The Forces That Drive Consumer Behavior Fanny Perreau TheConsumerFactor

THE FORCES THAT DRIVE CONSUMER BEHAVIOR

AND HOW TO LEARN FROM IT TO INCREASE YOUR SALES

2013 - FANNY PERREAU THECONSUMERFACTOR.COM

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THE FORCES THAT

DRIVE CONSUMER

BEHAVIOR

AND HOW TO LEARN FROM IT TO

INCREASE YOUR SALES

FANNY PERREAU

THECONSUMERFACTOR.COM




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CONTENTS

ABOUT ME

INTRODUCTION

P. 3

P. 4

THE INFLUENCING FACTORS:

CULTURAL FACTORS

SOCIAL FACTORS

PERSONAL FACTORS

PSYCHOLOGICAL FACTORS

THE STAGES OF BUYING DECISION PROCESS:

NEED RECOGNITION

INFORMATION SEARCH

ALTERNATIVE EVALUATION

PURCHASE DECISION

POST-PURCHASE BEVAVIOR

EXAMPLE OF BUYING DECISION PROCESS

RECOMMENDATIONS

THE DECISION-MAKING PROCESS:

THE 3 DECISION-MAKING PROCESSES

THE DECISION-MAKING PROCESS EVOLVE

RECOMMENDATIONS

P. 5

P. 6

P. 10

P. 14

P. 17

P. 23

P. 24

P. 27

P. 28

P. 29

P. 30

P. 31

P. 32

P. 34

P. 35

P. 37

P. 38




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My name is Fanny Perreau. Truly passionate by Consumer Behavior, Consumer Insights, Market Research, Neuromarketing and marketing in general, I have founded the website TheConsumerFactor.com, dedicated to these areas.

Understand the motivations and drivers of consumers and shoppers behavior, identify their needs, examine the new consumer trends, determine the best way to use Neuromarketing, Sensory Marketing or Shopper Marketing

to improve a retailers sales, find out how to improve the customers shopping experience and strengthen their commitment to the brand, etc.

That is the kind of things that keep me up at night. What truly impassions me. And how to transform these data and insights into actionable business recommendations to help companies and brands to improve their marketing strategy, create products that will appeal to consumers, improve the shopping experience and increase their sales.

After complete a Masters degree with Honors in Behavioral Sciences, Ive started as a Junior Market Research Analyst in a digital marketing agency where I provided insights and recommendations that combined with an effective digital marketing strategy led to 266% increase of the online sales for the account (a B2C company) Ive worked on.

Wishing to strengthen my expertise and expand my skills, I have joined in 2013 a Masters Degree in Market Research and Marketing Management at Rouen Business School near Paris, France.

CONTACT ME:

Ill be happy to discuss with you any opportunity. My email: [email protected]

FIND ME ON:

TheConsumerFactor.com Twitter LinkedIn Google + - Tumblr

ABOUT ME FANNY PERREAU




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How reacts a consumer? What are the stages through which they pass before making a purchase? Why a consumer will choose a product or brand over another? What are the factors that influence him? What are the motivations and aspirations that guide him?

The consumer is a complex individual. His purchase behavior varies greatly depending on stimuli, personal, social or psychological factors as well as the situation. The purchase is only the visible part of a more complex decision process created by the consumer for each buying decision he makes.

For brands, understand this behavior is a major challenge. In order to meet the expectations and needs of consumers, improve the shopping experience, build a more effective and targeted marketing strategy and increase sales and revenues.

In this ebook, you will find out an overview of the elements and factors that influence consumers and their purchasing behavior. As well as specific business and marketing recommendations. And also concrete examples of brands and marketing strategies, consumer insights, key figures and studies results.

Copyright 2013 All rights reserved Fanny Perreau - TheConsumerFactor.com

INTRODUCTION




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THE INFLUENCING

FACTORS




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A. Culture and societal environment:

Culture is crucial when it comes to understanding the needs and behaviors of an individual.

Throughout his existence, an individual will be influenced by his family, his friends, his cultural environment or society that will teach him values, preferences as well as common behaviors to their own culture.

For a brand, it is important to understand and take into account the cultural factors inherent to each market or to each situation in order to adapt its product and its marketing strategy. As these will play a role in the perception, habits, behavior or expectations of consumers.

For instance, in the West, it is common to invite colleagues or friends at home for a drink or dinner. In Japan, on the contrary, invite someone home does not usually fit into the local customs. It is preferable to do that this kind of outing with friends or colleagues in restaurant.

A significant specificity to take into account for brands in indutries such as savory snacking or sodas and alcoholic beverages. Usage and consumption moments are not the same in every region of the world.

THE EXAMPLE:

McDonalds is a brilliant example of adaptation to the specificities of each culture and each market. Well aware of the importance to have an offer with specific products to meet the needs and tastes of consumers from different cultures, the fast-food giant has for example: a McBaguette in France (with French baguette and Dijon mustard), a Chicken Maharaja Mac and a Masala Grill Chicken in India (with Indian spices) as well as a Mega Teriyaki Burger (with teriyaki sauce) or Gurakoro (with macaroni gratin and croquettes) in Japan.

While all the ingredients used by McDonalds in Arabic and Muslim countries are certified halal. The fast food chain is also naturally not offering any product with bacon or pork.

I. CULTURAL FACTORS




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B. Subcultures:

A society is composed of several subcultures in which people can identify. Subcultures are groups of people who share the same values based on a common experience or a similar lifestyle in general.

Subcultures are the nationalities, religions, ethnic groups, age groups, gender of the individual, etc..

The subcultures are often considered by the brands for the segmentation of a market in order to adapt a product or a communication strategy to the values or the specific needs of this segment.

For example in recent years, the segment of ethnic cosmetics has greatly expanded. These are products more suited to non-Caucasian populations and to types of skin pigmentation for African, Arab or Indian populations for example.

Its a real brand positioning with a well-defined target in a sector that only offered makeup products to a Caucasian target until now (with the exception of niche brands) and was then receiving critics from consumers of different origin.

Brands often communicate in different ways, sometimes even create specific products (sometimes without significant intrinsic difference) for the same type of product in order to specifically target an age group, a gender or a specific sub-culture.

Consumers are usually more receptive to products and marketing strategies that specifically target them.

THE EXAMPLE:

In terms of gender-targeted marketing strategy, the example of Coca-Cola is perhaps the best known from consumers. The U.S. company has launched two sugar-free versions of its famous soft drink:

The Diet Coke (or Coca-Cola Light), targeting rather a female target. The Coke Zero (or Coca-Cola Zero), targeting more a male target, with a more

"manly" packaging, a name more "raw" and advertising campaigns heavily targeting male consumers who, as studies have shown, may have experienced some psychological or social resistances to the idea of buying a diet soft drink.

However, with a few tiny exceptions, the ingredients and recipes of these two products are almost identical! However, male consumers mostly buy Coke Zero and women principally buy Diet Coke.




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C. Social classes:

Social classes are defined as groups more or less homogenous and ranked against each other according to a form of social hierarchy. Even if its very large groups, we usually find similar values, lifestyles, interests and behaviors in individuals belonging to the same social class.

We often assume three general categories among social classes:

Lower class Middle class Upper class

People from different social classes tend to have different desires and consumption patterns. Disparities resulting from the difference in their purchasing power, but not only. According to some researchers, behavior and buying habits would also be a way of identification and belonging to its social class.

Beyond a common foundation to the whole population and taking into account that many counterexample naturally exist, they usually do not always buy the same products, do not choose the same kind of vacation, do not always watch the same TV shows, do not always read the same magazines, do not have the same hobbies and do not always go in the same types of retailers and stores.

For instance, consumers from the middle class and upper class generally consume more balanced and healthy food products than those from the lower class.

They dont go in the same stores either. If some retailers are, of course, patronized by everyone. Some are more specifically targeted to upper classes such as The Fresh Market, Whole Foods Market, Barneys New York or Nordstrom. While others, such as discount supermarkets, attract more consumers from the lower class.

Some studies have also suggested that the social perception of a brand or a retailer is playing a role in the behavior and purchasing decisions of consumers.

CONSUMER INSIGHT:

The consumer buying behavior may also change according to social class. In general, a consumer from the lower class will be more focused on price. While a shopper from the upper class will be more attracted to elements such as quality, innovation, features, or even the social benefit that he can obtain from the product.




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D. Cultural trends:

Cultural trends or Bandwagon effect are defined as trends widely followed by people and which are amplified by their mere popularity and by conformity or compliance with social pressure. The more people follow a trend, the more others will want to follow it.

They affect behavior and shopping habits of consumers and may be related to the release of new products or become a source of innovation for brands.

By social pressure, desire to conformity or belonging to a group, desire to follow fashion trends or simply due to the high visibility provided by media, consumers will be influenced, consciously or unconsciously, by these trends.

For example, Facebook has become a cultural trend. The social network has widely grew to the point of becoming a must have, especially among young people.

It is the same with the growth of the tablet market. Tablets such as iPad or Galaxy Tab have become a global cultural trend leading many consumers to buy one. Even if they never had specially felt the need before.

For a brand, create a new cultural trend from scratch is not easy. Apple did it with the tablets with its iPad. But this is an exception. However, brands must remain attentive to the new trends and bandwagon effects. Whether to accompany it (create a page on Facebook) or to take part in the newly created market (create its own tablet).

THE STUDY:

The incredible growth of tablet sales worldwide shows the power of a new cultural trend in consumers. In July 2010, three months after the release of the first iPad, in a study on the website Retrevo, 53% of consumers surveyed said they were not interested in buying a tablet. To the question of what preventing them to buy an iPad, 52% did not see the need and 38% found it too expensive.

Three years later, things have changed. Tablet sales will soon exceed those of laptops. While, according to a Yankee Group study, the Apple iPad is the most desired tablet by consumer ahead the tablets from Amazon or Samsung.




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A. Reference groups and membership

groups:

The membership groups of an individual are social groups to which he belongs and which will influence him. The membership groups are usually related to its social origin, age, place of residence, work, hobbies, leisure, etc.

The influence level may vary depending on individuals and groups. But is generally observed common consumption trends among the members of a same group.

The understanding of the specific features (mindset, values, lifestyle, etc..) of each group allows brands to better target their advertising message.

More generally, reference groups are defined as those that provide to the individual some points of comparison more or less direct about his behavior, lifestyle, desires or consumer habits. They influence the image that the individual has of himself as well as his behavior. Whether it is a membership group or a non-membership group.

Because the individual can also be influenced by a group to which he doesnt belong yet but wishes to be part of. This is called an aspirational group. This group will have a direct influence on the consumer who, wishing to belong to this group and look like its members, will try to buy the same products.

For example, even if he doesnt need it yet, a surfing beginner may want to buy advanced brands or products used by experienced surfers (aspirational group) in order to get closer to this group. While a teen may want the shoe model or smartphone used by the group of popular guys from his high school (aspirational group) in order to be accepted by this group.

Some brands have understood this very well and communicate, implicitly or not, on the social benefit provided by their products.

II. SOCIAL FACTORS




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THE ROLES IN A REFERENCE GROUP:

Within a reference group that influences the consumer buying behavior, several roles have been identified:

The initiator: the person who suggests buying a product or service

The influencer: the person whose point of view or advice will influence the buying decision. It may be a person outside the group (singer, athlete, actor, etc..) but on which group members rely on.

The decision-maker: the person who will choose which product to buy. In general,

its the consumer but in some cases it may be another person. For example, the leader of a soccer supporters group (membership group) that will define, for the whole group, which supporters scarf buy and bear during the next game.

The buyer: the person who will buy the product. Generally, this will be the final

consumer.

Many brands look to target opinion leaders (initiator or influencer) to spread the use and purchase of their product in a social group. Either through an internal person of the group when it comes to a small social group. Or through a sponsorship or a partnership with a reference leader (celebrity, actor, musician, athlete, etc.) for larger groups.




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B. Family:

The family is maybe the most influencing factor for an individual. It forms an environment of socialization in which an individual will evolve, shape his personality, acquire values. But also develop attitudes and opinions on various subjects such as politics, society, social relations or himself and his desires.

But also on his consumer habits, his perception of brands and the products he buys.

We all kept, for many of us and for some products and brands, the same buying habits and consumption patterns that the ones we had known in our family.

Perceptions and family habits generally have a strong influence on the consumer buying behavior. People will tend to keep the same as those acquired with their families.

For example, if you have never drunk Coke during your childhood and your parents have described it as a product full of sugar and not good for health. There is far less chance that you are going to buy it when you will grow up that someone who drinks Coke since childhood.

For brands especially for Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG) successfully integrate the family is both a real challenge and an opportunity to develop a strong consumer loyalty among all the family members.

Thats why its important for brands to be seen as a family brand in order to become a consumer habit for parents and children when they will become adults.

THE FIGURES:

75% of women identified themselves as the primary shoppers for their households (GfK MRI, Survey of the American Consumer - 2011)

Women "control" or influence 72.8% of purchasing decisions and spending of their households (Women Want More: How to Capture Your Share of the Worlds Largest, Fastest-

Growing Market - HarperBusiness - 2009)




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C. Social roles and status:

The position of an individual within his family, his work, his country club, his group of friends, etc. All this can be defined in terms of role and social status.

A social role is a set of attitudes and activities that an individual is supposed to have and do according to his profession and his position at work, his position in the family, his gender, etc. and expectations of the people around him.

Social status meanwhile reflects the rank and the importance of this role in society or in social groups. Some are more valued than others.

The social role and status profoundly influences the consumer behavior and his purchasing decisions. Especially for all products which are visible from other people.

For example, a consumer may buy a Ferrari or a Porsche for the quality of the car but also for the external signs of social success that this kind of cars represents. Moreover, it is likely that a CEO driving a small car like a Ford Fiesta or a Volkswagen Golf would be taken less seriously by its customers and business partners than if he is driving a german luxury car.

And this kind of behaviors and influences can be found at every level and for every role and social status.

Again, many brands have understood it by creating an image associated with their products reflecting an important social role or status.

THE EXAMPLE:

The luxury industry is a perfect example of a premium positioning in order to convey a high social status. Brands like Louis Vuitton, Longchamp, Chanel and Herms have built a strategy based on exclusivity, significant prices and a very upscale and glamorous image.

Many aspects and features that attract customers also seeking to "demonstrate" and reflect, through its products, their purchasing power and high social status.




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A. Age and way of life:

A consumer does not buy the same products or services at 20 or 70 years. His lifestyle, values, environment, activities, hobbies and consumer habits evolve throughout his life.

For example, during his life, a consumer could change his diet from unhealthy products (fast food, ready meals, etc.) to a healthier diet, during mid-life with family before needing to follow a little later a low cholesterol diet to avoid health problems.

The factors influencing the buying decision process may also change. For example, the social value of a brand generally plays a more important role in the decision for a consumer at 25 than at 65 years.

The family life cycle of the individual will also have an influence on his values, lifestyles and buying behavior depending whether hes single, in a relationship, in a relationship with kids, etc. As well as the region of the country and the kind of city where he lives (large city, small town, countryside, etc.).

For a brand or a retailer, it may be interesting to identify, understand, measure and analyze what are the criteria and personal factors that influence the shopping behavior of their customers in order to adapt.

For example, it is more than possible that consumers living in New York do not have the same behavior and purchasing habits than the ones in Nebraska. For a retailer, have a deep understanding and adapt to these differences will be a real asset to increase sales.

III. PERSONAL FACTORS




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B. Purchasing power and revenue:

The purchasing power of an individual will have, of course, a decisive influence on his behavior and purchasing decisions based on his income and his capital.

This obviously affects what he can afford, his perspective on money and the level of importance of price in his purchasing decisions. But it also plays a role in the kind of retailers where he goes or the kind of brands he buys.

As for social status, some consumers may also look for the social value of products they buy in order to show external indications of their incomes and their level of purchasing power.

C. Lifestyle:

The lifestyle of an individual includes all of its activities, interests, values and opinions.

The lifestyle of a consumer will influence on his behavior and purchasing decisions. For example, a consumer with a healthy and balanced lifestyle will prefer to eat organic products and go to specific grocery stores, will do some jogging regularly (and therefore will buy shoes, clothes and specific products), etc.




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D. Personality and self-concept:

Personality is the set of traits and specific characteristics of each individual. It is the product of the interaction of psychological and physiological characteristics of the individual and results in constant behaviors.

It materializes into some traits such as confidence, sociability, autonomy, charisma, ambition, openness to others, shyness, curiosity, adaptability, etc.

While the self-concept is the image that the individual has or would like to have of him and he conveys to his entourage. These two concepts greatly influence the individual in his choices and his way of being in everyday life. And therefore also his shopping behavior and purchasing habits as consumer.

In order to attract more customers, many brands are trying to develop an image and a personality that conveys the traits and values - real or desired of consumers they are targeting.

Because consumers do not just buy products based on their needs or for their intrinsic features but they are also looking for products that are consistent and reinforce the image they have of themselves or they would like to have.

The more a product or brand can convey a positive and favorable self-image to the consumer, the more it will be appreciated and regularly purchased.

THE EXAMPLE:

Since its launch, Apple cultivates an image of innovation, creativity, boldness and singularity. Whether through these products, its "anti-IBM crusade" then "anti-Microsoft", its advertising campaigns - such as the famous "1984" ad or the TV ads "I'm a PC - I'm a Mac" - or even the personality of Steve Jobs.

A strong image able to attract consumers who identify to these values and who feel valued in their self-concept by buying a product from Apple.




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A. Motivation:

Motivation is what will drive consumers to develop a purchasing behavior. It is the expression of a need is which became pressing enough to lead the consumer to want to satisfy it. It is usually working at a subconscious level and is often difficult to measure.

Motivation is directly related to the need and is expressed in the same type of classification as defined in the stages of the consumer buying decision process (see: page 24).

To increase sales and encourage consumers to purchase, brands should try to create, make conscious or reinforce a need in the consumers mind so that he develops a purchase motivation. He will be much more interested in considering and buy their products.

They must also, according to research, the type of product they sell and the consumers they target, pick out the motivation and the need to which their product respond in order to make them appear as the solution to the consumers need.

IV. PSYCHOLOGICAL FACTORS




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B. Perception :

Perception is the process through which an individual selects, organizes and interprets the information he receives in order to do something that makes sense. The perception of a situation at a given time may decide if and how the person will act.

Depending to his experiences, beliefs and personal characteristics, an individual will have a different perception from another.

Each person faces every day tens of thousands of sensory stimuli (visual, auditory, kinesthetic, olfactory and gustatory). It would be impossible for the brain to process all consciously. That is why it focuses only on some of them.

The perception mechanism of an individual is organized around three processes:

Selective Attention: The individual focuses only on a few details or stimulus to which he is subjected. The type of information or stimuli to which an individual is more sensitive depends on the person.

For brands and advertisers successfully capture and retain the attention of consumers is increasingly difficult. For example, many users no longer pay any attention, unconsciously, to banner ads on the Internet. This kind of process is called Ad Blindness or Banner Blindness.

THE FIGURE:

86% of users suffer from the phenomenon of Banner Blindness. They have become "insensitive" or don't pay attention to banner ads on the Internet anymore.

Source: Infolinks December 2012

The attention level also varies depending on the activity of the individual and the number of other stimuli in the environment. For example, an individual who is bored during a subway trip will be much more attentive to a new ad displayed in the tube. It is a new stimulus that breaks the trip routine for him.




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Consumers will also be much more attentive to stimuli related to a need. For example, a consumer who wishes to buy a new car will pay more attention to car manufacturers ads. While neglecting those for computers.

Lastly, people are more likely to be attentive to stimuli that are new or out of the ordinary. For example, an innovative advertising or a marketing message (Unique Value Proposition) widely different from its competitors is more likely to be remembered by consumers.

Selective Distortion: In many situations, two people are not going to interpret information or a stimulus in the same way. Each individual will have a different perception based on his experience, state of mind, beliefs and attitudes. Selective distortion leads people to interpret situations in order to make them consistent with their beliefs and values.

For brands, it means that the message they communicate will never be perceived exactly in the same way by consumers. And that everyone may have a different perception of it. Thats why its important to regularly ask consumers in order to know their actual brand perception.

Selective distortion often benefits to strong and popular brands. Studies have shown that the perception and brand image plays a key role in the way consumers perceived and judged the product.

Several experiments have shown that even if we give them the same product, consumers find that the product is or tastes better when theyve been told that its from a brand they like than when theyve been told its a generic brand. While it is exactly the same product!

Similarly, consumers will tend to appreciate even less a product if it comes from a brand for which they have a negative perception.

THE STUDY:

A study conducted in the 70s showed that, in a blind test, consumers mainly preferred the taste of Pepsi than Coke. But the results were then reversed, in a second test, when consumers knew the brands they were drinking.

A study that inspired the "Pepsi Challenge" - blind tests organized by the brand to prove consumers that many of them prefer the taste of Pepsi - and has enabled the brand to make a nice breakthrough on the US market in the early 80's.




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Selective Retention: People do not retain all the information and stimuli they have been exposed to. Selective retention means what the individual will store and retain from a given situation or a particular stimulus. As for selective distortion, individuals tend to memorize information that will fit with their existing beliefs and perceptions.

For example, consumers will remember especially the benefits of a brand or product they like and will forget the drawbacks or competing products advantages.

Selective retention is also what explains why brands and advertisers use so much repetition in their advertising campaigns and why they are so broadcasted. So that the selective retention can help the brand to become a top of mind brand in the consumers mind.

THE FIGURE:

According to the model of Herbert E. Krugman on the "effective frequency" (the optimal repetition frequency of an advertising), which has been widely adopted in the advertising industry, it takes at least three exposures to a TV ad to ensure that advertiser's message begins to be effective and to be memorized by the consumer.




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C. Learning:

Learning is through action. When we act, we learn. It implies a change in the behavior resulting from the experience. The learning changes the behavior of an individual as he acquires information and experience.

For example, if you are sick after drinking milk, you had a negative experience, you associate the milk with this state of discomfort and you learn that you should not drink milk. Therefore, you dont buy milk anymore.

Rather, if you had a good experience with the product, you will have much more desire to buy it again next time.

The learning theories can be used in marketing by brands. As the theory of operant conditioning which states that you can build a good image and high demand for a product by associating it with a positive reinforcement (or rather a bad image with a negative reinforcement).




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D. Beliefs and attitudes:

A belief is a conviction that an individual has on something. Through the experience he acquires, his learning and his external influences (family, friends, etc..), he will develop beliefs that will influence his buying behavior.

While an attitude can be defined as a feeling, an assessment of an object or idea and the predisposition to act in a certain way toward that object. Attitudes allow the individual to develop a coherent behavior against a class of similar objects or ideas.

Beliefs as well as attitudes are generally well-anchored in the individuals mind and are difficult to change. For many people, their beliefs and attitudes are part of their personality and of who they are.

However, it is important to understand, identify and analyze the positive attitudes and beliefs but also the negative ones that consumers can have on a brand or product. To change the brands marketing message or adjust its positioning in order to get consumers to change their brand perception.




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INTRODUCTION:

Engel, Blackwell and Kollat have developed in 1968 a model of consumer buying decision process in five steps: Problem/need recognition, information search, evaluation of alternatives to meet this need, purchase decision and post-purchase behavior.

Figure 1: The 5 stages of buying decision process

THE 5 STAGES OF

BUYING DECISION PROCESS




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The need recognition is the first and most important step in the buying process. If there is no need, there is no purchase. This recognition happens when there is a lag between the consumers actual situation and the ideal and desired one.

However, not all the needs end up as a buying behavior. It requires that the lag between the two situations is quite important. But the way (product price, ease of acquisition, etc.) to obtain this ideal situation has to be perceived as acceptable by the consumer based on the level of importance he attributes to the need.

THE EXAMPLE:

You have a pool and you would like someone to take care of regularly cleaning it instead of you (ideal situation) because it annoys you to do it yourself (actual situation). But you dont judge the way to reach this ideal situation (pay $250 / month for a specialized company) as acceptable because its price to obtain it seems too high. Especially compared to the relatively low level of importance you attach to it. So you wont have a purchase behavior in this situation.

On the other hand, the ability to be able to go to your work by car in 20 minutes every morning (ideal situation) rather than lose three hours in transit because you do not have a car and you live in the countryside (actual situation) is something that means a lot to you. So you will have a buying behavior to purchase a car. Even if the price is important.

I. NEED RECOGNITION




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In addition to a need resulting from a new element, the gap between the actual situation and the ideal situation may be due to three cases. The current situation has not changed, but the ideal situation has (a neighbor told you about the possibility that you did not know to clean the pool by a specialized company). Or, the ideal situation is still the same but its the actual situation has changed (youre tired of cleaning your pool by yourself). Or finally, the two situations have changed.

The recognition of a need by a consumer can be caused in different ways. Different classifications are used:

Internal stimulus (physiological need felt by the individual as hunger or thirst) which opposes the external stimulus such as exposure to an advertisement, the sight of a pretty dress in a shop window or the mouth-watering smell of a French pain au chocolat when passing by a bakery.

Classification by type of needs:

o Functional need: the need is related to a feature or specific functions of the product or happens to be the answer to a functional problem. Like a computer with a more powerful video card to be able to play the latest video games or a washing machine that responds to the need to have clean clothes while avoiding having to do it by hand or go to the Laundromat.

o Social need: the need comes from a desire for integration and belongingness in the social environment or for social recognition. Like buying a new fashionable bag to look good at school or choose a luxury car to show that you are successful in life.

o Need for change: the need has its origin in a desire from the consumer to

change. This may result in the purchase of a new coat or new furniture to change the decoration of your apartment.




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The Maslows hierarchy of needs. Developed by the eponymous psychologist, this is one the best known and widely used classifications and representations for hierarchy of needs. It specifies that an individual is guided by certain needs that he wants to achieve before seeking to focus on the following ones:

o 1. Physiological needs o 2. Safety needs o 3. Need of love and belonging o 4. Need of esteem (for oneself and from the others) o 5. Need of self-actualization




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Once the need is identified, its time for the consumer to seek information about possible solutions to the problem. He will search more or less information depending on the complexity of the choices to be made but also his level of involvement. (Buying pasta requires little information and involves fewer consumers than buying a car.)

Then the consumer will seek to make his opinion to guide his choice and his decision-making process with:

Internal information: this information is already present in the consumers memory. It comes from previous experiences he had with a product or brand and the opinion he may have of the brand.

Internal information is sufficient for the purchasing of everyday products that the consumer knows including Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG). But when it comes to a major purchase with a level of uncertainty or stronger involvement and the consumer does not have enough information, he must turns to another source:

External information: This is information on a product or brand received from and obtained by friends or family, by reviews from other consumers or from the press. Not to mention, of course, official business sources such as an advertising or a sellers speech.

During his decision-making process and his Consumer Buying Decision Process, the consumer will pay more attention to his internal information and the information from friends, family or other consumers. It will be judged more objective than these from an ad, a sellers speech or a commercial brochure of the product.

II. INFORMATION SEARCH




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Once the information collected, the consumer will be able to evaluate the different alternatives that offer to him, evaluate the most suitable to his needs and choose the one he think its best for him.

In order to do so, he will evaluate their attributes on two aspects. The objective characteristics - such as the features and functionality of the product - but also the subjective ones - perception and perceived value of the brand by the consumer or its reputation.

Each consumer does not attribute the same importance to each attribute for his decision and his Consumer Buying Decision Process. And it varies from one shopper to another. Mr. Smith may prefer a product for the reputation of the brand X rather than a little more powerful but less known product. While Mrs. Johnson has a very bad perception of that same brand.

The consumer will then use the information previously collected and his perception or image of a brand to establish a set of evaluation criteria, desirable or wanted features, classify the different products available and evaluate which alternative has the most chance to satisfy him.

The process will then lead to what is called evoked set. The evoked set (aka consideration set) is the set of brands or products with a probability of being purchased by the consumer (because he has a good image of it or the information collected is positive).

On the other hand, inept set is the set of brands or products that have no chance of being purchased by the shopper (because he has a negative perception or has had a negative buying experience with the product in the past). While inert set is the set of brands or products for which the consumer has no specific opinion.

The higher the level of involvement of the consumer and the importance of the purchase are stronger, the higher the number of solutions the consumer will consider will be important. On the opposite, the number of considered solutions will be much smaller for an everyday product or a regular purchase.

III. ALTERNATIVE EVALUATION




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Now that the consumer has evaluated the different solutions and products available for respond to his need, he will be able to choose the product or brand that seems most appropriate to his needs. Then proceed to the actual purchase itself.

His decision will depend on the information and the selection made in the previous step based on the perceived value, products features and capabilities that are important to him.

But his Consumer Buying Decision Process and his decision process may also depend or be affected by such things as the quality of his shopping experience or of the store (or online shopping website), the availability of a promotion, a return policy or good terms and conditions for the sale.

For example, a consumer committed to the idea of buying a stereo of a well-known brand could change his decision if he has an unpleasant experience with sellers in the store. While a promotion in a supermarket for a yogurt brand could tip the scale for this brand in the consumers mind who was hesitating between three brands of his evoked set.

IV. PURCHASE DECISION




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Once the product is purchased and used, the consumer will evaluate the adequacy with his original needs (those who caused the buying behavior). And whether he has made the right choice in buying this product or not. He will feel either a sense of satisfaction for the product (and the choice). Or, on the contrary, a disappointment if the product has fallen far short of expectations.

An opinion that will influence his future decisions and buying behavior. If the product has brought satisfaction to the consumer, he will then minimize stages of information search and alternative evaluation for his next purchases in order to buy the same brand. Which will produce customer loyalty.

On the other hand, if the experience with the product was average or disappointing, the consumer is going to repeat the 5 stages of the Consumer Buying Decision Process during his next purchase but by excluding the brand from his evoked set.

The post-purchase evaluation may have important consequences for a brand. A satisfied customer is very likely to become a loyal and regular customer. Especially for everyday purchases with low level of involvement such as Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG). A loyalty which is a major source of revenue for the brand when you combine all purchases made by customer throughout his entire life (called lifetime customer value). The Holy Grail that all brands in the industry are trying to achieve.

Positive or negative, consumers will also be able to share their opinion on the brand. Whether in their family or by word-of-mouth. Or on a much broader scale now with social networks or on consumer product review websites. A tendency not to be overlooked because now with the Internet, an unhappy customer can have a strong power to harm for a brand.

Thats why thats important for companies to have awareness of that matter. In addition to optimizing the customer experience, a guarantee (for example, for a washing machine), an efficient customer service and a specific call center are some of the assets that can be developed to improve post-purchase behavior if there is any trouble with the product.

V. POST-PURCHASE BEHAVIOR




31

Nothing like a real example to better understand the five stages of the Consumer Buying Decision Process. Maybe this situation sounds familiar to you.

Stage 1 Need recognition: Its sunday night. Youre hungry (internal physiological stimulus) and there is nothing in the fridge. You will order food (statement of need).

Stage 2 Information search: You already have ordered to the Indian restaurant in your street last month (internal information). A friend recommended a pizzeria in your neighbourhood (external information from environment). And this morning youve found a flyer for a sushi restaurant in your mailbox (external information from advertising).

Stage 3 Alternative evaluation: You have a bad opinion of the Indian restaurant since youve been sick the last time (inept set). The pizzeria is both recommended by your friend and also happens to be a well-known brand (positive perception evoked set). As for the sushi restaurant, it got good reviews on Tripadvisor (positive perception evoked set).

Stage 4 Purchase decision: After evaluating the possibilities, youve decided to choose the well-known pizza delivery chain. In addition, a new episode of your favorite TV show is broadcasted tonight on TV.

Stage 5 Post-purchase behavior: The pizza was good (positive review). But you know there was too many calories and you regret a little bit (mixed feelings about yourself). The next time you will choose the sushi restaurant. There is less fat in sushi than pizza (next purchase behavior)!

EXAMPLE OF BUYING DECISION PROCESS




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A. It always starts with recognition of a

need!

The start of the buying behavior of the consumer is the need recognition. If there is no need, there is no purchase! Thats why generate or reinforce a need in consumers mind to trigger the buying behavior has a fundamental importance for brands.

Steve Jobs had become a master in the area with Apple thanks to remarquable marketing campaigns by successfully creating a need for millions of consumers for products they had never thought before before. But have finally become an important part of their daily lives.

In a different field, TV infomercials are remarquable examples of how to create an unexpected need in a consumers mind for a new product. You probably never felt any difficulty to cook a salad, but while watching the introduction of this great infomercial for this new kitchen tool, you finally realize the difficulty of the task and the importance of this new product as a solution to this problem.

Brands must focus on the activation or recall of a need whether physiological, functional, social or change-related for the consumer through their advertising campaigns. An even stronger challenge for new products, those with new features or those on new segments that consumers ignore the need or interest.

RECOMMENDATIONS




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B. Brand awareness for everyday purchases

is crucial:

For everyday purchases with low level of involvement, consumers will consider only a limited number of brands when making their choice. Those that come in head first or they know at least by name. This is called Top-of-mind awareness (TOPA).

For brands of the Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG) industry, branding and brand awareness can therefore be a real factor of influence of the consumer buying decision process. Especially for products with a low level of differentiation.

C. Provide concrete information for the

alternative evaluation:

During the alternative evaluation stage of the Consumer Buying Decision Process, consumers are looking for solid, reliable and tangible information that will allow them to make their choice. Especially for purchasing and products with high level of involvement.

The brands interest is to provide concrete information and proof of the product features, its added value compared to its competitors and how it will respond to their need in order to provide consumers with the information they need and positive influence in their decision making process.

D. Improve the shopping experience:

As we saw in previous section, the stage of post-purchase behavior can have important consequences for a brand. Positively or negatively.

To avoid reputation damage and to develop a lasting relationship with its customers, the brands interest is to multiply actions for optimizing the shopping experience in-store as well as the product experience. But also provide great customer service in case of dissatisfaction or issue with the product.




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INTRODUCTION:

According to the famous model developed by John Howard and Jagdish Sheth, two famous Professors of marketing, in their Theory of Buyer Behaviour, the decision-making process of consumers are divided into three stages: Extensive problem solving, Limited problem solving and Routinized response behavior.

THE DECISION-MAKING

PROCESS




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A. Extensive problem solving (EPS):

It is when the consumer discovers a new product category or wants to buy a product he does not know well and / or is particularly expensive and / or which present a significant risk regarding his economical or psychological point of view.

His lack of experience in the matter leads to his lack of decision criteria to make his choice. He has no preference for a brand or a specific product.

The level of consumer involvement is high. He will invest a lot of time looking for information and benchmarks to make his choice. The level of uncertainty and confusion about the choice of product can be high.

The purchase process is usually quite long. This is the case, for example, for buying a car or a new computer.

B. Limited problem solving (LPS):

The consumer has a clear vision of its expectations and decision criteria. He already had an experience with the product and knows it. However, he is still undecided about the brand or a particular model to choose and which one will best meet his needs.

The level of consumer involvement is moderate and information seeking is more limited. He will compare available products and especially want to determine which brand is best for him. The purchasing process will be shorter.

This is the kind of behavior found for occasional purchases such as clothing, video games and cosmetics.

I. THE 3 DECISION-MAKING PROCESSES




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C. Routinized response behavior (RRB):

This is about the everyday purchases with a low level of involvement from the consumer. These are common products typically Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG) that the consumer knows well.

He knows what brand to choose and which product suits him. He does not need specific information or a specific research time to make his choice. The purchase decision is simple and is quickly taken.

Usually, the more a product has become a routine buying behavior for a consumer, the less he will be responsive to stimuli or initiatives (advertising, discount, etc.) from the other brands.

Although it is not included in the original Howard & Sheth model, a fourth purchase situation could also be added:

D. The impulse buying:

As its name implies, impulsive buying is a purchase made while the consumer did not initially had a particular intention to purchase the product. Like, for instance, the pack of chewing gum at the grocery stores checkout or a pain au chocolat bought while passing in front of a bakery smelling particularly good.

The impulse buying opposes to the rational purchases to which the buying process of the consumer corresponds to the three situations previously seen and described by Howard & Sheth.




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But the same product or service does not necessarily mean the same kind of behavior for every consumer.

For example, a student, who recently became independent and who is shopping for himself for the first time at the supermarket, may have a Limited problem solving purchasing behavior for everyday products. What brand and type of pasta to choose? What is the best kind of cheese to buy? Is it better to choose liquid or powdered laundry detergent?

These are the kind of questions that a mother, accustomed to these products and with a Routinized response behavior for these purchases, probably does not have in mind anymore. She has her buying habits and knows directly what brand of pasta or washing powder to choose and put in her shopping cart.

When a consumer improves his knowledge about a product, he changes of stage of decision-making process. An evolution that can also be found for new products. At first, depending on its nature, a new product will require for consumers a decision-making process of Extensive problem solving or Limited problem solving. Then, gradually, as the product life-cycle evolves, consumers will have a deeper knowledge of it and the product will change of stage of decision-making process.

Image 1: For a same product, a mother and a young student will not have the same decision-making process. (Photo: GETTY IMAGES)

II. THE DECISION-MAKING PROCESS EVOLVE




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A. Brands whose clients are in a decision-

making process of extensive problem

solving:

With a lack of benchmarks and usually in a state of uncertainty and confusion, these consumers need reliable, detailed and concrete information about the products to build their choice. They need guidance and should be given confidence throughout their buying process. They want to be certain to make the best possible choice.

Give them maximum information:

A key point for companies and brands consist in assisting consumers in this process, providing them with a maximum of clear and relevant information about their product and follow them throughout their purchasing decision process.

Explain the features and benefits of the product in a practical way:

Companies must favor a marketing strategy based on the detailed explanation of the product and its benefits to the consumer rather than wrongfully assume that the consumer is already familiar with the product. This is why the advertising media selection of the advertising campaign is important.

Some advertising media (Press, Internet, Direct response marketing, etc.) allow advertisers to convey a lot of information on the product, its benefits and its use to consumers.

Being on the Internet at the time of decision-making process:

The Internet now offers an unprecedented opportunity for brands to reach their consumers at the heart of their buying decision process. Being directly present by an Inbound Marketing Strategy, an effective Google AdWords campaign and a Search Engine Optimization (SEO) strategy when the consumer is searching for product information on the web, brands can guide him, help him and direct him in his buying process.

III. RECOMMENDATIONS




39

Brands can accompany him in his decision-making process, keeping him in touch (with newsletters, social media, blogs, etc.) and continuing to give him useful content for his reflection and decision-making process.

Advise the shopper in-store:

An approach that could also be established in store by advising consumers and explaining them more concretely everything they needed to know about the product in order to make their choice.




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B. Brands whose clients are in a decision-

making process of limited problem

solving:

For these brands, the challenge is to successfully highlight its competitive advantages and convince the consumer that their products are exactly what he needs.

Use comparative advertising:

Comparative advertising is a good way to convey the products characteristics compared to competing brands and deliver directly to the consumers some comparable elements to consider.

Use advertising media with more impact:

Consumers are already familiar with the product. So brands can use advertising media for the campaign that do not convey as much information but have a stronger impact (TV, radio, billboards, etc.). With one goal: to communicate its Unique Value Proposition in a meaningful way for consumers.

Convince consumers with discounts:

Having not yet made the final choice regarding the brand to use, consumers will also be sensitive to marketing or discount campaigns in retail stores.




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C. Brands whose clients are in a routine

purchase process:

For brands, the most important thing is to successfully retain their customers to develop in them a purchase habit.

Slowly innovate:

They should also anticipate that some consumers may get bored of a product after a while. This is why there is a vital need for regular innovation for the product but without too abrupt changes. Because creating of potential factors of habit changing (price, design, distribution, etc.) may lead some consumers to reconsider their choice.

Larger investment opportunities for customer acquisition:

In their customer acquisition management, those brands can afford to spend a lot of money on advertising and have a high customer acquisition cost (COC).

Because they know that consumers are likely to remain loyal to the product and that their customer lifetime value (CLV) will be high. Therefore, capture the consumer as soon as possible before he develops his purchase habit is very important.




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Consumer behavior is a vast and exciting topic which is naturally not restricted to the elements presented in this guide.

But I hope you enjoyed it. Feel free to share this ebook on social networks or by email.

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CONCLUSION

The Forces That Drive Consumer Behavior Fanny Perreau TheConsumerFactor

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Transcript of The Forces That Drive Consumer Behavior Fanny Perreau TheConsumerFactor