CONSUMER BEHAVIOUR

A Journey into the Psyche of Consumers

CONSUMER BEHAVIOUR
Behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs
In order to analyze consumers, marketers need answers to the following questions:
Who Buys? What is their demographic, geographic, psychographic or behavioral orientation? What is Bought? Is it a core service, augmented service, etc.

CONSUMER BEHAVIOUR

Why is the Purchase Made? Influences on purchasing family, culture, friends, marketers, age, social status, etc. How Often is the Service Availed? Frequency of purchase, number of purchases, etc. Where is the Service Availed? Location, convenience, online, offline, etc. When is the Service Availed? Time, season, occasion, etc. How is the Service Availed? Decision making process

Consumer Behavior Is Interdisciplinary

Psychology Social psychology Sociology Anthropology Economics

SUCCESSFUL RELATIONSHIPS

Customer Value

Customer Retention

Customer Satisfaction

SUCCESSFUL RELATIONSHIPS
Customer Value
Defined as the ratio between the customers perceived benefits and the resources used to obtain those benefits Perceived value is relative and subjective Developing a value proposition is critical

SUCCESSFUL RELATIONSHIPS
Customer Satisfaction
The individual's perception of the performance of the product or service in relation to his or her expectations. Customers identified based on loyalty include loyalists, apostles, defectors, terrorists and hostages

SUCCESSFUL RELATIONSHIPS
Customer Retention
The objective of providing value is to retain highly satisfied customers. Loyal customers are key They buy more products They are less price sensitive They pay less attention to competitors advertising Servicing them is cheaper They spread positive word of mouth

ROLES PLAYED BY THE FAMILY MEMBERS

Initiators Gatekeepers Influencers Decision makers/Decider Purchasers/ Buyer Users

Consumer Decision Making Model

Characteristics Affecting Consumer Behaviour

Culture
Social

Personal
Psychological Buyer

CULTURE
Most basic cause of a person's wants and behavior. Values Perceptions
Subculture
Groups of people with shared value systems based on common life experiences. Religions Racial Groups Nationalities Geographic regions

Social Class People within a social class

Occupation Income Education Wealth

tend to exhibit similar buying behavior.

SOCIAL FACTORS
Reference Groups
Membership,Aspirational Dissociative

Opinion Leaders

Family
Husband, wife, kids Influencer, buyer, user

Social Factors

Roles and Status

PERSONAL FACTORS
Personal Influences
Age and Family Life Cycle Stage Economic Situation Occupation

Personality & Self-Concept

Lifestyle Identification
Activities Opinions

Interests

PSYCHOLOGICAL FACTORS

Motivation

Memory

Psychological Factors

Perception

Learning

Purchase Process for Services

Need Recognition

Information search
Evaluation of Alternative Service Providers Review Documentation Consult Others Visit possible service suppliers

Pre Purchase Stage

Service Encounter

Request Service from Chosen Supplier/Self Service

Service Delivery
Evaluation of Service Performance

Post Purchase

Future intentions

Pre-purchase Stage
Problem Recognition
Actual state Vs. Desired state of affairs Greater the difference between the two, greater that need to act, i.e., purchase. PR can be influenced Internal stimuli such as hunger, feelings, or other stages of the Maslows Need Hierarchy, etc., External stimuli such as friends, family, marketers, etc., or a combination of the two stimuli.

Pre-purchase Stage
Information Seeking or Search
The rational reason for searching for information before a purchase is to reduce the risk of making the wrong purchase. The type of search (internal vs. external) depends on a host of factors
Internal Search Situations High Confidence Level Frequently Bought Item Product/service Unchanged Low Risk, Low Priced Item External Search Situations Low Confidence Level Infrequently Bought Item/service Rapidly Changing Products Hi Risk, Hi Priced Product

Pre-purchase Stage
Evaluation of alternative products, brands, and purchase outlets.
Consumer identifies potential suppliers& than weighs the benefits & risks of each option In this case, consumer try to match anticipated performance with certain evaluative criteria such as quality, price, brand name, brand loyalty, etc. Certain heuristics are also employed by consumers to simplify and speed up the decision making process. Even though high price might be a negative factor, he or she is likely to expect the high quality of the brand to compensate for it.

Pre-purchase Stage
Type of Risk
Functional (unsatisfactory performance outcomes) Financial (monetary loss, unexpected cost) Temporal (Wasting time, delays) Physical (Physical injury or damage) Psychological (Personal fears or emotions) Social (How others think & react) Sensory (unwanted impact on any of the five senses)

Pre-purchase Stage
The choice of the product, brand, or outlet
The decision to purchase a specific brand is a complicated one. Consumers sometimes tend to procrastinate the actual purchase for various reasons. In other words, buying intentions do not always translate into actual purchases. For instance, situational influences such as illness, losing a job, changes in family status, etc. can halt the purchasing process. Marketers, on the other hand, try to offer certain incentives to buy now than later. In this networked economy, consumers are also confronted with a choice of buying either offline or online.

Service Encounter Stage

Begins with submitting the application, requesting a reservation or placing an order Contacts may take the form of personal exchanges between the customer & service provider or impersonal interactions In high contact services, customers may become actively involved with one or more service processes Experience a variety of elements during service delivery which provide clues for service quality

Types of Service Encounters

As the level of customer contact with the service operation increases, there are likely to be long & more service encounters (eg. Traditional banking, person to person telephone banking & internet banking) High Contact Services:
Involves personal visit of the customer to the service facility, active involvement with the service organization & its personnel during service delivery

Low Contact Services

Involve little, if any physical contact between the customer & service providers. Contact takes place through medium of physical distribution channel- mail, telephone , internet etc.

Service Marketing System

Represents all the ways in which the customer may encounter or learn about the organization in question Because services are experiential each of these elements offers clues about the nature & quality of the service product Inconsistency between the various elements may weaken the organizations credibility in the customers eyes

Service marketing System for High Contact Service

Service Operation System Service Delivery System Other customers Other Contact Points Advertising Sales Calls Marketing research

Interior & Exterior Facilities Technical Core

Equipments

The Customer

Billing Mails, Phone calls

Service People
Back Stage (Invisible) Front Stage (Visible)

Other Customers

Chance Encounters Word of Mouth

Services marketing System for Low Contact Service

Service Operation System Service Delivery System Other Contact Points

Mail Self Service Equipment

Advertising Marketing research

Technical Core

The Customer
Phone, Fax, Websites

Billing
Random Exposures to facility Word of Mouth

Back Stage (Invisible) Front Stage (Visible)

Customer Expectations
Components of Customer Expectations
Desired Service Levels: Wished for level- the type of service the customers hope to receive based on what they believe can & should be delivered in text of their personal needs.
Adequate Service Level: Minimum level of service that the customer will accept without being dissatisfied. It is dependent upon situational factors, level of service that might be anticipated from alternative suppliers.

Predicted Service Level: Anticipated Service

Anticipated service level Adequate level will be higher

Customer Expectations
Zone of Tolerance
The inherent nature of services makes consistent service delivery difficult across employees, The extent to which the customers are willing to accept this variation is the Zone of Tolerance
Personal needs Belief of what is possible Perceived Service Alterations Adequate Services Situational Factors Desired Services Explicit & Implicit Service Promises WOM Past Experiences

Zone of Tolerance Predicted Services

Post-purchase Stage
Generally there are three outcomes at the end of the process:
Performance/service quality equals expectations leading to satisfaction with the brand Performance/service quality greater than expectations leading to positive feelings about the brand Performance/service quality lower than expectations leading to dissatisfaction with the brand. In all three situations, the result is likely to be internalized by consumers, stored in memory and retrieved later.

QUESTIONS
1. Choose a service company with which you are familiar & show how each of the seven elements (7 Ps) of Integrated service management is being utilized 2. Choose a particular service & elaborate how it can fulfill different level of needs for different set of consumers,