Understanding Customer Behavior

1. Understanding Customer Behavior 任維廉 教授 at NCTU, 2014

2. Outline 1. Marketing’s Customer Focus 2. Importance of Understanding Customer 3.Unit of Analysis 4. Modeling Customer Behavior 5. Forming Attitudes 6. Comparing and Evaluating Alternatives 7. Decision-making Stages 8. Customer Needs 9. Social Systems 2 交通大學管理學院 任維廉教授

3. 1. Marketing’s Customer Focus • Making the entire firm customer oriented! • Marketing function affects customers more directly than any other functions. • Managers throughout the organization must understand what customer want and will pay for, and must apply this information creatively in their decision making. • Marketing is responsible for helping them understand their effect on customers. 3 交通大學管理學院 任維廉教授

4. 4 fundamental objectives: 1. To ensure that customers understand the basic concept behind a product or service. 2. To show customers the relevance of the firm’s product or service to their needs. 3. To remove or lower barriers to exchange so that customers can engage in a transaction with minimal effort. 4. To develop and manage trustworthy relationships with customers. 4 交通大學管理學院 任維廉教授

5. 2. Importance of Understanding Customer • Rapid social and technological changes, decline and emerging turnaround of many industries, • Losing touch with the voice of customer (before their competitors). • Managers sometimes assume: • Their own personal experiences represent a larger market. • They can treat changes in consumer behavior as isolated events rather than as part of a complex system of events. • Research methods and thinking frameworks that have proved useful in the past are appropriate in the present. • Customers know why their behavior has changed. 5 交通大學管理學院 任維廉教授

6. Decision-making biases: • Failure of success bias, • Narrow cognitive peripheral vision. • Well-educated, hardworking managers failure to: 1. anticipate the possibility of change among customers. 2. detect important changes soon after they occurred. 3. understand this changes once they became painfully event, 4. integrate the voice of customer in key decisions once the voice was understood. • Managers must update and reexamine existing conceptions and assumptions about customers. 6 交通大學管理學院 任維廉教授

7. 3. Unit of Analysis Types of Customers Individual Group Individual buying Family buying unit Household Organizational buyer Buying center Organization

8. Key roles • Opinion leaders: expertise in a specific product category • Market mavens: generally, broad, cross-category advice. • Innovators: very first to try. • Gatekeepers • Decision makers • Implementers • Users • The effects of marketer-controlled communications on individuals are moderated by social and cultural processes. 8 交通大學管理學院 任維廉教授

9. 4. Modeling Customer Behavior 1. External stimuli (sales call, consumer reports) 2. Internal stimuli (a change in financial circumstance) 3. Decision processes (or defer, pending) 4, Choice outcome (purchase an automobile) 5. Implementation (Buick supplier) • Customers have learned from their own or others’ experiences. This learning will affect their attention in future decision processes. 9 交通大學管理學院 任維廉教授

10. 4 Types of Problem-solving Behavior • Extensive • Buying a new type of product. • Limited • Consumer already know what attributes are important. • Routinized • When consumer have had extensive experience purchasing the same product, and are satisfied with it. • Exploratory • New product appeared, customer feel the need to reevaluate the appropriateness of the current brand. 10 交通大學管理學院 任維廉教授

11. 5. Forming Attitudes • Fishbein’s multiattribute attitude model: • Customer first generate a set of important beliefs about a brand based on external / internal stimuli. • They are carried in memory and help customers to differentiate offerings into acceptable / unacceptable sets. • Marketers may change customers’ attitudes: • Make certain attributes more important than others, • Increase the probability value associated with a positive evaluated belief, • decrease the probability value associated with a negative evaluated belief. 11 交通大學管理學院 任維廉教授

12. Fishbein’smultiattribute attitude model where A0 = attitude toward the object bi = belief strength assigned to a particular attribute ei = evaluation assigned to a particular attribute = summation of all the product attributes (1 to n) 12 交通大學管理學院 任維廉教授

13. 6. Comparing and Evaluating Alternatives • Simplifying strategies: Customers seemingly have limited capacities to evaluate and process information. 1. Affect referral (情感回溯): use an evaluation they recall from the past. 2. Lexicographic heuristic rule (挑選): The alternatives with the highest rating on the most important attributes is chosen. If two or more brands perform equal well on this attribute, then choose the 2nd important attributes. 3. Elimination by aspects model (淘汰): the alternative that performs most poorly on the highest priority attribute is eliminated. Then they selects the 2nd important attributes… 13 交通大學管理學院 任維廉教授

14. 4.Conjunctive strategy (連結): sets up minimum cutoff points for each attributes (and). Disjunctive heuristic (or). 5. Linear compensatory model (線性加總): weights are multiplied by scores, then summed, the highest score is selected. (Fishbein) 6. Phased strategies (兩階段): (1) 連結 /淘汰 to eliminate some alternatives. (min. time / effort consuming) (2) 線性加總 (max. accuracy) 7. Marketing implication: use 4 Ps to present products, • Guiding customers to use a set of heuristics that lead to favorable evaluation of our products. • Designing products so as to be viewed favorably in accordance with heuristics customers already use. 14

15. Goals of Decision Making (Bettman et al, 1998) 1. Accuracy maximization 2. Justification maximization 3. Cognitive effort minimization 4. Negative emotion minimization 15

16. 7. Decision-making Stages • Hierarchy of effects model: 1. An initial awareness of a product, 2. Development of further knowledge about it, 3. Leads to the creation of certain beliefs about the product, 4. Emergence of particular feelings or affect about it, 5. Translates into some intention to buy, 6. actual purchase behavior. • Decision-making stages vary according to the manager. 16 交通大學管理學院 任維廉教授

17. 8. Customer Needs • If external / internal stimuli are strong enough, people will seek more information. e.g., word-of-mouth communication, product demonstration. • A performance gap may be perceived between an actual and a desired state of being: need. Need may arise from: 1. perceived a better performing alternative, 2. perceived the current product is no longer satisfactory. • The greater the need, the greater the tendency to engage in decision processes. . 17 交通大學管理學院 任維廉教授

18. Marketing Implications: • The willingness to seek understanding and use incomplete information imaginatively is important. • By carefully examining their own personal experience and formal research (survey, 顯示性偏好，敘述性偏好, simulation), managers can: 1. formulate initial ideas, 2. obtain feedback, 3. develop more specific ideas, 4. obtain additional feedbacks, 5. refine ideas ….. 18 交通大學管理學院 任維廉教授

19. 9. Social Systems • People tend to differentiate themselves from one another, and yet to group together on the basis of important similarities. e.g., 車子, NB. • Market segments are subsets of customers who are homogeneous with respect to key thinking, behaviors, and other characteristics. • Managers must determine what cultural / subcultural differences are important, and how to respond to such differences. • 1. Universals • 2. Distinctions 19 交通大學管理學院 任維廉教授

20. 1. Universals • Human / near universals: traits and behaviors are very nearly all societies. • The universals represent a specific need. 1. identifying the relevant universals prior to introducing a product into a new cultural market. 2. ask whether in each market these universals manifest themselves in different ways that might changes in marketing mix. • Fashion / food products relate to a widely held need of self-expression may help in developing a common promotional theme in several countries. (Zara, Nike vs. 李寧) 20

21. A Small Sample of Universals (Brown, 1991) • Use metaphors • Have a system of status and roles • Divide labor by sex and age • Create art and artistic activities • Have standards by which beauty and ugliness are measured • Have followers of leaders who are apathetic, regimented, “mature,” and autarkic • Believe in the supernatural • Categorize color • Empathize • Dominate • Imagine 21 交通大學管理學院 任維廉教授

22. A Small Sample of Universals (續1) • Imitate outside influences • Resist outside influences • Compete individually and in groups • Dance • Sing • Tell tales • Change the language over time • Need novelty • Are curious • Express emotion with our faces • Interpret rather than merely observe human behavior • Envy 22 交通大學管理學院 任維廉教授

23. A Small Sample of Universals (續2) • Use symbolic means to cope with envy • Exchange • Settle disputes • Reciprocate (in both positive and negative [tit-for-tat] ways) • Associate music with ritual • Distinguish between public and private • Are aggressive • Get anxious • Appreciate aesthetics • Need privacy and silence occasionally • Need to explain the world • Feel pride, shame, amusement, and shock • …… 23

24. 2. Distinctions • While there are important universals among all societies, they are often expressed or manifested in vary different ways. • It may have to be designed, delivered and communicated in different ways with respect to that need. • Can marketing mix be standardized across international boundaries? 1. Successful standardization is the exception, not the rule. 2. Some important differentiation is often required particularly in advertising. 24 交通大學管理學院 任維廉教授

25. A Study of Food Tests in 4 Countries • Nearly all people in all societies have an explicit need for healthy food products and simultaneous need to indulge in the pleasures (less healthy) of foods. • Study 1, survey (same picture in 4 countries) • When a strawberry was add to a picture of a slice of cake, the cake was perceived as more appealing (than absent). • When strawberries were added to a bowl of breakfast cereal, the cereal was perceived more healthy and natural (than absent). 25 交通大學管理學院 任維廉教授

26. Study 2, in-depth interviews • Strawberry on the cake should be sliced, while remain whole when presented in the cereal in country A. But in country B, the reverse should be done. • There were other fruits that had an even stronger impact. • Marketing Implications: • Initial testing implied that a standardized advertising approach would be warranted. • By deeper analyses, differentiated promotional strategies in each country would be significantly more effective. 26 交通大學管理學院 任維廉教授

27. 10. Conclusion • To understand the voice of customer is a critical first step. • Many concepts and tools, with imagination, are available to help us understand, predict, and influence customers. • Back to basics: 沒有人喜歡被業務員施壓推銷， 世界上最好的業務是不賣東西的，他是幫客戶買東西， 故總會先摸清楚客戶為何要買？是否真的需要買？ 27 交通大學管理學院 任維廉教授

28. Using the human sciences to solve your toughest business problems (2014, 天下文化） • 慣性思考：過去與現在，什麼或多少，不確定性低的問題，量化數據，驗證假設。 e.g., 行銷現有明星商品，重點在效率，營運與銷售通路。 • 使用者意會 (sense-making): 研究未來，為什麼，不確定性高的問題，質化證據，探索現象。 e.g., 為何某些糖尿病患不願按照醫矚服藥？ 28 交通大學管理學院 任維廉教授

29. Adidas （梅西，厄齊爾）鬥智不鬥力踢贏 Nike （里貝里，魯尼，伊涅斯塔，C羅，內馬爾） • 運動產品設計的目的是幫運動員贏得比賽，故要應用科技，提升功能。Impossible is nothing! • 消費者行為變了，為何現在這麼多人上健身中心運動，而不是參加運動競賽？ • 其目的不再是求勝，而是身體健康，體重管理與維持身材。從運動員的專屬品牌，轉型為一個包容性的品牌，邀請所有人一同擁有更健康、美好的生活方式。All in! 29 交通大學管理學院 任維廉教授