Consumer Behavior Is The Study

Published Date: 02 Nov 2017

COLOMBO CAMPUS SRI LANKA

MBA FOR EXECUTIVES

MODULE ASSIGNMENT:

MARKETING MANAGEMENT

Student Name: I.P.Mayadunne

Student Registration No:

Module Lecturer:

Module Tutor:

Date Submitted:

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Executive summary

The report is written with the purpose to identify the behavior of the consumer. In the market the consumer plays a leading role. All of us are consumers. We consume things for daily use and buy products according to our needs, preferences and buying power. The consumer behavior varies time to time. By analyzing the market with well known products of the existing market the author was able to understand the basics of consumer behavior and how the concepts can be applied practically.

Buyer behavior means "the study of individuals, groups, or organizations and the processes they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society [Consumer behavior 2013]. Analysis in buyer behavior is a major task which marketers should carry out in order to achieve competitive advantage. A good marketing research should be carried out in order to understand consumer preferences time to time.

Applying 7O’s model, Black box model and the buyer’s decision making process a marketer can understand the consumer preferences easily. The report will flow and map the processes carried before, during and after making the purchase decision by a consumer.

Introduction

Consumer behavior is simply taken as the buying decision of final consumer. Most of the marketers fail as they just launch products to the market without concerning the consumer attitudes towards it. Consumers play a vital role in marketing environment. Therefore understanding the behavior of the buyer is a main thing which the marketer should do in order to attain competitive advantage. Therefore to understand the consumer behavior the marketer should understand the factors which affect the buyer’s decision internally and externally. Then the marketer should find a way to understand the consumer behavior and market according to the consumer needs and wants.

In the report the author will be explaining the consumer behavior in corporate world along with the theory where marketers can enhance the understanding on the target group and treat the market well with their products. 7 Os model and Black box theory along with the buyer decision making process will be explained in the document with advantages which marketers can gain using the said concepts. The author will finally conclude the document with analysis of drawbacks and recommendations.

Concept Definition

Consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society [Consumer behavior 2013]

Buying Behavior is the decision processes and acts of people involved in buying and using products. [Buying Behavior n.d.]

The buying behavior of final consumers – individuals and households that buy goods and services for personal consumption. [Kotler et al. 2010, p.115]

The process by which individuals search for, select, purchase, use, and dispose of goods and services, in satisfaction of their needs and wants. [The Business Directory n.d.]

Consumer behavior refers to the mental and emotional process and the observable behavior of consumers during searching, purchasing and post consumption of a product or service [‘Customer Buying Behavior’ (John et al.2008)]

As buyer plays a leading role in a business, the behavior of the buyer has to be identified to come up with a good marketing strategy. Understating buyer behavior involves identifying buying participants, buying criteria of different participants and the influence of the buyer as well as satisfying the needs and wants of the customer. Buyers vary in age, income, education and perception on goods and services. The satisfaction of consumer is a major achievement of the marketer. Therefore maintaining consumer relation even after sale is also really required.

Consumer behavior model

The black box model

Customers make their buying decision every day. To achieve the consumer attention towards the products the marketers have to find out answers to what consumer’s buy, where they buy, how and how much they buy, when they buy and why they buy. [Kotler et al. 2010, p.116]

Marketing and other stimuli consists of the four P’s (Product, Price, Place and Promotion) and Economic, Technological, Social and Cultural factors which affect to consumer buyer behavior.

The buyer’s black box explains about the characteristics of the buyer which finally comes to the conclusion of the buyer’s response.

Once the consumer understands the need he tries to find information before responding to the product or service. The response varies according to consumer’s interest.

C:\Users\admin\Desktop\MBA\black-box.jpg

[The image of Model of Buyer Behavior n.d.]

Factors affecting buyer behavior

Through the analysis of the buyer’s behavior; it will help in understanding the best market segment and the strategy. Decision making process of the buyer depends on both habitual and emotional factors and influenced by cultural, social, personal and physiological factors.

Culture explains what people value, attitudes and their thinking behavior over generations. Customer is a component in the society. The society has a high impact over the decisions taken by a person. Publicity over word of mouth and use of celebrities help marketer’s in achieving their marketing objectives. Personal and psychological factors are affected by cultural and social factors. Following Diagram gives a brief description on the above mentioned factors on buyer behavior.

C:\Users\admin\Desktop\MBA\ABkotler7_05_03.jpg

[The image of Factors Influencing Consumer Buyer Behavior n.d]

Individual Buyer Behavior

Individual characteristics play a vital role in buyer behavior. The explanation below will follow with the example of Munchee biscuit (Cream cracker: we called "the customer’s first recall memory" when saying the Munchee cream cracker)

Personality: Psychological characteristics which are unique to an individual (e.g.: the customer concerns on the brand name, social comments on the product)

Personal motivation: Possession which contributes and reflects the identities (the situation, taste and price)

Hierarchy of needs: Maslow’s hierarchy of needs are considered and categorized needs upon physiological needs, safety needs, esteem needs and self actualization needs (comes under physiological needs as food is a basic need of every human)

C:\Users\admin\Desktop\MBA\Maslow's_hierarchy_of_needs.jpg

[The image of Maslow’s Hierarchy of needs 2012]

Brand perception: Image of the public on the product (In Sri Lanka the brand name of Munchee has a good impression and word of mouth by consumers. The Munchee can be called as "The customer’s first recalled memory".

Refer appendix

Brand affinity and attachment: Consumer loyalty towards the brand (Though many brands of biscuit come to the market even a child knows the Munchee brand even by the name and packaging)

Exposure and learning: Once a consumer consumes and satisfies on the product he/ she tends to buy any new product produced by the same marketer. (When Munchee introduces biscuits with new tastes and new products like chocolate and curry products; the consumer buy it from the market and try on the new product. This explains that people believe Munchee have ability of new product development and innovative ideas than others.)

7 Os and Buyer Behaviour

The field of consumer behavior studies how consumers (individuals and groups) select, buy, use, and dispose of goods, services, ideas to satisfy their needs. To understand the consumers in the target market, marketing managers rely on the 7 O’s framework of consumer research. The 7 O’s answer to key questions in the market place.

Occupants – Understand a summary of customer’s demographic, psychographic and geographic profiles. (the quantity a customer buys, price of the product, brand identity of the product, from where the customer buys it)

Object - The customer’s choice on a range of products or services (biscuits on different flavors. E.g: chocolate biscuit, chocolate chip cookies, chocolate puff)

Occasions – When/At what time the customer seeks for the product or service (lunch room, party, and journey)

Organizations – The key players in decision making process (users, buyers, deciders, competitors)

Objectives – Reason the customer tend to buy the product (brand image, price, packaging, availability)

Operations – How the consumer gather information before buying the product (media, word of mouth, news papers)

Outlets – From where the consumers buy the product (retails shops, super markets, bakery shops)

[Consumer behavior 2013]

These 7 O’s help business in identifying basic customer wants and needs and therefore the marketer will be able to segment the market, target and position the product or service they offer in order to achieve competitive advantage.

The process of buying decision making

Robinson, Faris and Wind (page 133 text book)

Step #1: Need Recognition

In this situation the consumer identifies a need or a want. This need or want can arise with internal factors like hunger, thirst or an external factor like a TV commercial. The marketer has to do a market analysis in order to understand the requirement of the market and should formulate a procedure to make the consumer buy the product.

Corporate Example:01

In here the stimuli can be taken as hunger (or the need to munch something). Munchee chocolate puff can be taken as recently well-liked biscuit in the market. The Munchee Chocolate Puff comes under products of Ceylon Biscuit Limited which is a well known brand in Sri Lanka. The marketers found out a new way to satisfy consumers who loves the taste of chocolate. For this they use the Lemon Puff model asimitation. Chocolate cream is surrounded by two crispy biscuits and sprinkled sugar on the biscuit. This product was introduced to the consumer in 100g and 200g packets in an affordable price. The product can be used in many occasions and situations to satisfy the need to eat something. In here the Ceylon Biscuit Limited has played a good role as a marketer by identifying the customer taste. The advertisement campaign which the company carried out to make customer aware of the product made a huge impact on consumer’s mind to consume the product.

Munchee link

Refer appendix

Corporate Example:02

Dialog mobile network introduced a new way to top up the balance of the account when credit amount is not enough to make a call. This was introduced as "eZ reload". In early days when the account balance is not enough the customer has to go a communication to top up the amount. But when the customer is in a place where unreachable to a communication that customer has to wait till he meets the next communication shop or next day. So dialog introduced this eZ reload method which enables the customer to recharge wherever and whenever he needs credit. Once the customer registers for this facility he can easily do this in the second time. This became a trend in prepaid customers.

Corporate Example:03

Maliban mango puff was introduced to the market without understanding customer’s real need. Even the product was distributed all areas in Sri Lanka the consumer interest towards the product does not seem well. The consumers tend to buy the product due brand name of Maliban. But once the consumer enjoys the product he does not seem to buy it for the second time. (By Retail shop owner). When concerning on the market research done by Maliban in order to attract consumer attention they had paid less attention on the consumer need. The taste of mango inside of a biscuit is not what the consumers expected.

Step #2: Information Search

When a customer is aware of a product he seeks for more information before the consumption. Sometimes the customer buys a product without further information if he is expected to buy it. Customers search information on a product through various sources like family, friends, advertising, sales people and internet.

Consumers specially concern on the product when it is for consumption. So they seek information. To successfully achieve this good marketing team should be in action.

Corporate Example: 01

The product of Munchee chocolate puff is a new product introduced to the market. Therefore the once a consumer buys the product he should satisfied on the product. Munchee able to easily overcomes this obstacle. As Ceylon Biscuit Limited is a leading market player the customer has a good impression of CBL products. The consumer was aware on the product Munchee chocolate puff mostly through the word of mouth. And the advertisement published on television implied customer that "when someone has Munchee chocolate puff he/ she will never leave it for anything". This is called as the hit rate of Munchee products.

Corporate Example: 02

Samsung Galaxy Note. Samsung introduced the Galaxy note to the market with more new features which young people seek on their mobile devices. This was introduced to the market on October 2011 and became a trend in the market. This was highly became a fashion among the young generation. The device is formulated with the need of the market. The young people wanted a mobile device with latest android facilities like multi window and cascade view option which helps to open multiple windows while doing multiple tasks and the user friendly features. [Samsung Galaxy Note 10.1 Update n.d. ]

The Samsung marketing people identified the need in the mobile phone users in the market and became a successful producer through the marketing analysis.

Corporate Example: 03

Maliban Mango puff product was not advertised on the TV. The consumers even do not know that there is a product like Maliban Mango Puff in the market until they see the packaging in the grocery store. The customer awareness on the product is less compared to other products which entered to the market recently.

Step #3: evaluation of alternatives

The step which buyers collect information and choose the product among different alternatives and become brand loyal. The information collection varied on attitudes, family, advertisements and society. At this point the marketer should make a good impression on customer to make the customer brand loyal.

Corporate Example:

Hutchinson Telecom and Dialog Telecom provide service to the pre paid customers with a "per second package". Both companies provide less costly outgoing calls and SMSs to the customers. But customers seek information on the package other than call and SMS charges as signal strength, GPRS and communication centers which enable the customer to easily top up the connection.

Step #4: Purchase Decision

It is significant that the buyer makes the purchase decision among alternative brands. According to Kotler the purchase decision is influenced by the attitudes of others and unexpected situations. The decision can be influenced by others if they had already experienced that product or service or the attitude towards that product or service even if they have not experienced it.

Corporate Example:

Doctors advice people not to eat flour products for meals due to health reasons. In the market there are lots of noodle products by different producers made by flour. Recently The Kingdom of Raigam introduced noodle product which made of rice. The Raigam Company did a good marketing campaign even before they launch the product to the market.

Step #5: Post Purchase Behaviour

In marketing it is essential for the marketers’ to promise only what they can offer to the consumers. Marketing analysis after the buyer purchases the product will help the marketer to identify the satisfaction or dissatisfaction of the customer of that product. Good customer relationship provide marketer with lot of benefits like brand loyal customers, good word of mouth among the society, less attention to alternatives and the customers tend to buy other products on that brand.

Corporate Example:

Ceylon Biscuits Limited entered to the market launching their biscuits. Now the company has expanded the product range with chocolates, soya products, cake, cereal products, jelly and soup. The loyal customers of Munchee biscuits likely buy the other products as well because CBL has a product variation and the similar products category for the segmented markets.

[Kotler et al. 2010, p.131, 132, 133]

Advantages of using buyer behavior concept

The concept of buyer behavior helps marketer to identify the market needs, how to adjust their market according to customer needs, to attain competitive advantage and finally to make brand loyal consumers. Apart from that this concept helps to have a customer edge

Success Stories 01:

Ceylon Biscuits Limited (CBL) introduced "Munchee Chocolate Puff" to the market. As lemon puff product was widely spread among all type of consumers. To offer chocolate lovers with a familiar taste and new way CBL introduced Munchee Chocolate Puff to the market which spread over the whole market within a short period. Through the market research the marketing team has identified the need of the customers and when they tend to consume the product. Chocolate Puff can be consumed for hunger, to relax, to enjoy on a trip, party, etc... Consumers were aware of the product even it launched to the market through advertisement campaign. The brand image of Munchee helped the marketer in achieving the advantage. Apart from this the consumers did not has an alternative for Chocolate Puff biscuit. The competitors had only chocolate cream biscuit in the market. The brand loyalty, price, packaging and impression to consume the new product help to make the purchase decision of the customer. According to the author the post purchase behavior of the Munchee team was done by gathering comments and suggestions of the consumers in order to provide the consumer with a good product.

Success Stories 02:

Dialog telecom introduced an easy way to top up the credit amount when the amount in the account is not enough. By dialing #356# the holder can top up the amount. This method can be used by pre paid consumers. When the credit amount is not enough the customers have wait till he finds a communication centre to top up the account. But there is a time constraint. Most of the communication centers open after 10 a.m. and closed before 7 p.m. If a consumer needs to top up when the communications are closed he has to wait till may be the next morning. But through the easy reload method the user can top up the account wherever and whenever. Consumers made aware of this service through TV commercials and text messages. Dialog prepaid users who has experienced this service acknowledge other prepaid users about this service. When the customer requested credit and when it is credited to the account an automatic message is sent to the mobile phone saying that the amount has been credited.

Failure story 01:

The author’s knowledge and experience on the Maliban cheese puff is not really positive. Even though still Maliban cheese puff available in the market the consumer do not seem enjoying the product. With discussion had with retail shop owners they conveyed that once the consumers buy it they do not come for the second time asking for the product. In here the author’s comment is that the marketing analysis and the attraction of consumer have not taken for much consideration. Therefore the Maliban group has launched a product which consumer is not interested of. Even the consumer was not aware of the product because there was no TV commercial as well. Even the customers who are loyal to Maliban products buy the product the impression towards it does not seem satisfactory.

Failure story 02:

Some time back Dialog Telecom introduced a package targeting the kids. Along with the mobile connection they provided the mobile phone as well. By using the speed dial option the child can contact mother, father or the guardian. When the child needs to contact the guardian or parents when he was out of home, he can simply dial the number and connect with them. The schools do not allow children to carry a mobile phone with them. And the culture of Sri Lanka does not allow a child to use mobile devise at young age (age between 5 years to 15 years). Therefore this attempt was not successful.

Difficulties in using the concept

Needs of the customers varies from one to one. The marketing analysis carried by different marketers by only using data which are taken by a blind test with selected amount of contesters. Same age group, members in the same family and education background may consist of people with different attitudes.

The quality, price, packaging, brand name of alternative products plays a leading role in a market. Some consumers consume products and services of unpopular brands as those are able to provide customer satisfaction at a higher level. Therefore when consumers evaluate alternatives before taking the buying decision the marketer should be able to make customer attract towards their product.

Post purchase behavior is sometimes not practical. As it says when a marketer provide consumer with a product or a service he has to find what are the drawbacks, does the consumer finds it less user friendly, etc.. Most of the companies fail to do the post purchase behavior as they have a bulk of customers. Customer suggestions are comments varies. And most of the marketers are not able to keep track with their customers. Therefore the post purchase behavior is a place where marketer is unable to apply the marketing concepts.

Summary

In the thesis the author describes on the behavior of the customer when making the purchase decision.

The buyer behavior is influenced by the culture (values, behaviors, needs and wants which customer learned through family, society and friends). The buyer decision can be highly influenced by family, friends and related groups. The opinion and the suggestions given by family, friends, the contact group, life style, occupation and economic situation, personality, attitudes and beliefs has a major impact towards the decision power of the customer.

The consumer’s buyer decision, as a step in the marketing research on finding information on the target market the marketers rely on the concept of 7 Os which explains on Occupants (The parties which the market constitute of), Objects (What the market buy?), Objectives (What tends the market to buy the product or service?), Organizations (The parties involved in buying process), Operations (How does the market buy?), Occasions ( At what times the consumers buy the product or service?), Outlets ( where does the product or service available to buy?)

the buyer’s black box model explains on the factors, needs and characteristics which influence in making the buyer’s decision internally and externally and the final decision made by the consumer.

Analysis on the decision making steps of the consumer is a critical point in achieving competitive advantage and brand loyal consumers. This process is carried out in five steps. That is to understand the need of the consumer, search information on the product or service by the consumer, evaluate the alternative products and services available in the market, making the decision to buy the product or service and finally when the consumer buys the product or service the marketer should concern on the post purchase of the product as some consumers need further support from the marketer or the consumer has recommendations to enhance the quality of the product or service.

Conclusion and recommendations

In the report the author tries to give a detailed description on how to understand the factors which influence in making the buying decision, the consumer decision making, constraints a marketer has to face when analyzing the market and the importance of understating the buyer behavior.

The 7 Os model, Black box model and the decision making process of the buyer has explained in detail along with the corporate examples for the reader to easily understand and the author is recommending some points which the marketers can be used for further considerations.

Recommendation

The author has found the following recommendations through the results of the study carried out. Even in a target market there are consumers who are likely to buy. So analyzing the consumers past purchasing experience will help to predict the most appropriate time for a new product launch.

In addition the accuracy of all model based approaches should be updated time to time reflecting consumers evolving interests.

Furthermore, one interesting research extension would be the setting up of a real marketing campaign, in which customers would be targeted using the methodologies, which could then be evaluated with regard to performance evaluation.

The marketers when they achieve the highest position in the market, delay launching a new product in near future. But when the time passes the next best competitor would identify a new market strategy and lead the market. Therefore the marketers should carryout market research continuously.

Appendix A

What is the biscuit product which comes to your mind first?

What is the brand which you prefer most?

When do you love to enjoy the product?

Where do you buy the product?

How often do you buy the product?

What is the difference you see between the preferred product and other competitive goods?

Ratings:

Not interested *

Good **

Interested ***

Highly Interested ****

(The following grid is a summary of the author’s interviews with retailers and super markets)

Brand

Product

When to consume

Why that product

How did the consumer get to know the product?

Awareness

On the product

Where the consumers Buy?

Customer Rate

Munchee

Lemon Puff

Anytime

Tasty

Friends and Family

Good

Retail shops and Supermarkets

***

Chocolate Puff

Anytime

Tasty

Friends and Family

Average

Supermarkets

****

Apple Puff

Anytime

Good

TV Commercial

No Awareness

Supermarkets

**

Maliban

Lemon Puff

Anytime

Good

Friends and Family

Good

Retail shops and Supermarkets

***

Cheese Puff

Sometimes

Impression made by TV commercial

TV commercial

Good

Retail shops and Supermarkets

*

Mango Puff

Sometimes

The product was seen on the store

Sales Agent

Good

Retail shops and Supermarkets

**

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