Suggestions
  37. 37. SCENARIO CHALLENGE SOLUTION  Good Value for Money is now the most important factor in determining where customers buy their groceriesChanging Lifestyles and What do customers expect Tastes from supermarkets?  Customers choose a supermarket that offers a better selection of High Quality Brand and Products
  38. 38. SCENARIO CHALLENGE SOLUTION  Traditional media still remains the most influential channel.  Reviews/Ratings and Family/Friends are the most trusted information sources Which channels andAccess to multiple media  A store‟s/Brand‟s information sources do channels reputation is an they rely on? influential factor in what constitutes Good Value in consumers‟ minds. The power of perception is increasingly becoming very Important
  39. 39. SCENARI CHALLENGE SOLUTION O  Loyalty Cards:  We have started to see the launch of many types of loyalty cards  Can‟t say whether these cards will truly provide differentiation for retailers or whether these cards will just be a differentIncrease in the Gaining/Retaining means for shoppers to obtain promotional number of Customer Loyalty offers. supermarkets  Regardless, these cards will say a lot about shoppers. As the usage of such cards increase in popularity, the wealth of customer data and insights gained will increasingly be central to the shopper engagement strategies
  40. 40. Create Positive Perceptions Price Promotion Perception Supermarkets should understand that what customers expect is „Value for Money‟ „Good value‟ is matter of the mind The power of perception is very important – especially among shoppers Supermarkets can develop a strategy for taking the specific steps necessary to create positive perceptions about their Store Reputation and Brands Reputation
  41. 41. PART IIIAcademic and Commercial Benefits Limitations of the Research Suggestions for Future Research
  42. 42. Academic BenefitsPersonal Cultural This study provides students in Social psychology, marketing, and communications with information to:  Develop theoretical model of decisions made by customers  Study how customers respond to product/service related information and experiences  Study how different channels can be used to influence different age groups and improve their attitude towards a brand/product  Understand how people from different cultural backgrounds make purchase decisions
  43. 43. Commercial BenefitsPersonal Cultural This study will help retailers understand: Social  Buyer Behaviour  Buyers‟ Information Sources  Buyers‟ Characteristics  Buyers‟ Decision Making Process The insights gained from this study can be used for:  Collecting Customer Intelligence  Identifying who makes purchasing decisions  Identifying what customers expect when buying products from supermarkets  Retaining Customer Loyalty  Identifying the channels that could be used for marketing and providing information to customers  Finding new customers
  44. 44. Personal Cultural  The findings cannot be generalized because: Social  The majority of respondents are in the age group 20-40 This limitation can be overcome by conducting similar studies in other countries by inviting participants from more diverse age groups and also having questions that focus on other retail businesses  Methodology used for this research – Online Survey This limitation can be overcome by using other methodologies like face-to-face interviews, observational methods and diary studies
  45. 45. Suggestions For FuturePersonal Cultural Research  The current research focused on identifying the Social buyer behaviour based on nationality. Future researches on buyer behaviour can be carried out to identify if there are differences in buying behaviour between people of same ethnicity living in home country and a foreign country  Future research work could focus on:  Understanding the impact of Social and Psychological characters of consumers in the Decision Making process  The ways Technology is likely to fundamentally alter how and where shoppers spend their money and interact with retailers  Finding ways to retain customer loyalty  Understanding how important it is for stores to carry a lot of Private Label products that are cheaper
  46. 46. Recommendations For FuturePersonal Cultural Research Statistics show that about 40% of consumer spending is on impulse buying. Social A study can be conducted to understand the factors that influence Impulse Buying.

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