Consumer Behavior: Factors, Theories, and Decision-Making Process

Posted on Mar 24, 2024 in Economy

Factors Influencing Consumer Behavior

Situational Factors

• Buying task
• Market offerings

Personal Factors

• Demographics
• Life stage
• Lifestyle
• Personality

Psychological Factors

• Motivation
• Learning
• Attitude and beliefs

Social Factors

• Culture / subculture
• Social class
• Family
• Reference groups

ALSO:

• Disposable income (purchasing power) vs purchase spend
• Economic environment: confidence
• Group / social influences
• Marketing (global, overall) influences, especially “uncontrolled” social marketing information

a. Pavlovian Model: Learning = changes in behaviour developed through practice and experience.

1. Drive (strong internal stimuli requiring action)
2. Drivers (psychological needs creating triggers)
3. Reinforcement (repetition)

Consumer Behaviour BASIC Theories

2. Howard Sheth Model: Describes behaviour complexity through 4 elements:
   1. Inputs (inherently ambiguous)
   2. Constructs (perception biases)
   3. External/Exogenous variables
   4. Outputs
3. Family Decision Model: Describes decision as a consequence of interaction of 6 roles:
   1. User: Who plans to or will use the product.
   2. Influencer: The contributor of shared information, aligning views and resolving differences.
   3. Preparer: The responsible to transform the product to its ultimate shape.
   4. Gatekeeper: Filters information, taking out irrelevant or controversial components, aligning it to attributes of use.
   5. Buyer: The final and ultimate decisor(s).
   6. Decider: The money holder power.
4. Engel Blackwell Kollat Model (Behaviour through 4 “systematic dynamic”)
   1. IP , Information Processing: exposure, attention, comprehension, retention of product messages.
   2. CCI, Central Control Unit: Psycho factors: previous experience, evaluation criteria, changing mindset and personality of decisors
   3. Decision Process: Formal rational process (recognition, information, evaluation, purchasing decision, post-purchase satisfaction)
   4. Environmental Influences: Factors like income, financial status, social status, position influences.

Consumer Behaviour COMPREHENSIVE Theories

1. “Economic rational person” model:

   • According to the “economic person” model, consumers are rational and narrowly self-interested
   • People act selfishly as consumers, always trying to maximize the benefits they derive from the exchange process
   • The seller/producer is also an economic man, who always strives to maximize his profits from an exchange
   • The economic person model suggests consumers actively use information about all the available options before making a decision to purchase

2. “Stimulus / Response” model:

   • Black box: consumer as a thinker and problem solver who responds to a range of external and internal factors when deciding whether or not to buy

3. “Problem solving” model:

   • Consumer behavior is as a set of activities a person goes through in order to solve problems
   • This problem-solving process is triggered when a consumer identifies some unmet needs and/or wants
   • This model acknowledges that both rational and irrational factors may shape a buyer’s purchasing decisions: the problem-solving model helps us mapping a consistent process individuals go through as they make buying decisions.

4. “Dick Basu loyalty” model:

   • Customer loyalty model is a conceptualisation of the combined effects of attitude and behaviour. They suggest that loyalty is the result of the interaction between a customer’s relative attitude to a brand, or store, and their repeat purchase behaviour for that brand or store.
   • The typology divides customers into four loyalty groups. Customers with high attitudinal and behavioural loyalty are described as ‘true loyals’, those with high behavioural loyalty but low attitudinal loyalty as ‘spurious loyals’, those with high attitudinal loyalty but low behavioural loyalty as ‘latent loyals’, and those with low attitudinal and behavioural loyalty as ‘non loyals’.

Stages in Consumer Decision Process

1. Need recognition
2. Information search
3. Evaluation of alternatives
4. Purchase decision
5. Post purchase behavior

SM Funnel

Its is a virtual place where selling and buying processes meet enhanced by marketing activities. Enables different types of engagement at different stages. It is adapted to different types of buyer personas. Gives data for the analysis and planning of sales processes and marketing activities.

1. Awareness: seeking educational information to help grow in their knowledge of solutions.
2. Consideration: seeking demonstration of solutions expertise. Comparing to other solutions
3. Preference
4. Purchase
5. Loyalty

Differences between MQL and SQL

– A marketing qualified lead (MQL) is a lead who has been deemed more likely to become a customer compared to other leads. This qualification is based on what web pages a person has visited, what they’ve downloaded, and similar engagement with the business’s content.

– SQLs are prospects that have been vetted to determine if there’s an interest to connect them to the next stage in the buying cycle, sometimes called the Discovery or Demo stage.

Loyalty Loop

The customer loyalty loop is a customer service concept that illustrates how consumers decide what they buy, and then continue to make purchases from a given company again in the future. The model recognizes that, in real life, once people make a purchase they tell others what they think about the product, but constantly reevaluate if they should stick to that brand. It attempts to serve as a replacement and more realistic model for the funnel concept of marketing.

The 4 stages of the customer loyalty loop represent decision points for customers. At each stage, the customer makes a choice that determines whether or not the customer remains loyal to a particular brand.

CRM

Customer Relationship Management – is a system that allows businesses to manage business relationships and the data and information associated with them. You can store customer and prospect contact information, accounts, leads, and sales opportunities in one central location

How to Choose the Sales Reps Repartition

Evaluate environment

• Decision-makers, influencers… • Potential targets (SQL)
• Targeting

Interview / interact

• Prepare