Understanding Customer Behaviour

Our lives are intertwined with a multitude of choices, spanning from significant life decisions like education and careers to daily choices involving food, clothing, and entertainment.

These choices, both big and small, are driven by intricate decision-making processes, and understanding these processes and their influencing factors is crucial for both marketers and consumer researchers.

For companies seeking to sell products or services, gaining insights into consumer preferences, behaviors, and decision-making patterns is paramount.

This deep understanding of customers is the bedrock of successful marketing, forming the core of the marketing concept. Recognizing that consumer behavior is never static and continually evolves, businesses strive to remain attuned to emerging trends such as the current surge in social networking and the growing impact of digital influencers.

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Numerous influences shape the purchasing habits of customers, and our comprehension of these influences is continually evolving. This chapter delves into the complex nature of customer behavior, dissecting the frameworks and concepts employed to decipher customer actions.

By exploring the various dimensions necessary to fathom the intricacies of customer behavior and the forces that mold it, we gain a comprehensive understanding of the driving factors behind consumer choices.

Dimensions of Customer Behavior

Understanding customer behavior is a multi-faceted endeavor that involves analyzing various aspects of consumer decision-making and organizational buying. This understanding is crucial for businesses to tailor their strategies and offerings effectively. Differentiating between individual consumer purchasing and business-to-business (B2B) purchasing is a fundamental starting point.

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1. Individual Consumer Purchasing:

• Consumer Market: Comprises private consumers and groups like households. Consumer purchasing is often on an individual basis, such as buying a chocolate bar.
• Key Questions for Understanding Customer Behavior:
  • Who is important in the buying decision?
  • How do they buy?
  • What are their choice criteria?
  • Where do they buy?
  • When do they buy?

2. Organizational Buying (B2B):

• Industrial Market: Involves companies purchasing goods and services for their own production processes. For example, buying memory chips for smartphone manufacturing.
• Reseller Market: Encompasses organizations that buy products and services to resell, such as online retailers and supermarkets.
• Government Market: Involves government agencies purchasing products and services for their operational needs.

Key Questions for Understanding Organizational Buying Behavior:

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• Who are the key decision-makers in the buying process?
• How does the organizational buying process work?
• What are the criteria influencing their buying decisions?
• Where do they source their products and services?
• When do they make purchasing decisions?

The answers to these questions can be gathered through personal interactions with customers and supplemented by marketing research and data analytics. By addressing these key dimensions of customer behavior, businesses can tailor their marketing strategies, product offerings, and communication channels to effectively meet the needs and preferences of their target audiences.

Who buys?

In the intricate choreography of the buying decision-making process, different individuals take on distinct roles, each contributing to the final verdict. Blackwell, Miniard, and Engel’s framework outlines five pivotal roles that collectively shape the outcome:

1. Initiator: The curtain rises with the initiator—a person who ignites the contemplation of a purchase. Armed with information, they embark on gathering data to inform the decision.
2. Influencer: The influencer takes the stage next. Their role involves persuading others within the group, attempting to sway the decision in their favored direction. They actively collect information and endeavor to impose their choice criteria on the decision.
3. Decider: The decider holds the reins of power. With financial authority and decision-making clout, this individual ultimately seals the deal, selecting the product that aligns with their vision.
4. Buyer: Stepping onto the scene, the buyer executes the transaction. Whether making the call, visiting a store, or navigating online platforms, they orchestrate the payment and oversee delivery.
5. User: The finale unfolds with the user—the ultimate consumer of the product. Their interaction with the product brings the decision-making process full circle.

Often, one person may assume multiple roles within this group dynamic. A toy purchase scenario exemplifies this complexity: a girl may spark the idea, seeking to influence her parents (the deciders), while her sister might offer an alternative influence. One of the parents might take on the role of the buyer, completing the transaction. Both children assume the role of users. Within this interplay, marketers find diverse opportunities to shape the decision.

For instance, Microsoft’s partnership with the CoderDojo Foundation leverages a multi-faceted approach to appeal to younger consumers. Through sponsorship of events like the CoderDojo Coolest Projects Showcase, Microsoft cultivates brand awareness, nurtures a positive brand image, and fosters favorable attitudes among this demographic.

Organizational buying introduces an additional layer of complexity, often involving a decision-making unit (DMU) or buying center. This dynamic entity, subject to change as the decision-making journey unfolds, entails various individuals. While a managing director might influence the decision to purchase new equipment, they might not be involved in selecting the manufacturer. Identifying key members within the DMU becomes paramount for effective marketing outreach.

Yet, this task is no simple feat. The expanding size of decision-making groups in organizations, coupled with gatekeepers—such as secretaries—exerting control over access to key DMU members, challenges the marketer’s pursuit. A savvy salesperson must identify a positive advocate within the DMU who champions the supplier’s product, arming them with the necessary information to navigate internal discussions.

Understanding the constellation of roles within the buying center yields implications for marketing communications and segmentation. Precisely identifying each role empowers tailored and persuasive communication strategies. Notably, the consumer using or consuming the product might not always wield the greatest influence or decision-making power. However, their insights and opinions can serve as potent persuasive forces during the decision-making journey.

For instance, recommendations from plumbers substantially influence shower purchase decisions. Consequently, brands like Mira have proactively sought to raise consumer awareness to reduce the influence wielded by these “deciders” in the purchasing process.

In this intricate dance of roles and influences, understanding and effectively addressing the nuances become the key to orchestrating a harmonious buying decision that resonates with consumers and leverages the dynamics of decision-making units.

How they buy?

Understanding how consumers buy and what influences their buying decisions have been the core questions examined in the field of consumer behaviour.

It is a rich arena of study, drawing on perspectives from disciplines as diverse as economics, psychology, sociology, cultural anthropology and others.

The dominant paradigm in consumer behaviour is known as the information processing approach and has its roots in cognitive psychology. It sees consumption as largely a rational process – the outcome of a consumer recognizing a need and then engaging in a series of activities to attempt to fulfil that need.

The information processing approach

The realm of consumer behavior delves into the intricacies of how consumers make purchasing decisions and the factors shaping these choices. It’s a multidisciplinary field that draws insights from diverse disciplines like economics, psychology, sociology, and cultural anthropology.

One dominant paradigm in this realm is the information processing approach, rooted in cognitive psychology. According to this paradigm, consumption is viewed as a predominantly rational process, encompassing various stages aimed at addressing a recognized need.

Outlined in Figure 1, the typical consumer and organizational decision-making process navigates several stages, starting from need recognition and culminating in post-purchase evaluation. Organizational buying processes can be more intricate, often encompassing more stages, especially for complex and high-cost items.

Figure 1 Buying decision processes: consumer vs organizational

Need Recognition: This initiates the journey, arising from either routine depletion (e.g., fuel, food) or unpredictable events (e.g., appliance breakdowns). Marketers must keenly grasp consumer needs and challenges, tailoring strategies to resonate with these aspects. Brands like Dove have successfully aligned themselves with trends such as positive body image, effectively associating their brand with consumer values.

Information Search: The second stage involves sourcing information. This may include personal contacts, commercial sources, third-party reports, and personal experiences. With the digital age, information search predominantly occurs online through platforms like compare.com and trivago.com. This phase aims to construct the awareness set, a roster of potential solutions.

Evaluation of Alternatives: From the awareness set, consumers distill the evoked set, a shortlist of options for serious consideration. This screening process helps narrow down choices before thorough evaluation. Organizational buying, with its decision-making units (DMUs), may involve different members using distinct choice criteria during this screening process.

Purchase: Following evaluation, the ultimate choice is made, leading to the purchase of the product or service.

Post-Purchase Evaluation: After the purchase, customers often evaluate their decision. This can manifest as satisfaction or cognitive dissonance—concerns stemming from uncertainty about the right choice. Cognitive dissonance can be intensified due to various factors: the purchase’s expense, decision complexity, irreversibility, and anxiety. Strategies to alleviate dissonance range from seeking reassurance through advertisements and brochures to engaging with other purchasers.

Organizations, keen to manage customer expectations and reduce buyer’s remorse, often employ techniques like customer reviews and post-purchase communication to reaffirm the wisdom of the decision and underscore the quality of after-sales service. By comprehending and navigating these stages, marketers strive to create a seamless and satisfying buying experience for consumers while mitigating potential doubts or concerns.

The consumer decision journey

While the information processing approach provides a rational, linear model of consumer decision-making, the dynamic digital landscape has prompted a reevaluation. Enter the Consumer Decision Journey, a modified version that maps the path to purchase in our media-rich age. This approach recognizes the circular nature of consumption, wherein post-purchase evaluation feeds back into need recognition, triggering the process anew.

Figure 2. The consumer decision journey

A key departure from the linear funneling of alternatives is the notion that online information search expands options during the journey. Brands initially overlooked might emerge as viable contenders due to the ease of online discovery. This illustrates the impact of digital empowerment on reshaping the buying landscape.

Post-purchase engagement has gained prominence, with consumers sharing the unboxing experience through videos and leveraging social media for both positive and negative feedback. This active post-purchase phase contributes to an ongoing cycle of consumer engagement.

Touchpoints throughout the journey have become focal points for marketers. Insights into where consumers gather information and the right mix of online and offline communication become pivotal for crafting effective strategies.

Enhancing the customer journey has emerged as a priority. This might entail a fully digitized experience, heightened convenience, and tailored journey customization to align with individual preferences.

Consumer Culture Theory (CCT): A Paradigm Shift

An alternative perspective, Consumer Culture Theory (CCT), disrupts the notion of consumption as a purely rational process. CCT delves into consumption’s socio-cultural and experiential dimensions, shedding light on why consumers derive joy from shopping and attach certain meanings to their chosen brands.

CCT goes beyond the consumer-centric lens to explore intricate relationships among material, economic, symbolic, institutional, and social aspects. Researchers draw from sociology, anthropology, media studies, and various disciplines to comprehend consumer behavior’s intricate tapestry.

CCT encompasses four core domains, intertwining to provide a holistic understanding of consumer behavior:

1. Consumer Identity Projects
2. Marketplace Cultures
3. Socio-Historic Patterning of Consumption
4. Mass Mediated Marketplace Ideologies and Consumer Interpretative Strategies

This approach pushes for diverse research methods. Introspection invites structured self-reflection, while narrative analysis delves into the connection between consumer experiences and brands through personal narratives. Ethnography, a qualitative research technique, observes consumer actions in their natural settings, uncovering environmental, social, cultural, and psychological influences.

The impact of CCT is vast, placing consumers in a broader context. It advocates a shift towards introspective, narrative-based, and ethnographic research, empowering marketers to decode the intricate dynamics of consumer behavior in a rapidly evolving world.

The information processing approach and consumer culture theory offer distinct lenses to understand consumer behavior, as summarized in Table 3.1. The attributes they emphasize and the aspects they focus on demonstrate their differing viewpoints.

Attribute	Information Processing Approach	Consumer Culture Theory
Level of analysis	Individual	Society
Focus	Cognitive processes	Context of consumption
Purpose of consumption	Utilitarian	Experiential
Process of consumption	Logical	Random
Key consumption influence	Rationality	Social

Types of Purchase Decisions

Both approaches enrich our comprehension of consumer behavior, yet they also shed light on various types of purchase decisions (see Figure 3).

Figure 3 Types of consumer decision

Here’s how they relate:

1. Extended Problem Solving: Applied in significant purchases like cars, electronics, houses, and holidays, where consumers actively search and evaluate options due to perceived differences and time availability.
2. Limited Problem Solving: Involves some experience, internal memory-based information search, with some external evaluation before making purchases. Marketers can influence this through advertising and risk reduction strategies.
3. Habitual Problem Solving: Characterized by low involvement and limited perceived brand differences, common in repeat purchases with minimal evaluation. Advertising maintains brand recall and reinforces existing attitudes.
4. Variety-Seeking Behavior: Found in low-involvement situations with perceived brand differences. Consumers switch to try new experiences, driven by factors like sales promotions and sampling.

In essence, the nature of purchase choices varies from thoughtful to relatively automatic, influenced by the perceived importance of the decision. The underlying reasons for these choices are intricate, paving the way for deeper exploration into consumer behavior.

What are the choice criteria?

When customers evaluate products and services, they consider a range of attributes known as choice criteria. These criteria serve as the basis for choosing one brand over another. Different individuals within the buying center may prioritize distinct choice criteria based on their roles and responsibilities. Four types of choice criteria are outlined in Table 3.2, along with examples of each:

1. Technical Criteria: These criteria pertain to product or service performance and include attributes such as reliability, durability, comfort, convenience, style/looks, delivery, and taste. While customers often rationalize their purchase decisions using technical criteria, underlying motives can be more emotional.
2. Economic Criteria: Economic criteria revolve around cost-related aspects, encompassing elements like price, value for money, running costs, residual value, and life-cycle costs. In B2B contexts, buyers increasingly consider life-cycle costs, which include factors beyond initial price.
3. Social Criteria: Social criteria influence consumer choices significantly. They concern the impact of purchases on personal relationships and adherence to social norms. Consumption’s social effects are potent, such as wearing clothes with recognizable labels leading to higher perceived status and improved job prospects.
4. Personal Criteria: Personal criteria center on the psychological relationship between individuals and products or services. Emotions play a pivotal role in decision-making. Manufacturers initially focused on economic and technical aspects of products like smartphones and computers but later shifted towards emotional attributes like appearance and color.

In organizational contexts, personal criteria also play a role. Risk reduction can sway decisions, as risk-averse individuals prefer “safe” brands. Supplier preferences might even hinge on personal relationships, liking or disliking salespeople, and internal office politics. For instance, the famous IBM slogan “No one ever got fired for buying IBM” reflected the significance of risk reduction in decision-making.

Influences on Consumer Behavior: Personal and Social Drivers

Consumer behavior is shaped by a multitude of influences, which can be categorized into personal and social factors. These factors collectively guide how individuals make purchasing decisions and engage with products and services. The main influences within these categories are:

Personal Influences:

1. Life Cycle: An individual’s stage in life, such as their age, marital status, and family composition, can impact their consumption patterns. For example, the needs and preferences of a young single person differ from those of a married couple with children.
2. Motivation and Values: Personal motivation and core values drive consumer behavior. People are often motivated by fulfilling needs, desires, or aspirations, which influence their product choices and consumption patterns.
3. Beliefs and Attitudes: Consumer beliefs and attitudes towards products, brands, and services shape their purchasing decisions. Positive attitudes towards a brand can lead to brand loyalty and repeat purchases.
4. Personality: An individual’s personality traits play a role in their consumption patterns. Extroverted individuals might be drawn to social events, while introverted individuals may prefer solitary activities.
5. Lifestyle: Lifestyle encompasses an individual’s patterns of behavior, interests, and activities. Consumers with active, health-conscious lifestyles might prioritize products that align with their values.

Social Influences:

1. Culture and Subculture: Cultural norms, values, and practices impact consumer behavior. Subcultures within larger cultures can also influence preferences and consumption patterns, such as ethnic or religious groups.
2. Social Class: Social class, determined by factors like income, education, and occupation, can shape consumer preferences. People from different social classes may have distinct tastes and priorities.
3. Reference Groups: Reference groups are social circles that influence individuals’ attitudes, values, and behaviors. These groups can include family, friends, colleagues, and online communities. People often align their choices with those of their reference groups.

Both personal and social influences interact to guide consumer behavior. An individual’s motivation, values, personality, and lifestyle blend with cultural norms, social class, and reference group dynamics to determine their preferences, purchasing decisions, and overall consumption patterns.

Influencer Marketing: Leveraging Social Media Influencers

Influencer marketing is a strategic approach that harnesses the power of social media influencers to amplify a brand’s message and connect with targeted audiences.

Social influencers are individuals who possess the ability to impact others’ opinions and behaviors. Initially, influencers were often celebrities; however, in today’s landscape, influencers can be everyday individuals who hold sway over their followers, making them potential trendsetters capable of influencing their friends, family, and online audience.

There are generally three categories of influencers within influencer marketing:

1. Celebrity Influencers: These influencers are often widely recognized figures, including celebrities from the entertainment, sports, and other industries. They boast millions of followers on their social media platforms and wield significant influence.
2. Macro-Influencers: This group includes individuals with follower counts ranging from 100,000 to millions. They may specialize in specific niches and enjoy a dedicated and engaged following.
3. Micro-Influencers: Micro-influencers typically have follower counts ranging from 1,000 to 100,000. They maintain a more intimate and close-knit online community, often within niche interests.

Companies collaborate with these influencers by inviting them to become brand ambassadors and engage in conversations about the brand across various online platforms. Influencers span diverse domains, such as fitness, gaming, beauty, fashion, social media, and more. They employ platforms like Facebook, Twitter, Instagram, TikTok, and YouTube to share product information and promote the latest brand offerings to their followers.

Terms such as “social media stars,” “brand influencers,” and “digital influencers” collectively refer to these influential individuals. The terms “YouTubers,” “Instagrammers,” “Snapchatters,” “vloggers,” and “bloggers” are used to specify influencers based on the platforms they engage with. Influencer marketing capitalizes on the personal connections and trust that influencers have cultivated with their followers, making it an effective way to authentically reach and engage target audiences.

Influences on Organizational Buying Behavior

Organizational buying behavior possesses distinct characteristics that set it apart from consumer buying behavior. These unique features stem from the complex dynamics within the business-to-business (B2B) context. Understanding the influences on organizational buying behavior is essential for both suppliers and buyers in the B2B market.

1. Market Characteristics:

• Limited Number of Customers: In B2B markets, the number of customers is relatively small compared to consumer markets. A few key clients can significantly impact a supplier’s success or failure.
• Complex Purchases: Organizational purchases tend to be intricate and high-risk, especially in scenarios like major IT investments. The involvement of multiple stakeholders in the decision-making process is common.
• Derived Demand: The demand for many industrial goods is derived from the demand for consumer goods. Changes in consumer demand can reverberate through the supply chain, affecting suppliers’ operations.
• Impact on Suppliers: The financial health of large organizational customers affects their suppliers. Requests for price reductions can strain supplier profitability, and economic shifts can lead to supply chain disruptions.
• Negotiations and Reciprocity: Negotiations between buyers and sellers are prevalent in B2B transactions. In some cases, reciprocal buying occurs, where agreements involve mutual concessions, like a technology company providing computers in exchange for a car fleet.

2. Factors Influencing Organizational Buying:

• Buy Class: This categorizes organizational purchases based on their complexity and the degree of decision-making involvement. The three buy classes are new buy, straight rebuy, and modified rebuy.
• Product Type: The nature of the product being purchased influences the buying decision. For example, strategic products with significant implications require thorough evaluation.
• Importance of Purchase: The significance of the purchase to the organization can shape the buying behavior. High-value, critical purchases often involve meticulous scrutiny.

Understanding these influences aids suppliers in positioning their offerings strategically and adapting their marketing efforts to the organizational buying context. It also empowers buyers to make informed decisions that align with their business goals and requirements.

Conclusion

In conclusion, the study of consumer behavior is a multifaceted endeavor that delves into the intricate processes by which individuals make purchasing decisions. Drawing insights from various disciplines, including economics, psychology, sociology, and cultural anthropology, this field seeks to unravel the complexities of human choice. The dominant information processing approach, rooted in cognitive psychology, highlights consumption as a rational progression driven by recognizing needs and undertaking deliberate activities to fulfill them.

As consumers embark on their buying journeys, a blend of cognitive and emotional elements shapes their decisions. The evolving landscape of consumer behavior continually introduces new trends and influences, such as the rise of social media and the impact of digital influencers. Marketers and researchers alike leverage these insights to craft effective strategies that resonate with consumers, ultimately enhancing the understanding of their preferences, motivations, and the diverse factors that guide their choices.

Through a comprehensive examination of individual and social influences, the study of consumer behavior not only aids businesses in crafting successful marketing strategies but also enriches our comprehension of the intricate interplay between personal psychology, societal dynamics, and consumption patterns.