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CONSUMER BEHAVIOUR

A Journey into the Psyche ofConsumers

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CONSUMER BEHAVIOUR

Why is the Purchase Made?Influences on purchasing family, culture, friends,

marketers, age, social status, etc.

How Often is the Service Availed?

Frequency of purchase, number of purchases, etc. Where is the Service Availed?

Location, convenience, online, offline, etc.

When is the Service Availed?

Time, season, occasion, etc.

How is the Service Availed?

Decision making process

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Consumer Behavior Is Interdisciplinary

Psychology

Social psychology

Sociology

Anthropology Economics

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SUCCESSFUL RELATIONSHIPS

CustomerValue

CustomerSatisfaction

CustomerRetention

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SUCCESSFUL RELATIONSHIPS

Customer Value Defined as the ratio between the customers perceived

benefits and the resources used to obtain those benefits

Perceived value is relative and subjective Developing a value proposition is critical

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SUCCESSFUL RELATIONSHIPS

Customer Satisfaction The individual's perception of the performance of the

product or service in relation to his or her expectations.

Customers identified based on loyalty include loyalists,apostles, defectors, terrorists and hostages

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SUCCESSFUL RELATIONSHIPS

Customer Retention The objective of providing value is to retain highly

satisfied customers.

Loyal customers are keyThey buy more products

They are less price sensitive

They pay less attention to competitors advertising

Servicing them is cheaper

They spread positive word of mouth

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ROLES PLAYED BY THE FAMILYMEMBERS

Initiators

Gatekeepers

Influencers

Decision makers/Decider

Purchasers/ Buyer

Users

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Consumer Decision Making Model

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Characteristics Affecting Consumer Behaviour

Buyer

Psychological

Personal

Social

Culture

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CULTURE

Social Class

People within a social classtend to exhibit similar buying

behavior. Occupation

Income

Education

Wealth

Most basic cause of a person's wants and behavior.

Values

Perceptions

Subculture

Groups of people with sharedvalue systems based on common

life experiences. Religions

Racial Groups

Nationalities

Geographic regions

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SOCIAL FACTORS

Reference Groups

Membership,Aspirational

Dissociative

Opinion Leaders

FamilyHusband, wife, kids

Influencer, buyer, user

Roles and Status

Social Factors

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PERSONAL FACTORS

Personal Influences

Age and Family Life CycleStage

Occupation

Economic Situation

Lifestyle Identification

Activities Opinions

Interests

Personality & Self-Concept

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PSYCHOLOGICAL FACTORS

PsychologicalFactors

Motivation

Perception

Learning

Memory

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Purchase Process for Services

Need Recognition

Information search

Evaluation of Alternative Service ProvidersReview DocumentationConsult OthersVisit possible service suppliers

Request Service from Chosen Supplier/Self Service

Service Delivery

Evaluation of Service Performance

Future intentions

Pre Purchase Stage

Service

Encounter

PostPurchase

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Pre-purchase Stage

Problem Recognition Actual state Vs. Desired state of affairs

Greater the difference between the two, greater that needto act, i.e., purchase.

PR can be influenced

Internal stimuli such as hunger, feelings, or other stagesof the Maslows Need Hierarchy, etc.,

External stimuli such as friends, family, marketers, etc.,or a combination of the two stimuli.

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Pre-purchase Stage

Information Seeking or Search The rational reason for searching for information before a

purchase is to reduce the risk of making the wrong purchase.The type of search (internal vs. external) depends on a host of

factorsInternal Search Situations External Search

Situations

High Confidence Level

Frequently Bought Item

Product/service UnchangedLow Risk, Low Priced Item

Low Confidence Level

Infrequently Bought

Item/serviceRapidly ChangingProducts

Hi Risk, Hi PricedProduct

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Pre-purchase Stage

Evaluation of alternative products, brands, and purchaseoutlets. Consumer identifies potential suppliers& than weighs the

benefits & risks of each option

In this case, consumer try to match anticipated performance withcertain evaluative criteria such as quality, price, brand name,brand loyalty, etc.

Certain heuristics are also employed by consumers to simplifyand speed up the decision making process. Even though highprice might be a negative factor, he or she is likely to expect thehigh quality of the brand to compensate for it.

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Pre-purchase Stage

Type of Risk

Functional (unsatisfactory performance outcomes)

Financial (monetary loss, unexpected cost)

Temporal (Wasting time, delays)

Physical (Physical injury or damage)

Psychological (Personal fears or emotions)

Social (How others think & react)

Sensory (unwanted impact on any of the five senses)

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Pre-purchase Stage

The choice of the product, brand, or outlet

The decision to purchase a specific brand is a complicated one.Consumers sometimes tend to procrastinate the actual purchase

for various reasons. In other words, buying intentions do not always translate into

actual purchases. For instance, situational influences such asillness, losing a job, changes in family status, etc. can halt thepurchasing process.

Marketers, on the other hand, try to offer certain incentives to

buy now than later. In this networked economy, consumers are also confronted with

a choice of buying either offline or online.

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Service Encounter Stage

Begins with submitting the application, requesting areservation or placing an order

Contacts may take the form of personal exchanges betweenthe customer & service provider or impersonal interactions

In high contact services, customers may become activelyinvolved with one or more service processes

Experience a variety of elements during service deliverywhich provide clues for service quality

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Types of Service Encounters

As the level of customer contact with the service operationincreases, there are likely to be long & more serviceencounters (eg. Traditional banking, person to persontelephone banking & internet banking)

High Contact Services: Involves personal visit of the customer to the service facility,

active involvement with the service organization & its personnelduring service delivery

Low Contact Services

Involve little, if any physical contact between the customer &service providers. Contact takes place through medium ofphysical distribution channel- mail, telephone , internet etc.

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Service Marketing System

Represents all the ways in which the customer mayencounter or learn about the organization in question

Because services are experiential each of these elementsoffers clues about the nature & quality of the serviceproduct

Inconsistency between the various elements mayweaken the organizations credibility in the customers

eyes

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Service marketing System for High Contact Service

TechnicalCore

Interior & ExteriorFacilities

Equipments

Service People

Advertising

Sales Calls

Marketing research

Billing

Mails, Phone calls

Chance Encounters

Word of Mouth

TheCustomer

Other

customers

Other

CustomersBack Stage

(Invisible)Front Stage

(Visible)

Service OperationSystem Other Contact Points

Service Delivery System

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Services marketing System for Low Contact Service

TechnicalCore

Mail

Self ServiceEquipment

Phone, Fax,Websites

Advertising

Marketing research

Billing

Random Exposures tofacility

Word of Mouth

TheCustomer

Back Stage

(Invisible) Front Stage

(Visible)

Service OperationSystem Other Contact Points

Service Delivery System

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Customer Expectations

Components of Customer Expectations Desired Service Levels: Wished for level- the type of service

the customers hope to receive based on what they believe can &should be delivered in text of their personal needs.

Adequate Service Level: Minimum level of service that thecustomer will accept without being dissatisfied. It is dependentupon situational factors, level of service that might beanticipated from alternative suppliers.

Predicted Service Level: Anticipated Service

Anticipated service level Adequate level will behigher

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Customer Expectations

Zone of Tolerance The inherent nature of services makes consistent service delivery

difficult across employees,

The extent to which the customers are willing to accept this

variation is the Zone of Tolerance

Zone ofTolerance

Desired Services

Adequate Services

Personal needs

Belief of what is

possible

Perceived ServiceAlterations

Situational Factors

Explicit & ImplicitService Promises

WOMPast Experiences

Predicted Services

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Post-purchase Stage

Generally there are three outcomes at the end of theprocess: Performance/service quality equals expectations leading to

satisfaction with the brand

Performance/service quality greater than expectations leadingto positive feelings about the brand

Performance/service quality lower than expectations leading todissatisfaction with the brand.

In all three situations, the result is likely to be internalized byconsumers, stored in memory and retrieved later.