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CUSTOMER BEHAVIOUR. Facilitator: Neels Bothma Email: [email protected] CUSTOMER BEHAVIOUR. Topic 1: Introduction to customer behaviour Topic 2: Determinants of customer behaviour Topic 3: The customer’s mind set Topic 4: Customer decision-making Topic 5: Customer focused marketing.

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customer behaviour

CUSTOMER BEHAVIOUR

Facilitator: Neels Bothma

Email: [email protected]

customer behaviour1
CUSTOMER BEHAVIOUR

Topic 1: Introduction to customer behaviour

Topic 2: Determinants of customer behaviour

Topic 3: The customer’s mind set

Topic 4: Customer decision-making

Topic 5: Customer focused marketing

slide3
TOPIC 1

INTRODUCTION

slide4

INTRODUCTION

Definitions:

Study of individuals, groups or organisations and the processes they use to select, secure, use and dispose of products, services, experiences, or ideas to satisfy needs

The mental and physical activities undertaken by household and business customers that result in decisions and action to pay for, purchase, and use products and services

slide5

MENTAL AND PHYSICAL ACTIVITIES

  • Mental activities - includes feelings about a product, previous experience with the brand
  • Physical activities - include visiting a store, comparing different products, buying products/services
slide6

TYPES AND ROLES OF CUSTOMERS

Types of customers:

  • Households
  • Business markets

Roles of customers:

  • Buyers
  • Users
  • Payers
importance of customer behaviour
IMPORTANCE OF CUSTOMER BEHAVIOUR

Customer satisfaction

The marketing concept

Customer focus

Customer retention

Focus on needs

Serve needs of society

Long-term survival

marketing strategy and customer behaviour
MARKETING STRATEGY AND CUSTOMER BEHAVIOUR

Outcomes

Individual

Organisation

Society

Customer decision

Marketing strategy

Market segmentation

Market analysis

Organisation

Competitors

Environment

Customers

slide9

CREATING VALUE FOR THE CUSTOMER

  • Three meanings of value:
  • Pricing value
  • Customer value
  • Strategic value
slide10

HOW TO MEASURE VALUE?

  • Determine expected value [Benchmarking]
      • Use a Customer Satisfaction Index
      • Determine value as perceived by customers
  • Prepare strategy
      • Convince staff of Customer Value Management
      • Devise an action plan
  • Measure how well value was delivered
      • Use a Balanced scorecard
      • Determine market share, customer acquisition, retention, and customer satisfaction
  • Investigate and adapt
      • Investigate deviations and adapt the strategy
slide11

MARKET SEGMENTATION

  • Bases of market segmentation:
  • Geographic
  • Demographic
  • Psychographic
  • Behaviouristic
  • Needs/benefit
  • Market value
slide12

OVERALL MODEL OF CUSTOMER BEHAVIOUR

External influences

Culture

Subculture

Reference group

Social class

Family

Marketing activities

Market characteristics

Climate

Economy

Government

Technology

Decision-making

Individual

Organisational

Family

Customer

Internal influences

Perception

Learning

Motivation

Lifestyle

Attitudes

Personality

Self-concept

Personal characteristics

Race

Gender

Age

slide13
TOPIC 2

EXTERNAL FACTORS INFLUENCING CUSTOMER BEHAVIOUR

culture and subculture
CULTURE AND SUBCULTURE

The meaning of Culture

“…the sum total of learned beliefs, values, and customs that serve to direct the consumer behaviour of members of a particular society.”

Subculture

“… a distinct cultural group that exists as an identifiable segment within a larger, more complex society”

Subcultures include nationalities, religions, racial groups, and geographic regions

slide15

CULTURE IS LEARNT THROUGH

  • Formal Learning
    • adults and older siblings teach a young family member "how to behave.“.
  • Informal learning
    • a child learns primarily by imitating the behaviour of selected others.
  • Technical learning
    • teachers instruct the child in an educational environment as to what, how, and why it should be done.
transmission of cultural elements
TRANSMISSION OF CULTURAL ELEMENTS

Social institutions

  • Family--the primary agent for enculturation teaches consumer-related values and skills.
  • Educational institutions--charged with imparting basic learning skills, history, patriotism, citizenship, and technical training.
  • Houses of worship--provide religious consciousness, spiritual guidance, and moral training.
  • Mass media--disseminates information about products, ideas, and causes.
ma r k et ing i mplications of c ultures
MARKETING IMPLICATIONS OF CULTURES

Cultural relevance.

  • Understanding a sub-culture’s values, customs, and aspirationsand presenting products andpromotions in light of theseunique characteristics.
  • Avoiding symbols, icons, andheroes that are meaninglessto a sub-culture.
slide19

REFERENCE GROUPS

Any person or group that serves as a point of comparison/reference for an individual customer in forming certain values, attitudes and behaviour patterns

types of reference groups
TYPES OF REFERENCE GROUPS
  • Formal and informal
  • Primary and secondary
  • Membership and non-membership
  • Aspirational and dissociative reference groups
slide22
TOPIC 3

INTERNAL FACTORS INFLUENCING CUSTOMER BEHAVIOUR

slide23

PERSONAL CHARACTERISTICS

  • Race
  • Gender
  • Age

Pay special attention to the changing roles of women!

slide24

THE CUSTOMER’S MINDSET

Customer perception and learning

The Nature of Perception

Perception is the way buyers interpret the world surrounding them

Perceptual process

  • Exposure to stimulus
    • - Only small number of stimuli noticed
  • Paying attention to it
    • - Stimuli often not processed objectively
  • Interpreting its meaning to respond
    • - Meaning of stimulus in terms of needs and experiences
learning
LEARNING

Learning is a process by which individuals acquire buying and consumption knowledge and experience which they apply to future-related behaviour

Elements of learning

  • Stimulus
    • Products, size, quality stimulate consumer
    • Must be motivated to seek object
    • The stronger motivation, the quicker one learns
learning cont
LEARNING…cont
  • Response

Is any action as result of stimulus

    • Cues provide direction
    • Marketer should provide consistent cues
  • Reinforcement
    • Satisfaction from successful behaviour
    • Causes person to repeat behaviour
    • Factors in reinforcement
      • Repetition
      • Participation
motivation
MOTIVATION
  • Motivation links needs and objectives
  • Needs – refer to something body needs
  • Motivation – driving force that impels us to action
  • Need arousal
    • There are different types of arousal:
      • Physiological
      • Emotional
      • Cognitive
      • Environmental
customer attitudes
CUSTOMER ATTITUDES
  • Attitude is a learned predisposition to behave in a consistently favourable or unfavourable way toward market-related objects
  • It is the way we think feel and act toward stimuli
  • Important facets of attitude:
    • Attitudes are learned
    • Attitudes tend to be consistent
slide29

SOURCES OF INFLUENCE ON ATTITUDE FORMATION

  • Direct experience
  • Influence of family and friends
  • Exposure to mass media
components of attitudes
COMPONENTS OF ATTITUDES
  • Cognitive component
    • Consists of customer’s beliefs about object
    • Also customer’s knowledge about object
    • There are two types of beliefs:
        • - Informational beliefs – associated with product attributes
        • - Evaluative beliefs – associated with product benefits
  • Affective component

Involves our feelings and emotions toward object

May also be result of several evaluations of performance

Products are evaluated in context of specific situation

components of attitudes cont
COMPONENTS OF ATTITUDES…cont.
  • Behavioural component

This component represents outcome of cognitive and affective components

Does customer buy or not?

  • Component consistency

Three components tend to be consistent

Change in one components affects others

changing customer attitudes
CHANGING CUSTOMER ATTITUDES
  • Changing the affective component
    • Classical conditioning
    • Positive effect
    • Mere exposure
  • Changing the behavioural component
  • Changing the cognitive component
    • Changing beliefs
    • Shifting performance
    • Adding beliefs
    • Changing the ideal
changing customer attitudes cont
CHANGING CUSTOMER ATTITUDES….cont
  • Changing the product
    • Packaging
    • Change of services
    • Change of properties
    • Attitude of sales person
  • Perceptual change
    • New information
    • Promotion
  • Strength of the attitude
  • Market segmentation
characteristics of personality
CHARACTERISTICS OF PERSONALITY

Those inner psychological characteristics that both determine and reflect how a person responds to their environment

  • Personality reflects individual differences
  • Personality is consistent and enduring
  • Personality is partially created and influenced by the environment
  • Personality can change
personality is important to marketers
PERSONALITY IS IMPORTANT TO MARKETERS
  • Customers tend to purchase products that reflect their personality
  • Customers prefer advertisements that appeal to their personality
slide37

TYPES OF SELF IMAGE

  • Actual self - How we actually perceive ourselves
  • Ideal self - How we would like to see ourselves
  • Social self - This is how we think others perceive us
  • Expected self - Somewhere between actual self and ideal self
  • Situational self - Our self image in a specific situation
  • Extended self - Our self concept that includes the effect of personal possessions
  • Possible selves - This is what we would like to become
slide38
TOPIC 4

CUSTOMER DECISION MAKING

customer decision making
CUSTOMER DECISION-MAKING

Stages in the decision-making process

Problem recognition

Search for information

Evaluation of alternatives

Buying

Post-buying evaluation

family decision making
FAMILY DECISION-MAKING
  • Influencer
  • Gatekeeper
  • Deciders
  • Buyers
  • Preparers
  • Users
  • Maintainers
  • Disposers
the family life cycle
THE FAMILY LIFE-CYCLE

Stage

Bachelorhood

Honeymooners

Parenthood

Post-parenthood

Dissolution

modified to the family life cycle
MODIFIED TO THE FAMILY LIFE-CYCLE
  • At-home singles
  • Starting-out singles
  • Mature singles
  • Young couples
  • New parents
  • Mature parents
  • Single parents
  • Golden nests
  • Left alones
organisational buying behaviour
ORGANISATIONAL BUYING BEHAVIOUR

Types of buying decisions

  • New task buying
    • Buying something that was never bought before
  • Straight rebuy
    • Buying more of the same products bought before
  • Modified rebuy
    • Product specifications, prices, terms or suppliers are modified
slide44
TOPIC 5

CUSTOMER-FOCUSSED

MARKETING

customer loyalty
CUSTOMER LOYALTY

What is branding:

  • Branding distinguishes one product from similar ones so that they can be marketed separately.
  • A brand is a name, symbol, or set of characteristics that enables customers to identify the goods and services of one seller from that of competitors.
  • Customers attach value to brands based on their product/brand experience and perception of quality.
  • Customers use brands as a form of security, for quick decision-making, as predictive cues for product performance.
repeat buying brand loyalty and variety seeking
REPEAT BUYING, BRAND LOYALTY AND VARIETY SEEKING
  • Repeat buying involves buying the same brand often (possibly based on availability or price).
  • Repeat buying of a brand does not imply brand loyalty towards it.
  • For brand loyalty to exist, there must be psychological commitment to the brand.
  • Hence, repeat buying behaviour refers to customers buying the same brand over time but brand loyalty includes psychological and evaluative processes.
  • Brand loyalty is the opposite of variety-seeking behaviour.
  • Variety seeking is the cognitive commitment to purchasing different brands.
  • Variety seeking arises out of the desire to try new things, curiosity, novelty, creativity or the need to overcome boredom with the same choice.
brand preference
BRAND PREFERENCE
  • Brand preference is the tendency to select a brand/product from among a set of known available brands.
  • When faced with a choice of brand, the customer is more positive towards one brand than to others.
  • Brand preference reflects the knowledge-attitude-behaviour (KAB) model of customer behaviour.
  • The model emphasizes that customers have knowledge (K) of several brands and holds positive attitudes (A) towards a few of them, which will result in behaviour (B), reflected in the act of purchasing the most preferred brand.
  • Brand preference may change as a result of marketing efforts eg. Price reductions, product changes, promotional strategies.
brand preference and brand switching
BRAND PREFERENCE AND BRAND SWITCHING
  • A change in brand preference is called brand switching.
  • Brand switching is a result of customers having problems or experiencing dissatisfaction with a product or service.
  • The aim is to get rid of the problems experienced in the previous purchase.
formation of brand loyalty
FORMATION OF BRAND LOYALTY
  • People become brand loyal in different ways eg. by trying different brands until they find one that optimally satisfies them.
  • Hence, becoming brand loyal is a learning process which takes place over a period of time.
  • Brand loyalty occurs as a result of:-
    • Exposure to information concerning the brand.
    • Favourable experience in buying and using the brand.
    • The extent of its use by peers and social/reference groups.
  • The degree of brand loyalty is influenced by numerous factors. Brand loyalty is lower when:-
    • More brands are available for customers to choose from.
    • More products are bought of greater value.
    • Prices are rather active amongst competing brands.
    • Customers use a number of brands at the same time.
brand loyalty and vulnerability
BRAND LOYALTY AND VULNERABILITY
  • One may distinguish between brand loyal customers and vulnerable customers.
  • Brand loyal customers like and buy the brand.
  • Vulnerable customers are those who buy a brand but like other brands equally well or better and hence, are vulnerable to these other brands and may buy them.
  • Brand loyalty and vulnerability are therefore, based on the interrelationship between:-
    • the buying pattern of a particular brand.
    • the attitude toward the brand.
  • Brand loyal customers are not vulnerable because they consistently buy the same brand, hold strong beliefs about the quality of that brand, are devoted to the brand and resist competitors’ efforts to persuade them to buy other brands.
stages of brand loyalty
STAGES OF BRAND LOYALTY
  • Brand awareness
  • Brand trial
  • Brand preference
  • Brand habit
  • Brand loyalty
relationship based buying
RELATIONSHIP-BASED BUYING
  • Motivators that drive relationship buying
    • Search costs
    • Risk reduction
    • Switching costs
    • Value-add benefits
    • Socio-cultural factors
  • Outcomes of relationship-based buying
    • Supplier loyalty
    • Willing to pay more
    • Proactive word-of-mouth
    • Good will
the end
THE END

Questions

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