CHAPTER 3

CUSTOMER BEHAVIOR
  Why are customers important to a
business?
Model of Consumer Behavior
CONTENTS 

 Characteristics affecting consumer

behavior
 The Buyer Decision Process
 Business Markets and Buying Behavior
What are the difference between CUSTOMER, CONSUMER and BUSINESS ?

▪ A CUSTOMER is a person who has purchased something or engaged in some form

of exchange transaction.

✓ A CONSUMER is a person who consumes or uses something.

Example: a child could be a consumer of breakfast cereal, while the child's
mother would be the customer.

✓ A BUSINESS is an organization (such as a store, company, or factory) that

makes, buys, or sells goods or provides services in exchange for money
1. Why are customers important to a business?
To get a better sense of the importance of understanding
consumer behavior, we begin by first looking at Apple.

What makes Apple users so fanatically loyal? Partly, it’s

the way the equipment works. But at the core, the brand
itself is a part of their own self-expression and lifestyle.

It’s a part of what the loyal Apple customer is.

1. Why are customers important to a business?

“Companies don’t give job security.

Only satisfied customers do.”
1. Why are customers important to a business?

OR
market share customers’ satisfaction
1. Why are customers important to a business?
In fact, most companies pay more attention to
their market share than to their customers’ satisfaction.

This is a mistake!!!

Market share is a backwardlooking metric; customer

satisfaction is a forward-looking metric.

If customer satisfaction starts slipping,

then market share erosion will follow very soon.
1. Why are customers important to a business?
Companies need to monitor and improve the level of customer satisfaction.
The higher the customer satisfaction, the higher the retention.
Here are four facts:
Acquiring new customers can cost 5 to 10 times more than the costs involved
in satisfying and retaining current customers.
The average company loses between 10 and 30 percent of its customers
each year.
A 5 percent reduction in the customer defection rate can increase profits by
25 to 85 percent, depending on the industry.

The customer profit rate tends to increase over the life of the retained customer.
 CONSUMER MARKETS BUSINESS MARKETS
 CONSUMER (B2C – BUSINESS TO  BUSINESS (B2B – BUSINESS TO BUSINESS)
CONSUMER) The products and services of the business
The final customer is the consumer with a are marketed to other businesses.
B2C business. Examples: include advertising agencies, web
Examples: Housecleaning services, hosting and graphic design services, office
restaurants and retail stores. Websites that furniture manufacturers and landlords who
offer consumer products are B2C. lease office and retail space.
2. Model of Consumer Behavior

Study customer behavior to answer:

How do consumers respond to various

marketing efforts the company might use?
2. Model of Consumer Behavior

MODEL OF CONSUMER BEHAVIOR

3. Characteristics affecting consumer behavior
 3. Characteristics affecting consumer behavior
Cultural Factors

CULTURE SUBCULTURE SOCIAL CLASS

The set of basic values, perceptions, A group of people with shared Relatively permanent and
wants, and behaviors learned by a value systems based on ordered divisions in a society
member of society from family and common life experiences and whose members share similar
other important institutions. situations. values, interests, and behaviors.
 3. Characteristics affecting consumer behavior
Cultural Factors

CULTURE SUBCULTURE SOCIAL CLASS

Example: The shift toward Example: four such important Example: The Major American
informality has resulted in more subculture groups include Social Classes: Upper Class,
demand for casual clothing and Hispanic American, African Middle Class, Working Class,
simpler home furnishings. American, Asian American, and Lower Class.
mature consumers.
 3. Characteristics affecting consumer behavior
Social Factors

FAMILY ROLES AND STATUS

REFERENCE GROUPS A role consists of the activities
People often are influenced by The family is the most important
people are expected to perform
reference groups to which they do consumer buying organization
according to the people around
not belong. in society. Family members can
them. Each role carries a status
strongly influence buyer
reflecting the general esteem
behavior. given to it by society.
 3. Characteristics affecting consumer behavior
Social Factors
 Informal reference groups
Example:
 Families
 A group of local mothers
 Peer groups
REFERENCE GROUPS  Formal reference groups
People often are influenced by Example:
reference groups to which they do • Labor unions
not belong. • Mensa, a society for people with high IQ
• Mothers Against Drunk Driving (MADD)
 3. Characteristics affecting consumer behavior
Social Factors

For example, today women

account for 50 percent of all
technology purchases. So
consumer electronics
FAMILY companies are increasingly
The family is the most important designing products that are
consumer buying organization easier to use and more
in society. Family members can appealing to female buyers.
strongly influence buyer
behavior.
 3. Characteristics affecting consumer behavior
Social Factors

Consider the various roles a working mother plays:

 In her company, she plays the role of a brand manager.

 In her family, she plays the role of wife and mother.
ROLES AND STATUS  At her favorite sporting events, she plays the role of avid fan.
A role consists of the activities
people are expected to perform As a brand manager, she will buy the kind of clothing that
according to the people around
reflects her role and status in her company.
them. Each role carries a status
reflecting the general esteem
given to it by society.
 3. Characteristics affecting consumer behavior
Personal Factors

Age & Personality &

Occupation Economic situation Lifestyle
life-cycle stage self-concept
 3. Characteristics affecting consumer behavior
Personal Factors

“Consumers experience many life-stage changes during their lifetimes.

As their life stages change, so do their behaviors and purchasing
preferences. Marketers who are armed with the data to understand the
timing and makeup of life-stage changes among their customers will
have a distinct advantage over their competitors.”
(Acxiom)
Age &
life-cycle stage *Acxiom Corporation is a marketing technology and services company with offices in the
United States, Europe, Asia, and South America.
3. Characteristics affecting consumer behavior
Personal Factors

A person’s occupation affects the goods and services bought.

Blue-collar workers tend to buy more rugged work clothes,
whereas executives buy more business suits.

Occupation
 3. Characteristics affecting consumer behavior
Personal Factors

A person’s economic situation will affect his or her store and

product choices. Marketers watch trends in personal income,
savings, and interest rates.

Economic situation
3. Characteristics affecting consumer behavior
Personal Factors
Lifestyle is a person’s pattern of living as expressed in his or her psychographics.
It profiles a person’s whole pattern of acting and interacting in the world.

It involves measuring consumers’ major AIO dimensions:

▪ Activities: work, hobbies, shopping, sports, social events.
▪ Interests: food, fashion, family, recreation.
▪ Opinions: about themselves, social issues, business, products.

Lifestyle Consumers don’t just buy products; they buy the values
and lifestyles those products represent.
3. Characteristics affecting consumer behavior
Personal Factors

 Personality:
Refers to the unique psychological characteristics that distinguish
a person or group.
 Self-concept:
The idea is that people’s possessions contribute to and reflect
Personality &
self-concept their identities—that is, “we are what we have.”
3. Characteristics affecting consumer behavior
Psychological Factors

motivation perception learning beliefs and attitudes

 3. Characteristics affecting consumer behavior
Psychological Factors

motivation perception learning beliefs and attitudes

Belief
A need that is The process by which Changes in an A descriptive thought that a
sufficiently pressing to people select, organize, individual’s behavior person holds about something.
direct the person to and interpret information arising from Attitude
seek satisfaction of the to form a meaningful A person’s consistently favorable
experience.
need. picture of the world. or unfavorable evaluations,
feelings, and tendencies toward
an object or idea.
3. Characteristics affecting consumer behavior
Psychological Factors

Maslow’s
Hierarchy of Needs

motivation
4. The Buyer Decision Process

BEFORE PURCHASE DURING AFTER

The buying process starts long before the actual purchase and continues long after.
In fact, it might result in a decision not to buy. Therefore, marketers must focus on the
entire buying process, not just the purchase decision.
 4. The Buyer Decision Process

I need a book! Use Google Search Evaluation of Make a choice Feel Satisfied
Alternatives
 4. The Buyer Decision Process

Occurs when the buyer recognizes a problem or need

triggered off by:
➢ Internal stimuli
➢ External stimuli

NEED RECOGNITION
 4. The Buyer Decision Process

Maslow’s
Hierarchy of Needs

NEED RECOGNITION
 4. The Buyer Decision Process

Several sources of information:

 Personal sources: family, friends, neighbors, acquaintances.

 Commercial sources: advertising, salespeople, dealer Web
sites, packaging, displays.
 Public sources: mass media, consumer rating organizations,
Internet searches.
 Experiential sources: handling, examining, using the product.
INFORMATION SEARCH
 4. The Buyer Decision Process

Commercial sources: the consumer receives the most

information about a product

Personal sources: the most effective sources

INFORMATION SEARCH
 4. The Buyer Decision Process

Personal sources: the most effective sources

As one marketer states, “It’s rare that an

advertising campaign can be as effective as a
neighbor leaning over the fence and saying,
‘This is a wonderful product.’”
INFORMATION SEARCH
 4. The Buyer Decision Process

How the consumer processes information to

arrive at brand choices?

EVALUATION OF ALTERNATIVES
 4. The Buyer Decision Process

 The act by the consumer to buy the most preferred brand.

 The purchase decision can be affected by:
 Attitudes of others
 Unexpected situational factors
PURCHASE DECISION
 4. The Buyer Decision Process

 The satisfaction or dissatisfaction that the consumer feels about

the purchase.
 Relationship between:
 Consumer’s expectations
 Product’s perceived performance
 The larger the gap between expectation and performance, the
greater the consumer’s dissatisfaction.
 Cognitive dissonance is the discomfort caused by a post-
POSTPURCHASE BEHAVIOR purchase conflict.
 5. Business Markets
and Business Buying Behavior

Characteristics
of
Business Markets
5. Business Markets
and Business Buying Behavior

A Model of Business Buyer Behavior

 5. Business Markets
and Business Buying Behavior

Participants in the Business Buying Process

Buying center: All the individuals and units that play a role in the purchase decision-making
process.
The buying center includes all members of the organization who play any of five roles in the
purchase decision process:
 Users
 Influencers
 Buyers
 Deciders
 Gatekeepers
 Participants in the Business
are those that will use the product
or service
Buying Process
Users

help define
specifications and
provide information
Gatekeepers Influencers
control the flow for evaluating
of information Buying alternatives
center

have formal or informal have formal authority to select

power to select and Deciders Buyers the supplier and arrange
approve final suppliers terms of purchase
5. Business Markets
and Business Buying Behavior

Major Influences on Business Buyer Behavior

5. Business Markets
and Business Buying Behavior

Stages of the Business Buying Process

Model of Consumer Behavior
Characteristics affecting consumer behavior
The Buyer Decision Process

BEFORE PURCHASE DURING AFTER

The buying process starts long before the actual purchase and continues long after.
In fact, it might result in a decision not to buy. Therefore, marketers must focus on the
entire buying process, not just the purchase decision.