Buyer Behaviour and CRM BA4207 MARKETING MANAGEMENT Anna University

Understanding Industrial and Consumer Buyer Behavior − Influencing factors – Buyer Behaviour Models – Online buyer behaviour − Building and measuring customer satisfaction – Customer relationships management – Customer acquisition, Retaining, Defection − Creating Long Term Loyalty Relationships.

1. Buyer Behaviour and CRM Rhema Joy Sharath

2. Syllabus Understanding Industrial and Consumer Buyer Behavior − Influencing factors – Buyer Behaviour Models – Online buyer behaviour − Building and measuring customer satisfaction – Customer relationships management – Customer acquisition, Retaining, Defection − Creating Long Term Loyalty Relationships.

3. Consumer behavior Consumer behavior is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. 3

4. The Buying Center Initiators —Users or others in the organization who request that something be purchased. Users —Those who will use the product or service. In many cases, the users initiate the buying proposal and help define the product requirements. Influencers —People who influence the buying decision, often by helping define specifications and providing information for evaluating alternatives. Technical personnel are particularly important influencers. Deciders —People who decide on product requirements or on suppliers. Approvers —People who authorize the proposed actions of deciders or buyers. Buyers —People who have formal authority to select the supplier and arrange the purchase terms. Buyers may help shape product specifications, but they play their major role in selecting vendors and negotiating. In more complex purchases, buyers might include high-level managers. Gatekeepers —People who have the power to prevent sellers or information from reaching members of the buying center. For example, purchasing agents, receptionists, and telephone operators may prevent salespersons from contacting users or deciders. 4

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6. The Marketing Funnel 6

7. Factors influencing Consumer behavior 7

8. Consumer behavior models A consumer behavior model is a theoretical framework for explaining why and how customers make purchasing decisions. The goal of consumer behavior models is to outline a predictable map of customer decisions up until conversion, thus helping you steer every stage of the buyer’s journey. 8

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10. Howard Sheth Model John Howard and Jagadish Sheth put forward the Howard Sheth model of consumer behavior in 1969, in their publication entitled, ‘The Theory of buyer Behaviour ’. The inputs are in the form of Stimuli. The outputs are reaction with attention to a given stimulus and ending with purchase. In between the inputs and the outputs, there are variables affecting perception and learning. 10 Jagdish N. Sheth

11. Howard Sheth Model 11

12. Nicosia model 12 Nicosia model of consumer behaviour was proposed by Nicosia (1976).This model concentrates on the buying decision for a new product. Human being is analyzed as a system with stimuli as the input and the behaviour a is the output. Nicosia model explains the consumers’ buying behaviour from the marketers’ perspective.

13. Nicosia Model 13

14. The Engel-Blackwell- Miniard Model 14 This model is also called the consumer decision model. The model is “structured around a seven-point decision process: need recognition followed by a search of information both internally and externally, the evaluation of alternatives, purchase, post-purchase reflection, and finally, divestment”

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16. Organizational buying is the decision-making process by which formal organizations establish the need for purchased products and services, then identify, evaluate, and choose among alternative brands and suppliers. The business market consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others. 16 Organizational buying

17. Industrial Buying Process 17

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19. Sheth’s Industrial Buyer behaviour model 19

20. Webster and Wind model The Webster and Wind Model is focused on B2B buying. It theorizes that there are four major variables affecting the buying decisions of businesses. They include environmental, organizational, buying center, and individual variables. Environmental variables: external factors like supplier relationships, customer demands, politics, and competitive pressure Organizational variables: internal business factors like a company's leadership team and goals Buying center variables: factors within the team making buying decisions like who is in charge of approving the decision and who's involved in the process Individual variables: factors within individual prospects such as their age, education, priorities, etc. 20

21. Webster and Wind model 21

22. Online buyer behaviour 22 Online consumer behavior is the process of how consumers make decisions to purchase products in ecommerce. Examples −Online catalogues, Websites, or Search engines. When customers have sufficient information, they will need to compare with the choices of products or services. Factors influencing OBB: External Environment Demographics Personal characteristics Product characteristics Website quality

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24. Online buyer behaviour process 24

25. Top 10 online shopping websites in India 25 1. Flipkart 2. Amazon 3. Myntra 4. Meesho 5. Ajio 6. Snapdeal 7. Nykaa 8. JioMart 9. TataCliq 10. Pepperfry

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27. Issues and challenges in OCB Lack of security Low bandwidth Difficulty in integrating E-commerce Not all customers have access to internet Initial cost Security and privacy Lack of trust and user resistance Lack of touch and feel Customers relations problems Corporate vulnerability Legal issues Technical issues Non technical issues 27

28. Building and measuring customer satisfaction 28 Satisfaction is a person’s feelings of pleasure or disappointment that result from comparing a product’s perceived performance (or outcome) to expectations. Many companies are systematically measuring how well they treat customers, identifying the fac tors shaping satisfaction, and changing operations and marketing as a result. Wise firms measure customer satisfaction regularly, because it is one key to customer retention.

29. 29 MEASURING CUSTOMER SATISFACTION

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32. DETERMINENTS OF CUSTOMER SATISFACTION 32

33. Customer relationship management 33 Customer relationship management (CRM) is the process of carefully managing detailed information about individual customers and all customer “touch points” to maximize loyalty.

34. Customer relationship management 34 A customer touch point is any occasion on which a customer encounters the brand and product— from actual experience to personal or mass communications to casual observation. For a hotel, the touch points include reservations, check-in and checkout, frequent-stay programs, room service, business services, exercise facilities, laundry service, restaurants, and bars. Personalizing marketing is about making sure the brand and its marketing are as relevant as possible to as many customers as possible—a challenge, given that no two customers are identical

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36. 36 There are different types of CRM software

37. CRM in Banks to Retain the customers 37

38. CRM Enhanced customer service & satisfaction Trend spotting Automation Increased sales revenue Reduced cost of sale Low cost of acquiring customers Increased customer retention and loyalty Requires Top management support Complicated and confusion Problem in implementation Fails to serve interested customer Customer Dissatisfaction Advantages Disadvantages 38

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40. Customer acquisition 40 Companies seeking to expand their profits and sales must spend considerable time and resources searching for new customers. Blogging , Video content , email-marketing, Gated content Customer acquisition cost (CAC) refers to how much a business spends on average to convert a lead into a customer. Customer acquisition cost = marketing costs / total customers acquired

41. Strategies for Customer Acquisition 41

42. Customer Retention 42 Customer retention refers to a company's ability to turn customers into repeat buyers and prevent them from switching to a competitor.

43. The Leaky bucket theory 43

44. Customer Loyalty ladder 44

45. Defection 45 It is not enough to attract new customers; the company must also keep them and increase their business. Too many companies suffer from high customer churn or defection. To reduce the defection rate, the company must: Define and measure its retention rate. Distinguish the causes of customer attrition and identify those that can be managed better Compare the lost customer’s lifetime value to the costs of reducing the defection rate.

46. Types of defectors 46

47. Creating Long Term Loyalty Relationships 47 Creating a strong, tight connection to customers is the dream of any marketer and often the key to long-term marketing success. INTERACTING WITH CUSTOMERS Listening to customers is crucial to customer relationship management. Some companies have created an ongoing mechanism that keeps their marketers permanently plugged in to frontline customer feedback DEVELOPING LOYALTY PROGRAMS Frequency programs (FPs)are designed to reward customers who buy frequently and in substantial amounts. Club membership programs can be open to everyone who purchases a product or service, or limited to an affinity group or those willing to pay a small fee. CREATING INSTITUTIONAL TIES The company may supply customers with special equipment or computer links that help them manage orders, payroll, and inventory. Customers are less inclined to switch to another supplier when it means high capital costs, high search costs, or the loss of loyal-customer discounts.

48. Thank you Rhema Joy Sharath [email protected]