BUYER/CONSUMER/ BEHAVIOR
BY DR.GENET GEBRE
BUYER/CONSUMER BEHAVIOR
Definition of consumer behavior
Consumer behavior involves
• The psychological processes that consumers go
through in recognizing needs
• Finding ways to solve these needs,
• Making purchase decisions
Make plans and implement these plans
A clear understanding of the consumer usually
makes the difference between companies that
succeed and those that fail
By understanding the behaviors of consumers, one
can make more informed business decisions
These decisions helps to
Raise bottom-line revenues,
lower customer acquisition costs
Increase customer retention and profitability
1.2 The study of consumer Behavior tells
us
why consumers act the way they do
why they buy
what they buy
who they buy from
Consumer behavior also shows the
marketing influence that businesses have on
consumers.
If you want to succeed in your marketing,
you have to understand why a particular
consumer thinks, acts, and responds in the
way that he does.
Then you create an effective marketing
strategy that accommodates those feelings,
actions, and responses.
The study of consumer behavior helps
If you are a student, you better understand consumer
behavior and why it’s so important to marketing
If you are a business owner, it helps you to evaluate
marketing techniques, target market, and marketing
strategies
If you’re an aspiring entrepreneur, it gives a road map
to consult when creating and marketing your business.
It gives a clear idea about the specific target market
If you are in sales, it helps you how to identify
customers need and create a message that satisfies that
need and move them to decisions
Cont….
If you’re a sales manager, this knowledge
can help to train sales team to better
understand consumer behavior.
If you are in customer service, the study of
consumer behavior helps you understand
customers.
It also helps to create customer loyalty by
giving top-notch service
Applying consumer behavior to marketing strategy
The knowledge of consumer behaviour helps to
understand issues such as how consumer thinks, feels,
reasons, and selects between alternatives.
A lot of components go into creating marketing
strategy.
If done correctly, marketing strategy can be used as a
detailed roadmap that com-bines consumer behaviour
knowledge with marketing initiatives to achieve
business goals
Consumer behaviour allows businesses to understand
their customers and stay close to them; and marketing
strategy helps to effectively reach out to them
Defining marketing objectives
Marketing objectives are accomplished by using
marketing program
It’s crucial that the entire marketing strategy supports
marketing objectives, because the strategy is used to
guide step by step to the success of those objectives
as well marketing objectives should be in line with
company’s growth and sales goals
Marketing strategy is based on the predictions and
assessment of customers’ behaviour,
Marketing objectives need to be:
Clear objectives must be easy to understand and
specific.
Measurable must be measureable by percentage,
quantity, or revenue. How much do you want to sell?
What percentage do you want to grow?
Time specific An objective that isn’t time specific will
never occur.
e.g. Increase product awareness by 20 percent in the
next six months.
Increase our database by 15,000 names in the next 90
days.
consumer behaviour affects product strategy
When companies understand the behaviour of
potential consumers — they can accurately determine
what products your customers are looking for.
Companies can use this knowledge to create a product
strategy that will enhance the chances of companies
products/services to be successful in the marketplace.
Companies that have a grasp on consumer behaviour
more often develop products that contain the features
and benefits that the market demands, and they almost
always come out ahead of their competition.
Cont…
Consumer behaviour and product identification
Companies need to analyze and define objectively what
they’re selling, based on why people want to buy their
product.
It’s important to remember that consumers purchase
because of needs and desires
product definition should consider the following issues
Specific: It must be easy to understand and clearly
identifiable by the consumer.
Marketable: It must carry marketing value. In other
words, the company need to determine why consumers
should pay attention to its product
Profitable: Obviously the goal of the product definition is to
make a consumer want to purchase that product and
provide you with a profit
Achievable: the product definition must be true and the
consumer who purchases the product must be able to see
the truth.
For example, the company don’t want to say that the product
dish soap softens hands when it doesn’t actually do so
Vision matching The product must meet the vision created
in companies product definition
Easily communicated Can the definition be easily
communicated or understood?
The goal is to be able to use companies’ product definition in
a way that consumers have an understanding of that
product
When a consumer reads the description, he/she will
know exactly what she/he is getting
Consumer behaviour and description of product
functionality, features, and benefits
The following steps helps to identify the functionality,
features, and benefits of a product:
Evaluate each feature, benefit, and function to
determine how the consumer will see that the product
has value.
List each one by one on a piece of paper. Doing so will
help to recognize the consumer’s need or want that the
company is satisfying.
Investigate the product by asking current customers how
they use it and what they like about it.
This investigation can help to identify whether the
company need to make any product changes to enhance
the experience that the consumer is having with your
product
Evaluate whether the product delivers true benefits,
features, and functionality
The more a product brings to the table, the more the
importance of price diminishes.
Consumers don’t purchase based on price; they purchase
based on benefits
Promotion strategy
Is part of the company’s marketing strategy.
It explains how the company bridges the gap between the places
where it sells the product or service and the places and ways the
customers gather and absorb information.
A complete promotion strategy contains a description of the
promotion methods the company will use in its marketing plan.
Developing a consumer-centric promotion strategy
Consumer behaviour explains the “why” behind a consumer’s
purchase. When companies understand the “why,” they can
create a promotion strategy that speaks directly to that consumer.
understanding consumers enables the company to recognize
their needs, motivations, attitudes, and intentions to buy.
A company can create a promotion strategy that supports those
behaviours and moves consumers to purchase directly from it.
Knowledge of your customers’ behaviour affects the
various components of promotional strategy in many
ways
Advertising: Advertising doesn’t drive an immediate
purchase. That’s because customers can’t quickly
purchase a product when they see it advertised.
However, with that mind, advertising may trigger a
need or serve as a reminder to consumers that they
need to make a purchase.
Marketing collateral:
Marketing collateral is a promotional material such as
a brochure, newsletter, poster.
They’re created to serve as a reminder to consumers, because
typically the consumer takes the marketing collateral home to
evaluate and contemplate the purchase
collateral can be used to identify, recognize, and speak directly
to the needs of consumers. In doing so, it also presents to them
the benefits they receive when they purchase the product
Media relations campaign
The important thing to remember with media relations
campaigns is not to make them sales oriented.
Instead, give the consumers something of value — something
that educates them so they walk away with a perceived value
that makes the company memorable to them.
Promotional activities create not only awareness about the
company and products, but they also create a trust around the
company. This trust eases the mind of the consumer when she’s
making a purchase
Publications
When the company published about its
product/service in a trade magazine / journal that the
target reads, it can create instant credibility and trust
with potential consumers.
The company can often reach a broader audience to
share the knowledge about its product/service.
Public speaking and conferences
Public speaking and conferences tend to carry the most
weight in light of consumer behaviour
That’s because the company is presenting to an
audience that contains the target market.
It is sharing them with a topic that they’re interested in
and they can see first hand knowledge .
Cont…
These activities create a level of trust and enhance the credibility of
the company as the expert in the market.
This type of promotion is most beneficial for the company that
offers more service-oriented products
Evaluating the factors of pricing strategy
The pricing strategy of a company offers a lot of flexibility.
The price is what the company sells for its product.
It’s the price that the market can pay for a specific product.
It isn’t just about the price tag of the company’s product; the perks
and payment options that is offered to consumers are also
important.
Perks include discounts or incentives that you offer
when a consumer purchases your product
Payment options represent the different ways a
consumer can pay for its product. Those options may
include cash, check, credit card, payment plans
Linking consumer behaviour to pricing strategy
Consumers don’t base their decisions solely on price,
but price obviously does play a role
If the price is too high, consumers may not even take
time to learn more about the benefits that drive the
price up.
If a price is too low, they may not perceive any value in the
product and will go for the competitor’s product instead
Pricing is always about value. If consumers see a higher
value, paying the extra few dollars(birr) may not be an
issue.
But if they don’t see value in a product, it’s easier for them
to walk away
It’s important to price within the value zone of consumers.
In other words, if your price is higher than your
competitor’s price, you must be able to explain why in
order for a consumer to be willing to pay the extra money.
If it’s less than your competition, you need to be able to
explain why you’re able to sell the product for less while
still providing a highly valuable product.
Pricing can be considered one of the most difficult of
the four P’s of marketing strategy. The reason for
this is because there’s no single “right” method to
price a company’s product.
We have to consider many things when pricing
product, including company’s position in the
marketplace, the demand, and the cost to produce
the product.
The company may determine the goal that it is
trying to achieve in pricing. The goals may be any of
the following. The company may
be looking for short-term revenue.
want to price in order to sell in large quantities.
Cont….
be looking to differentiate itself in the marketplace.
Points to consider in pricing
• Will customers see value in the price that the company
set for its products?
How does the company’s price compared to the prices
of competitors?
Can the company quantify the benefits of its product
in order to show value to consumers
These questions are important to consider, because
consumers don’t base their purchases on price alone;
they base them on the value that the products bring to
their needs or wants
placement strategy
Defines how the product is distributed and what
vehicles the company used to do so
It also defines the locations where the company will
make its products available
When developing a placement strategy, it’s important
to keep in mind that not all consumers shop the same
way, so product placement is a key to get company’s
products in front of the right consumers at the right
time
Companies have many several options when it comes
to placements and distribution channels
The company can select many methods, not just one.
It simply depends on what works best for the
company and its placement objectives
Methods of distribution
Direct sales When using the direct sales method, the
company is selling directly to the customer or end-
user
Indirect sales With the indirect sales method,
the company is selling to someone who then sells the
product /service to the end-user or distributes it
to others who sell to the end-user. E.g Retailer or whole
seller
Multilevel marketing
With multilevel marketing, the company can sell both
directly to the customer / end-user and to other people who
distribute and sell its product
placement strategy used to break down the distribution
channels in accordance to where company’s consumers shop
and where they’re most likely to look for its specific product
offering.
Distribution channels can have significant implications on the
following
Product margins and profits
• The channel that the company used to sell its products will
determine the amount of profit you make.
If the company choose an indirect sales method, it has to pay
the middleman for selling its products
Marketing budget
Outsourcing sales often can save marketing budget, because the
middleman does the product marketing for the company in order to
meet their own sales goals.
Final retail pricing
Direct and indirect sales channels will determine the final product
pricing differently.
If the company uses indirect sales channels, they’re allowed to price the
product at the price they choose, Otherwise, it may need to increase the
price in order to cover their commission or fee
Sales management practices
•The control over the company’s sales management practices is solely
dependent on whether it out-sources or sells directly. When
outsourcing, the company will often use some percentage of that control
Where are your customers located?
Location is important when it comes to placement.
If companies have a large number of customers in their
local area, they could sell through local retail outlets
If customers are located in multiple geographic
locations, companies may want to consider distribution
through agents, wholesalers, or Internet methods
How large are the orders?
The size of your average order will help firms to
segment customers according to their order size
The company can sell directly to customers purchasing
large orders and use an indirect method for smaller
orders
