UIB

Consumer Behavior, Market Research and

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Consumer behavior

Companies today operate in an increasingly competitive environment. They treat customers like royalty to buy their goods/services

To understand customer companies must understand their behavior when buying things.

Consumer behavior model

Personal CharacteristicAge, gender, ethnic, education, lifestyle, knowledge, values

Environmental characteristicSocial, cultural/community, political, technological

Market stimuliPrice, brand, variety, promotion, product quality, customization

Buyer’s decisionBuy / notWhat, where, when, how

EC systemsLogistic support

Technical supportCustomer Service

Payments, delivery, securityWeb design

FAQ’s, call centers, emails

Decision-making process

Independent uncontrollable

variables

dependent variables

Vendor controlled

interveningvariables

Consumer behavior

Online consumer are divided into 2 types : Individual consumer Organizational buyers, they do the most shopping in

terms of dollar volume of sales

Now, let’s discuss the model……

Independent variables

Personal, refer to demographics, internal individual factors and behavioral characteristic

Major demographics factor : gender, age, marital status, education, ethnic, occupation and household income

From these variables we know what people buy and why they do not buy

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Independent variables…..

• Reasons why people do not buy online :– 51%, shipping charges– Quality of products, 44%

• From there it’s divided again :– 32%, items return– 24%, credit card safety– 23%, can not ask questions– 16%, download time– 15%, delivery time– 10%, prefer off-line– 1,9%, unfavorable experience

Independent variables

Environmental Social, people buying behavior are influenced by

family, friends, coworkers and trends Cultural/community, different culture different buying

behavior Other, government regulations, legals, situational

factors

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Vendor intervening variables

These variables are controlled by vendor completely, pricing, promo, branding, customer service, tech support

Dependent variables

To buy or not to buy?What to buy?Where, when and how much?These questions are very dependent to

independent and intervening variablesback

Decision making process

Before we move on there are 5 major roles in this situation : Initiator, suggest or think of buying this product Influencer, they make advice when buying products Decider Buyer User

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Decision making process

Generic model: Need recognition Information search Evaluation of alternatives Purchase & delivery Post purchase

There are several models too, but basically all the models are based on this generic model

One-to-one marketing

• The greatest benefits of EC is its ability to match products and services with individual customer via personalization/customization

• The concept :– Customer exposed to marketing exposure (4P’s)– Customer make a purchase– Transaction data is collected– Data analyzed– Marketing exposure updated based on the analyzed

data– Customer exposed to new marketing

One-to-one marketing

Personalization refers to the matching of services, products and advertising content to individuals (User profile)

Strategy used to compile user profiles : Direct info from customer Cookies Previous purchase patterns Marketing research

One-to-one marketing

Collaborative filtering, a method that uses consumer data to infer customer interest in other products/services

Some variations : Rule based filtering. Content based filtering Activity based filtering

Filtering may cause certain privacy issues

One-to-one marketing

• Customer loyalty is very important because it takes 3 or 8 times more effort to attain new customer than keep existing ones.

• There are 6 levels of loyalty :– The first 3 levels identified as loyalists, emotionally

attached, do not have intention to switch vendors– The last 3 levels however, not so loyal because

lifestyle change, new needs, dissatisfied etc.

• EC make loyalty levels down cos of the ease to switch vendors

E-trust

Trust in business is a mustIn EC trust is also important because

transactions is not done face-to-faceEc transactions holds many risksThe EC trust model exhibit 4.5…………Brand names also increased trust in EC

Market Research

• The goal :– Find info & knowledge about connections between consumer,

products, marketing and marketers

• The aim :– Discover opportunities– Establish marketing plans– Understand the purchasing process– Evaluate marketing performance

• On the web the objective is to turn browsers into buyers

• MR can be conducted via offline or online• MR must be conducted based on groups or

segmentation on the society

Market Research

• Market segmentation, divides the market into groups that holds potential for marketing.

• Marketers can look into these segmentation and then tailored their marketing efforts to suit these groups

• So, what are marketers looking for in this research?– Online buying behavior– Purchase pattern for each segmentation– Factors encouraging online purchase– Buyers or browsers?– Navigation behavior– Web design– Do they need help?– trends

Market Research

• Online methods– Usually to draw customer to fill research

questionnaire, web site offers free games, prizes or free software• Online Focus Groups• Direct consumer communication• Customer scenarios• Tracking customers movements• Transaction logs, generates a clickstream data• Cookies, web bugs and spyware

Market Research

• Clickstream data analysis– What goods the customer looked– What goods the customer purchased– What goods the customer examined but didn’t

purchase– What customer bought in conjunction– Which ads is effective and not– Are the catalog to crowded– Are there any certain product is hard to find– Are product descriptions adequate– Etc.

Market Research

Limitations : Accuracy of response Loss of respondent (technical problems) Ethics and legality Truly representative samples anonymity

Web Advertising

Internet introduce a whole new way of advertising

Beside cost reduction, online ad is truly beoming one-on-one advertising because : Two way communication E-mails Specific targets

Web Advertising

Mass Ad Direct Mail Ad Interactive AdDesired outcome Volume sales Targeted reach,

more sales, customer data

Volume sales, CRM, customer feedback

Consumer activitis Passive Passive Active

Leading products Food, personal care products, beer, autos, camera, computer

Credit card, travel, autos, appliances

A lot of things

Market strategy High volume products

Targeted goods to segments

Targeted individual or groups

Nerve centers Advertiser companies

Postal, warehouse Cyberspace

Preferred media TV, newspaper, magz Mailing list Banners, e-mails

Preffered tech TV Database Servers, web

Worst outcome Channel surfing Trash bin Log off

Web Advertising

Why? TV viewers are turning more into web Internet can be very specific Instant feedback Faster reach

Other reasons : Cost Richness of format Personlization Timeliness Location basis Digital branding

Web Advertising

The methods : Banners, usually around 5 to 6.25 inch in length, 0.5

to 1 inch in width, and hotlink to its owners website and static Keyword banner Random banner

Benefits : direct link, customization, forced view, multimedia

Limitation : cost, limited information, unnoticeable sometimes

Big Quiz next week

Read and study chapter 4! The consumer behavior model! Personalization EC loyalty Market research Web advertising!

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