Session 3: Consumer behavior Who is important in the buying decision? How do people buy and what choice criteria do they use? Influences on consumers' purchasing Conclusions

Market research: process of gathering data using techniques, e. g Market research: process of gathering data using techniques, e.g., questionnaire, interview or online survey, to produce information about current situation in a given market. Useful for collecting information about customer buying habits through loyalty cards

Extreme customer service To know customers better is to answer: Who is important in the buying decision? How do they buy? What are their choice criteria? Where do they buy? When do the buy? Retailers find answers to these questions using online & offline market research techniques

Who is important in the buying decision? According to Blackwell et al. (2005), five roles performed in a buying centre: Initiator, who starts buying process Influencer, who persuade others Decider, who makes final purchase decision Buyer, who conducts actual buying transaction User, who actually uses product.

Fig 1: she is initiator, decider, buyer & user, & sales assistant acts as influencer Fig 2: He is decider & buyer, woman is initiator & user, & sales assistant again acts as influencer.

How do people buy & what choice criteria do they use? Consumer decision making process: Stages individual will pass through when making a buying decision Figure 3.1 Stages in the buying decision process

Need recognition Need recognition - problem awareness: functional requirement: ex; thirsty Routine depletion : purchase is straightforward replace P that has been consumed Some situations decision is more complex/ unpredictable: ex; losing your mobile phone From k of customers' need recognition, retail marketing managers are aware of trigger for buying situation & can identify each customer solution.

Information search  Buyers engage in information searching according to the importance of the purchase Information searching is to create an awareness set (the number of different P brands). Internet help consumer decision making process as individuals go online to search for P information. Thus, price comparison websites have emerged selling P knowledge & pricing information

Evaluation of alternatives Searching over, time to reduce choice Individual will reduce awareness set to evoked set, which is a set of brands that they seriously consider buying. Consumers use ≠ criteria to reduce P choice It is important for retail marketing manager to understand key criteria consumers use

Criteria which can affect consumer choice: Technical criteria, e.g., reliability, performance  Economic criteria, e.g., price, value for money  Social criteria, e.g., status, social belonging  Personal criteria, e.g., self-image, ethics Nb, importance & influence of choice criteria depend on nature of purchase & consumer's level of involvement.

Evaluation of alternatives & purchase This depends on level of involvement. Involvement is degree of perceived relevance & personal importance accompanying the brand choice. High involvement : high expenditure or personal risk Low-involvement: simple evaluations about purchases, simple tactics to reduce time For high-involvement purchases: Fishbein and Ajzen theory of reasoned action For in low-involvement situations work by Ehrenberg & Goodhart for simple evaluation

Fishbein and Ajzen model:  This model suggests that an attitude towards a brand is based upon a set of beliefs about brand's attributes (e.g., value for money, durability). Each attribute is weighted by how good or bad consumer believes the attribute is likely to be. Those attributes that are weighted highly will have a large influence in the formation of attitude Attitude is the degree to which someone likes or dislikes the brand overall.

Besides personal beliefs, important normative beliefs affect purchase decision & may conflict with personal beliefs. Normative beliefs: form an overall evaluation of the degree to which these outside influences approve or disapprove of the purchase (subjective norms). The link between normative beliefs & subjective norms is a theory of reasoned action. Consumers are highly involved in purchase to the extent that they evaluate consequences of purchase & what others will think about it.

Fishbein and Ajzen model: Figure 3.2a Evaluation & purchase model: High involvement: Fishbein & Ajzen model of reasoned action

Ehrenberg & Goodhart model:  Low-involvement situation is repeat purchase Ehrenberg & Goodhart: simple process to explain purchase behavior Awareness precedes trial, which, if satisfactory, repetition Habitual Behavior: little conscious thought prior behavior Awareness precedes behavior that precedes attitude Consumer does not seek info but is a passive recipient. Consumer searches for satisfactory solution Any of several brands in the evoked set is adequate.

Differential advantage is when there is a clear difference between competing products or companies in terms of the criteria which are important and inform consumers' choice. Differential advantage when clear difference between competing P in terms of the criteria which are important & inform consumers' choice Fig 3.2b Evaluation & purchase model: Low involvement: the Ehrenberg & Goodhart repeat purchase model

Distinguishing between high & low involvement situations High-involvement situation: marketing managers need to provide good info about +consequences of buying. Messages with high information content enhance k about the brand; because consumer actively seek info Print media & websites may be appropriate in this case since they allow detailed study of information. This influences consumer's beliefs Sales force also has an important role to play ensuring that the customer is aware of the important attributes of P & correctly evaluates their consequences.

Low-involvement situations: evaluation of alternatives is basic & attitude change after purchase Gain top-of-mind awareness through advertising & providing + reinforcement better than masses of info about consequences of buying the brand. Consumer is not seeking info but a passive receiver. Messages should be short but with high repetition Marketers create a feeling of warmth about their brands. More exposure to a brand name over time Impulse buying: associated with emotions 'wild', 'sensation'

Purchase decision & post-purchase behavior After evaluating alternatives, consumer decide which particular item to buy. Once purchase is made, consumer assesses whether they have made right choice. If they have concerns, this is called 'post-purchase dissonance' It is important to allay any concerns cause otherwise customer may return the product to the store. Retailer offers good after-sales care to ensure that the customer does not reject P& to reinforce belief that they made 'right' choice in the first place.

Influences on consumers' purchasing There are three buying situations:  Extended problem solving. Highly involved consumer requires a great P information, makes a detailed examination of alternatives Limited problem solving. Consumer has some experience of P & may do a limited evaluation such as checking prices when making certain purchases. Habitual problem solving. Consumer is making repeat purchases, little evaluation of alternatives, same P are bought as on previous occasions.

Six influences on consumer behaviour: Personal influences Six influences on consumer behaviour: Information processing: How we receive, store & interpret information Many market research aim to discover more about consumers' perceptions Magnetic resonance image (MRI) scanning to gain more scientifically based insight into how consumers' brains actually process information 'neuro-marketing'.

Motivation - our needs & goals are what drives us to solve problems and achieve goals. At the most basic level are Physical motivations: survival and safety Socially driven motivations: belonging and love Self-fulfilment : Achieve what you are capable of Beliefs and attitudes - how what we believe to be true shapes our views & subsequent behaviour. Beliefs are very important & are used by marketers to encourage changes in behavior. Many shoppers' belief that supermarket Sainsbury sells good-quality.

Personality: - Inner psychological characteristics of individuals which shape responses to particular situations - widely used in branding to create links between buyers & sellers  Lifestyle: Ways we live our lives Pattern of living as expressed in a person's activities, interests & opinions‘ Market research is used to identify discrete patterns of shopper behavior. Important particularly in food & drink sector where personalization has become increasingly popular

Life-cycle & age: stage of life consumer has reached Purchasing behavior changes according to a person's life situation. Stage in life-cycle is important to retailers as it affects P people require, disposable income & amount they are prepared to spend. It is very important for marketers to understand not only the buying situation but also the personal influences which affect consumer behaviour.

Store choice Store choice is linked to the type of buying situation Consumers can be creatures of habit & in this situation retailer should aim to ensure that shopping experience is within customers' expectations in terms of number of sales staff, organization of the store & P availability Failure to meet expectations can kick-start the customer into re-evaluating where to shop.  85 % world's consumers ranked good value for money as most important consideration when selecting store Note that location &convenience are also influences

Possible attributes which affect store choice include:  value for money convenient location ease of parking low prices range of products available  cleanliness and attractiveness of the store quality of own-label products quality of fresh produce availability of specialist and high-quality products in-store promotions helpfulness of the staff proximity to where you live availability of parking space store opening hours other facilities such as a petrol station or coffee shop recreational facilities situation of the store in relation to other shops.