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Ppt Buying Motives in Marketing Consumer Behavior

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									                   Consumer Behavior - Issues and concepts

 Consumer behavior can be defined as “The decision process and physical
activity engaged in evaluating, acquiring, using or disposing of goods and

Who is a consumer?
A “consumer” is anyone who typically engages in any one of all the activities
described in the definition stated above.

The term consumer is a far wider term encompassing not only the actual buyer
or customer but all its users i.e. consumers.

What is decision process?
We have defined consumer behavior as the „decision process‟ and „physical
activity‟ the individuals are engaged in.

The physical activity refers to purchase.

It is influenced by complex and hidden variables, which might influence the
purchase activity.

Decision Process

The decision process comprises a series of steps:-
  1) Problem recognition
  2) Information search and Evaluation
  3) Making a choice regarding which outlet to purchase from – Purchasing
  4) Post purchase behavior

Individual determinants

   1) Motivation- Internal force which arouses or activates some need and
      provides direction of behavior towards fulfillment of the need.
   2) Involvement – Returns to personal relevance or importance of a product
      or service that a consumer receives in a given situation.
             High involvement leads to a highly motivated state of mind as in
             case of a Professional photographer.


Attitudes are our learned predisposition towards objects, people and events

Attitudes are not inborn an innate in us. Rather they are learnt from people
around us.

Personality and self-concept

Personality is the sum total of the unique individual characteristics that make
each one of us what we are.

Markets also try to give a district image or personality to their products

Hearing and Memory

       Everyday we are exposed to a wide and diverse range of information.
       Our motives, attitudes, and personality act as filters by letting in only
relevant information and keeping all other information out.

Information processing

      This refers to the process and activities which consumers become
engaged in while gathering, assimilating and evaluating information

External Environment

      Cultural Influences

Complex, Sum total of knowledge, beliefs, traditions, customs, art, morals, law
and any other habits acquired by people as members of the society.

      Sub-Cultural Influences

Within a given culture there are many groups or segments of people with
distinct customs, tradition and behavior, which set them a part from other

      Social class Influences

Social class is a group consisting of a number of people who share equal
position in a society. Within a social class, people tend to share same values,
beliefs and exhibit similar patterns of behavior and consumption.

Social group Influences

A social group is a collection of individuals who share common attitudes and a
relationship because of interaction with each other. Social groups may be
primacy where face-to-face interactions take place frequently, such as family,
workgroups, and study groups. Examples of primary groups are association of
professional members of a political party, and social groups as Rotary, Lions

Family Influences

Family is a social group, which can be defined as a primary group.

The first and strongest influence is a child is that of his family, he imbibes
many behavioral patterns from other members of the family subconsciously,
and they tend to stay with him even after attaining adulthood.

Personal Influences

      The family, social class, sub-cultural and cultural group to which he
belongs, and yet has his own distinct personality, which influences this decision
and behavior as a consumer, influences each individual.

Other Influences

Any other influences not covered above are covered here. National or regional
level events, situational factors or any other external influences are included

Applications of consumer behavior in Marketing.

      Marketing is defined as “Human activity directed at satisfying needs and
wants through exchange processes‟.
      Application of consumer behavior in marketing is spelt out below-

          1. Analyzing market opportunity study of consumer behavior helps
             in identifying needs and wants which are unfulfilled.
          2. Selecting the target market the study of consumer trends would
             reveal distinct groups of consumers with very distinct needs and
          3. Determining the product mix consumer behavior guides
             determination of might product mix, price, promotion and
          4. Price the market has to determine the price level, which also
             maximizes the sales revenue. Far doing this he must understand
             the way this product is perceived by consumer, the criticality of
             price as purchase decision and that an increase or decrease would
             affect the sales.


      Having determined the product size, Shape, packaging and price the
marketer has to decide on the distribution channel.
      The marketer must develop a good understanding of the minds of the
consumed to decide the nature of outlets, retail, wholesale, closely placed or
placed at distances.

Consumer Behavior and Lifestyle marketing


       The marketer here is concerned with finding the most effective methods
of promotion which will make the product stand out of the clutter of so many
other brands, and products, which will help achieve the sales objective and yet
by within the budget. Consumer behavior and lifestyle marketing

       Lifestyle marketing is a process establishing relationship between
products offered in the market and targeted lifestyle groups. It involves
segmenting the market on the basis of lifestyle dimensions, positioning the
product in a way that appeals to the activities, interacts and opinions of the
targeted market and understanding specific promotional campaigns which
exploit life style appeals to enhance the market value of the offered product.

Demographics, Psychographics and lifestyle

      Demographic variables help the marketers „locate‟ their target mar
 marketer with more insight about the segment. It is in
Common parlance life style analysis or A 10 approach.
      The demographic and psychographic life style approaches are highly
complementary and work best together.

Approaches to study lifestyle

AI0 inventories

Activities          Interests     Opinions     Demographics

Work                Family        Themselves Age

Hobbies             Home          Social       Education

Social events       Job           Politics     Income

Vacation            Community Business         Occupation

Entertainment       Recreation Economics Family size

Club member           Fashion      Education     Geography

Community             Ford         Products      City size

Shopping              Media        Culture       Life cycle

Sports                Achievements

Activities indicate how a consumer /Family spends his/her/their time

Interest is a families/consumer‟s preferences or priorities

Opinion is how a consumer feels about a wide variety of events and things.

         Organizational buying behavior

What is organizational buying behavior?

It is a complex process of decision-making and communication, which takes
place over time, involving several organizational members and relationship with
other firms and institutions.

      It is important to recognize the emphasis on the decision process;
Robinson, Faris and wind have identified the process as follows:

   1.    Need recognition
   2.    Definition of the characteristics and quantity of item needed
   3.    Development of the specifications to guide the procurement
   4.    Search for and qualification of potential sources
   5.    Acquisition and analysis of proposals
   6.    Evaluation of proposals and selection of suppliers
   7.    Selection of an order routine
   8.    Performance feedback and evaluation

Major influences on organizational buying behavior

External environment            Organizational

Economic                            Objectives
Infrastructural                       Policies
Social                          Procedures
Political                       Organizational Structure
Competition                     System

Interpersonal                         Individual

Authority                       Age
Status                          Income
Empathy                         Education
Persuasiveness                         Job Position
                                Risk attitude

Consumer Motivation and involvement

Why do we buy one product or brand rather than the other? Why do we buy
from one shop than the other? Why do we buy at all?

      The basic reason is human behavior. The chief characteristic of the
human actions is that each part of it is guided by motives, conscious or
      A successful marketer understands the motives and “Shapes them”.

The Concept and typology of needs

Consumer motivation and involvement is based primarily on the nations of
consumer needs and wants.

Types of needs

        People are barn with a need for certain elements necessary to maintain
life, such as food, water, air and shelter. These are called biogenic needs;
psychogenic needs are acquired in the process of becoming a member of a
culture. There include the need for status, power, affiliation, and soon.

Maslow‟s Hierarchy of needs

      Maslow‟s approach is a general one originally developed to understand
personal growth and the attainment of peak experiences.

       Maslow formulated hierarchy of needs in which levels of motives are

        A hierarchical approach implies that the order of development is fixed,
that is, a certain level must be reached before the next higher one is activated.

        Marketers have adapted this universal approach to motivation because it
specifies certain types of product benefits people might be looking for,
depending upon the different stages in their development and /or their
environmental conditions.
These levels are summarized below.

Self-fulfillment and enriching experiences

Ego needs
Prestige, Status
Love, friendship
Acceptance of others

Security, Shelter


Water, Sleep, Food

Maslow‟s hierarchy and marketing strategies

Level of hierarchy          Relevant Product
Self actualization          Hobbies, travel, education, cars
Ego needs                   furniture, credit cards, stores,
                            Country clubs
Belongingness                      clothing clubs, drinks

Safety                      Insurance, alarm systems, retirement

Physiological               Medicine, Staple items

         Implication of Maslow‟s hierarchy

one must satisfy the basic need before progressing up the ladder (i.e.a starving
man is not interested in status symbols, friendship or self fulfillment)

       This hierarchy may not be inflexible
        Same product or activity may satisfy various needs.
       Maslow‟s hierarchy is culture bound. Western cultures vary widely from
the oriented cultures.

        The importance of Maslow‟s hierarchy of needs lies of its wide
application and recognition that consumers may have different need priorities
at different times.

Motives: The basis of motivation

A motive is an underlying reason for behavior and not something, researchers
can see or easily measure. The same behavior can be caused by a number of
different motives.

The concept of motivation

Motivation refers to the processes that cause people to behave as they do.

Figure below gives an overview of the motivation process

Need Recognition                                               Personal &
                                                               Cultural factors

Tension ____Drive strength_____ Drive Direction ____Behavior __ want
____ goal

Alternatively, motivation has been defined as the inner drive in individuals,
which impel them to action.


The consumer recognizes a need. This need may be utilitarian (i.e. a desire to
achieve some functional or practical benefits) or it may be hedonic (i.e. an
experimental need, improving emotional responses or fantasies) The desired
state is the consumer goal.

In either case, a discrepancy exists between the consumer‟s present state and
some ideal state. This leads to a tension. The magnitude of this tension
determines the urgency to reduce the tension. This degree of arousal is called a


A number of ways can satisfy a basic need, and the specific path a person
chooses is influenced by his or her unique set of experiences, cultural
upbringing, and so on, these factors combine to create a want, which is one
manifestation of a need.

Theories of Motivation

   a) Instinct theory of motivation

Early work on motivation ascribed behavior to instinct____the innate patterns
of behavior that are universal in species

   b) Drive theory
Drive theory focuses on biological needs.

Consumer buying behavior

Various factors affecting consumer-buying behavior


Culture (set of basic values, perceptions, want and behavior learned by a
member of society from family and other institutes)

Subculture-a group of people with shared value system based on common life
experience and situations.

Social class-Relatively permanent and ordered divisions in a society where
members share similar values, interest and behavior.

Social-It refers to reference groups like club members, groups sharing
Opinion leaders and family.

Personal-A buyer‟s decision is also influenced by his/her age, life cycle stage,
occupation, life style, personality and self-concept.

Psychological-Psychological factors affecting our purchase decision include
motivation, perception, learning, beliefs and attitudes.

Consumer buying roles
There are five key buying roles in the decision-making process

Initiator-A person who first suggests or thinks of buying.

Influencer-A Person whose views or advice carries some weight in final buying.

Decider-The person who ultimately makes a buying decision.

Buyer-The person who makes the actual purchase.

User-The person who consumes uses a product or service

Consumer decision process stages

Need recognition

Information search

Evaluation of alternatives

Purchase decision

Post purchase behavior

Reasons for brand choice

Social imagery


                     Cross Selling, Relationship Banking

   1. How has the marketing scenario changed?


              Yesterday                                   Today
Mass                                      Personal
Consumer is passive                       Consumer is participative
One off, short term                       Lifetime, long term
Limited use of technology                 Widespread use of technology
Serve customer well                       Serve customer differently
Success measured by current market        Success measured by lifetime market
share                                     share
Success measured by current Profits       Success measured by lifetime Profits.

   2. Customer Relationship -------- Importance
      It is seven times more expensive to obtain a new customer than to retain
      an existing one.

          Strong commitment to customer care at all levels.
          Promises made must be realistic and achievable.
          Intimate knowledge of the customer leads to excellent customer
          Continuous feed back from the customers.

   3. Cross Selling and Relationship banking;-
      Cross selling means selling more services to existing customers.
      Increased cross selling can increase sales to existing market.

   3.1 Transaction Marketing vis-à-vis Relationship Marketing;-
        Relationship marketing is the attraction, maintaining and ------ in multi
        Organization ------ enhancing customer relationships.
       (Leonard Berry)
           Emphasis from transaction focus to relationship focus
           A recognition that quality, customer service and marketing go

         Transaction Marketing                  Relationship Marketing
Focus on single sale                     Focus on customer retention
Orientation on product features          Orientation on Product benefits
Short time scale                         Long time scale
Less emphasis on customer service        Higher emphasis on customer service
Low customer commitment                  Higher customer commitment
Mode rate customer contact               High customer contact
Quality is a primary concern of          Quality in the concern of all

       Relationship marketing views customers as clientele and emphasize
        on their retention.
       Relationship marketing transforms single usage to multiple service
        usage and indifferent customers into loyal clientele.
       Relationship marketing involves decisions regarding the target
        segments, the services offered to those accounts and most
        appropriate selling approach for each category of target account.
       Relationship marketing aims to change customers to advocate by
        replacing customer satisfaction by customer delight and offering
        services quality that exceeds expectations.
           Successful development of relationship marketing rests on;
       Segmentation and targeting

 Development of a „core service‟ that the customers is particularly in
  need of
 Establishment of a liaison representative in the financial organization
  whom the customer may always approach.
 Provision of an incentive to the customer via relationship pricing to
  encourage the use of services by special clientele.
 Informing the clientele anything that might be of use to them as
  special clientele.

In the 19990‟s banking industry took a turn towards liberalization,
deregulation, privatization and globalization exposing them to
unprecedented competition, for which banks found a solution in the
strategy of „Relationship banking‟. New technologies in information and
delivery system. The opening up of the banking system to the private
and foreign banks as also large scale disintermediation have unleashed
competitive forces which the nationalized banks have to live with as the
sellers‟ (bankers) market has been transformed into buyers (customers)

                          Relationship Banking

3.2 Relationship Banking:-
    The emphasis here is on viewing the customer as a long term
     business relationship.
    Banks plan to meet the total banking requirement of the
     customers and expect repeat business.
    Relationship is based on full knowledge about the customer needs
     and causing total customer satisfaction by providing services that
     exceeds his expectation.
    An understanding of exactly what the customer is buying in
     critical. The basic utility he derives from the product is the
     nucleus of core in the center, surrounded by services of both
     tangible and intangible attributes.

    Theodore Levitt suggested four different levels constituting a
total product concept:

     Core or generic-
 For banking service like deposit account the core element might be
safety and return on deposits

  Expected _

 The customer expects warm, friendly atmosphere, transaction to be
completed without undue delay and on going information regarding

Augmented –

 Additional facilities like loan, locker, credit card, mutual fund,
insurance, housing, investment counseling etc.

The banker transforms into friend, philosopher and guide.

  At the first level customer‟s basic need in satisfied. He derives
greater benefit
Through second (expected) level and the third (augmented) level. As
the service extends to fourth (potential) and final level building up of
customer relationship is complete.
Relationship management plan and a roadmap to its implementation:

Sep I: On super-ordinate goal
Draw the vision and mission statements around the customer value.

Customer service- IBM
Progress        - GE
Innovation       _ HP
New ventures - 3M

Step II : Strategy
Draw a strategy of market segmentation to focus on a customer

  Segmentation makes relationship strategy focused, helps devise
appropriate delivery system and tailors the relationship Programme to
customer needs.
   Within a segment, there is further need to calculate lifetime value.
that is, net present value of contribution of a customer over
anticipated retention period.

Step III : On structure
Restructure the organization as a cross-functional and process
oriented one.
    Relationship management requires a market facing organization
structure, which can marshal multidisciplinary teams for customer
satisfaction. In such a structure, the relationship manager is the sole
interface with the client, and skilled product groups support him in
product delivery.

Step IV : System

  Design a service delivery system on quality and coordination.
      Market facing delivery system takes a logistic approach, as it is
process based and not function based. Logistics should be designed
in such way that gives a cost effective, yet consistent output.
     Service quality should be designed into the process There
should be clear accountability for coordination in delivery.

Step V: On skill

 Cultivate skill as cutting edge.
For successful relationship management, an organization should have
three skills, i.e. marketing skills, product skills and listening skills.

Step VI: On Style

Devise a suitable appraisal system and reinforce it through top
management intervention.

Step VII: On Staff

Devise policies, which empower staff and encourage open

   Once a relationship management plan is based on a strategic
approach as above , it will generate customer loyalty. Loyalty is most
mobile. It is never there unless earned. Once earned, like many other
rare assets, it will be appreciate in value, as satisfied customers
become your most vocal sales persons.

Personal Selling:

 Personal selling is oral presentation in a conversation with one more
prospective purchaser for the purpose of making sells.

  It is a process of informing the customers and persuading them to
purchase the product through personal communication in an
exchange situation.

  Personal selling involves communications aimed at satisfying
consumer needs by matching specific products with specific

  Personal selling provides one to one communication vehicle.

  Personal selling is for attracting new customer and selling more
volume/ services to the existing customers.

  It can be through calling on in person or telephone.

  An excellent tool for relation building.

These seven steps are major in effective personal selling:

Step I: Prospecting and qualifying
Step II: Preapproach
A will prepaid call has good chances of success.
Learning as much as possible before calling a customer .
Setting the call objective.
Deciding the best approach

         General sales strategy

         Step III: Approach
                  Points of significance

            Caller‟s appearance
            Dress
            Opening words
            Follow-up remarks
            Ability to observe
            Listening

         Step IV: Presentation
          Avoid formula approach
          Adopt needs satisfaction approach

          Step V: Handling objections

          Step VI: Closing

          Step VII: After sales service and follow-up

Internal Marketing

Essence of internal marketing

    There is need to market products to the grassroots level people before we
expect them to market this product effectively to the customers. Treating our
employee as internal customer is essence of internal marketing.

     Internal marketing is based on:

 Principle of inseparability – seller and product constitute the banking product
in the eyes of the customer.

Everybody sells.

The concept aims at making the staff member of the organization to deliver the
best possible performance and increase productivity.

The same marketing tool used to attract the customers can also serve to attract
and retain the best employees

Internal and External marketing- Comparison

Internal Marketing:

Genesis:        Employee needs/ expectation

Process:         Satisfy needs. Market Bank‟s products / strategies to

Objectives:      Achieve employee involvement and participation

External Marketing:

Genesis:         Satisfy customer needs

Process:         Manage sales and delivery to the customers

Objectives:      Achieve customer satisfaction

           Excellence in service quality

           Crumbling of barriers has made markets open to competition

           Competition has intensified

           Banking reforms have removed the shackles in opening of branches
           even by foreign banks

         Public sector banks are facing stiff competition from foreign and new
         Private Banks
         Technology has further complicated the situation
          Customers are sophisticated, techno savvy, knowledgeable and

           Now the mantra is transition from customer satisfaction to customer
         Banks are resorting to segmentation of customers and are taking
measures to
         Continuously upgrade their services in tune with their expectations
and beyond that

           Relationship marketing has revolutionized the traditional marketing

           Service customers attach lot of importance to the following factors:

           Reliability: Customers expect the promised service

            Responsiveness: Service to be delivered promptly

           Assurance: Service employees must be courteous, knowledgeable,
and assuring

           Empathy: customer service should be individualized and

            Tangibility: Physical evidence associated with service facilities should
be clear

             Quality can improve through organization wide commitment and
support to
             Building a service culture through corporate missions, standards,
reward and
          People must be properly trained
         Incorporating latest tools and technology


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