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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


TOPIC 1

INTRODUCTION


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


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


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


CREATING VALUE FOR THE CUSTOMER

  • Three meanings of value:

  • Pricing value

  • Customer value

  • Strategic value


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


  • MARKET SEGMENTATION

    • Bases of market segmentation:

    • Geographic

    • Demographic

    • Psychographic

    • Behaviouristic

    • Needs/benefit

    • Market value


    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


    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


    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.



    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



    TOPIC 3

    INTERNAL FACTORS INFLUENCING CUSTOMER BEHAVIOUR


    PERSONAL CHARACTERISTICS

    • Race

    • Gender

    • Age

    Pay special attention to the changing roles of women!


    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


    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 EFFECT

    • 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 EFFECT

    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 EFFECT

    • Customers tend to purchase products that reflect their personality

    • Customers prefer advertisements that appeal to their personality


    TYPES OF SELF IMAGE EFFECT

    • 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


    TOPIC 4 EFFECT

    CUSTOMER DECISION MAKING


    Customer decision making
    CUSTOMER DECISION-MAKING EFFECT

    Stages in the decision-making process

    Problem recognition

    Search for information

    Evaluation of alternatives

    Buying

    Post-buying evaluation


    Family decision making
    FAMILY DECISION-MAKING EFFECT

    • Influencer

    • Gatekeeper

    • Deciders

    • Buyers

    • Preparers

    • Users

    • Maintainers

    • Disposers


    The family life cycle
    THE FAMILY LIFE-CYCLE EFFECT

    Stage

    Bachelorhood

    Honeymooners

    Parenthood

    Post-parenthood

    Dissolution


    Modified to the family life cycle
    MODIFIED TO THE FAMILY LIFE-CYCLE EFFECT

    • 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 EFFECT

    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


    TOPIC 5 EFFECT

    CUSTOMER-FOCUSSED

    MARKETING


    Customer loyalty
    CUSTOMER LOYALTY EFFECT

    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 EFFECT 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 EFFECT

    • 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 EFFECT

    • 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 EFFECT

    • 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 EFFECT

    • 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 EFFECT

    • Brand awareness

    • Brand trial

    • Brand preference

    • Brand habit

    • Brand loyalty



    Relationship based buying
    RELATIONSHIP-BASED BUYING EFFECT

    • 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 value of e commerce in customer behaviour
    THE VALUE OF E-COMMERCE IN CUSTOMER BEHAVIOUR EFFECT

    • Online customer behaviour


    The end
    THE END EFFECT

    Questions


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