Week 5 - Customer Analysis and Buyer Behavior

I thought that the lecture was interesting this week and pretty helpful when it comes to Pharmasim. I learned more about buyer behavior process or how the customer views value and how that translates to the consumer decision making process. In the video Understanding the Consumer Decision-Making Process, it was said that the consumer decision-making process consists of five steps, which are need recognition, information search, evaluations of alternatives, purchase and post-purchase behavior. So if a customer decides that they actually don’t need the product, they might not buy it. At the same time, in their information search, they could find a product that does the same thing but costs less. These variables are what influences buyer behavior. I also find that if there is an external stimulus, such as a friend around encouraging the purchase, I might be more inclined to buy the product. An example of influence from friends as well as the general culture can be seen in my purchase of an iPhone. In the video Influences on Consumer Buying Decisions, culture (norms to guide our purchase decisions), values (what we place importance on), social class (where we stand in society compared to others based on income, education and occupation), reference groups and opinion leaders all influence our buyer behavior. I was not fitting in with my peers in school because most people had an iPhone. It was normal to have this phone and you were perceived to have money. There was a time where I was in class and the teacher asked the people with iPhones to raise their hands. Another girl and I were the only ones to not raise their hand. Even the teacher’s hand was up. That is when I established a need based on external influences, for this phone.

The first example in class was the process of buying a computer and how lengthy that process can be. There are many factors that customers consider when buying a computer such as price, brand, benefits, features etc. However, there are things that affect and may shorten the buying process. For example, if there is urgency, as mentioned in class, customers might overlook certain things. For example, if my laptop broke and I had a few papers due this week, I would have to get a new computer as fast as possible. Therefore, I might not research a lot into each of my options. This quick decision might lead to cognitive dissonance, which was discussed later in the class. In the video Cognitive Dissonance & Post-Purchase Process, Cognitive dissonance was defined as the uncomfortable tension or feelings that occur when we hold conflicting thoughts, attitudes or beliefs.

A question was asked along the lines of, would pricing products properly, describing products accurately, and providing quality customer service, alleviate cognitive dissonance? I would say no because there are always going to be those people that ask themselves, was this product worth it? Were its flaws worth it? Even if the price was competitive, was it worth it? There are always purchases that I make that I will regret. It’s all about perceived risk, which is something that is always desired to be low. The factors based on this risk can be seen below:

I know that there are computers out there that are of great quality that are made by IBM and Dell as well as other companies but from past experience, I will probably never stray from Apple. I have a brand loyalty to them that will be hard to break. I know that if a Conjoint Analysis was done on me (like on page 153 of Lehmann) and I had to rank laptops by viewing the brand, battery life, and weight of the product, I would be bias. I went through two Dells in high school and both crapped out on me around a year from the purchase date. Then I purchased a Mac Book and I’ve had the same one for the past five years. Therefore, I would excuse the fact that it might not have as long of a battery life or might weigh more, just because it is an Apple computer. It still works perfectly and it gets an emotional rise which is another aspect not always thought about but discussed in class.

This reminds me of the Benefits Ladder in this weeks Chalk Talk. There are companies that use their physical product or services’ attributes to evoke and appeal to not just a functional value but also an emotional one to the customer. Lehmann says focusing on benefits is also important in understanding the competitive set. Benefits are more important than the physical product and also helps define the
competition based on the benefit. “Thus, a key problem facing a marketing manager is to understand what benefits different customer groups or market segments are seeking” (145).

When it comes down to it and you look at model of value creation, at no point does concept of physical attributes come in to play. It’s the benefits or intangibles that are valued.  I’m going to use a product such as Monopoly as an example. When you see the commercials for Monopoly what do you see? You see a family or group of friends getting together and having fun. A person can see this product as a way of getting closer to someone else. It will evoke joy and togetherness among people so I should buy this product. It again goes to show how good marketing can demonstrate value to a customer who was not originally planning on buying that product but now intends to.

Lehmann this week, showed us why customer analysis is so important.  He states on 137 that when talking about a customer “we mean not only current customers of a given product but also both customers of competitors and current noncustomers of the product category (i.e., potential customers). The term customer also refers both to direct (immediate) customers,
i.e., supermarkets and discount stores and critically Wal-Mart for consumer product companies such as P&G and manufacturers for component manufacturers such as Intel, and to final customers/consumers (i.e., individuals and businesses).” The Purchase Intention Survey in Pharmasim can help with this by telling how many intended to buy the product based on its benefits and how many actually bought the product.

In the second half of class and in Section three of the Pharmasim manual, there was a large discussion on Segmentation. It was decided that as a four-hour cold multifunction remedy, All Round is a Mass-market strategy. The mass market provides one product regardless of individual needs and the customer can choose to use it or not. Researching new markets may provide flexibility because currently All Round is mass market focusing on the large market. Now it can look for additional markets to go into. So a new product will be created for the customers who have different needs. An example of this could be seen in the multi-segment. In other words, each segment has a unique need or problem, which separates them into segments. They are based on a common need.

In the competitor analysis section of Pharmasim, I would be able to see how competitors are serving the various needs of customers. My direct competitors are going to be my product form and category competitors (any product exactly like yours or can be substituted for yours). Brand Perception in the simulation is also important because it gives insight to how customers measure effectiveness and

helps to understand evaluation of products. In the end, it comes down to how effective you are at converting buyers to users and retention of the products. This can be measured by satisfaction or post purchase viewing how satisfied people are with the product. Tradeoffs, how people perceive the relationship between value of product as well as value creation or delivered benefits vs. perceived benefits.