Buying Behaviour

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Buying Behaviour

An important part of the marketing process is to understand why a customer or buyer makes a purchase. Without such an understanding, businesses find it hard to respond to the customer's needs and wants. Marketing theory traditionally splits analysis of buyer or customer behaviour into two broad groups for analysis - Consumer Buyers and Industrial Buyers

Consumer buyersare those who purchase items for their personal consumption

Industrial buyersare those who purchase items on behalf of their business or organisation

Businesses now spend considerable sums trying to learn about what makes “customers tick”. The questions they try to understand are:

• Who buys?
• How do they buy?
• When do they buy?
• Where do they buy?
• Why do they buy?

For a marketing manager, the challenge is to understand how customers might respond to the different elements of the marketing mix that are presented to them.

If management can understand these customer responses better than the competition, then it is a potentially significant source of competitive advantage.

THE BUYER BEHAVIOUR MODEL

Marketing stimuli

Other Stimuli

Buyer's Characteristics

Buyer's Decision Process

Buyer's decisions

Product

Price

Place

Promotion

Economic

Technological

Political

Cultural

Cultural

Social

Personal

Psychological

Problem recognition

Information search

Evaluation

Decision

Product Choice

Brand choice

Dealer Choice

Purchase timing

Purchase Amount

MAJOR FACTORS INFLUENCING BUYER BEHAVIOUR

The factors influencing buyer behaviour can be broadly classified into: Cultural, Social, Personal and Psychological. Let us see each one in detail.

01. Cultural Factor :-

* Cultural factor divided into three sub factors (i) Culture (ii) Sub Culture (iii) Social Class

o Culture:-

§ The set of basic values perceptions, wants, and behaviours learned by a member of society from family and other important institutions. Culture is the most basic cause of a person's wants and behaviour. Every group or society has a culture, and cultural influences on buying behaviour may vary greatly from country to country.

o Sub Culture :-

§ A group of people with shared value systems based on common life experiences and situations.

§ Each culture contains smaller sub cultures a group of people with shared value system based on common life experiences and situations. Sub culture includes nationalities, religions, racial group and geographic regions. Many sub culture make up important market segments and marketers often design products.

o Social Class:-

§ Almost every society has some form of social structure, social classes are society's relatively permanent and ordered divisions whose members share similar values, interests and behaviour.

02. Social Factors :-

* A consumer's behaviour also is influenced by social factors, such as the (i) Groups (ii) Family (iii) Roles and status

o Groups :-

§ Two or more people who interact to accomplish individual or mutual goals.

§ A person's behavious is influenced by many small groups. Groups that have a direct influence and to which a person belongs are called membership groups.

§ Some are primary groups includes family, friends, neighbours and coworkers. Some are secondary groups, which are more formal and have less regular interaction. These includes organizations like religious groups, professional association and trade unions.

o Family:-

§ Family members can strongly influence buyer behaviour. The family is the most important consumer buying organization society and it has been researched extensively. Marketers are interested in the roles, and influence of the husband, wife and children on the purchase of different products and services.

o Roles and Status :-

§ A person belongs to many groups, family, clubs, organizations.

§ The person's position in each group can be defined in terms of both role and status.

§ For example. M & “X” plays the role of father, in his family he plays the role of husband, in his company, he plays the role of manager, etc. A Role consists of the activities people are expected to perform according to the persons around them.

03. Personal Factors:-

* It includes

* i) Age and life cycle stage (ii) Occupation (iii) Economic situation (iv) Life Style (v) Personality and self concept.

o Age and Life cycle Stage:-

§ People change the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture, and recreation are often age related. Buying is also shaped by the stage of the family life cycle.

o Occupation :-

§ A person's occupation affects the goods and services bought. Blue collar workers tend to buy more rugged work clothes, whereas white-collar workers buy more business suits. A Co. can even specialize in making products needed by a given occupational group. Thus, computer software companies will design different products for brand managers, accountants, engineers, lawyers, and doctors.

o Economic situation :-

§ A person's economic situation will affect product choice

o Life Style :-

§ Life Style is a person's Pattern of living, understanding these forces involves measuring consumer's major AIO dimensions.

§ i.e. activities (Work, hobbies, shopping, support etc) interest (Food, fashion, family recreation) and opinions (about themselves, Business, Products)

o Personality and Self concept :-

§ Each person's distinct personality influence his or her buying behavior. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one's own environment.

04. Psychological Factors:-

* It includes these Factors.

* i) Motivation (ii) Perception (iii) Learning (iv) Beliefs and attitudes

· Motivation :-

o Motive (drive) a need that is sufficiently pressing to direct the person to seek satisfaction of the need

· Perception :-

o The process by which people select, Organize, and interpret information to form a meaningful picture of the world.

· Learning:-

o Changes in an individual's behavior arising from experience.

· Beliefs and attitudes :-

o Belief is a descriptive thought that a person holds about something

o Attitude, a Person's consistently favorable or unfavorable evaluations, feelings, and tendencies towards an object or idea.

TRENDS IN BUYING BEHAVIOUR

In the natural & organic food segment, Rick Sterling, founder and president of Sterling-Rice Group (Boulder, Colo.) sees ‘big food' entering the natural retail channel with their natural and organic brands—less for volume than for the pedigree and experience in marketing to an unfamiliar consumer group. “It is more important that food companies learn how to engage a values-based consumer that shops across natural and conventional outlets than it is for these companies to capture their ‘fair share' of sales in the natural channel.” Sterling believes this to be true for Kraft with their Back To Nature brand, General Mills with Cascadian Farms, and Kellogg's with Kashi. All three of these brands involve a consumer segment that the food companies have not traditionally engaged.

Sterling also sees more brands taking aim at sports clubs and spas, again for positioning. “Clif Bar is good at getting into nontraditional locations with philosophically aligned people.”

THE NATIONAL PORK COUNCIL

By 1985 pork consumption had dropped to 59 pounds per capita from a high of 68 pounds in 1980. The nation was on a anti beef and anti pork kick, favouring leener, less cholesterol laden poultry. While pork products were actually improved as a result of new feeding and breeding methods, the public still considered pork an unhealthy choice. The National Pork Producers Council called up an ad agency Bozell Inc. to change the image of pork, and it put some $12 million into a national marketing campaign. The new campaign centered on the slogan, “Pork, The other white meat”. Between 1986, when the campaign began, and 1988, pork sales rose 11%- about equal to the gain for chicken, and far ahead of the 2% increase for beef in the same period.

TYPES OF BUYING BEHAVIOUR

The four type of consumer buying behavior are:

* Routine Response/Programmed Behavior--buying low involvement frequently purchased low cost items; need very little search and decision effort; purchased almost automatically. Examples include soft drinks, snack foods, milk etc.

* Limited Decision Making--buying product occasionally. When you need to obtain information about unfamiliar brand in a familiar product category, perhaps. Requires a moderate amount of time for information gathering. Examples include Clothes--know product class but not the brand.

* Extensive Decision Making/Complex high involvement, unfamiliar, expensive and/or infrequently bought products. High degree of economic/performance/psychological risk. Examples include cars, homes, computers, education. Spend alot of time seeking information and deciding.
Information from the companies MM; friends and relatives, store personnel etc. Go through all six stages of the buying process.

* Impulse buying, no conscious planning.

The purchase of the same product does not always elicit the same Buying Behavior. Product can shift from one category to the next. For example: Going out for dinner for one person may be extensive decision making (for someone that does not go out often at all), but limited decision making for someone else. The reason for the dinner, whether it is an anniversary celebration, or a meal with a couple of friends will also determine the extent of the decision making.

BUYER DECISION PROCESS

In general there are three ways of analysing consumer buying decisions. They are:

* Economic models - These models are largely quantitative and are based on the assumptions of rationality and near perfect knowledge. The consumer is seen to maximize their utility. Consumer theory, Game theory can also be used in some circumstances.

* Psychological models - These models concentrate on psychological and cognitive processes such as motivation and need recognition. They are qualitative rather than quantitative and build on sociological factors like cultural influences and family influences.

* Consumer behaviour models - These are practical models used by marketers. They typically blend both economic and psychological models.

Models of buyer decision making

General model

A general model of the buyer decision process consists of the following steps:

1. Problem recognition;

2. Gathering Information

3. Alternative education

4. Purchase decision

5. Post-purchase behavior/buyer's remorse (cognitive dissonance)

There are a range of alternative models, but that of AIUAPR, which most directly links to the steps in the marketing/promotional process is often seen as the most generally useful;

* AWARENESS - before anything else can happen the potential customers must become aware that the product or service exists. Thus, the first task must be to gain the attention of the target audience. All the different models are, predictably, agreed on this first step. If the audience never hears the message, they will not act on it, no matter how powerful it is

* INTEREST - but it is not sufficient to grab their attention. The message must interest them and persuade them that the product or service is relevant to their needs. The content of the message(s) must therefore be meaningful and clearly relevant to that target audience's needs, and this is where marketing research can come into its own.

* UNDERSTANDING - once an interest is established, the prospective customer must be able to appreciate how well the offering may meet his or her needs, again as revealed by the marketing research. This may be no small achievement where the advertiser has just a few words, or ten seconds, to convey their message.

* ATTITUDES - but the message must go even further; to persuade the reader to adopt a sufficiently positive attitude towards the product or service that he or she will purchase it, albeit as a trial. There is no adequate way of describing how this may be achieved. It is simply down to the magic of the advertiser's art, or based on the strength of the product or services itself.

* PURCHASE - all the above stages might happen in a few minutes while the reader is considering the advertisement; in the comfort of his or her favorite armchair. The final buying decision, on the other hand, may take place some time later; perhaps weeks later, when the prospective buyer actually tries to find a shop which stocks the product.

* REPEAT PURCHASE - but in most cases this first purchase is best viewed as just a trial purchase. Only if the experience is a success for the customer will it be turned into repeat purchases. These repeats, not the single purchase which is the focus of most models, are where the vendors focus should be, for these are where the profits are generated. The earlier stages are merely a very necessary prerequisite for this!

This is a very simple model, and as such does apply quite generally. Its lessons are that you cannot obtain repeat purchasing without going through the stages of building awareness and then obtaining trial use; which has to be successful. It is a pattern which applies to all repeat purchase products and services; industrial goods just as much as baked beans. This simple theory is rarely taken any further - to look at the series of transactions which such repeat purchasing implies. The consumer's growing experience over a number of such transactions is often the determining factor in the later - and future - purchases. All the succeeding transactions are, thus, interdependent - and the overall decision-making process may accordingly be much more complex than most models allow for.

Cognitive and personal biases in decision making

It is generally agreed that biases can creep into our decision making processes, calling into question the correctness of a decision. Below is a list of some of the more common cognitive biases.

* Selective search for evidence - We tend to be willing to gather facts that support certain conclusions but disregard other facts that support different conclusions.

* Premature termination of search for evidence - We tend to accept the first alternative that looks like it might work.

* Conservatism and inertia - Unwillingness to change thought patterns that we have used in the past in the face of new circumstances.

* Experiential limitations - Unwillingness or inability to look beyond the scope of our past experiences; rejection of the unfamiliar.

* Selective perception - We actively screen-out information that we do not think is salient.

* Wishful thinking or optimism - We tend to want to see things in a positive light and this can distort our perception and thinking.

* Recency - We tend to place more attention on more recent information and either ignore or forget more distant information.

* Repetition bias - A willingness to believe what we have been told most often and by the greatest number of different of sources.

* Anchoring - Decisions are unduly influenced by initial information that shapes our view of subsequent information.

* Group think - Peer pressure to conform to the opinions held by the group.

* Source credibility bias - We reject something if we have a bias against the person, organization, or group to which the person belongs: We are inclined to accept a statement by someone we like.

* Incremental decision making and escalating commitment - We look at a decision as a small step in a process and this tends to perpetuate a series of similar decisions. This can be contrasted with zero-based decision making.

* Inconsistency - The unwillingness to apply the same decision criteria in similar situations.

* Attribution asymmetry - We tend to attribute our success to our abilities and talents, but we attribute our failures to bad luck and external factors. We attribute other's success to good luck, and their failures to their mistakes.

* Role fulfillment - We conform to the decision making expectations that others have of someone in our position.

* Underestimating uncertainty and the illusion of control - We tend to underestimate future uncertainty because we tend to believe we have more control over events than we really do.

* Faulty generalizations - In order to simplify an extremely complex world, we tend to group things and people. These simplifying generalizations can bias decision making processes.

* Ascription of causality - We tend to ascribe causation even when the evidence only suggests correlation. Just because birds fly to the equatorial regions when the trees lose their leaves, does not mean that the birds migrate because the trees lose their leaves.

BRAND POSITIONING

it is the “added value” or augmented elements that determine a brand's positioning in the market place.

Positioning can be defined as follows:

Positioning is how a product appears in relation to other products in the market

Brands can be positioned against competing brands on aperceptual map.

A perceptual map defines the market in terms of the way buyers perceive key characteristics of competing products.

The basic perceptual map that buyers use maps products in terms of their price and quality, as illustrated below:

Quality

Low High

ECONOMY BRANDS

BARGAIN BRANDS

COW BOY BRANDS

PREMIUM BRANDS

Price: Low

High

Once you determine the way in which you can reach your market, the next thing to look at is how you are going to lure your customer to try your brand.

Here is a list of nine positioning types you can think of before deciding on which one you will attach to your brand:

1. Quality positioning
2. Value positioning
3. Feature-driven positioning
4. Relational positioning
5. Aspiration positioning
6. Problem/solution positioning
7. Rivalry-based positioning
8. Warm and fuzzy positioning
9. Benefit-driven positioning

COMMUNICATION TOOL

Childhood obesity has become a nationwide epidemic. Television food advertising is a known contributor to this problem but little research has examined newer marketing venues such as the Internet. Accordingly, a content analysis of online food marketing practices was conducted for four popular children's websites: CartoonNetwork.com, Nick.com, Neopets.com, and Candystand.com. Consistent with patterns in television advertising, results indicate that the food products marketed online are high in calories and low in nutrients. Candy, sweetened breakfast cereals, snacks, and quick serve restaurants dominated. Candystand.com, a food-based website, exhibited the greatest amount of food marketing. The types of marketing appeals used to promote these foods ranged from clearly delineated advertisements, to more immersive marketing techniques such as product placements, ‘advergames,' and integrated marketing pages. Common to all marketing appeals was the use of attention-getting features, such as dynamic images, bold/colorful text, and animation, as well as child-directed branded characters. Because the foods marketed online are not consistent with a healthy diet, it is recommended that additional steps be taken to regulate online marketing practices.

COMMUNICATING THE COMPANIES POSITIONING

Once the company has developed a clear positioning strategy, it must communicate that positioning effectively. Suppose a company chooses the best in quality strategy. Quality is communicated by choosing those physical signs and cues that people normally use to judge quality. Here are some examples:

A lawn mover manufacturer claims its lawn mover is powerful and uses a noisy motor because buyer think noisy lawn movers are more powerful.

Truck manufacturer undercoats the chassis not because it needs undercoating but because undercoating suggests concern for quality.

Quality is also communicated through other marketing elements. A high price usually signals a premium product to the buyers. The products quality image is also affected by the packaging, distribution, advertising and promotion. Here are a few cases were the brands quality image was hurt.

A well known frozen food brand lost its prestige image by being on sale too often.

A premium beers image was hurt when it switched from bottle to cans.

A highly regarded television receiver lost its quality image when mass merchandise outlets began to carry it.

For an organic food manufacturing company, its important that the quality aspect is given due importance. The highlighting of the quality of food product, packaging and the freshness it provides along with the highlighting of the nutrient contents will be of great help to the promotion of the product. Especially when the product is a baby food, health will be the main concern of the buyer. The communication message will be attractive if the content carries something related to purity; for example, the image of a baby, nature etc.