Understanding Buyer Behaviour Notes

• The sales of a product are the sum total of the purchases made by individual consumers. An increase in sales must therefore be due to changes in individual behaviour.

• Sales of a product depend on:

  • How many people buy it.

  • How much people buy.

  • How many make repeat purchases.

  • How many buy something else instead.

• Many marketing activities can be used to try and stimulate change in a market.

• The basic anatomy of a market can be described in the following terms:

  • Penetration – percent of consumers buying the brand.

  • Frequency – number of purchase per buyer.

  • Repeat buying – percent who continue to buy the brand.

  • Brand switching – percent who change to another brand.

• In regards to penetration and frequency, marketers need norms in order to interpret the observed results of the performance of their brands.

• The general argument is that:

  • Sales depend on individual consumers.

  • Analysing consumer’s behaviour helps in identifying the nature of marketing problems.

  • Such diagnoses become more useful when a particular result can be compared with other brands and markets.

Repeat Buying

• Repeat buying is the key factor in a frequently bought brands continuing health.

• In practice the incidence of repeat buying can be successfully predicted in those cases where the overall level of sales remains more of less steady. This is because purchase frequency and repeat buying are interrelated.

  • The more a consumer buys a brand in one period, the more likely they are to buy it again in the next period.

• Most brands are normal in their repeat buying patterns. This theory therefore provides interpretative norms but also tells marketers that there are constraints in the marketplace.

• This implies that there is no special marketing action that can be taken.

Brand Switching Or Multi Brand Buying

• Brand switching is a concept that is often talked about.

• Over a sequence of purchases a consumer will typically buy a number of different brands and will continue to buy these brands. In such cases there has usually been no dramatic switch, but instead consumers tend to buy repeatedly from a certain repertoire or mixture of brands.

• Some of these brands will eb bought less often than others but they will each be bought consistently over time. Only the precise incidence and ordering of these different purchases vary.

• Brand choice behaviour looks highly dynamic and variable in the short run but over time appears to be fairly regular.

• The dynamic concept of brand switching is therefore better replaced by the term multi brand buying.

• A substantial upset in brand choice – real brand switching – occurs only occasionally and can be a result of:

  • A new brand introduction.

  • A change in the consumers’ needs or perceptions.

  • A promotion.

  • A price change.

• Marketing plans need to therefore be based on the knowledge that most consumers are not 100% loyal. The extent of this multi brand buying is major not minor.

• The implication of this multi brand buying is that companies will not be able to gain sales from another brand simply by converting a number of brand Y buyers into brand X buyers. Instead there may be marginal shifts in the selection of brands a consumer has in their repertoire.

Conclusions So Far

• Systematic analysis of buyer behaviour can radically affect ones perception of how markets operate.

• The four factors considered so far are:

  • How many people buy a brand.

  • How often they buy it.

  • How many buy it again.

  • How many switch to another brand.

• The results of such analysis are a necessary ingredient for a proper marketing plan.

• The value of such analysis increases if the results for one brand can be compared with similar figures for another brand.

• The user of the analysis is primarily concerned with how the findings can be applied to practical problems.

The Role of Information

• Knowing about consumers does not tell marketers what to do but it helps them to evaluate the alternatives for action.

• In developing a new market retailers have to be persuaded to stock, sell and service a product that is new to them rather than to add a brand to ones already stocked.

• Consumers have to be encouraged to use new products rather than merely adopt a different brand.

The Leaky Bucket Theory

• When it is observed that consumers buy a product but do not buy it again in the next period it is often thought that the brand is losing some of its buyers and that these have to be replaced to keep sales level steady.

• If this view of buyer behaviour is taken the repeat buying from one period to another would decrease the further the two periods are apart, however, this hardly ever happens.

• Therefore the relatively low incidence of repeat buying cannot be explained by a loss or previously loyal repeat buyers. Instead people have varying frequencies in how often they buy a brand and as a result they do not appear as repeat buyers every period.

• This view implies that there is no leaky bucket theory and that retention of market share requires a defensive marketing effort – to keep existing buyers rather than look to attract new buyers in an attempt to replace those who have leaked away.

• As a general rule to advertising and marketing strategy, buyer behaviour can therefore be viewed in the medium term as being steady and habitual rather than as volatile and changing.

Summary So Far

• Information about buyer behaviour does not itself tell marketers what to do.

• The failure to repeat buy from ne period to another does not imply a lapsed buyer. And as such marketing efforts should not be made to replace the buyer.

• Instead the buyer is an infrequent one who comes again at a later stage.

Brand Loyalty

• There is no single and generally accepted definition of brand loyalty.

• Some regard buyers as loyal if the buy a brand again whereas others consider a consumer to be brand loyal only if they buy no other brand in that period.

Repeat Loyalty

• When a new brand is put on the market it is fairly easy to get current users of the product class to try it.

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