6/5/2011

LEARNING OBJECTIVES

CHAPTER 4
CONSUMER BEHAVIOUR

Various roles played in the consumer decision

making process
The consumer decision making process: How
consumers buy
Marketing implications of various steps in the
consumer decision making process
The nature of choice criteria: What parameters are
used by consumers
The differences in evaluation of high versus low
involvement situations

Learning Objectives (Contd.)

Influences on consumer behavior: The buying

situation, personal and external influences, and
their marketing implications
Consumer loyalty and profitability
Customer portfolio management: Selecting the
right customers
Creating an emotional engagement with customers
Customer relationship management
Understanding relationship marketing

Important questions to be asked

about customers are:

What are the consumers buying?

Who is important in the buying decision?
How do they buy?
What are their choice criteria?
Where do they buy from?
When do they buy?

6/5/2011

THE BUYER

Initiator
Influencer
Payer
Decider
Buyer
User

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

The Buying Process (Contd.)

THE BUYING PROCESS

Problem recognition
Magnitude of discrepancy between desired and
present situation
Relative importance of the problem
Need inhibitors have to be overcome

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

6/5/2011

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

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

CHOICE CRITERIA
Features and benefits a customer uses when
evaluating products
Technical criteria
Economic criteria
Social criteria
Personal criteria
Risk reduction
Choice criteria may be of emotional nature
Undergo changes over time even for the
same customer

THE BUYING SITUATION

Extended problem solving
Limited problem solving
Habitual problem solving

6/5/2011

Personal Influences (Contd.)

PERSONAL INFLUENCES
Perception
Selective attention
Selective distortion
Selective retention

Learning
Classical conditioning
Operant conditioning
Cognitive learning
Modeling/Vicarious learning
Reasoning

SOCIAL INFLUENCES
Culture
Social class
Reference groups

Motivation
Maslows theory of motivation

Belief and attitude

Personality
Lifestyle
Life cycle

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

6/5/2011

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

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

CUSTOMER PORTFOLIO
MANAGEMENT

CUSTOMER
RELATIONSHIP
MANAGEMENT
Create a customer strategy before implementing
CRM
Before CRM technology is installed, a
customer-focused 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

6/5/2011

RELATIONSHIP
MARKETING

Identifying the customers

Differentiating the customers
Interacting with customers
Customizing the companys behavior