Session Customer Analysis

Session Outline Customer Profiling Consumer Behaviour Benefits Sought Attitudes Values Stereotypes

This Session Weekly Activity: Understanding Markets Select a category of passenger car from the list used by VFACTS. To find this list, go to www.fcai.com.au and click on “sales”, “cars” & “segmentation criteria” in the top menu With this category as a basis, describe (or profile) a market segment that would be interested in buying a new vehicle, using each of the segmentation approaches discussed as sub-headings. Explain your approach for each sub-heading.

Customer Analysis Customer Analysis This section analyses the factors that impact on or influence customer demand and the business’s ability to supply it’s products and services to cater for this demand, factors would include perception gaps, loyalty, satisfaction and customer service levels as well as responses to advertising and promotion Total Market Segments This section looks at the make-up of the catchment or trading area by various customer groups (segments) using criteria such as: education, income, religion, ethnicity, age,social class, lifestyle, family life-cycle, etc. This information is available from export trade/census data

Customer Analysis Target Customer Groups This section broadly describes the specific customer groups (segments) you have selected as your targets which the majority of your business revenue will come form. Each target customer group should be described as individual segment categories. Group Profiles (characteristics) This section profiles each individual segment category in detail by their segment attributes or specific characteristics

Topic Example Video The following video explains customer needs and wants. Take note of the key points. https://www.youtube.com/watch?v=yVCZ-7xSsCw

Customer Analysis Consumer Behaviour (needs & wants) This section outlines the needs and wants of each individual segment and links this to your products/service features and benefits that would be satisfied. In other words, it considers how customers will behave (purchase or not) to what you are offering them (products and services).

Topic Example Video The following video explains how marketers need to dig deep to really understand consumer needs and wants. Take note of the key points. https://www.youtube.com/watch?v=yVCZ-7xSsCw

Customers Customers should be one of the major foci of the organisation. Particular attention should be given to customer’s buying behaviour. Buying behaviour can change to or adapt according to cultural trends.

Customer Markets

Topic Example Video The following video describes the process of customer profiling. Take note of the key points. https://www.youtube.com/watch?v=VGTN80mqZho

Customer Profile Describe the profile of the customer by each market segment. What do they buy? Where do they buy it? Why do they buy it? When do they buy it? Where and how are the products sold in each market segment?

Customer Profile Who is the buyer and who is the end user in each market segment? Who buys what in what market segments? Will they change their buying habits? Remember, buyer behaviour is affected by economic, social and political influences.

Customer Profiling Customer Profiling is a prospecting tool that exploits data about customers buying patterns and behavior to gain a greater understanding of consumer motivations. Customer Profiling assists in micro targeting the right customer with the right product or service. Businesses today are using profiling to reduce fraud, to anticipate demand, to increase new customer acquisition and customer loyalty. Customer Profiling is also used to develop lifelong relationships with Customers by anticipating and fulfilling their needs.

Customer Profiling Customer profiling business uses: Nokia uses psychological profiling to understand consumer needs and drive their business strategy Telecommunications, stock exchanges and credit card and insurance companies use profiling to detect fraud, optimize marketing campaigns, and identify the most profitable strategies The medical industry uses profiling to predict the effectiveness of surgical procedures, medical tests and medications Retailers use profiling to assess the effectiveness of coupons and special events, and predict which offers are most appropriate for different consumers.

Basic Customer Profile

Topic Example Video The following video discusses what is target marketing. Take note of the key points. https://www.youtube.com/watch?v=0ZW0SFwYjw8

Target Marketing Is Where! Organisations specifically design, implement and maintain their marketing efforts at those most likely customer groups sharing common needs or similar traits/characteristics as well as having the highest potential for buying it’s products or services intending to result in mutually satisfying exchanges.

Effective Segmentation Measurability Substantiality Responsiveness Accessibility Successful segmentation Requirements for Effective Segmentation Measurability - refers to the ability to measure the size and purchasing power of the segments. The accuracy and availability of measures of market potential are important. Accessibility - refers to the ability to reach a market segment. Selecting a segment that cannot be reached is useless. Substantiality - refers to the ability of the segment to be large or profitable enough to service. Responsiveness - refers to the ability of the organisation to influence the behaviour of the segment through the offering of choice. The organisations resources figure prominently in this requirement for successful segmentation.

Effective Segmentation 1. Measurability - size and purchasing power. 2. Accessibility - can be reached and served. 3. Responsiveness (Actionability) - effective programs can be designed to attract and serve the segment. 4. Substantiality - large and/or profitable.

The Consumer Market The consumer market consists of all individuals and households who buy goods and services for their personal use. Individuals in the consumer market will vary in their consumption patterns in terms of; their age their income their occupation and educational status their household composition.

Personal Factors A buyer’s decisions are also influenced by personal characteristics such as: age life cycle stage occupation economic situation lifestyle personality self concept

Family Life Cycle Family life cycle will determine the purchase behaviour of individuals and reason for purchase. Single parent & two-parent family. Young couples no children. Family (usually 2 adults, 2 young children). Family with teenagers. Multi-cultural (or mixed) family.

Activity: Country Census Data Census data is often not easy to find especially for foreign countries. In Australia, the Australian Bureau of Statistics provides this information Using the (www.census.gov) website, under “People & Households” go to “International”. Under “Quick Links”, go to “International Data Base (IDB)”. Under “Enter the Databases”, go to “Data Access”. Select a country and year and go to the “References” section. Search for that country’s census website address. Go to that specific country’s census website address and search for more specific census information.

Lifestyle A person’s pattern of living as expressed in their activities, interests and opinions.

Topic Example Video The following video explains what is psychographics. Take note of the key points. https://www.youtube.com/watch?v=yfOWtaNp2Yg

Psychographics The technique of measuring lifestyles and developing lifestyle classifications. It involves measuring the major AIO dimensions (activities, interests and opinions) towards specific products, brands, services, etc.

Topic Example Video The following video outlines what is VAL’s (Values, Attitudes & Lifestyles) and how this is important in marketing. Take note of the key points. https://www.youtube.com/watch?v=kgcLYXol-xM

Values, Attitudes, Lifestyles - VALS VALS is a classification of adults into eight distinct segments based on their attitudes towards social issues. The VALS segments describe specific lifestyles as: innovators thinkers believers achievers strivers experiencers makers survivors.

VALS Applications VALS information is used for market and product positioning strategies Identifies which market opportunities are the strongest by relating features and benefits to distinct segment needs clarifies strategies for targeting and expansion. Applications include: Competitive Analysis Brand Differentiation Target Selection Proprietary Research Linking of Data Sets Customer Retention.

Activity: VALS Online Survey Undertake the VALS Online Survey to determine your primary and secondary VALS types. Go to: www.strategicbusinessinsights.com/vals/surveynew.shtml Comment on whether or not this is an accurate reflection of your lifestyle outlook.

Behavioural segmentation Dividing a market into groups based on: Purchase occasion Benefits sought User status/ usage rate User loyalty status

BUYING-DECISION PROCESS Need recognition SOCIAL AND GROUP FORCES Culture Subculture Social class Reference groups Family and households PSYCHOLOGICAL FORCES Motivation Perception Learning Personality Attitude INFORMATION Commercial sources Social sources SITUATIONAL FACTORS When consumers buy Where consumers buy Why consumers buy Conditions under which BUYING-DECISION PROCESS Need recognition Identification of alternatives Evaluation of alternatives Purchase and related decisions Post-purchase behaviour

Modes of Buyer Behaviour

Buyer Decision-Making Complex buying behaviour Dissonance- reducing buying Variety- seeking Habitual High Involvement Significant differences between brands Few Low

Buyer Decision-Making There are four types of decisions that buyers make: habitual (routine) decision-making variety seeking (limited problem solving) dissonance reducing (eg. insurance) complex (extended problem solving).

Topic Example Video The following video outlines the consumer buying process. Take note of the key points. https://www.youtube.com/watch?v=zPFeoNkZYGc

The Consumer Decision Process Problem Recognition Information Search Alternative Evaluation Purchase Decision Postpurchase Evaluation

Evaluative Criteria Marketer’s view: Consumer’s view: Product is a bundle of attributes Consumer’s view: Product is a set of consequences Functional consequences are concrete, tangible outcomes Psychological consequences are abstract and subjective

Purchase Decision The step of the buyer decision process in which the consumer actually buys the product. Two factors can come between the purchase intention and the purchase decision: attitudes of others unexpected situational factors

Situational Influences SITUATIONAL INFLUENCES ARE TEMPORARY FORCES ASSOCIATED WITH THE IMMEDIATE PURCHASE ENVIRONMENT THAT AFFECT BEHAVIOUR When consumers buy—the time influence. (day, week, season). Where consumers buy—the place a decision is made (home, point of purchase). How consumers buy—the way in which consumers buy (bulk etc).

STAGE 5—POST-PURCHASE BEHAVIOR, OR COGNITITVE DISSONANCE Post-Purchase Behaviour STAGE 5—POST-PURCHASE BEHAVIOR, OR COGNITITVE DISSONANCE Consumers strive for internal harmony and consistency among their cognitions (knowledge, attitudes, beliefs, values) any inconsistency in these cognitions will result in anxiety—cognitive dissonance. Consumers will experience post-purchase, cognitive dissonance when alternatives have both advantages and limitations.

Post-Purchase Behaviour The stage of the buyer decision process in which consumers take further action after purchase, based on their satisfaction or dissatisfaction. What determines whether the buyer is satisfied or dissatisfied with the purchase? consumer’s expectations versus perceived performance

Psychological Processes Decision Process Stages Psychological Processes Problem Recognition Motivation Information Search Perception Alternative Evaluation Attitude Formation Purchase Decision Integration Postpurchase Evaluation Learning

Topic Example Video The following video explains the use of Maslow’s Hierarchy of Needs in marketing. Take note of the key points. https://www.youtube.com/watch?v=2UkyU5v0WdM

Motivation (Maslow) Self-actualization needs Esteem needs Social needs (self-development, realization) Esteem needs (self-esteem, recognition, status) Social needs (sense of belonging, love) Safety needs (security, protection) Physiological needs (hunger, thirst)

…… … … Perception The limitations to perception are due to our selective process to stimuli. Selective attention (We perceive only part of what we are exposed to). Selective distortion (We alter stimuli based on our attitudes and beliefs). Selective retention (We retain only part of what we selectively perceive). Selective action (We act upon part of what we retain).

Personality A person’s unique psychological characteristics that lead to relatively consistent and lasting responses to their environment. self confidence dominance sociability autonomy defensiveness adaptability aggressiveness

Attitudes and beliefs Attitude—a persons enduring tendency to evaluate, feel about or act in relation to some object or idea. Attitudes are formed by the information individuals acquire through their learning experience and influenced by personality traits. Attitudes Influence Beliefs

Consumer Attitudes Consumers may hold attitudes toward: Learned predispositions to respond toward an object—an individual’s overall feelings toward or evaluation of an object. Consumers may hold attitudes toward: Individuals Brands Companies Organizations Product categories Retailers Advertisements Media

Leaky Bucket Theory Every business must both have a flow of new customers (offensive marketing) at the same time restricting exiting customers (defensive marketing). The aim is to increase the number of customers available to the business. To achieve profitability both strategies must work in tandem.

Leaky Bucket Theory Customer acquisition Offensive marketing Customer base Defensive marketing Customer retention

Topic Recap Video The following video provides some tips on how consumer behaviour is changing. Take note of the key points. https://www.youtube.com/watch?v=2N6spwyBuvE

Next Session Weekly Activity:CRM Software Today many organisations use computers to help them better manage their client relationships. A basic CRM system consists of a database containing information about people with whom staff maintain relationships with. Download the Reflect free CRM software at www.nchsoftware.com/crm/index.html. Learn some of the fundamentals of CRM including customer information searching, time management, communication, sales forecasting, etc. Evaluate it’s usefulness as a CRM tool.