In the Name of Allah, The Most Beneficent, The Most Merciful

Consumer Behavoiur

SESSION 4
BY
Khurram NasarullahKhan
 CHAPTER 4

Consumer Behavior
Purchase Decision Process
 Company Orientation toward the Marketplace

1- Trade Era 2- Production Era 3- Product Era 4- Sales Era

-Handmade goods -Produce more -Make Quality Products - Advertised more
-Barter systems -Sell at low cost -Sell at low cost - Focus on Sales

5- Marketing Era 6- Holistic Era 7- Social Media Era

- Develop, Design, Market - Connect with your clients
- Understand Need/Want - As Everything matters - Give them solutions
- Create affordable offer - Relationship Marketing
Model of Buyer/Consumer Behavior
How do consumers respond to
various marketing efforts stimuli
 Purchase Factor

Following are the Factors that are customers consider when they purchases
Offer.
1. Time,
2. Money.
3. Need/Want Intensity.
4. Choices /Variety
5. Quality /Value for money
6. Functionality
7. Durability
8. Warranty
9. Service and Support
 Determinants of Retailer Success or Failure

• Location.
• Nature of Quality of Assortments.
• Price.
• Advertising and Promotion.
• Sales Personnel.
• Service Offered.
• Physical Store Attributes.
• Nature of Store Clientele.
• Point of Purchase Displays.
• Consumer Logistics.
 Demand Chain vs Supply Chain

Demand chain management (DCM) is the

management of relationships between
suppliers and customers to deliver the best
value to the customer at the least cost in
the demand chain as a whole.

Demand chain management is similar to

supply chain management but with special
regard to the customers.
 Methods of Studying Consumer Behavior

• Traditional Methods
• Psycho Physiological Method
 Methods of Studying Consumer Behavior
- Traditional
• Focus Group (a group of people are asked about their perceptions, opinions, beliefs,
and attitudes towards an offer.)

• Survey (Method of gathering information from individuals. )

• Choice Modeling (attempts to model the decision process of person via revealed
preferences or stated preferences made in a particular context or contexts, Choice through
Past Experiences.)

• Observation (action or process of closely observing or monitoring consumers)

• Shadowing (Following the consumers and asking them questions and buying &
consumption)

• Psychological observational methods. (Observing consumer through

eye movement, Skin Response or lie-detector etc.)
 Methods of Studying Consumer
Behavior - Psycho Physiological
• Biofeedback (Attach machine to consumer body to read responses)

• Facial Coding (Reading expressions of Consumers)

• Eye Tracking (Reading eye movements of Consumers)

• Vocal Analysis (Reading Voice Modulation of Consumers)

 Customer Centric Organization
• Customer centricity is a strategic commitment to focus every resource of
firm on serving and delightful profitable customers.
• Features are :
• Shared Vision and Values (across all Dept. and all Levels)

• Cross Functional Integration (Linking All Depts. And people together)

• System Wide Simultaneous Training (same strategy for all same role employees)

• Customer Based Metrics. (Changing all profit measurements to Customer based)

 From Market Analysis to Market Strategy.
Where does consumer behavior fit??
• The main purpose of customer
centric organization is to provide
more value than competitors.

• Price vs Quality Matrix

Marketing Centric diagram
 Marketing Strategy
• Marketing strategy involves the allocation of resources that customer will
perceive to provide more value than competitor.

This includes:
• Market Analysis (Trends, Demand, Growth, Competitors, Regulatory) Micro+ Macro
• Market Segmentation (Demographic, Geographics, Psychographics, Behavior)
• Brand Strategy (Line extension, Brand Extension, MultiBrands, New Unique brands)
• Implementation (Focused, Partial, Full)
 What is Segmentation ?
Dividing the Total Market into smaller groups that Total Market
have similar wants & needs to identify the Target Market.

Market segmentation is a natural result

of the vast differences among people. - Donald Norman Demographics

Geographic
Four Categories:
Psychographics
1. Demographic (Income, Age, Gender, Family, Education.. Behavioral
Occupation, Ethnicity )

2. Geographic (Location: Urban, Rural)

Target Market
3. Psychographic (Life Style, Beliefs & Values) (Similar Customers)

4. Behavioral (Pattern , Usage Loyalty)

 Why we do Segmentation ?
Reasons:

1. To identify the Target Market

2. To put Company’s Efforts focus on certain

category of people.

3. To create ‘Competitive Advantage’ in the

market

4. To manage Company’s Resources

Efficiently and Effectively
 What is Target Market ?
Total Market
The process of evaluating
each market segment’s
attractiveness and selecting Segmentation
one or more segments to
serve.

Target Market
(Similar Customers)
Factors Affecting Consumer Behavior
 Factors Affecting Consumer Behavior

1. Social Factors
✓ Family Role (Opinion Leader : who can influence you to take decision)
✓ Reference Groups (who are you trying to impress? – to gain acceptance)
✓ Social Economic Class (Similar income level, Luxury, status symbols)
✓ Culture & Sub-Culture (More colors in Ruler areas, Sindh Culture: MAJU culture)
2. Personal Factors
✓ Demographics (Income & Savings, age, location, gender, education etc.)
✓ Situation (Time available, Physical Environment: pleasing , not pleasing -crowed)
(5 Senses Stimuli: in-store display, smell, lighting, soft music, Sale..!)
✓ Involvement (how many people are involved in decision making process)
✓ Personality (unique characteristic of mind that person respond to situation )
✓ Life Style (pattern of taste of living, activity, interest, opinion)
3. Psychological Factors
✓ Perceptions (Process of selection, organize, interpret info. : Thinking, beliefs, values)
✓ Motives (What drives your actions to satisfy need–Emotions, beliefs, habits, values)
✓ Learning (Change behavior by info. Behavior [operant: reward, punishment], Cognitive [observe])
✓ Attitudes (feeling, knowing and doing : it is last evaluation of person= Crest vs Colgate toothpaste)
 Buyer Decision Process

1. Need Recognition

2. Information Search

3. Evaluation of Alternatives

4. Purchase Decision

5. Post Purchase Evaluation

Buyer Decision Process

Cognitive Dissonance:
discomfort caused by
post-purchase conflict.
 Buyer Decision Process (Detail)

1. Problem Recognition (Awareness of Need)

Need: It is the difference between the desired state and the actual condition.
Deficit in assortment of products.
e.g. Hunger → Food. Hunger stimulates your need to eat.

Can be stimulated by the marketer through product information--did not know you were deficient?
i.e., you see a commercial for a new pair of shoes,
it stimulates your recognition that you need a new pair of shoes.

2. Information search

Internal search: Searching the memory.

External search: if you need more information.
- Friends and relatives (word of mouth).
- Marketer dominated sources; comparison shopping; public sources etc.

A successful information search leaves a buyer with possible alternatives, the evoked set.

Hungry Customer wants to go out and eat, evoked set is

- Chinese food - Indian Food - Burger King - Pizza Hut etc.
 Buyer Decision Process (Detail)

3. Evaluation of Alternatives-

- Need to establish criteria for evaluation,

- Features the buyer wants or does not want.
- Rank/weight alternatives or resume search.
- May decide that you want to eat something spicy, Indian gets highest rank etc.

If not satisfied with your choice, then return to the search phase. Can you think of another restaurant?
Search the net etc. Information from different sources may be treated differently.

Marketers try to influence by "framing" alternatives. (use my product instead of other)

4. Purchase decision-
-Choose buying alternative, includes product, package, store, method of purchase etc.
Heuristics: mental rule of thumb.

i. Price = quality (people by expensive things, thinking if it cost more, then it must be better.)
ii. Brand loyalty (people will buy again, assuming that company will maintain Quality of its products and services)
iii. Country of Origin: (Swiss made=High quality , China made= low Quality)

5. Post-Purchase Evaluation-
-Outcome: Satisfaction or Dissatisfaction.
Cognitive Dissonance: Confusion thinking ..have you made the right decision.?
This can be reduced by warranties, after sales and communication etc.
 Roles In Collective Decision Making

Initiator (Identifier)
The person who brings up the idea or identifies a need.

Gatekeeper (What to buy and from whom)

One who conducts the information search and controls the flow of information

Influencer (Cost vs Benefits)

One who tries to sway the outcome of the decision.

Buyer (Paying and Getting)

One who actually makes the purchase

User (Consumer)
who actually consumes the product or service
THANK YOU