Lecture Notes 3&4.pdf

Module 3 Consumer & Buyer Behaviour What is Consumer Behaviour and Why is it Important? Consumer and Buyer Behaviour - Consumer behaviour is the term used to describe the analysis of the behaviour of individuals and household who buy goods or services for personal consumption. -Understanding of cons...

Module 3 Consumer & Buyer Behaviour What is Consumer Behaviour and Why is it Important? Consumer and Buyer Behaviour - Consumer behaviour is the term used to describe the analysis of the behaviour of individuals and household who buy goods or services for personal consumption. -Understanding of consumer behaviour, informs all decisions made about the marketing mix - Possible consumer behaviour range is limitless but consumer decision making behaviour can be identified. - Can be a range of simple habitual decision making to highly complex extended decision making. What are the Factors Influence Consumer Behaviour Influences on Consumer Behaviour - Range of factors influencing is virtually limitless - Rather than studying individually, we can develop awareness to issues that may influence an organisation’s target market. Give Examples of Situational Factors dont Wokeebusmess plan Situational Influences croissan - Easiest to understand is rest Principal influences; arran Location within place or context Tence , cause Smell amb o - Physical for Trends-frank greenmore food consumers longer - Social & money Weather-winter spend jacket - Time a - Motivational hungry money - Mood therapy - Nudge Theory - Positively uses situational influences. Environment is slightly altered called choice architecture to make people behave in a predictable way. - This doesn’t dispose of alternatives. - Doesn’t provide significant incentives for behaviour to change. , , , stay , time purchase wanted A but i your confined to B At that time if you out of stock -. wait to eat or home buy food & Uni. Good mood-save bad mood-retail Give Examples of Group Factors Group Influences - Consumer purchasing decisions are profoundly affected by group factors or by groups consumer interacts with. - Group influences comprise of; 1) Social Factors; the influence of other people - Social level is concerned with developing understanding of individual behaviour within their wider group - Social psychology - Focuses on understanding how group influences behaviour of members - Group pressure can cause individual conformity and these influences are known as social factors a) Reference Groups; Group to which an individual looks for guidance on values, attitudes, behaviours friend groups - Reference group influence is strong when individual lacks previous experience in guided behaviour or when behaviour carries social risk. - Groups can have opinion leader who leads influential advice about specific topic. - 3 major types of reference groups; i) Membership Rgs; Those we are already apart of ii) Aspirational Rgs; Those we want to associate with iii) Dissociative Rgs; Those we don’t want to associate with If b) Family; Social group with most influence they have a bably different purchases - Family life cycle describes stages through which most families pass. see needed Minacohabits 2) Roles washin ty b move I Wy likely detergent , & Status 2) Cultural Factors; The influence of the values, beliefs and customs of the person’s community. - Cultural factors come from level of whole society or major societal groups “mass market” - Concerned with aggregate behaviour of entire market - Social class can explain or reliably predict differences in buyer or consumer behaviour a) Culture; Broadest group influence on behaviour. - It is a system of knowledge, beliefs, values, rituals by which a society defines itself. - It is multidimensional and includes intangible and tangible elements - Cultural frameworks exist to categorise these influences - Hofstede found national cultures could be distinguished by four dimensions 1 Power distance; extent to which less powerful members accept and expect unequal power distributions 2 Uncertainty avoidance; extent members tolerate uncertainty 3 Individualism; focus on rights and concerns of each member 4 Masculinity; extent to which members stress different expectations for men and women b) Subculture; Group of individuals who differ on some influential dimensions. - Extracted from broader culture, stick out. um - Notice when shopping and purchasing behaviour is different from remainder of population and as such, may represent distinct marketing opportunity. Class; Individuals of similar social rank. Status can be useful when focus is on purchasing power. higher c) Social- Specific attention to economic factors; price - Income - Occupation - Educational background Ramadan hi Purchases Give Examples of Individual Factors Individual Factors - Factors that influence a consumer’s behaviour, purchase process and final product choice, which occur independently of social circumstance. - Relate to personal and psychological characterisitcs - These factors must be measured and are presumed to differ between individuals 1) Personal Characteristics - Personal characteristics for individual buyer or consumer level - Constitute an individual’s identity and are objective, relatively stable in short term a) Demographics; Described using existing and known objective and measurable characteristics such as income and age as they can be related to the purchase of consumption of different products. - Marketers use demographics as purpose for campaigns. b) Lifestyle; How time is spent, how people interact with others I - Difference between actual and preferred lifestyle I 94m - Consumers purchase products that play a role in their lifestyle and may purchase aspirational or symbolic products to express their preferred lifestyle. c) Personality; Most distinctive definition of individual behaviour - Difficult to measure as can evolve over life in response to social/environmental/personal influences or experiences. 2) Psychological Characteristics - Psychology is an individual factor that shapes; - Thinking - Aspiration - Expectations - Behaviours of the individual - Psychological factors are independent of an individual’s situational and social circumstance. a) Motivation; Individual’s internal drive to satisfy unfulfilled need or goal - Specific to individual and situation but some motives can be consistent over time and population - Maslow’s Hierarchy of Needs - Recognised theory of motivation regard earimaly ng b) Beliefs and Attitudes; Make up the mental map - Consumer rely on these for judgement of products for wanted not needed goods. - Three components of an attitude; 1 Cognitive component 2 Affective component 3 Behavioural component c) Perception; Psychological process that filters, organises and attributes meaning to stimuli - Perception is selective and can result in; 1 Selective Exposure 2 Selective Attention ord , 3 Selective Distortion 4 Selective Retention d) Learning; Apply learning to behaviour - Behavioural learning theories stress role of experience and repetition of behaviour - Cognitive learning theories describe learning takes place through problem and emphasises better processing of new information orean, cod organic Explain the General Steps in the Consumer Decision-Making Process Consumer Decision Making Process - Comprises 5 stages usually present in all consumer buying decision 1 Need/Want Recognition - Consumer unaware of unmet needs or wants - Market creates awareness of this 2 Information Search - Seek info from trusted sources and convenient sources 3 Evaluation of Options - Develop ranking criteria, rank options, consider purchase or other use of money 4 Purchase - Chose product and brand and decide whether or not to purchase and purchase 5 Post-Purchase Evaluation - Continue product evaluation - Assess post purchase cognitive dissonance - Assess attitude towards product/brand/seller for future purchases. - Exceptions to process; 1 Habitual Decision Making; Involves little involvement with purchase 2 Limited Decision Making; Limited info to evaluate options for infrequent purchases within familiar product categories 3 Extended Decision Making; High involvement with purchase decision in deliberate and detailed way e.g. laptop We don't a 4 Impulse Purchases; Very little involvement, no planning, forethought. Decision is made before buyer recognises need. can't - Relative importance duration and sequence varies for different decisions hap - Involvement level is important to determining an effective marketing type. something ourselves Buyer Behavour Introduction to Business Markets - B2B (Business Markets); Distinctive characteristics make them different from consumer markets - Small number of large competitors - Small number of large buyers - Purchase for large amounts - Larger in revenue than consumer markets that they service. Business Markets - Made up of individuals or orgs that purchase products for; 1 To resell product 2 To use product in production of other products 3 To use product in daily business operations - Overall business market comprises 4 categories; 1 Reseller Markets; Buy products in order to sell or lease to other parties for profit - Wholesalers purchase from suppliers and producers for resale to other intermediaries - Industrial Distributors purchase products from producers and sell them on to organisational buyers. - Retailers purchase from suppliers, manufacturers and intermediaries for resale to consumers. 2 Producer Markets; Purchase products for use in production of other products or daily business. - Operate across all sectors of economy; primary, secondary, tertiary industries - Gross domestic product generated by manufacturing in Australia and NZ is declining and manufacturers moving to lower cost countries “Offshoring” 3 Government Markets; Substantial provider and purchaser of goods - Demand fluctuates due to fiscal policy used to smooth economic fluctuations and as governments of competing political opinions, fluctuate in power. This time and uncertainty cost, increase company reluctance to deal with government, regardless of sales revenue. 4 Institutional Markets; Markets where Orgs that are neither public nor for profit buy or sell. - NFP orgs typically have specific goals and fewer resources than commercial orgs - Marketing to these orgs is less profitable but overall NFP sector still comprises a substantial market Business Buying Behaviour - Business purchases usually vary from straight rebuy, modified rebuy or new task purchase. - Straight Rebuy; Buyers purchase same products routinely from established vendors whom which they have already dealt with, often through automated system. - Modified Rebuy; Involves some degree of evaluation of alternative products - New Task Purchase; Business has new problem or new product, often involves purchase in a new product category. - Level of involvement reflect in buying approach and can involve; - Negotiation - Description - Inspection - Sampling - Business decision making involves same basic stages as consumer decision making process - For business, stages are more protracted and formal. Module 4 Segmentation, Targeting and Positioning 1. What is the Concept of Market and Target Marketing? Knowing the Market Market is group of people with heterogeneous needs and wants Can’t appeal to all consumers and businesses and so marketers identify and understand part is total market to which it can offer the most value. Introduction For successful marketing, we need to identify and understand potential customer’s and their needs Consumer markets consistent of households and individuals that buy for private consumption Market segmentation enables organisation to form a segment with common features rather than market to everyone. Organisation develops most effective marketing mix for each segment known as target marketing concept 2. What Does Targeting Mean? Target Marketing Choice of marketing strategy involves degree of compromise between the necessity to respond to specific individual customer desires and the objective of achieving the lowest possible production and marketing costs. Target Marketing is based on three premises - Individual buyers or groups can be identified - Sellers understand the need of buyers - Sellers seek to have their offer to meet the needs of target buyers Mass Marketing; Buyers have common needs, wants, demands - Single product offerings is created, communicated, delivered to meet needs of most in market - Undifferentiated approach to marketing - Mass marketing captures large markets at low cost per unit, ensuring high levels of profitability - Characteristic of commodity products and global mass products e.g. salt One-to-One Marketing; Buyers have unique needs, wants, demands - Appeals to each customer by providing customised offering to meet individual needs e.g. haircut, accountant, advisory - Small business take one to one approach - Results in high unit costs and more restricted market - Conditions form a basis of a focus or niche strategy Target Marketing: Target Specific Subgroups; Market contains subgroups - When choosing target markets, org will consider 1) It’s own resources, 2) Market demand, 3) Competition - With a differentiated targeting strategy, an org identifies a range of market segments which cover the majority of the total market - e.g. different types of toothpaste - For each segment, a unique marketing mix is tailored. - Could be used to appeal to a group of students. Product and Market Specialisation Small orgs with limited resources typically use a specialised approach to marketing; - Product Specialisation - Market Specialisation - Product Market Specialisation Specialisation works if; 1 Market is characterised by wide needs and preferences 2 Clear segments and product categories are identified 3 Market is clearly divided 4 Market segments are profitable enough 5 Segments are actionable 3. How Companies Segment, Target and Position their Products and Services? The Target Marketing Process Target Marketing Process is fundamental for any org Process involves 3 strategies; 1 Segmentation 2 Targeting 3 Positioning Is it substantial? What is size of market? Is it rational for within timeframe and budget? Incl. aim for percentage of market wanting to reach. 4. How Could Segmentation Be Conducted 1 Market Segmentation; Two steps 1 Identify variables to define meaningful segments - Segmentation variables are characteristics buyers have in common and are related to purchasing behaviour - Possible variables of segmenting fall into four broad categories; 1 Geographic - Climate, local population density, region, topography, urban, suburban, rural 2 Demographic - Related to quantifiable social characteristics of populations - Age, ethnicity, household composition, income, gender 3 Psychographic (psychology + demographic) - Based on consumer characteristic - Based on differences in; - Psychological traits - Geodemographics - Lifestyles 4 Behavioural - Indicator of market segments and their purchasing behaviour - Benefit expectations, brand loyalty, occasion, price sensitivity, volume of usage. - Segmenting Business Markets - Business markets are characterised by small numbers of buyers, each displaying a close relationship with the seller - Traditional segmentation variables less relevant - Customised or one to one best suited - Demographic equivalent relates to industry - Geographic indicator of buyers in certain area. - Effective Segmentation Criteria - Segments must be evaluated to ensure segment is worthwhile pursuing by analysing; - Measurability - Accessibility - Substantiality - Practicability 2 Profile segment so they can be assessed in second stage of target marketing process - Describes potential customer in market segment, common features shared and how they differ between segments - Segment profiles are usually described in a range of segmentation variables 2 Market Targeting - Market targeting involves systematic examination of possible market segments; Potential sales of each Potential revenue Ability to satisfy expectation - Requires understanding of competitors, how their offerings are seen by target segments - Important to know that no company can satisfy everything 1 Evaluate Potential Segments - Involves analysis of; - Sales potential - Competitive situation - Cost Structure - SWOT 2 Select Target Markets - Estimate market potential in each to determine sales volumes and if profitability is sustainable - Selecting particular market segments is at heart of marketing concept - Org is no longer referring to individual buyer or mass market, its referring to segments 5. How do we Position Brands as Marketers and how do we Re-Position Brands? 3 Market Positioning - Describes how markets perceive the organisation’s offer relative to competing offers - How customers distinguish the organisation and its products from competitors or available alternatives - Positioning is based on customer perception - Can correspond with product’s objective characteristics - Determine Positioning for Each Segment - To determine appropriate positioning for products, org needs to undertake market research to understand positioning in the minds of market segments - Common technique for determining positioning is conceptual mapping: showing how competing brands relate to each other in terms of attributes. - Analysing Current Positioning - Establish current positioning based on analysis - Commonly used positioning variables; - Attributes - Use/Application - Product user - Price and quality - Product class - Determine Marketing Mix for Each Segment - Marketing mix for each segment should - Be consistent with desired positioning - Be internally consistent - Be sustainable long term. When elevating relevant market segments we need to consider competition, costs and estimated sales.