Consumer behavior

Consumer behavior

Contents

Introduction

1. Consumer Behaviour. Types of Consumer Buying Situation

2. Factors influencing a consumer's behavior

3. Buyer Decision Making Processes

4. Implications for Marketing Strategy

Conclusion

Bibliography

Introduction

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 buyers are those who purchase items for their personal consumption. Industrial buyers are those who purchase items on behalf of their business or organization.

The purposes of this report is to display an understanding of the theoretical framework of buyer behaviour, to appraise the links between marketing communications and buyer behaviour theory and to discuss the impact of the major variables influencing buying behaviour.

1. Consumer Behaviour. Types of Consumer Buying Situation

We are not perfectly rational, sensible buyers. We do not always choose goods and services solely on price, performance and availability. The truth is that many purchases are influenced by a whole host of emotional reasons like esteem and image. Many of these non-rational reasons are hidden deep in our subconscious.

In-depth research probes into the darker depths of our unconscious. Some research presents such bizarre explanations that many marketers reject the findings.

Research helps find the real reasons why we buy what we buy. This requires time, money and expertise. Surprisingly many other organisations don't really know exactly why their customers buy or don't buy from them. Yet understanding customers is at the heart of marketing. Once the reasons why people buy or don't buy are discovered, the marketing mix can be changed to suit the buyer's needs and wants.

Buyer behaviour involves both simple and complex mental processes. Marketers cannot capture human nature in its entirety but we can learn a lot about customers through research, observation and thinking. Here's Professor Theodore Levitt:

I think it is a process of trying to think your way through why people behave in certain ways. Or if not why, then what that behaviour is likely to be given certain kinds of products, certain kinds of... just stop to think.

A customer's approach to purchasing a product or service is influenced by their situation - whether they have money and how important, frequent, risky or urgent the purchase is to them in their situation.

Customers make more of an effort, and become more involved, if the purchase is relatively important to them - particularly if they have no previous experience of buying such a product or service.

On the other hand, if the item being purchased is low value and frequently bought, like a jar of coffee, it follows that the buyer will spend less time and effort and will have less involvement with the purchase.

These frequent, inexpensive purchases generally have little risk, and require less information. These kind of purchase situations are referred to as 'Low Involvement Purchases'. In these situations, consumers can fall into a routine purchasing pattern which requires little thought and even less effort.

Whenever the need is stimulated - a particular brand is automatically purchased. This is called 'Routinised Response Behaviour.' You can visit the Hall Of Fame later to see the gurus explain how brands influence routine purchases.

Alternatively, an expensive high risk infrequent purchase like your first computer will require a lot of detailed information and careful analysis before deciding which machine. This is called 'High Involvement'. Here the consumer goes through an extensive problem solving process - searching and collecting information, evaluating it and eventually deciding on a particular choice.

There is a third type of buying situation. This is where the customer has had some experience of buying a particular type of product or service before. There is less risk attached and less information is required. This is called 'Limited Problem Solving'.

Customers require different marketing mixes in different buying situations. For example, a routinised response purchase, like a can of cola, doesn't require much supporting product literature but perhaps it needs wide distribution and easy availability. An extensive problem solving Type of Purchase, on the other hand, would require detailed product literature and trained sales people.

2. Factors influencing a consumer's behavior

Buyer behaviour is focused upon the needs of individuals, groups and organisations. To understand consumer buyer behaviour is to understand how the person interacts with the marketing mix. As described by Cohen (1991), the marketing mix inputs (or the four P's of price, place, promotion, and product) are adapted and focused upon the consumer.

The psychology of each individual considers the product or service on offer in relation to their own culture, attitude, previous learning, and personal perception. The consumer then decides whether or not to purchase, where to purchase, the brand that he or she prefers, and other choices.

People today are looking for prevention rather than just cure. In 1994, 32% of New Zealanders took some form of supplement and in the latest study in 1997 this figure has increased to 74%. Each different product market consists of buyers, and buyers are all different in one way or another. They may differ in their wants, resources, locations, buying attitudes and buying practices. Because buyers have unique needs and wants, each buyer is potentially a separate market.

Consumer involvement is the perceived personal importance and interest consumers attach to the acquisition, consumption, and disposition of a good, service, or an idea. As their involvement increases, consumers have a greater motivation to attend to, comprehend, and elaborate on information pertaining to the purchase. (Mowen & Minor, 1998, p.64). In the case of low involvement, consumer views a purchase as unimportant and regards the outcome of his or her decision as inconsequential. Because the purchase carries a minimal degree of personal relevance or identification, the individual feels there is little or nothing to be gained from attending to the details of a purchase. (Hanna & Wozniak, 2001, p.290). High involvement purchases are those that are important to the consumer either from a financial, social, or psychological point of views. The purchase is characterised by personal relevance and identification with the outcome. (Hanna & Wozniak, 2001, p.291). An individual anticipates a potentially significant gain from expending time and effort in comparison-shopping before buying. For example, a girl purchasing an expensive ball dress has a high degree of personal identification. Therefore, a high level of felt involvement can increase an individual's willingness to search for, process, and transmit information about a purchase.

The most important factors influencing a consumer's involvement level are their perceived risks. The purchase of any product involves a certain amount of risk, which may include:

- Product Failure - risk that the product will not perform as expected.

- Financial - risk that the outcome will harm the consumer financially.

- Operational - risk that consists of alternative means of performing the operation or meeting the need.

- Social - risk friends or acquaintances will deride the purchase.

- Psychological - risk that the product will lower the consumer's self-image.

- Personal - risk that the product will physically harm the buyer.

In a high degree of perceived risk, decisions in this case may require significant financial commitments, involve social or psychological implications. In the case of low degree of perceived risk, decisions in this case may require small or no financial commitments that involve social or psychological implications. Consumers may already established criteria for evaluating products, services, or brands within the choice category.

In high involvement situations consumers are usually more aroused and more attentive, which expands their short-term memory capacity to its maximal extent. In low involvement conditions, the arousal level is apt to be low, so consumers focus relatively little memory capacity on the stimulus. (Mowen & Minor, 1998, p.101). As involvement levels increases, consumers may allocate more capacity to a stimulus.

3. Buyer Decision Making Processes

Evaluative criteria are the various features a consumer looks for in response to a particular problem. The number of evaluative criteria used by consumers depends on the product, the consumer and the situation. ((Neal, Quester & Hawkins, 2000, p.5.3-5.4 & p.5.22) Formal Clothing In the process of evaluation, a student will evaluate the characteristics of various formal clothing and choose the one that is most likely to fulfil her or her needs. The evaluative criteria of the students include tangible cost, social and psychological measures. The importance of particular evaluative criteria differs from consumer to consumer. The decision to purchase formal clothing is base on the following evaluative criteria:

- Price.

- Quality.

- Brand.

- Style.

- Store.

The evaluative criteria regarding the purchase of formal clothing are complex due to the level of perceived risk involved with such a high involvement purchase. Typically, high involvement planned purchases (such as formal clothing) follow the more complex compensatory decision rules. A compensatory model involves students evaluating each formal wear they view across all need criteria. In this instance, one formal wear may compensate for weaknesses in one criterion.

However, often consumers will go through different stages of rules, that is, they will utilise a range of rules when evaluating alternatives with different attributes being evaluated by different rules at each stage. There are certain criteria regarding the purchase of formal clothing that the students is not willing to accept at a minimum level. Style and price are two attributes that was found from the interviews. Students are not prepared to lower their expectations; therefore the compensatory model does not always apply in this situation. These two criteria are more non-compensatory rules. Initially a disjunctive approach was adopted by respondents, where they would evaluate all formal clothing that meet their requirements concerning style. Then they would move onto an elimination-by-aspects approach. This involved them choosing formal clothing that rated highest on their next most important criteria (price), and then continuing through the other attributes (brand, quality) until only one formal wear remained. In summary, the formal clothing purchase decision involves both compensatory and non-compensatory models depending on the stages of the evaluation.

4. Implications for Marketing Strategy

As consumer markets become more and more competitive, marketers need to understand very thoroughly both the needs and desires of their potential consumers; which product features can be combined to satisfy these needs and desires. A better knowledge of consumer behavior can enhance the company's understanding of itself and its environment. Product bought by habit and low involvement purchases such as health supplements tend to be purchased more frequently in which provide a greater opportunity for positive reinforcement and brand loyalty. With each successive purchase of the same brand, the chances of consumers buying again increases until there is a high probability that the consumer will continue to repurchase. It is important for marketing management to identify the position of its brand in the market and as the strategic implications of this applies to every aspect of the marketing strategy. Companies selling low-involvement, habitual products such as health supplements must ensure that their products are distributed extensively. This is because the health supplements industry produces high turnover and low margin products. Widespread distribution is important as consumers seeing the products often will help remind them to buy, and it also keeping with the fact that the most consumers purchase the health supplements from a particular store because of the store's convenience. Many health supplements companies have been successful in their distribution of their products. Healtheries has climbed to number on in personal products in the supermarkets, this success is attributed to the channel switching from chemists and health food shops to super market chains. (Marketing, 1999, p.23). Many consumers buy from stores like pharmacies and health food stores because they need to seek more information about the health supplements products; therefore, it is important that the retailers can provide information for their customers. The nature of advertising and promotion also differs according to the involvement level of the purchase. In low-involvement decision process, consumers engage in very little external search before they make a purchase. Therefore it is crucial that consumers immediately think of the company's brand when they recognise a problem.

Conclusion

The decision-making processes of health supplements and formal clothing are completely different. The level of involvement the consumers has in the purchasing decision for formal clothing is high, this is because their perceived risks such as financial and psychological risks are high as well. In contrast, the health supplements purchase has little or no risks involved therefore low involvement occurs in the purchase decision. A consumer simply feels a physical problem will purchase health supplements. There is not need for an extended information search because the consumer does not consider the purchase important enough to was time and effort in its search. The formal clothing purchases in another hands; involve an extensive information search. The types of information search also have influences on the types of advertising used. Regarding to the low-involvement health supplements purchase, mass audiences are targeted through repetitive advertising. Marketers must try to induce a higher level of involvement from customers through their advertising and promotion strategies. Formal clothing advertising is much more specialised and focused. Marketer uses persuasive advertising messages to induce sales. And informative and detailed advertising are often used to assist consumers in their information search. The complex nature of the evaluative criteria of formal clothing reinforces this idea, where alternative solutions are evaluated using numerous criteria, in contrast to health supplements are mainly evaluated mainly on the basis of convenience and sales force's expertise. The decision making processes that consumers goes through is also important as it helps the marketer to gain an understanding of the way to increased their revenue. The ability for marketers to apply strategies that influences the consumers' decision is the key to successful marketing.

Bibliography

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