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Understanding Buyer Behaviour Notes

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Understanding Buyer Behaviour - Essays

The Anatomy Of Buyer BehaviourThe 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:
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How many people buy it.

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How much people buy.

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How many make repeat purchases.

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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:o

Penetration - percent of consumers buying the brand.

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Frequency - number of purchase per buyer.

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Repeat buying - percent who continue to buy the brand.

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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:
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Sales depend on individual consumers.

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

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

Repeat BuyingRepeat 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.
oThe 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 BuyingBrand 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:
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A new brand introduction.

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A change in the consumers' needs or perceptions.

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A promotion.

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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 FarSystematic analysis of buyer behaviour can radically affect ones perception of how markets operate.The four factors considered so far are:
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How many people buy a brand.

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How often they buy it.

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How many buy it again.

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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 InformationKnowing 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 TheoryWhen 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 FarInformation 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 LoyaltyThere 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 LoyaltyWhen a new brand is put on the market it is fairly easy to get current users of the product class to try it.A good product, an experienced sales force, attractive terms of trade, heavy advertising and introductory price cuts can all be done and as a result substantial penetration of the market can almost be guaranteed.However, the question is whether initial tryers of the brand can be converted into loyal followers.In reality continuing sales of frequently bought goods depends on repeat buying and many new product failures stem from a failure to attract this kind of loyalty.A large brand will have more repeat buyers. Any brand with a high penetration tends to have a higher average purchase frequency than a small brand.It might be thought that long established brands which are slowly declining must be relying on hard core loyal buyers and should therefore have a high average purchase frequency. However this is generally not found to be the case.Similarly, private label brands do not always attract more repeat buyers than manufacturer's brands.The picture is largely one of uniform rates of repeat buying.

The Incidence Of Sole BuyersConsumers differ in the extent to which they restrict their purchases to just one brand.Some buy only one brand over a period of time - they are 100% loyal to it - whilst others buy two or more brands.On a single shopping trip consumers generally seem 100% loyal as they seldom have two brands of the same type of product on the same occasion, Most buyers of grocery product are therefore 100% loyal in a week.But on the next purchase occasion many people buy another brands and therefore over longer periods of time the incidence of sole buyers declines.The criteria of being 100% loyal seems a rather extreme measure as it excludes anyone who has been loyal for a specified time period except on one occasion.Many marketers would instinctively like their brand to have 100 % loyal byers. However, the evidence suggests this is unlikely to occur.Not only do most brands have predictably few sole buyers over an extended period of time but sole buyers are not even particularly attractive in terms of their purchase frequency.In terms of sales per buyer there is often no advantage in having buyers who are 100% loyal to a brand.In some product classes sole buyers of a brand tend to buy somewhat more than the average buyer of the brand and in some cases they tend to buy less than the normal buyer of the brand. ?

The lesson for marketers is that 100% loyal buyers are not necessarily heavy purchasers of the brand and that in any case there are generally quite few of them.Therefore there is no special reason for marketers to invest and aim to increase the proportion of sole buyers of their brand.

Conclusions So FarEstablished brands generally differ little in the degree of repeat buying they attract or in the extent to which they possess sole buyers.It therefore seems that brand loyalty does not differ greatly from one brand to another.Large brands have somewhat more repeat buyers and sole buyers than small brands. However this si==is generally the case for any large brand.Brand loyalty is therefore perhaps more a product class characteristic than a brand characteristic.Some products appear to have higher brand loyalty than others.In many product classes, however, there is less brand loyalty today that 20 years ago due to greatly increased consumer promotions.Due to this lack of marked differences for established brands it seems pointless to try and increase the brand loyalty of any particular brand.Marketing activities which aim to do this still exist however.

Market SegmentationMany products are bought only by a certain part or segment of the population. But within a product class the different brands usually appeal to the same buyers.Market segmentation means separating consumers into sub groups or segments with different wants or needs and it has long been a popular marketing concept.Market segments must have different buying characteristics to be of practical relevance. They should also be susceptible to differential marketing attacks.
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EXAMPLE: Different product formulation or marketing strategies like pricing, promotion, distribution and packaging.

Product SegmentationProduct segmentation is widespread. Marketers must seek to establish a market for their product.Further segmentation may exist if there are clear cut functional or price differences within a product class.Segmentation does exist for many product classes but does not apply so much to individual brands.Although there has been much talk about brand segmentation and brand positioning, the evidence shows that in most markets brand segmentation would be the exception rather than the rule.

Brand SegmentationWhen a consumer is faced with several brands of the same product it is natural to suppose the consumer has a reason for choosing one brand over another.This leads to the idea that there must be a group of consumers with a certain need in common and that a brand or promotional appeal can be provided to satisfy that need. This is brand segmentation. ?

Such groupings of brands might be based on characteristics of particular appeal to different segments of the population:o

Physical properties.

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Price.

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Packaging.

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Advertising appeal.

Buyers of one brand should then be very likely to buy other brands of the same type.

DiscussionThe evidence for frequently bought goods is that most consumers have experience with a number of brands.In practice any consumers purchases tend to be spread across some repertoire of brands which they are familiar with.
This repertoire will vary from consumer to consumer but on average it will match up with the brands market share.It is therefore unnecessary to assume that a brand must have a special identity or appeal. There are many product groups where most product groups are virtually indistinguishable in product formulation.Some of these brands have a large share of the market and others a small share.Therefore a "me-too" approach in branding can be highly successful.This is not to deny the possible advantage of a brand having some real product plus. But it has to be real and it has to matter to the consumer.With new brands marketers often start with the idea that it must be different to succeed and therefore try to establish some consumer need which differentiates a sizeable sub group of consumers from the rest. A new brand with the required characteristics is then launched in this segment.Most members of the target group may be attracted by the new brand. But this attraction is unlikely to be overwhelming or exclusive in terms of brand choice.The evidence of buyer behaviours is that they have already been buying brands which do not have the special property which the new brand has and evidence shows they will continue to buy them.They can learn whether the new brand matches up to well established brands in other respects or whether its special property is crucial.If it measure up then they may include it in the repertoire of brands which they normally buy, but few will become sole buyers of the new brand.Over emphasis on positioning a brand to appeal to some specific group of consumers explains the common failure of new brands.Consumers with different needs exist but there needs tend to be highly varied. It is more appropriate to think of a market as fragmented into a large number of highly variable consumers with overlapping needs than as segmented into a small number of more or less exclusive groups.When consistent preferences arise they usually relate to product characteristics.

Description or ExplanationThe study of buyer behaviour ultimately aims at explanation and hence at more successful control of marketing activities. However, it is usually beneficial if some description comes first.One approach tries to explain each purchase and the motives behind it.The other tries to describe buyer behaviour in terms of patterns which are common to different brands, products and market conditions.

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