Unit 37 Consumer Behavior and Insight Assignment
Consumers are the pivot for every business organisation around which every business activity revolves. Therefore, understanding and recognising the factors that affect their decisions regarding purchasing a product. In this report, five stages of consumer decision-making and factors that influence the ultimate decision have been discussed thoroughly in accordance with the online shopping giant- Amazon.In this case, the Prime membership option by Amazon has been studied. Apart from this, significance of mapping the consumer decision-making journey is elaborated with respect to the online shopping enterprises. In later section, a discussion on application of different models and theories to respond to the consumer decision making is done. Furthermore, the B2B and B2C approaches and their impact on consumer have been elucidated, and a comparison has been drawn between the two marketing approaches. Before concluding this report, an evaluation of different factors affecting the consumer decision-making process have been carried out.
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LO1- Demonstrate the ability to map a path to purchase in a given category, including the decision-making process.
P1- Explain and analyse the stages of the consumer decision-making journey for a given product/service.
The consumer decision-making process is a part of marketing studies which the marketers often brought into use in order to track or identify the whole process of decision-making of the customers from the beginning to end. Usually, it consists of five independent stages that are shown in the figure 1.
- Problem Recognition: This stage involves the identification of the customer’s desires or needs. The customer tries to identify the factor which is missing and make efforts to get back to feeling normal. In case of Amazon, the main problem that people used to face was delay in the delivery of their order. So, the giant of online shopping- Amazon identifies this problem and launched the Prime Membership Those who avail this service is given the benefit of delivery within 24 hours after placing the order.
- Information Search: This stage is always changing and the information is gathered from consumers through recommendations and prior experiences. In addition to this, the customer begins to give attention to risk management. A consumer might make a decision based on pros and cons list. Prime membership cost the consumer some extra amount but they are being benefitted with the fastest delivery than any other online shopping business.
- Evaluation of Alternative: In this stage, the consumer starts to ask questions in order to seek some alternatives of the product. This can be done by reading reviews or comparing the prices, and finally choosing a product that suits them the most. Amazon understands this, and recommend its consumers some alternatives of its own.
- Purchase: Here, the customer makes up his/her final decision regarding the purchasing of the product that they are interested in. The final decision is based on the assessment of emotions, experiences, marketing, or advertisement.
- Post Purchase Satisfaction (Reviews): The review stage is the most crucial stage as it can provide information about the satisfaction level of the customer. Feedback (both positive and negative) are studied and changes based on the analysis are made. Amazon specifically evaluates the feedbacks from the customer and try to change or improve its product quality.
P2- Explain why it is important for marketers to map a path to purchase and understand consumer decision-making
The stages of purchase are ever-changing and it’s quite cyclic. Amazon understands that in today’s day and age, consumer are more into comparing, recommending, consuming, and make decisions regarding the purchase. In addition to this, social media and other review sites impact the decision-making decisions. They expect organisations to know their customer and their needs. Therefore, Amazon initiated the new trend of consumer journey mapping. These maps contain an overview of the consumer’s experience and how people behave with a particular brand (Wolny and Charoensuksai, 2014). The importance of mapping the purchase journey are given below:-
- It helps the marketer to develop some tailored experiences, thereby providing a better way of measuring the effectiveness of the campaign. For Amazon, the maps created from the viable data help in understanding the customer behaviour.
- It keeps its focus on developing long-term relationship with the customers by gathering data based on attitude, behaviour, demographic information, and perception of the people.
- It assists and triggers customer towards purchasing with the help of awareness campaign. In addition to this, mapping helps the marketers to understand the each stage of decision-making of customer, thereby making them attract people towards their brand.
- It helps the organisations to create a business plan in accordance with the desires of the customer. The quality of good journey map is that it helps in identification of those touch points that could assist in achieving the consumer-centric goals.
- It helps in understanding the buying stage and make the marketers to put more attention on that stage. By making use of customer insights in the identification of the areas that require high attention, mapping helps the organisation in meeting the need of customers (Trueblood, et.al, 2013).
- It assists in the identification of the gap in the objectives of business. It develops a framework for employees to work together in order to improvise the firm’s overall performance.
M1- Evaluate how marketers are responding to the decision-making process, applying relevant concepts and models.
Customers in today’s time are like a fluid that can follow various steps to make a purchasing decision, and business must understand those critical paths taken by their customers.Amazon did not make it mandatory for everyone to pay the subscription fee of its prime membership service. Instead, it is keeping it as an option with some extra perks. Those customers who want to avail those benefits have to pay for the same (Simon Model). Different theories and models are being used by the marketers to understand, evaluate, and analyse the decision-making process of customers. Before moving further, first one should understand the customer behaviour. The Consumer Buying Behaviour in reference to the business environment can be defined as the process that makes the person look for, select, buy, consume, and dispose of goods or services. “Consumer behaviour” is the study of persons, groups, enterprises, or processes used by customers to choose, buy, use, and dispose of the goods to meet the desires of customers.
Decision-making Models are evaluated below:-
- Simon Model (1960): This model divides the decision-making process into three individual stages: 1) Intelligence activity 2) Design activity 3) Choice Activity. In his paper, Simon gave an argument that the process of decision-making is nothing more than a cognitive one which can be divided into simple steps.
- Nicosia Model (1966): This model talks about putting a focus on the communication process between the brand and customers. It makes use of event in some sort of sequence that is also called fields.
- Engel, Kollat& Blackwell model (1968): This consumer decision- making model consist of various components, such as input, analysing information, decision process, and identification of the variables affecting the decision-making. The decision-making process comprises five stages- 1) Recognition 2) Search 3) Alternative Evaluation 4) Purchase 5) Outcomes
- Mintzberg model (1976): The key theory of this model is that the decision of restructuring the project cost and project management is based upon the strategic decision process.
LO2- Evaluate appropriate forms of research to understand influences on the decision-making process (B2C and B2B)
P3- compare and contrast the key differences of the decision-making process in the context of B2C and B2B, providing specific examples.
B2B and B2C are two major marketing approaches used for selling the products, they are not similar. B2B stands for Business to Business and is a variety of commercial transaction in which the buying and selling of the products are done between two business organisations. Business to Consumer (B2C) is a type of transaction where the business organisation sells its products and services directly to the end users (consumers). However, one should not consider the customer as the end user as it is very helpful for the organisation because for B2C to occur, several B2B transactions take place in the past.
The purchaser is sophisticated who understands the goods and services very well, and wants to purchase them in order to keep his/her company competitive and profitable. Talking about the B2C buyers, they are mostly seeking the best price and study the market and competition before making the purchase. Apart from this, another factor that does play a significant role is the trust of the buyer on the retail outlet or online business. It has been found that people still do not trust the online businesses and make purchases from the trusted outlets (Trainor, et.al, 2014). In this respect, B2C marketing should work in building trust and loyalty with their consumers.
B2B marketing is relationship-driven and focuses on the customer’s decision-making process. B2B marketing places quality as their key factor in business. B2B customer service plays a critical role as a bad service to a customer might waste all the marketing efforts of an organisation. Customer service takes place even before making the first sale and includes contacting the clients via, phone calls.
P4- Evaluate the different approaches to market research and methods of research used for understanding the decision-making process in both B2C and B2B contexts.
In B2B, mixed research approaches are quite common. The research methods can be qualitative or quantitative or ethnographic depending on the type of results the researcher seeks. The B2B marketing research is complicated and complex, therefore multiple approached are applied. Moreover, the B2B research methodologies are neutral. Tele-depth approach is one of the famous methods in qualitative Business to Business (B2B) as the businesses in this marketing make their most of the transactions by phone. Tele-depth interviews are often preferred as it provides a better top-notch quality data than face-to-face interviews (Karimi, 2013.). Apart from this, making use of the focus group does not serve the purpose of qualitative research as the businesses are geographically scattered and are in competition with each other.
In B2C research, the sample size is larger than the B2C, thereby making this research less skewed and more reliable. In addition to this, B2C research is customer-oriented rather than business-oriented in order to understand the perspective of the consumers while purchasing the product or services. Since B2C research focuses on building the relationship with the customers and loyal consumer base. Therefore, in B2C approaches incentives are given to participants in the form of cash, reward points, coupons, gift cards, etc (Hadjikhani and LaPlaca, 2013).
M2- Provide a coherent and justified evaluation of how different factors influence decision-making and buying behaviour, supported by specific examples.
There are numerous factors affecting the consumer purchases, such as psychological, social, personal, etc. According to Amazon’s marketing manager, consumer behaviour is strongly derived from the factors, such as consumer’s social class and subculture. For example, needs of people living in Asian subcontinent differ from those living in Europe. Therefore, Amazon has to design its online marketing strategies to sell products according to the customer’s requirement.
Social factors comprise family, status, reference group. Here, the decisions of the consumer are influenced strongly by the opinion of other, changing lifestyles, and role. These factors reflect the changing shape of the market. Amazon is trying to match up with emerging lifestyle and is now offering products based on the social status of people (Lysonski and Durvasula, 2013).Apart from this, consumer’s attitude, perception, age, personality, etc., shape the brand image an Amazon has successfully match its marketing strategy in accordance with the aforementioned factors.
LO3- Evaluate how marketers influence the different stages of the decision-making process (B2C and B2B)
P5- Evaluate how marketers influence each stage of the decision-making process of B2C and B2B, giving specific examples
It is a well-known fact that an average customer go through a pre-defined decision-making process before making a purchase of the desired goods or services. This path involves some commonalities across organisations and target audience, but it is essential to understand a specific buying process. Understanding the decision making process is important to grow business. In this section, how marketers influence the consumer-decision making process has been evaluated.
There are numerous ways by which marketers can influence the consumer-decision making process in B2C that are elucidate in here.Identifying the target audience can help in influencing the consumer behaviour. For that purpose, marketers make use of both qualitative and quantitative market segment tools. These tools help in assessing the factors, such as geographic, demographic, age, location, etc. They also analyse the behavioural and psychographic influences. The organisations try to build the relationships with consumers based on experiences, knowledge, perceptions, and usage. This help the organisation in improving the brand loyalty, brand attributes, enhancing the usage rates and occasions.
Apart from this, companies are currently making use of niche marketing. It allows the organisation to amplify the marketing strategy rather than vanishing the investment in the general market. Niche market invented as a result of analysing the consumer behaviour in order to serve the under-served market.
There are numerous ways by which marketers can influence the consumer-decision making process in B2B that are explained here. The changing canvas of the commerce is affecting their choices. The business in current time is being operated online rather than offline modes. The seller’s behaviour and sophistication have been improved in the course of time. Buyers now have the option to return, exchange or replace their orders. Apart from that, the door-step services also helping the businesses in influencing the consumer behaviour. In addition, the technological changes have triggered the growth of the emerging market. Use of advance technology in the production of goods and services has led to higher efficiency and market in growth.
M3- Critically Evaluate how marketers influence each stage of the decision-making process of B2C and B2B with reference to relevant methods and models applied
In this presentation, the marketer’s approaches to influence different stages of consumer buying process and business buying process have been explained. Firstly, the each stage of the B2B and B2C have been discussed, and then the factors affecting them have been mentioned. Based on these factors, the marketers approach have been explained.
Consumer behaviour tries to explain the buyer decision-making process and characteristics of a particular consumer, such as behavioural and demographics variables. Consumer behaviour in the field of management is a newly added topic and is very important in implementing and formulating most of the marketing strategies.Marketing starts with the customers’ requirements and ends with their satisfaction.
In B2C, there are five stages that are explained below:-
Problem Recognition: In this stage, the customer tries to figure out the problem or the missing factors (identify customer’s needs). Here, the fastest delivery is the need of the time and Amazon identifies it very well.
Information Search: In this stage, the consumer gathers information through recommendations and prior experiences. Reviews of Prime Membership are good, so taking the subscription is not a bad choice.
Evaluation of Alternative: In this stage, the customer look for some other options. This can be done by reading reviews or comparing the prices. Since no other online shopping brand offer the fastest delivery option so Amazon Prime Membership (Exclusive) is the only alternative.
Purchase: Here, final order is placed.
Post Purchase Satisfaction: Reviews are being given about the product quality.
Psychological Factors: Motivation, attitude, biogenic needs, psychogenic needs, perception, past experience.
Cultural Factors: Demographic, religion, social class etc.
Social Factors: Family, reference group, roles and status.
Personal: Age, Occupation, Lifestyle, Self-concept.
All these factors affect the buyer’s choice of decision-making. So organisations must attend to them as soon as possible.
Marketers carry out different types of researches in order to know their customers need and buying behaviour. The behaviour depends on several factors, such as social factors, culture, demographic variables, age, gender, etc. The research can be qualitative and quantitative
Need recognition: Organisationrecognises that by purchasing certain goods problems can be resolved.
Need Description: Organisation figures out the parameter about the goods that is required to be purchased
Product Specification: Products size, amount, etc., are noted down.
Supplier Search: The vendors that could meet the demand of the specified product is searched for.
Proposal Solicitation: The proposal is asked from the supplier (Request for Proposal (RPF)).
Supplier Selection: RPFs are reviewed and depending on the goals of the organization, the proposal is selected.
Order routine establishment: The quantities along with the time of delivery is set up here.
Post-purchase Evaluation: Routine surveys are done.
Environmental: Location, technological innovation, government regulations, industrial development, other cultural factors.
Organisational: Organisation’s structure, informal or formal interaction within the departments
Interpersonal and Individual: professional experience, personal goals, life-style, personality traitsattitudes and opinions,
It is the key mantra of business that the more time a business spend in understanding the each stage of decision-making process, the more solid its strategies are. Amazon understood its customer base and their need. Customers nowadays are not settling up with 24 hours delivery option. They want their products to be delivered within 5 to 6 hours of placing the order. Therefore, Amazon Prime Membership (Exclusive) offers the delivery-by-drone option that delivers the product within 6 hours of placement. Also, by increasing the payment options, it has simplified its ordering process.
In the report, it was noticed that how consumer behaviour is the driving force behind the launch of Amazon Prime Membership (Exclusive). It was also noticed that how controlling the factors affecting the buyers’ behaviour can help the business in flourishing. Also, a model of consumer decision-making was discussed in brief.
D1- Critically evaluate the application of appropriate theories, concepts, and models that influence and impact upon the decision-making process, supported by specific examples and contexts.
In an organisation, numerous approaches or models can be practiced in order to understand the consumer decision-making process. The area is undergoing many research and some new approaches may come in near future. The role of factors that influence the buying behaviour of consumers, such as ethics, social factors, age, gender, culture, etc., are considered in all the discussed model, but the social responsibility and altruism are highly ignored by the theories and models. The models discussed in the section 1 have undertaken the perplexing consumer choices and key factors that drives the behaviour. It is quite difficult to include all the factors together in one model, but there are some conceptual models that have been proposed and accepted by many researcher.
Here, it was figured out that customers’ decision-making process is one of the crucial factor organisations must consider to make their business going and growing. In the course of writing the report, different stages of consumer decision-making process were talked about with respect to the chosen organisation- Amazon. Furthermore, the models and theories organisation apply to understand the consumer’s behaviour and decision making had been talked about. In addition to this, organisations apply B2B and B2C approaches in order to gather information about the consumer’s interest and factors that affect their decision-making process. So, both of those approaches have been talked about and compared. In the end of the report, the impacts of different factors on customer’s choice-making had been evaluated briefly so as to justify how different factors affect the buying behaviour of consumer.
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