Understanding consumer behaviour

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Understanding consumer behaviour

• There is only one boss the customer. And he
  can fire everyone from the Chairman down
• Sam Walton, Founder, WalMart
  Stores

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Studying consumer behaviour
Blackwell 2006
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What is consumer behaviour?

• The decision process and physical activity
  individuals engage in when evaluating, acquiring,
  using or disposing of goods and services
• Loudon and
  Della Bitta
• Those acts of individuals directly involved in
  obtaining, using, and disposing of economic goods
  and services, including the decision processes
  that precede and determine these acts
• JF Engel

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Consumer-centric marketing
Blackwell 2006
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Consumer insight

• Consumer-centric marketing is based on consumer
  insight which is an understanding of consumers
  expressed and unspoken needs and realities that
  affect how they make life, brand, and product
  choices
• Blackwell 2005

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Comprehensive models of consumer behaviour
(Blackwell 2005)
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Common features of consumer behaviour models

• Consumer behaviour as a decision process
• Behaviour is rational and can be explained
• Behaviour is purposive involving search,
  evaluation and storing of data
• Preferences develop based on more limited use of
  information
• Outcomes from purchase decisions, whether
  satisfaction or dissonance shape future purchase
  decisions

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Who is the consumer?
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Possible participants in the purchase process

• S uggester
• P urchaser
• A dvisor
• D ecision maker
• E nd user

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Why study consumer behaviour

• Marketing management rests upon some conception
  or other of how customers behave and of the
  consequences their reactions to product, price,
  promotion and distribution strategies are likely
  to have for the attainment of corporate
  objectives. In affluent competitive economies
  successful marketing depends above all on
  matching the marketing mix which results from the
  integration of these strategies to the
  willingness of consumers to buy and in doing so
  more effectively than ones rivals
• Gordon Foxhall

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How do consumers approach retail purchases?

• Generally speaking human beings are usually
  quite rational and make systematic use of the
  information available to them. We do not
  subscribe to the view that human social behaviour
  is controlled by unconscious motives or
  overpowering desires, rather people consider the
  implications of their actions before they decide
  to engage or not engage in a given behaviour
• Ajzen and Fishbein (1980)

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The information processing consumer and rational
shopping behaviour
CONSUMER
RECEIVING - perceptions
INTERPRETING experiences, goals, aspirations,
status
SEARCHING clarification of aroused need/want
EVALUATING alternative options for need
satisfaction
DEVELOPING beliefs, attitudes, opinions
re purchase intention
ACTING translate to behavioural intention
RE-EVALUATING extent of satisfaction
STORE outputs, attitudes for future reference
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The rational purchase decision
From Blackwell 2005
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One more time how do consumers approach retail
purchases?

• A true understanding of shoppers decision
  making processes is the key to retail success.
  Psychologists have identified that we have two
  main shopping modes alpha and beta. In the alpha
  state, attention is fully engaged and the
  decision process is conscious. But 80 of our
  shopping is carried out in beta mode..(when)..all
  decision making, orientation and interaction is
  subconsciously controlled.
• Siemon Scamell-Katz (2002)

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Types of buying situation in consumer markets

• Lengthy information search and close examination
  of alternatives
• Reduced search and evaluation based on prior
  knowledge of product/market
• Repeat purchase with little or no evaluation

• EXTENDED PROBLEM SOLVING
• LIMITED PROBLEM SOLVING
• HABITUAL PROBLEM SOLVING

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The consumer purchase decision sequence
Need recognition/ Problem awareness
Information search
Evaluation of alternatives
Purchase
Post purchase evaluation
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Influences on consumer behaviour
BUYER/CONSUMER
CULTURAL Culture Sub culture Social Class
SOCIAL Reference group Family Roles and
status
PERSONAL Age, lifecycle stage Occupation Economi
c circumstances Lifestyle
PSYCHOLOGICAL Motivation Perception Learning Be
liefs, attitudes
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Lifestyle dimensions of consumer behaviour
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Marketing mix determination and consumer behaviour

• PRODUCT
• PRICE
• PLACE
• PROMOTION

• Size, shape, features, design, packaging,
  service, warranties
• Price awareness, brand/price sensitivity, price
  elasticity of demand, incentive to encourage
  adoption
• Distribution channels, retail outlet, retail
  image
• How to promote, gain attention, communicate
  message, encourage trial, encourage repurchase,
  build loyalty, purchase influences

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Trends in consumer behaviour (Blackwell 2005)
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Important consumer behaviour effects
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Outcomes from purchase decisions

• Satisfaction or dissonance
• Satisfaction is a pleasurable fulfilment response
• What are the components of a PFR
• How satisfaction/dissonance impact on future
  purchase intentions

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Value from the consumer and marketer perspective
Baker 2003
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Perceived benefits of ownership

• Product and its performance
• Brand values
• Brand associations
• Packaging
• Ease of use
• Quality
• Reliability
• Convenience

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What is quality?

• Conformance to requirements
• Superior product or service specification
• Standard, badge, league table
• Value for money
• Innovation and added value
• Personal evaluation, perception or experience
• Trust
• What the customer thinks it is

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Costs of ownership

• Economic costs
• Lifecycle costs
• Psychic costs (stress, frustration, out of stock,
  travelling, crowds, crap sales staff)
• Risks (financial, unknown brand, unknown quality,
  unknown reputation)

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Stock-outs cause walkouts
Buyer behaviour when faced with stock-out
(Corsten and Gruen 2004)
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Shopping as holistic experience
SEARCH EXPERIENCE
PRODUCT
PLEASURABLE FULFILMENT RESPONSE
PURCHASE EXPERIENCE
CONSUMPTION EXPERIENCE
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Personal shopping drivers (based on Tauber 1971)

• Role play learned and routinised behaviour
• Diversion recreation or entertainment ????
• Gratification esteem building, therapeutic
• Learning new trends, new ideas
• Physical activity????
• Stimulation sights, sounds, shopping as
  experiential

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Social shopping drivers

• Social experience and interaction
• Communicate shared interests
• Peer group attraction
• Status and authority
• Bargaining

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Value drivers

• Convenience
• Reputation
• Brand meaning
• Retail environment characteristics
• Service expectations
• Merchandise expectations
• Value expectations
• Holistic experiential expectations

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Other shopping behaviour influences

• Role and family life cycle
• Children
• Reference groups
• Demographics
• Social class
• Reference groups
• Psychographics (lifestyle)

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Reflection topics

• What are the most critical decisions customers
  make about products?
• How price aware are customers?
• Are there any typical consumer information search
  patterns for different products/services?
• What evaluative criteria do you/other consumers
  appear to have for products/services and how are
  they developed?

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Summary why retailers need to understand
consumers

• Focus on factors that determine consumer
  perception of value (maximise perception of
  benefits/minimise perception of costs/minimise
  perception of risk)
• Consumers make purchase decisions to solve
  problems and reduce dissonance (store choice and
  product choice). Retail activities should aid
  consumer decision making.
• Shopping is driven by multiple motives and the
  retail offer should deliver multiple sources of
  satisfaction