Focus on customers the psychology of buying behaviour

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Information about Focus on customers the psychology of buying behaviour
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Published on January 24, 2009

Author: roymogg

Source: slideshare.net

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This presentation covers how to deal with customers and looks at the psychology of buying behavior and demographics. This presentation is from a series at the www.1stoutsource.com community forum search us out and call in.

Slide: 1 Slide 1More free downloads and templates at: 1stOutsource Research Dr Stephanie J. Morgan Marketing Principles and Practices Lecture 2 – Customer focus: The psychology of buyer behaviour

Slide: 2 Slide 2More free downloads and templates at: 1stOutsource Research Lecture 2 - Aims and Objectives Aims: Outline theory and methods used in understanding consumer and organizational buyer behaviour Provide an understanding of links between decision making and buying decisions Objectives Assess the usefulness of theory and methods in understanding purchasing behaviour Outline characteristics and dimensions of organizational purchasing processes Identify some choice criteria and personal/social influences on buyer behaviour

Slide: 3 Slide 3More free downloads and templates at: 1stOutsource Research Why do you buy what you buy? Think for a moment about your most recent purchases:  What influenced you?  Why that item?  Did you feel it reflected on you as a person?  Would it make your friends or family happy/jealous?  What did the marketing people do to influence you?  Might there be other things that they did that you are not aware of?

Slide: 4 Slide 4More free downloads and templates at: 1stOutsource Research 2D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Marketing Concept The achievement of corporate goals through meeting and exceeding customer needs better than the competition The Marketing Concept Customer orientation Corporate activities are focused upon providing customer satisfaction Integrated effort All staff accept the responsibility for creating customer satisfaction Goal achievement The belief that corporate goals can be achieved through customer satisfaction Marketing concept The achievement of corporate goals through meeting and exceeding customer needs better than the competition Customer orientation Corporate activities are focused upon providing customer satisfaction Integrated effort All staff accept the responsibility for creating customer satisfaction Goal achievement The belief that corporate goals can be achieved through customer satisfaction

Slide: 5 Slide 5More free downloads and templates at: 1stOutsource Research 2D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Understanding customers How do they buy? What are their choice criteria? Customers Who is important? Where do they buy? When do they buy?

Slide: 6 Slide 6More free downloads and templates at: 1stOutsource Research Why is it important to understand customers?  Fundamental marketing decision – choice of customer.  Vital to enable segmentation, positioning and targeting.  Informs priorities for product design, distribution, support.  Even in mass marketing, important for targeting and communications.  Remember may be different people involved in a purchase.

Slide: 7 Slide 7More free downloads and templates at: 1stOutsource Research Figure 3.1 Brassington Consumer Buying Decision-Making Process Situational influences Individual influences Group influences Marketing mix Decision-making process

Slide: 8 Slide 8More free downloads and templates at: 1stOutsource Research 7D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Alternative views on Influences on consumer purchasing behaviour  information processing  motivation  beliefs and attitudes  personality  lifestyle  lifecycle  culture  social class  geodemo- graphics  reference groups Personal influences Social influences Consumer The buying situation

Slide: 9 Slide 9More free downloads and templates at: 1stOutsource Research The Consumer Decision-Making Process Need recognition/problem awareness D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill 9 Information search Evaluation Of alternatives Purchase Post-purchase evaluation of alternatives Relative Importance? Need inhibitors? Stimulation? Internal, external, Awareness Set Impact Internet Evoked Set Level of Involvement? Context, situation, Ease, Cognitive Dissonance, Confirmation Seeking Remorse? Disposal? Issues: Rational? Simplistic? How determine?

Slide: 10 Slide 10More free downloads and templates at: 1stOutsource Research Information Search  What kind of purchase will address problem?  How can the product be obtained?  What information is needed? Source: C&G http://www.cheltglos.co.uk

Slide: 11 Slide 11More free downloads and templates at: 1stOutsource Research Information Evaluation Information Evaluation involves a process of narrowing down a wide list of potential options to an evoked set, typically by constructing performance criteria with which to judge choices. Think about how you gather and evaluate information – does it vary by type of product, price, situation?

Slide: 12 Slide 12More free downloads and templates at: 1stOutsource Research 10D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill The Consumer Decision-Making Process and Level of Purchase Involvement Stage Need recognition Problem awareness Information Search Evaluation of alternatives Post-purchase Evaluation Minor Limited Few alternatives Considered Many alternatives And choice criteria Extensive Major personality important Low Involvement High Involvement Limited evaluation Extensive evaluation

Slide: 13 Slide 13More free downloads and templates at: 1stOutsource Research 3D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Normative beliefs Personal beliefs Purchase intentions Purchase Attitudes Subjective norms High involvement: the Fishbein and Ajzen model of reasoned action TrialAwareness Repeat Purchase Low involvement: the Ehrenberg and Goodhart repeat purchase model ‘Attitude-Behaviour Problem’ Evaluation and purchase models

Slide: 14 Slide 14More free downloads and templates at: 1stOutsource Research 8D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Determinants of the extent of problem solving Self-image Perceived risk Social factors Hedonism Differentiation and number of alternatives Level of involvement Time pressure Extent of problem solving

Slide: 15 Slide 15More free downloads and templates at: 1stOutsource Research Other models of buying decision process:  Health Model, Stages of Change (DiClemente & Prochaska): Precontemplation Contemplation Preparation Action Maintenance  Customer Activity Cycle Model (Vandermerwe) Plot on cycle x product Pre: Deciding what to do During: Doing it process Post: Keeping it going…

Slide: 16 Slide 16More free downloads and templates at: 1stOutsource Research Choice Criteria Used When Evaluating Alternatives 5D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Technical- Reliability Durability Performance Style/looks Comfort Delivery Convenience Taste Economic- Price Value for money Running costs Residual value Life style costs Social- Status Social belonging Convention Fashion Personal- Self-image Morals Emotions

Slide: 17 Slide 17More free downloads and templates at: 1stOutsource Research Review of the Decision-Making Process I’m hungry What’s available? Cakes or chocolate? Snickers! I should’ve had cake. Problem recognition Information search Information evaluation Decision Post-purchase evaluation

Slide: 18 Slide 18More free downloads and templates at: 1stOutsource Research Psychological influences  Information processing 1. Perception – selective attention, selective distortion, information framing, selective retention. 2. Learning – classical and operant conditioning, shaping, rote and vicarious learning, reasoning.  Motivation.  Beliefs and attitudes.  Personality.  Life-style (psychographics) links beliefs, activities, values and demographics.

Slide: 19 Slide 19More free downloads and templates at: 1stOutsource Research Personality Personality can play a role in consumer behaviour, particularly with high involvement products (e.g., choice of holiday) Source: © Hayes & Jarvis (Travel) Ltd http://www.hayesandjarvis.co.uk

Slide: 20 Slide 20More free downloads and templates at: 1stOutsource Research Theories of Motivation Freud: Hidden Unconscious Esteem Social Safety Physiological Self- Actualization Dis-satisfiers Satisfiers Herzberg: Issues: Sample Method Empirical Support? Maslow

Slide: 21 Slide 21More free downloads and templates at: 1stOutsource Research Attitudes Cognitive Conative (connects C & A to Behaviour) Affective (emotions) What, who etc… How do I feel? Why? What shall I do?

Slide: 22 Slide 22More free downloads and templates at: 1stOutsource Research Skoda Responded to Negative Attitudes

Slide: 23 Slide 23More free downloads and templates at: 1stOutsource Research Social Influences  Culture – traditions, taboos, values of society  Social Class – discriminates consumption patterns  Geodemographics – postcode clustering  Reference Groups – friends, family, work colleagues, clubs and societies  Life-cycle, people behave differently within society if they are teenagers, grand-parents etc. Note – no one classification system works across all product fields and sometimes best to supplement or use a variety.

Slide: 24 Slide 24More free downloads and templates at: 1stOutsource Research Consumer or Organisational Products Why was the product Purchased ?  For personal or household use  For use in the operation of a business or organisation.  To manufacture other products  For resale to others ORGANISATIONAL PRODUCT CONSUMER PRODUCT 2D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill

Slide: 25 Slide 25More free downloads and templates at: 1stOutsource Research B2B Marketing Defined B2B marketing is the management process responsible for the facilitation of exchange between producers of goods and services and their organisational customers (Brassington & Pettit, 2006)

Slide: 26 Slide 26More free downloads and templates at: 1stOutsource Research 4D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Characteristics of Organisational Buying Derived demand Negotiations Risks Reciprocal buying Nature and size of customers Complexity of buying Economic and technical choice criteria Buying to specific requirements Organisational Purchases

Slide: 27 Slide 27More free downloads and templates at: 1stOutsource Research Implications for Marketing  Sales force skills, team efforts, multi-level negotiation, account management to develop relationships.  Risk analysis, withdrawal from bids,  Increased likelihood of design for specific customers.  Marketing mix may vary for each party in a DMU Bear in mind also changing nature of organisations:  Just-in-Time buying, increased use of technology, growth in centralised purchasing etc.

Slide: 28 Slide 28More free downloads and templates at: 1stOutsource Research Types of B2B Customers  Commercial enterprises  Government bodies  Institutions

Slide: 29 Slide 29More free downloads and templates at: 1stOutsource Research Figure 4.2 Brassington A Clothing Manufacturer and its Suppliers Suppliers of raw materials and components Suppliers of manufacturing equipment Suppliers of labour Suppliers of other equipment and supplies Suppliers of services Manufacturer

Slide: 30 Slide 30More free downloads and templates at: 1stOutsource Research Source: © Goodyear Dunlop Tyres Europe B.V. http://eu.goodyear.com Derived Demand Goodyear’s RunOnFlat Tyres are featured on BMWs, Ferraris, Corvettes, Maseratis, and Mercedes

Slide: 31 Slide 31More free downloads and templates at: 1stOutsource Research Joint Demand Demand for Samsung’s Solid State Disk (SSD) is tightly coupled with the demand for computers and other devices with memory chips

Slide: 32 Slide 32More free downloads and templates at: 1stOutsource Research Buyer Decider (Decision Maker) Gatekeeper D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Users actually use the product. They may be the one who initiates the purchase process and may develop the product specification. Influencers supply information and advice. Outsiders such as consultants sometimes perform the role. Gatekeepers control the flow of information to the buying centre. Purchasing department Staff frequently fill the role but it could be any member of the organisation. Buyers choose suppliers and negotiate purchase terms often reducing the actual purchase to a clerical task. Deciders (Decision Makers) have the authority to approve the purchase. Deciders (Decision Makers) have the authority to approve the purchase. The Buying Centre – DMU’s

Slide: 33 Slide 33More free downloads and templates at: 1stOutsource Research Roles in the Buying Process  Purchasing - handle relationships with suppliers  Production/operations - meeting targets for the end product in both quantity and quality terms  Engineering - the specification and design  Research and Development (R&D) – look for new solutions to problems  Finance - devolve budgets to appropriate managers  Marketing - outputs of the production process

Slide: 34 Slide 34More free downloads and templates at: 1stOutsource Research Government/Institutional market Schools, hospitals, prisons etc. Tensions include Cost vs. quality Low Budget Complex Buy Processes Captive Clientele Continual Change and public scrutiny

Slide: 35 Slide 35More free downloads and templates at: 1stOutsource Research 6D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Recognition of a problem (need) Determination of specification and quantity of needed item Search for and qualification of potential sources Acquisition and analysis of proposals Evaluation of proposals and selection of supplier(s) Selection of an order routine Performance feedback and evaluation Buy phases: the organizational decision-making process

Slide: 36 Slide 36More free downloads and templates at: 1stOutsource Research Major influences on buying behaviour Environmental: Demand Economic outlook Interest rates Rate of Tech change Political Competitive Developments Social Responsibility Organizational: Objectives Policies Procedures Structures Systems Politics Interpersonal: Interests Authority Status Empathy Persuasiveness Nationality Individual: Age Income Education Position Personality Risk attitudes Plus Types of Purchasing process – routine, strategic etc. Note similarities here to consumer behaviour

Slide: 37 Slide 37More free downloads and templates at: 1stOutsource Research Management styles in the European Community, US and Japan 6D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Group Individual Leadership Organic Systematic Organisation Source: Mole, J. (1990) Mind Your Manners Italy Portugal Greece Netherlands Spain France Germany USA Ireland Belgium Luxembourg DenmarkUK

Slide: 38 Slide 38More free downloads and templates at: 1stOutsource Research Building Organizational Relationships Customer Services: Technical, expertise, resource, etc. Past, Present, Future - Expectation Management Competitive Awareness: Setting requirements Planning and Strategic moves Account Management: Understanding and developing DMU Consider also stages of relationships

Slide: 39 Slide 39More free downloads and templates at: 1stOutsource Research Psychology of Organizational Relationships Individual personality, role set, motivation, cognition, learning, decision making Emotions Group: Contagion, Conformity, Polarization Conflict Inter-personal: interactions, tactics, Exchange/equity, influence processes Trust Societal: Culture, norms, Stereotyping, Prejudice… Discourses Stories

Slide: 40 Slide 40More free downloads and templates at: 1stOutsource Research Ethical considerations may overlap both types – consumer and industrial  Issues with targeting vulnerable groups  Manipulation  Intrusive selling or direct marketing  Deception by salespeople or Account Managers  Hard selling  Bribery  Confidentiality

Slide: 41 Slide 41More free downloads and templates at: 1stOutsource Research Evaluating usefulness of theories (must do in essay to gain good marks)  Applicability will vary by product/service type.  Should be aware of weaknesses of each form of categorisation and main theories.  Often descriptive or prescriptive, always consider variety in cases/processes.  Often based on small samples and limited timescales.  However – most are useful tools to help you think through the customer experience and requirements, and design your marketing mix in the most appropriate manner.

Slide: 42 Slide 42More free downloads and templates at: 1stOutsource Research Aims and Objectives Achieved? Aims:  Outline theory and methods used in understanding consumer and organizational buyer behaviour  Provide an understanding of links between decision making and buying decisions Objectives  Assess the usefulness of theory and methods in understanding purchasing behaviour  Outline characteristics and dimensions of organizational purchasing processes  Identify some choice criteria and personal/social influences on buyer behaviour

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