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MNM2605- Summary Notes.
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MNM2605-Summary
Notes.
, MNM2605–ConsumerBehaviour
StudyUnit1:NatureofConsumerBehaviour
Customerbehaviour:acombinationofactivitiesandinfluencesthatoccurbefore,duringandafterthe
purchaseitself.It’salltheconsumeractivities,includingtheemotional,mentalandbehaviouralresponses
thatprecede,determineorfollowtheseactivities.
Customertypes Roles
Activities
Customers Users
Mental Selectors
Businesses Physical Payers
Typesofcustomers
Business:tomanufactureotherproducts,toreselltootherorganisationsorindividuals,toconduct
operations
Consumer:all-encompassingtermtomeananyenduser,customer,client
Rolesofcustomers:
Selector:participatesinprocurementfromthemarketplace
Payer:financesorpaysforpurchase
User:actuallyconsumestheproduct,receivesthebenefitofproductorservice
Onepersoncanbeone,two,orallthreeforaproduct.Theremaybeconflictsbetweenroles,e.g.your
parentsbuyyouasmallcarbutyouwantedasportscar.
Activities
Physical:actionstakensuchasvisitingthestore,discussingproductwithsalesperson,comparing
productsandbuying.
Mental:assesshowwelltheproductwillsatisfyneeds,experiencewiththeproduct,andknowledgeof
differentbrands,opinionsorviews.
Individualfactorsthatinfluencedecision-making
Motivation:theneeds,wants,drivesanddesiresofanindividualthatleadthemtothepurchaseof
productsorideas.
Perception:individualbecomesawareoftheenvironmentandinterpretsittointheirframeofreference.
Learningability:consumersacquirepurchaseandconsumptionknowledge,experiencewhichtheyapply
tofuture-relatedbehaviour.
Attitude:learnedpredispositiontobehaveinaconsistentlyfavourableorunfavourablewaytowards
objects,eventsorsituations.
Personality:psychologicalcharacteristicsthatdetermineandreflecthowtheyrespondtotheir
environment.
Lifestyle:wayofliving.
Groupfactorsthatinfluencedecision-making:
Family:nuclearandextendedfamily.
Culture:institutionalisedwaysofappropriatebehaviour.Distinctivepatternsofbehaviourofagroupof
people,includingbeliefs,norms,valuesandpremises.
Socialclass:groupwhichenjoysmoreorlessthesameprestigeandstatusinsociety.
Referencegroups:areusedasabasisofcomparisonorpointofreferencewhenformulatingresponses.
Opinionleaders:onepersonperformingthefunctionofareferencegroup.
Importanceofcustomerbehaviour
Customersatisfactionandcustomerretention
Itismorecostlytorecruitnewcustomersthantokeepoldones.Organisationsmustmeetorexceed
customers’expectationsofservice,quality,priceanddelivery.
Marketingconcept
Marketingactivitiesareinfluencedbyfourcompetingorientations:
Productionorientation:focusedontheinternalcapabilitiesofthebusinessratherthandesiresand
needsofthemarketplace.Whatcanwedobest?
, Salesorientation:useofaggressivesalestechniques,withhighsalescreatinghighprofits.
Marketingorientation:focusonwhatcouldbesold,i.e.theneedsofthebuyers.Thisledtothe
puremarketingconcept:
●Consumerorientation:allmarketingactsshouldbeaimedatsatisfyingconsumerneeds,
demandsandpreferences.
●Profitorientation:achievingprofitabilityisessential,maximisingprofitsistheprimary
objective.
●Organisationalintegration:theorganisationisseenassystemofunitsthatworktogetherto
achieveajointobjective.
Societalorientation:askswhetherthepuremarketingconceptisadequatewhilefacingproblems
ofenvironmentaldamage,resourceshortages,populationgrowth,etc.Isitwhatisbestinthelong
run?
Customerfocus
Organisationsthatfocusontheneedsofthecustomerensurethattheneedsofsocietyareservedbetter.
Thisisessentialforlong-termsurvival.
Applicationofknowledgeofcustomerbehaviour:
Marketingstrategy
Basedonexplicitorimplicitbeliefsaboutcustomerbehaviour.Strategiesbasedonresearchandsound
theorywillbemoresuccessful.Themarketingstrategyprocessconsistsoffouriterativeprocesses:
Socialmarketing
Satisfywants,needsandinterestsoftargetmarketsinsuchawaythatitpreservesorenhancesthelong-
termwell-beingofconsumersandsociety.(Behaviourchangecampaigns,promotingsocialissues,
donatingrevenuetoacause,providingvolunteers)
Better-informedindividuals
Itisimportantthatcustomersunderstandthestrategiesandtacticsthatcompaniesareusingtoinfluence
theminorderforthemtomakeproperlyinformeddecisionsaboutwhattheybuy.
RoleofCustomerBehaviourinMarketingStrategy
Customervalue:thedifferencebetweenallthebenefitsderivedfromaproductandallthecostsof
acquiringthosebenefits.
Marketingstrategyworksinthefollowingway:
1.MarketAnalysis:detailedanalysisoftheorganisation’scapabilities,strengthsandweaknessesof
thecompetitors,theeconomicandtechnologicalforcesaffectingthemarketandthecurrentand
potentialcustomersinthemarket.
a. Customers: e.g.customervalueanalysis-theuseofacustomerinformationdatabaseto
enabletheorganisationtoprojectthefuturebehaviourofcustomersonthebasisoftheir
purchasehistories.
b. Organisation:understandingofcapabilities,e.g.finances,managerialskills,production
capabilities
c. Competitors:understandthecompetitors’capabilitiesandstrategies,aswellasit
understandsitself.
d. Environment:variableswhichmaybeinfluenced,butnotcontrolled,bytheorganisation.
Thesearetheconditionsunderwhichthestrategywillbeimplemented.
, 2.MarketSegmentation:basedonmarketanalysis,theorganisationidentifieshomogenousgroups
orsegmentsonwhichtofocus.Thesegmentsaredescribedintermsofdemographic,
psychographicandgeographicaspects.Customersinthesegmenthavesimilarneedsandwants.
Asegmentmustbelargeenoughtobeprofitableforacompanytotargetit.
a. Benefits
i. Forcesfocusoncustomerneeds
ii. Identificationofnewmarketingopportunitiesfromresearch
iii. Guidelinesfordevelopmentofseparatemarketofferings
iv. Facilitateappropriateallocationofmarketingresources
b. Disadvantages
i. Developmentofseparatemodelsandmarketofferingsisexpensive
ii. Limitedmarketcoverageisachieved
iii. Excessivedifferentiationmayleadtoaproliferationofmodels,andcannibalisation
c. Criteriaforeffectivesegmentation
i. Measurableintermsofsize,buyingpower,potentialprofit
ii. Largeenoughtobeworthexploitingwithtailoredoffers
iii. Accessibletomarketers
iv. Actionablee.g.fundstocreateseparatemarketofferings
v. Differentiableintermsofneeds,demandsanddesires,easytodistinguishbetween
3.MarketingStrategy:aimedatpenetratingtheselectedsegment(s).Thestrategyisformedinterms
ofthemarketingmix,whichinvolvescombiningproductfeatures;pricestobecharged,promotion
oftheproductandmakingitavailableintheplacecustomerswantit.Thiscombinationisthetotal
product.
a. Product:marketersmustbalancethebenefitsofcustomisationagainstawiderangeof
productoptions-includesquality,styling,specialdesignfeatures,packaging,rangeofsizesor
options,warranties.
b. Promotion:therearesevenformsofmarketingcommunication(advertising,personal
selling,publicrelations,salespromotion,sponsorships,directmarketing,publicity).Themarketing
communicationstrategyneedstoanswer:
Withwhomdowewanttocommunicate?
Whateffectdowewantourcommunicationtohaveonthetargetaudience?
Whatmessageshouldweconveytothetargetmarket?
Whatmeansandmediashouldweusetoreachthetargetaudience?
Whenshouldwecommunicatewiththetargetaudience?
c. Price:customerscanbuyownershiporlimitedusagerights(rent).Lowerpricesdonot
alwaysequalmoresales.Pricecanbeseenasameasureofquality.Companyneedsto
understandthesymbolicrolethatpriceplaysfortheproductandtargetmarket.
d. Place:distribution’sroleistogettheproducttoitstargetmarket.Customerswillonly
rarelygooutoftheirwaytoobtainaparticularbrand.Strategieshavetobedeveloped,suchas
methodsandroutestogettheproducttothelocation.
Outcomesofcustomerbehaviour
Organisationaloutcome
Productpositioning-Thewayinwhichthecustomersdefinetheproduct’simportant
attributes.
Sales-Producetherevenuenecessaryfortheorganisationtostayinbusiness.
Customersatisfaction-Keepingexistingcustomersbecausetheyaresatisfiedwiththe
products.
Individualoutcomes
Needsatisfaction-actualandperceivedneedfulfilment.Often,fulfillingoneneedaffects
theirabilitytofulfilothersbecauseoffinancialandtimeconstraints,e.g.gambling.
Societaloutcomes
Economicoutcomes-Cumulativeimpactofbuyingdecisions,incl.decision
Physicalenvironment-Pollution,availabilityofscarceresources.
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