CONSUMER BEHAVIOR - 2

Transcription

1 CONSUMER BEHAVIOR INTRODUCTION Hello students, welcome back to the discussion on consumer behavior. In the last session, we had discussed about introduction and definitions of consumer behavior, important factors to study consumer behavior and the factors influencing buying behavior. In today s session, we will be going to discuss the model of consumer behavior, characteristics affecting consumer behavior, types of buying decision behavior, the buyer decision process and finally the buyer decision process for new products. 2. MODEL OF CONSUMER BEHAVIOR Let s just briefly discuss the review and meaning of consumer behavior before we move forward to the model of consumer behavior. Consumer or buyer behavior refers to the buying behavior of final costumers, individual and household who buys goods and services for personal consumption.

2 As you can see on your screens, the model of consumer behavior, the marketing mix and other stimuli forms the buyer black box or result in buyer s black box. The marketing mix consisting of product, price, place, promotion and the stimuli factors including economical, technological, political and cultural. These marketing mix and stimuli factors result into the buyer s black box which consists of the buyer s characteristics and the buyer decision process, leading to the product choices, brand choices, dealer s choices, purchase timing, purchase amount and finally results in the buying process. There are basically four types of buying decision behaviors, the complex buying behavior, Dissonance reducing buying behavior, habitual buying behavior and the variety seeking buying behavior.

3 As you can see on your screens, these four types of buying behaviors are resulting from high or low involvement and differences between the brands. As you see, the first complex buying behavior here, high involvement is there with significant brand differences. Let s study each of these buying decision behaviors. The first one, the complex buying behavior, this occurs when consumers are highly motivated in purchase and perceived significant differences among the brands. Purchases are highly motivated when product is inexpensive, product is risky, product is purchase infrequently and product is highly self expressive. Second, the Dissonance reducing buying behavior, this type of behavior occurs when consumers are highly involved with an expensive, infrequent or risky purchase but see little difference among the brands. The post purchase dissonance occurs when consumer notices certain disadvantages of the product purchased or here favorable things about the product not purchase. Third, Habitual buying behavior, this type of behavior occurs when consumers have low involvement and there is little significant brand difference. Here the low purchase involvement and few differences among the brands,

4 for example, toothpaste, brush, cold drinks, fruit juices, bread etc. These are items that one purchases regularly, he does not consider other alternatives available, the decision is made on the basis of his or her past experience with the product. And finally, the variety seeking buying behavior, this occurs when consumers have low involvement and there are significant brand differences.

5 3. BUYER DECISION PROCESS After the types of buying decision process, let s move to the buyer decision process. The buyer decision process is divided into five different stages, first the need recognition, second information search, third evaluation of alternatives, fourth purchase decision and finally the post purchase behavior. Let s have a look at each of these different stages. Need recognition, need recognition occurs when buyer recognizes a problem or need is triggered by internal or external stimuli, which is a result of imbalance between the actual and desired state. For example, a man is bored and feels that a movie would be good entertainment. His actual state is, he is getting bored where is his desired state would be entertainment, thus the decision to watch a movie. Actual states results into the desired state but sometimes the desired state also becomes the actual state leading into another desired state. For example, a woman is having a gold jewellery, this is her actual state and her desired state would be she wants platinum jewellery, now once, she gets the platinum jewellery, this will become her actual state

6 and she would like to have diamond jewellery will become her desired state. Let s see this by way of this example or this chart. In this diagram, the actual state is represented by some internal and external stimuli s, the internal stimuli could be hunger, thirst, a person s normal needs, where as the external stimuli could be T.V advertising, magazine advertising, radio slogans, stimuli in the environment. This actual state results into the recognition of a need where recognizes a problem or a need. Once this need is recognized, this leads to the desired state, a state where the buyer needs a fulfill and the buyer is satisfied. We can relate this back to the two examples of the man watching a movie and a lady wanting different types of jewelries. The second stage in buyer decision process is the information search, information search is the amount of information needed in the buying process and it depends on the strength of the drive, the amount of information you start with. The ease of obtaining the information, the value placed on the additional information and the satisfaction from search.

7 The information can be collected from different sources, it could be from personal sources like the family or friends, from commercial sources which could be advertising, internet, etc., public sources which could be mass media, consumer organization etc and the experimental sources, handling, examining, using the product etc. Let s evaluate the sources and roles of the information. In case of personal information which is collected from family, friends, neighborhood, acquaintance, it is very legit ate information. From the commercial information like advertising, sales person, websites, dealers, packaging, display, this is more of a informative information. The public information like mass media, consumer rating operations, internet searches, this again is more of a informative information and finally the experimental information like personal handling, examining, use of brand etc. This is more of a evaluative information.

8 The third stage in buyer decision process is evaluation of alternatives. Evaluation of alternatives is how consumer process information to arrive at brand choices. Let s look at an example, here appropriate evaluation criteria s are important to identify the possible solutions, for example, shrinivas who wants to buy a new T.V set will search for both internal and external information sources, to set down the certain criteria to identify the brands which will meet the need, in process, shrinivas becomes aware of 10 television brands, Onida, Sony, Philips, BPL, Sansui, LG, Panasonic, Akai, Heir and Videocon. All these 10 T.V brands together forms his awareness sets. These awareness set together with the unawareness set of Toshiba and Samsung becomes the possible alternatives. After setting a certain evaluation criteria from all these possible alternatives, say quality, performance, shrinivas review all these brands, he remembers that Akai, BPL and Sansui give some problems to his relatives who have these brands. He does exclude these three brands from his list of possible alternatives. These three brands together form his in tempt set, that is, brands he actively dislikes or avoids. He finally short list three brands Sony, Hair and LG for further investigation. These three brands together form his consideration set, that is, the brands he will investigate to reach a final decision. All the other brands Onida,

9 Philips, Panasonic, Videocon etc form his inert set, that is the brands he is indifferent to but might consider as back up option in case the brand in his consideration set are unavailable. In this stage of evaluation of alternatives, consumers may use careful calculations in logical thinking s. Consumer may buy on impulse and rely on intuitions. Consumer may make buying decisions on their own. Consumer may make buying decision only after consulting from others; marketers must study buyers to find out how they evaluate the brand alternatives. In the stage four, once the information is collected, the purchase decision is made, the purchase decision is the act by the consumer to buy most preferred brand. The purchase decision can be effected by the attitudes of the others in unexpected situational factors. And finally, once the purchase decision has been made and the customer has purchased the product, the post purchase decision come into existence. The post purchase decision is the satisfaction or dissatisfaction of customer.

10 After the purchase decision, the last stage in buyer decision process is the post purchase decision. The post purchase decision is the satisfaction or dissatisfaction, the consumer feels about the purchase. The relationship between customer s expectations and the product perceived performance. The larger the gap between the expectations and the performance, the greater is the customers dissatisfaction, also cognitive dissonance is the discomfort caused by the post purchase conflict. Cognitive dissonance is the inner tension that a consumer experiences after recognizing an inconsistency between the behavior and values or opinions. He or she ask question to himself, did I make a good decision, did I buy the right product, did I get a good value for the product purchased, as a marketer, we can minimize these through effective communication, follow up, guarantees or warranties. Customer satisfaction, is a key to building profitable relationships with consumers, to keeping and growing consumers, and reaping there customer life time value. Once we exceed the customers expectations, the customer is satisfied which results in repeat purchases, favorable word of mouth, less attention to competitors and purchase of other

11 products from other companies is reduced which increases the customer life time value. 4. BUYER DECISION PROCESS FOR NEW PRODUCTS Now let s move to the buyer decision process for new products. New product is a good or service or an idea that is perceived by some potential customers as new. Adoption process is a mental process as an individual goes through first learning about an innovation to final regular use. There are various stages in the adoption process for a new product, first awareness, second interest, third evaluation, fourth trial and finally the adoption. Awareness is when the consumer becomes aware of the product but he or she lacks the information about that product. Interest is when the customer is aware of the product and he or she tries to collect the information about that product. Evaluation is when the consumer has already collected the information and he or she tries to evaluate the product. Trial once he or she has evaluated the product, he or she would like to make a trial or use the product before he or she make a decision to buy and finally adoption is when consumer decides to finally make a purchase of the product and regularly use the product. We also go through the individual differences and innovation. Early adopters are opinion leaders and adopt new ideas but cautiously, early majority are deliberate and adopt new ideas before the average person. Late majority are spectacle and adopt new ideas only after the majority of people have tried it and laggards are suspicious of change and adopt new ideas only when they become tradition.

12 For example, let s look at this figure, which explain the innovators early adopters, early majority, late majority and laggards on the graph. Let s take the example of IPOD,

13 there were 2.5 % of normally the people who initially are consider as innovative who like to try when a new product is launched. This was the case, again in case of IPOD where 2.5 % of the people who tried this new technology before it move to the early adopters, roughly 13.5 % of the people belong to this category of early adopters who once the innovators who have tried the product and given a positive review of the product would like to try, once these early adopters are happy with the product, the product will move into the early majority, this is the time when the product is on the growth scale of the product life cycle. These 34 % of the early majority would then be using before the product becomes a commercial success and moves into the late majority. Again here we will have around 34 % of the people who as late majority would be using this product once it has become commercially successful in. Almost everybody is using the product and finally 16 % of the laggards which once the product has been used by majority of people, has been given a good product. The product has been evaluated by most of the people. It has become a commercial success and it has been moving into the new segments, new product or new innovation in the same category has launched were the innovators are trying the new product at the same time the laggards would be using that old product, which represent 16 % of the population. This is again the time when the product is on decline stage in the product life cycle. Then we come to the influence of product characteristics on rate of adoption. Relative advantage is a degree to which an innovation appears to be superior to the existing product. Whereas compatibility is a degree to which innovation fits the value and experience of the potential customers. Complexity is the degree to which the innovation is difficult to understand or use, and finally the visibility is the degree to which the innovation may be tried on limited bases. With this we conclude that consumer behavior is an important aspect which marketers need to consider to be successful in the market, they need to understand the expectations, whims and the requirements of the

14 consumer before their product could become commercially viable and successful in the market. Thank you