Unit 2: Understand what influences customer behaviour.
2.1 Discuss the importance of customer/consumer buying behaviour to marketers.
Customers and consumers are different. A customer pays for a product and a consumer uses it – this means that they can be different people.
It’s important to understand the differences in customers and consumer behaviour as they have slightly different buying expectations and behaviours. Also as there’s more diversity, individualism and influence from social media these days, it’s even more important to understand their behaviour. Businesses are also becoming more complex.
It can be easier to understand the customer in B2B where there are fewer customers with more regular contact. It’s typically more difficult to understand B2C customer behaviour due to a larger number of customers, minimal contact and more diverse needs. Not understanding a customer’s behaviour could result in having a marketing program that isn’t relevant or that the consumer can’t relate to.
If marketing programs are not influenced by customer behaviour, they become less and less relevant and are at risk of becoming uncompetitive
Customers expectations are changing as a result of technology, many want to be able to see, review and compare online before going to outlets. They want multi-channel access on any device that is quick and easy to find the information they want. Stores now aim to be a destination with a multi-sensory experience. B2B expectations are also changing, which the use of technology, online conferences and such.
Marketing programs are often changed and updated to reflect this.
Understanding customers by conducting market research ensure customers needs are met and they are satisfied.
Review the impact on marketing programmes on customer/consumer satisfaction and discuss how this builds and manages customer/consumer relationships.
Stage 1: Situation Analysis.
Stage 2: Objectives
- To deliver customer value and outstanding service rather than products.
- Customer focus signals expectations in standards.
Stage 3: Core marketing strategy
- Segmentation of the market for tailored, relevant products. Targeting for specific solutions and messages to attract attention and reduce customer effort. Positioning to differentiate from competitors.
- Marketing strategy: connection with a brand that meets the needs of respected brands/reassurance.
Stage 4: Tactical Acton Plans (marketing plan)
- Marketing mix values, benefits and motives for buying are designed into each element of the mix to match what customers want.
- This gives the customer an effortless transaction.
Stage 5: Control
- Customer experience measures are prioritied.
- This means their experience and expectations are protected in the future.
What are the stages customers/consumers travel through when they adopt new innovations?
Innovators, early adopters, early majority, late majority, laggards.
Relationship marketing focuses on customer retention and loyalty, transactional marketing focuses on a single sale.
2.2 Appraise the key influencers on the customer/consumer buying progress.
Levels of involvement or involvement theory depend on the risk of the item. The customer buying process is:
- Needs recognition: realising a problem needs to be solved or a benefit sought.
- Information search: Sourcing information to help decision making.
- Evaluation: comparing and assessing.
- Decision: final selection
- Purchase: buying process and exchange of money
- Post-purchase behaviour: If delighted, will buy again and recommend to others. If not, they will eliminate in the future and advise others to do the same.
The personal factors that influence customer behaviour are:
- rational and functional evaluation
2.3 Appraise the key influencers on the business to the organisation buying process.
Many of the processes in the organisational buying process the same as the customer buying process. Though it can be complex at times leading to longer process. Expensive purchases take more time but routine purchases are straight forward. Generally speaking, in the organisational buying process, there’s re-buy, modified re-buy or new buy. There also may be more people involved in decision making.
Review the environmental factors that influence organisation buying
Micro factors: Political, economic, social, technological
Macro factors: Customer behaviour, trends, competitor behaviour and actions, supplier and distributor influences.
Review organisation, group and individual factors that influence organisation buying.
The key influences of organisational buying = environmental, group, individual and organisational factors.
- Organisation culture and values
- Structure and systems processes
- Leadership and management
Organisations part of a larger group – such as Premier Inn all using the same coffee supplier. Centralised purchasing for lower prices and long term relationships.
Personality, rank within company, beliefs and values.
Understand the different roles within an organisation’s Decision-Making Unit.
The different roles within an organisation’s DMU are:
2.4 Compare the different types of consumer and business to business buying behaviour.
Compare and contrast the nature of decision making between consumers and organisational buyers.
Consumer buying can be a routine response, impulse buying, limited-decision making, extensive decision making. Organisational buying can be re-buy, modified re-buy or new purchase.
Understand the different types of buying behaviour carried out by consumers and businesses.
Need recognition vs Identification or problem or need.
Information search vs identification of requirements.
______________ vs development of specification.
Evaluation alternatives vs supplier search and evaluation proposals
Purchase decision vs Selection order processing
Post-purchase behaviour vs performance evaluation.
2.5 Explain the principle of market segmentation and how markets are segmented.
Define the principles of market segmentation and targeting.
Marketing segmentation and targeting is part of the core marketing strategy, along with positioning. Market segmentation is a way to categorise customers into groups that have similar characteristics or needs. This makes it easier to target them with different strategies – we tailor the mix to specific segments to maximize efficiency.
Identify and explain different types of segmentation in B2C and B2B markets.
- behavioural (eg occasion, usage, innovators, brand loyalty status)
- psychographic segmentation (attitudes, VALs)
- geodemographic (similar characteristics of residents)
- online segments
Macro segmentation – SIC code. Process or product, geographic, size of the company, buyer behaviour/uses
Micro-segmentation – operating variables, circumstances, purchasing methods, personality characteristics
Explain the principle of market positioning.
Marketing positioning is putting your brand in a unique position to stand out in the mind of customers from competitors.