Marketing Seminar 3 PDF

Friday, 15 September 2023 Marketing Seminar 3 Understanding Consumer Behaviour & Organisations as Customers Consumer Purchase Decision Process 1.1 Problem Recognition Perceiving a Need “Problem” in Problem Recognition does not have a negative connotation, it is used in a broad and neutral way...

Friday, 15 September 2023 Marketing Seminar 3 Understanding Consumer Behaviour & Organisations as Customers Consumer Purchase Decision Process 1.1 Problem Recognition Perceiving a Need “Problem” in Problem Recognition does not have a negative connotation, it is used in a broad and neutral way. It is a universal terminology. Instead, Problem Definition in Business refers to the presence of a trigger or stimulus that kickstarts the buying process, where our basic needs and wants are what triggers us into certain buying behaviours. Problem Recognition - Trigger Buying Behaviour For more flavour in our food Sauces like ketchup and chili. To safeguard/protect our health during the pandemic Masks To send a congratulatory message/gift to the receiver Soft toy graduation bears 1.2 Information Search: Seeking Value When it comes to making a purchase, there are 2 categories of searches that exists - Internal and External. Internal Search 1) Our own previous experiences: We trust ourselves and our own experiences 1) E.g. Dining at F&B Establishments, Repurchasing from the same Sites when Online Shopping External Search Personal Sources Information that originates from the people found in our most inner circle of trust/ closest to “you”, since “you” trust them most. 1. According to the Cambridge Dictionary, Trust: It is the believe that someone is GOOD and HONEST, that they will not harm you. 1  2. The role that these individuals play are so important that marketers will try to reach out to these people to reach “you”. 3. Examples: 1. School => Parents => Children (Potential Students) 1. Organising Parents’ Forum, Talks and Seminars to target them during events like Open House, so that they can influence their children’s school of choice. 2. Obstetricians => Friends => Potential Pregnant Women 1. Since friends are people that you are close with and have trust/faith in, so they believe that they will give great/good recommendations. Public Sources Sources that are available for everybody to refer to, are neutral, for the general public, and usually not commercial in nature - they are not like advertisements. Examples: 1. Consumer Reports, Government Agencies - sources that are governmental in nature are credible and reliable. 2. HDB’s website: Listing of Registered Renovation Contractors => A Public Service that they are doing so that home owners can seek qualified, approved and licensed professionals. 3. Singapore Plumbing Society: Provides a list of licensed plumbers and contractors that are approved by PUB 4. Globally Known Awards/Certificates/Surveys/Rankings can be found publicly and are usually neutral. - Like SkyTrax 5. Online Reviews and Feedbacks given by members of the public out of their own free will which gives it a certain weightage/importance on such publicly available information. Marketer-Dominated Sources The result is purely based off the efforts of the company’s efforts through their advertisements, website design, promotions, marketing collateral. Hence it makes them more biased and skewed to them Information Gathering & Assessment Utilising information that maybe gathered to assess the value of the product or service. 1) Purchase Decision Criteria 1) Functions 2) Size 3) Colour 4) Fragrance/Smell (May or may not be applicable) 2) Brand Names (That may meet the criteria) 2  1) Familiarity 2) Well-Known 3) Value Perceptions: Benefits that consumers will obtain, it is subjective and dependent/ individualised on the consumer him/herself 1) Value for Money 2) Certified/Recognised 1.3 Alternative Evaluation: Assessing Value Objective & Subjective Evaluative Criteria 1) Objective: Based on Facts, not influenced by opinions 1) Budget 2) Function 2) Subjective: Influenced by Personal Opinion, Tastes, Preferences 1) Brand Loyalty 2) The “Feel” - Gut feeling and “want” that convinces the consumer to purchase it. 1.4 Purchase Decision Buying Value At the point of purchase many other factors come into play. 1) Ranging from Whom & When (Which Store and When to Purchase) 2) Influencing Factors: 1) Terms of Sales, Return Policy: Exchange/Refund (in resale-able condition) with a valid receipt to assure customers and aid them make a decision at the point in time. 2) Past Experience: Memorable, It speaks volumes and its very influential 3) Store Atmosphere, Shopping Experience: Unique, Enjoyable 4) Time Pressure: Nature of the thing to be bought and the time allowance available - Urgent Purchases that are Important. Hence, time is a very huge determinant. 5) Financial Circumstances: Spending decisions are affected by our spending ability, feulled by disposable income. 1.5 Post-Purchase Behaviour: Value in Consumption or Use The last stage of the decision making process - comparing expectations and reality. 1) Behavioural Manifestations in the post-purchase stage 1) Customers/Guest Satisfaction that leads to stellar/good reviews or complaints - a mode for them to vent their frustrations and unhappiness 2) Post-Purchase Psychological Tension or Anxiety 1) Cognitive Dissonance: Disharmony of Thoughts 2) Buyer’s Remorse/Regret - Disappointment from Poor Purchase Choices 3  In uences on Consumer Behaviour: Situational, Psychological, Sociocultural 2.1 Consumer Involvement & Problem-Solving Variations Although there are steps to a consumer’s purchase decision process, that is based on a textbook/picture perfect scenario. 1. In reality, the steps of the decision process might be skipped or the process itself might be minimised or changed. 2. Depending on the context - nature of item or product, the number of criteria and options, and amount of time spent - be it extended or limited will be affected, it might be a routine problem-solving situation. 3. In turn, impacting marketing strategy. 1. They can include inventory reinforcement, personal selling efforts and so on. Problem-Solving Duration 1) Routine: Something that is purchased frequently that does not require much thought - almost automatic. 1) Reasons for purchase: low cost and widely available. 2) Impact on marketing: Marketers must ensure that these items and products are always readily available, as the convenience of this item makes it prone to replacement. 3) E.g. Sweets 2) Limited: There are certain product that require a longer period of consideration prior to purchase. 1) Reasons for purchase: higher price point and importance prevents impulse purchases. 2) Impact on marketing: Marketers may turn towards personal selling - provide more information to consumers by demonstrating, allowing them to touch and feel the product, and even offer customers brochures on the product to aid the decision making process. 3) E.g. Luggages, Phones. 3) Extended: These are products that are rarely or seldom bought. 1) Reasons for purchase: Expensive/very costly and significance of the purchase requires more assurance and satisfaction before the purchase is made. 2) Impact on marketing: Marketers do not rush customers to make their decision as soon as possible. Instead, they facilitate the process, making it as smooth as possible by providing them with opportunities for physical interactions so that they will have an easier time. 3) E.g. Cars, Houses. 4 fl  In uences This is something that is difficult to track and understand due to the diversity of needs. Regardless on the type of needs, even similar ones may warrant/influence different wants. In short, the consumer purchase decision process is affected by a myriad of factors: 1. Marketing Mix: 4Ps 2. Situational: Purchase Task, Social Surroundings, Temporal Effects, Antecedent States 3. Psychological: Motivation, Personality, Perception, Learning, Culture, Lifestyle 4. Sociocultural: Personal, Referral Groups - Internal & External, Social Class, Culture and Subculture 2.2 Situational In uences 1) Purchase Task 1) It impacts the entire purchasing decision - from determining criteria, functions etc. 2) This is essentially who are we buying for, why are we buying it. 2) Social Surroundings 1) The people around us, how do they behave and what are they like? 3) Physical Surroundings 1) The physical space/area that triggers a human’s senses - sound, mood, atmosphere, ventilation/aircon, scent etc. 4) Temporal Effects 1) This refers to timing - time of the day, which month. How much time one has. 5) Antecedent States 1) What happened/existed before the purchase, a preceding event that gave rise to the event after. 2.3 Psychological In uences It is the understanding of the “what” and “how” of consumers to influence buying behaviour. Motivations/Needs/Wants Products and Services can satisfy multiple needs at once. The idea is to understand and speak at the buyer’s frequency and appeal to them. 5 fl fl fl Personality 1) A person’s consistent behaviours or responses to recurring events or situations. 2) Enduring characteristics within a person that are often revealed in a person’s self- concept 3) Although people do have varying personalities, we can be categorised/recognised by big/overarching groups - extroverts, introverts. These are the similarities between consumers. 4) The way that people see themselves and the way they believe others see them. 5) There is always a business opportunity by understanding the consumers’ personality Perception 1) The selection, organisation and interpretation of information to create a picture of the world. 2) Selective Perception: Filtering of exposure, comprehension and retention - We are bias and subjective. 1) This is through sight, people of different ages perceive things differently - different level of understanding. 2) Environmental Factors that appeal to your senses which evokes buying behaviour. 3) Subliminal Perception: Seeing and hearing messages without being aware of them - these are low-key influences. 1) These are subtle and artistically done - triggers memories. 4) Perceived Risk 1) Risk can be psychological or physical - Anxieties that are felt by the buyer. 6  2) Financial Commitment, Physical Safety, Product Performance, Psycho-social effect - buyer’s are affected by how they will be judged by others. 5) Companies’ Strategies 1) To counter perceived risks, companies generate solutions such as certifications/ awards, seals of approval, endorsements, free trials, usage instruction, warranties and guarantees. So that it instills a sense of safety in consumers. 2) Guarantee is a promise, assurance about quality, while warranty is a more binding agreement to give customers a greater sense of assurance. 3) Popularity influences buyer’s decision to buy => something that is more concrete. Learning 1) Behavioural Learning 1) The process of developing responses based on repeated exposures to a situation - forming a habit. 2) How: Drive, Cues, Responses and Reinforcement. 2) Stimulus Generalisation: Brand Extension/Impression/Recognition - Response elicited by one stimulus is generalised to another. 1) When a thought is reinforced time and time again - high recurrence and repetition through memory. 2) Could result in negative or positive association. 3) Stimulus Discrimination: Brand Differentiation - Ability to perceive differences in stimuli. 1) If you see something often enough, we will be able to differentiate it from its competitors. 2) E.g. Chicken burgers look different across all fast food chains. 4) Cognitive learning 1) Through thinking, reasoning and mental problem-solving without direct experience. 1) E.g. Stereotypes 5) Brand Loyalty 1) Habit formation through positive reinforcements. Values, Beliefs & Attitudes 1) These are learned through culture and are predisposed to respond in a consistent way. 2) Attitudinal changes may be made through marketing strategies. 1) Attitude does not always stay stagnant. 7  2) Trends in the world will always keep changing, affecting the attitude of consumers. 3) Some times its the other way around, it is not so simple to change the attitudes of people - its strong, powerful and resilient. 4) Marketers have to observe and jump at opportunities that arise at the right moment, when world trends evolve, marketing has to change along with it. Lifestyle 1) Mode of living 1) E.g. Houses we live in, City or Rural environment 2) How people spend their time and resources 1) E.g. Recreational habits, Hobbies 3) What they consider to be important in their environment 2.4 Sociocultural In uences Personal In uence 1) Key Opinion Leaders, Opinion Leadership 2) Word-of-mouth, magnified by the Internet 1) Qualities that influences advertising strategies for items that involve higher stakes: Trustworthy, Familiar Faces, Reliability 3) They are great at encouraging initial purchase, but seldom repeat. 4) They are expensive Reference Groups People who form the basis of self-appraisal or source of personal standards 1) Associative: The group you belong/relate to. 2) Aspiration: The group you don’t belong to be aspire to be => something you wish to become, admire because of certain skills, fame or status. 3) Dissociative: The group you don’t want to belong to - have no relation with and reference from. Family In uence 1) Consumer Socialisation - Brand exposure and purchase pattern. 2) Family Life Cycle - At different stages in life, people buy different things in accordance to age and needs. 1) E.g. Insurance, House 8 fl fl fl 3) Family Decision-Making - Everyone plays a different role when it comes to purchasing, we have to understand how family dynamics work. (Who has more bargaining power within the family) 1) 5 Roles: 1) Information Gatherer - Children 2) Influencer - Children 3) Decision Maker - Mothers 4) Purchaser - Mothers 5) User - The entire family Social Class - Social Hierarchy 1) Societal Divisions based on occupation, income, educational level - categorised broadly: upper, lower, middle. 2) Grouping of similar values, interest and beliefs Culture & Subculture The fabric of our society is dictated by culture. The Nature & Size of Organisational Markets This is based on corporate/industry. 3.1 Classi cations of (Global) Organisational Buyers 1) Commercial Enterprises: For business operations 2) Government & Public Organisations: Service and Goods for the country (Macro scale) 3) Institutions: Established organisations founded for religious, educational;, professional, social, etc. purpose. 4) Resellers: Buy and resell to consumers (B2B) 1) E.g. Global Organisational Market 3.2 Characteristics of Organisational Buying 1) Demand Characteristics 1) Derived Demand - driven by the demand of end consumers. 2) Size of Order/Purchase - Large as a result of who it is for, resulting in purchasing policies/procedures 3) Number of Potential Buyers - No. of actual buyers (Small - 1 firm buys for many consumers) 2) Organisational Buying Objectives 9 fi  1) Business Firms: Increase profits through reduced costs or increased revenues. (Value for money) 2) Non-Profit Firms & Governmental Agencies: Meet the needs of groups that they serve. 1) E.g. Aim: Financial Governance 3) Organisational Buying Criteria 1) Price: For special buying/quotation/corporate rates. 2) Ability to meet quality specifications: Specific Features, Needs 3) Delivery Schedules: Should the products be delivered at a timely manner, within the specified timeframe 4) Warranties & Claim Policies: For damages, defective goods, wrong specifications 5) Past Performances: Track records allows for reliability and creditability 6) Production Facilities & Capacity: E.g. manufacturing facilities, MICE spaces. 4) Buyer-Seller Relationships & Supply Relationship => Collaborations or Agreements 5) Negotiations Over Extended Period 6) Long-Term Contracts 3.3 The Buying Centre A cross-functional group of individuals with functions and roles within a structure. Broad Categories of Roles: 1) Initiator: Kickstarts the Process 2) Influencer: Gives Opinions that Influences the decision 3) Gatekeeper: Controls the paper flow - Admin work, that gets the flow smooth 4) Decider: The one that makes the final call - Senior Management 5) Buyer: The administrative department that owns/in control of the process that requires the purchase 6) User: The final user/beneficiary of the functions/goods/services. Charting the Organisational Buying Process The same broad steps as consumer buying process, but more complex due to the people and money involved - high stakes. More individuals are involved Supplier capability becomes more important - fulfilment, tender occurs at the end when selecting the actual suppliers Post-purchase evaluation is more formalised - E.g. Meetings, Long laborious process, Tender 10