But in between, from the goal to the finalization of the purchase, lies the customer's decision-making process for making the purchase, that is, how the customer buys. This factor, along with the customer's reason for buying, influences the customer's final behavior.
So to get a complete picture of customer behavior and better strategic marketing analysis, we need to move on to another factor that influences customer buying behavior: how do people buy?
You make all sorts of buying decisions every day, from helping your business buy machinery and equipment to eating and drinking. What are some of the things you do to pick your favorite products?
You can imagine people's purchases as a decision-making process, and comprehensively, this decision-making process **** has five stages: problem identification, information search, evaluation of alternatives, decision-making stage and evaluation stage.
To give you an example of this decision-making process.
First problem identification is when the consumer recognizes their need. Let's say it's 11pm and you're feeling a little hungry, this means you recognize that you need something to eat, this is the problem identification stage.
Next you move to the information-seeking stage, where the consumer searches for what products are available to meet their needs from various sources in order to fulfill them.
You look around to see what's available to eat and you find a cake in the fridge, a box of chocolates in the drawer, and an apple in the kitchen that you took a bite of at lunchtime.
Next comes the evaluation phase of the alternatives. Having gathered so much information about the products, the consumer compares them, forms criteria for choosing the product based on this information, and forms a willingness to buy.
Your requirement for food is freshness, and you feel that apples are kept too long, so you are going to choose from cakes and chocolates.
Moving on to the decision stage where the consumer makes a decision. Eventually you decide to eat the chocolate.
After eating the chocolate you realize that you are still hungry and you enter the post-purchase evaluation stage, feeling regret that you would have eaten the cake.
By understanding the customer buying process, marketers can identify and capture opportunities at all stages of the decision-making process and develop marketing strategies to make customers more likely to buy their products.
If you're not a marketer, your understanding of this decision-making process can help you, as a consumer, reduce the chances of buying the wrong thing.
In this session, I will analyze the five stages of the customer buying decision process: problem identification, information search, evaluation of alternatives, decision-making stage and evaluation stage one by one, so as to find out what actions marketers can take in the customer's decision-making process, to promote the customer's decision.
The first stage is called problem identification. That is, when a customer finds that there is a gap between the current state and his ideal state, the "problem" will appear. This is when the customer looks for a product to solve the problem and fulfill their needs.
For marketers, how to seize marketing opportunities at this stage? Marketers can do three things:
For example, the problem of a person hungry and a person thirsty is easy to recognize, but we actually do not quite understand when he will be hungry and thirsty. Scenario mining is about how marketing should happen at the right time and remind people of their desire for a product.
This picture is a marketing campaign that Colgate used to do in some countries in Southeast Asia. This little girl is eating a Woluche ice cream sorbet, and after eating it, she realizes that the ice cream stick in her hand is slowly revealing its full form, kind of like a toothbrush, with Colgate and the phrase: Don't forget Colgate. It means that when you finish your ice cream, Colgate can help you with your oral cleanliness and health!
First of all, Colgate is keen to capture the oral problems that people may have after eating ice-cream, and to understand the problems that correspond to the cleanliness and health needs of the people who produce them, and then the scenario in which this problem occurs is often when people have just finished eating ice-cream before they have done the next thing.
So Colgate presented itself at the right time, took control of the moment, and told people in the first place that you have a problem, and don't forget that I'm your solution.
Then when people recognize the problem, they think about finding out how much value there is in the product they might want to buy, i.e., whether it meets their needs, or even exceeds their expectations, to help them make a decision about whether or not it's worth it to buy the product.
Into the information search stage, where do customers go to find information? And how do they perceive the value of the information they find to determine which products meet their expectations?
First of all, we need to understand that customers' information sources usually come from commercial information, personal information, experience information and public information, and according to research, personal information has the most influence on people.
So how do customers perceive the information and value that a product delivers? In fact, people's perception of the value of the product will increase over time, i.e., the value perceived after purchase will be greater than the value perceived before purchase.
Here we divide product attributes into search attributes, experience attributes, and confidence attributes based on the time nodes at which people perceive information.
At this stage, the marketer should continue to improve the customer's value perception of their products in the collected information, and try to improve their value perception of the product before purchase, relying more on the search attribute of the product, so as to improve the possibility of customers to choose their own products.
Then I will take you from the customer's information source and value perception of two aspects of the customer's cognitive characteristics of this stage and marketers can take action.
We can categorize the information that customers can collect into the following four categories: commercial information; personal information; experience information and public information.
The first type of public information is called third-party reviews, which are evaluations of products and services provided by objective and unbiased professional organizations or professionals, such as Consumer Reports magazine in the US, which evaluates various products in each issue, such as the cleanliness of a washing machine, or the safety of an automobile, etc.
The other type of information is public information, which is the information that is collected by the customer.
Another type of public information is called consumer reviews. For example, the website Dianping.com, or yelp.com in the United States, reviews restaurants and other services, and the reviews come from ordinary consumers.
If you think about it, which source of information do you trust more when you are collecting information for your own consumption? It may be that you are influenced differently by different sources of information for different products.
For example, if you buy a car, which is more complicated, expensive, and low-frequency, you may be more likely to trust third-party reviews in the public domain, while for a cheaper, high-frequency product such as a meal, you may be more likely to accept friends' recommendations, which are personal information.
You might say that everyone is different, and that's true.
Here's a statistic from the US showing what sources of information US consumers use before making a purchase from 2004 to 2016. The length of the bars in the graph represents how influential each type of information source is on people's overall purchases.
The most influential source is personal information, with consumer reviews in the public domain coming in second. The third most influential is personal information, and the second most influential is consumer reviews from publicly available information, followed by commercial information of all kinds.
So customers are searching for information, and if a marketer can make them perceive that the value they will ultimately get from the product is greater than the price they will pay for it, they are much more likely to buy the product.
Now that you know the main sources of information that people search for, how do you enhance the customer's perception of the value of the product?
In fact, people's perception of the value of the product is not a one-time completion, but will occur at different points in time, such as your circle outside the course, before you do not understand, you do not know its value, at this time the value of the perception of 0; Afterwards, you through the circle outside the article and friends to understand the circle outside the course of the structure and the system, you began to understand the value of its courses, at this time your perception of the value of the increase, and Further as you buy the course to complete the course, the course will bring you a further increase in the perception of value.
We can use a simple model to show the dynamic change process of people's value perception. The horizontal axis represents time, and the intersection of the time axis and the dotted line represents the moment we purchased the product.
The length of the lower line represents the price we pay for the product. And the triangles represent the change in the amount of value people perceive at different times, going through a complete change from left to right.
By the moment of purchase, there is still not much value that people can perceive, so very often the perceived value of the purchase is not as high as the value paid, and this is the great challenge that many marketers face, because the value of a product can only be fully perceived if people have experience using the product they are buying.
To maximize the customer's perception of value, on the one hand, marketers need to adopt different strategies at different points in time; on the other hand, advancing the customer's perception to a point where the customer believes that the value of the product is greater than the price paid at the time of purchase.
Because the reason why people buy a product is because they believe that the value they ultimately get from the product will be greater than or equal to the price they pay.
This last red line represents the value that customers will ultimately perceive from the product, and the red line must be greater than or equal to the purple line for people to buy the product.
So how do you get customers to believe that the product will deliver more value at the point of purchase? It's about understanding what value users perceive before and after they buy.
So for the time of the customer's perception of the value of the product, before use, after use and after use for a period of time, we can product attributes can be divided into three categories, respectively, search attributes, experience attributes and confidence attributes.
The distinction between search attributes, experience attributes, and confidence attributes is based on when each attribute is perceived as valuable.
By understanding the different attributes a product possesses, you can design a marketing strategy that corresponds to the product's characteristics. If most of a company's value is created by searching for attributes, then marketing is easy because people recognize the value of the product before they buy it.
But if a large portion of the value in your product is created by experiential attributes and confidence attributes, it can be a challenge for customers to perceive, so you need to accelerate people's perception of the value of the product as much as possible by using some strategies and designs to promote sales. Below we will specifically understand the various types of attributes.
For example, the brand name, course theme, number of sessions, and length of study in your out-of-circle course purchase are all values that you can recognize before you buy.
So what can companies do to present a complete picture to potential customers as far in advance as possible to increase the customer's perception of the value of the product?
Enterprises can through advertising and publicity and other channels that customers are willing to contact, will be conducive to increasing customer value perception of the information vividly displayed to the customer, such as a lot of stores in front of the slogan, the store eye-catching banner play this role.
####### The second type of attribute is the experience attribute, that is, the customer must be in the process of use in order to complete the perception of the value.
So outside the circle the experience attribute is obviously the quality of teaching. Only after the class you can perceive whether the quality of teaching is good or bad.
How do companies convince people of the value that the experience attribute brings before they buy? In fact, courses that offer free retakes similar to the warranty system, the return and recall system of automobile companies, and online courses that can also introduce a trial service can all allow customers to increase their perception of value before they buy.
By allowing value to be perceived later, it will be perceived earlier, making customers more willing to pay for it.
The Outside the Circle confidence attribute is your belief that this course will help you get better at what you do in your future career. This part of the value you genuinely want must be the value you still can't confirm after experiencing the course.
So for the confidence attribute, how do you get people to confirm that this value can be delivered? The first is to rely on the brand's reputation, if the brand reputation outside the circle is getting stronger, even if people do not go through the confirmation of the course value, the brand's reputation allows you to believe enough.
You can also look for students who have graduated, and students who will be studying the course to communicate, and use their experience to prove the value of the course.
For the three different attributes, companies can try to move the value experience of different attributes forward as much as possible, so as to increase the customer's pre-purchase value perception, and thus be more willing to pay for the product.
To end the information-seeking phase, customers select multiple products for them to evaluate based on perceived value and the price of the product.
After that people enter the alternative evaluation stage, marketing has been talking about value, then people in different alternative products in the best value, given the quality of the product I can get, given the price I have to pay, and finally people will definitely put the highest amount of value of the product selected.
Value in traditional economics is a physical quantity that can be measured, just like your height and weight. But in the marketing perspective, there is a "relativity" of value perception, where the value of each product is not measured in isolation. A product in a specific scene, in the end can be perceived how much value is dependent on our comparison between products. So in order to better highlight the value of a product, marketers
often need to set up a comparison scenario to help customers make choices.
Here I'm going to introduce you to a model of the decoy effect, the figure on the left has AB two products, we present them through two dimensions, respectively, attribute one: quality, attribute two: the price is cost-effective.
So what kind of product is advantageous? Obviously in the quadrant the higher the quality the more cost-effective the product is more advantageous, so the product in the upper right corner is always better than the product in the lower left corner, so a company to gain a competitive advantage, we have to create more value for the customer, you have to work hard to move their products from the lower left corner to the upper right corner of the direction.
Product A is good quality but not cost-effective; option B is a little worse quality but cost-effective. In Figure 1 if you were asked to choose from A and B, you might want to think about it.
Let's look at the right side of this picture, A and B remain unchanged, but A appears in the lower left corner of a -A, you know that A must be better than -A, this time the comparison becomes easier, so -A is very useful, it is precisely because of its existence, people will be in the comparison of A, B, -A, this three will be found in A has a kind of comparative advantage, and finally there are more people go to choose A, which is also the bait effect.
Not only do people tend to compare between products, they also tend to focus on products that are easy to compare. Often times you get people to evaluate products independently which is hard for them to do, so marketers need to be good at designing decoys that place a product in a specific scenario where people have the opportunity to compare the relative merits of the products before they can say which product they actually want. And as a customer, you can also find out if there is a decoy in the choice, and whether your final choice is the one you want most or is influenced by the decoy?
There are two options in their annual magazine subscription list: one option is an electronic subscription for $59 a year the second is paper plus electronic for $125 a year. These are the low quality, low price and high quality, high price options, and clearly the magazine expects people to choose the second option that makes the business more profitable, so if you were a consumer which would you choose to subscribe to?
Let's look at the subscription below, with an additional second option (the one in the middle), a $125 subscription to the print edition. At this point think again about which subscription you would choose?
Let's look at an actual experiment in which a professor chose two groups of one hundred MBA students each from the MIT Sloan School of Management.
In the two experimental conditions, 68% of the first subscription chose the $59 e-version; and when the subscription became three options, those who chose the $59 e-version turned out to be 16%, and those who chose the e-version plus the print version rose to 84%.
Clearly the lure of $125 for the print edition helped people make value judgments and choices more quickly.
You can further think about if you were to drive sales of the $59 e-version, how would you go about accomplishing that?
There are two things you can do if you want to make your product more competitive in sales. First you need to understand the real needs of your customers, and design your product to create real value, that's your basic skill.
Even if your product has a strong value advantage, you have to do the second thing, create an environment for the product, in which your product has a relative advantage, i.e., create an -A.
People compare various alternative products and then move to the fourth stage - decision making. This is the final part of the purchase, where the customer has evaluated the value of the product and the next step is to finalize the purchase.
Companies understand the decision-making stage of people's decision-making characteristics, can be more targeted design, to promote people's decision-making.
But in many cases when consumers make purchases, or when companies make purchases, the decision is not made by a single person, but by many departments or individuals, playing different roles, **** the same to complete a purchase decision.
Here I share with you a conceptual model: the Decision Making Unit DMU.
There are five typical roles. Initiator, Influencer, Decider, Actual Buyer, and User.
In fact, in addition to life, there are many roles that play a role in organizational purchases, such as a company buying a set of financial management software.
In addition to the common five roles, there is also a gatekeeper role. That is, if this role does not agree with the purchase, then the purchase can not be implemented.
For example, the company's compliance department, as long as they do not agree that the purchase can not be carried out; daily life of a boy and a girl to get married, this time the mother-in-law said that if you do not have a house, then I will not allow my daughter to marry you, so at this time, the mother-in-law has become the role of the gatekeeper.
In the face of different products, five roles will often have different people to play, but also involves different needs, the marketer to sort out in the end what the DMU, respectively, to find out who they are and each of them are concerned about the most core issues, the most urgent needs, but also to understand each of them through which channels to search for information, so that we will be concerned about his The problem and access to information channels to design the marketing strategy.
Putting it another way, many times the decision-making units of DMUs are interconnected, which creates new marketing opportunities for us.
Mushroom Street is a fashion e-commerce platform, and more than 90% of its users are young women after 9-5.
Another brand is Helan House, a men's retail brand with a focus on brick-and-mortar stores.
The target customers of Mushroom Street and Hailan Home are completely different, but in recent years Hailan Home and Mushroom Street have done a lot of cooperation. Here is an example of how Hailan uses Mushroom Street to create a clever connection between the users and buyers of men's clothing, and the influencers, girlfriends or wives, to drive sales of men's clothing.
Mushroom Street has a live streaming channel, where female anchors, known as "queens of the goods", are invited to broadcast products of interest to women on Mushroom Street. In this partnership, Mushroom Street asked the anchors to invite their male friends to show them what they look like when they wear Hailan's clothes, which quickly led to a flow of traffic to Hailan's. One of these broadcasts was on the radio, and the other one was on the TV. During one of the broadcasts, one of the main T-shirts of Hailanjia got more than 3,000 orders in less than two hours.
At the same time, the Mushroom Street shopper squad would match dress up sets at Hailan House, take real shots of the try ons, and then go on to teach other little girls how to dress up their boyfriends through the live broadcasts.
In the cooperation they also chose some specific industries, such as car drivers, they are all young men, work will wear uniform formal dress, but if the transformation into the right so, the sense of image and personal characteristics greatly enhanced. In the campaign's Vegetarian Makeover segment, they started with the drivers on Cao Cao's taxi app, and through this Mushroom Street fashionista, they completed the makeover, completely subverting the stereotypes we have of taxi drivers. The campaign's slogan was called No Ugly Husbands, Only Lazy Girlfriends, so now you know what the whole of these campaigns have to do with DMU.
These guys are the users of menswear, but their wives and girlfriends can play important roles in the DMU, such as initiators, influencers, decision makers or buyers.
So by doing this, Mission Hills pried the different roles in the DMU together, connecting the male user with the female DMU role and driving sales.
Another example, taxi apps such as DDT are very common in our lives, but older people need to go out too, so what if they don't know how to use the app?
And DripTaxi's version for the elderly allows parents to call a taxi with a single click. As you can see in the image on the right, children can help their parents with the process of getting a taxi. The parents are the actual users, and these young children help their parents complete the purchase, and they become the decision maker buyers or influencers, in a way that is very similar to the earlier example, and also further expands our market and grows our business.
The final stage, which is often overlooked, is called post-purchase evaluation. Many companies think that after the product is sold, what is the impact of the customer's feelings and evaluation?
But there is a phenomenon that often occurs after purchase called cognitive dissonance. Customers worry about the shortcomings of the chosen brand and are upset that they didn't get the benefits of the unpurchased brand.
In the post-purchase evaluation stage, consumers compare their expectations with their actual post-purchase experience to determine their level of satisfaction with the product and post-purchase activities.
This level of satisfaction will not only affect the consumer's attitude towards the product, providing information on whether or not to repeat the purchase in the future, but will also affect the attitude of other consumers towards the product.
So companies need to help customers justify their purchases before they buy, to help customers resolve cognitive dissonance before they buy, to better understand their customers and dispel their doubts and confusion.
For example, if you buy a new cell phone, and then you look at your previous purchase, how much it costs now. How would you feel if you found out that the price of this phone was dropping by 10% every week that passed?
You'd feel like you lost money and that you didn't get a good deal on this phone. This is what we mean when we say that you're experiencing a cognitive dissonance.
If a customer experiences cognitive dissonance and realizes that the price of the phone he just bought is dropping fast, do you think he'll buy that brand the next time he buys a phone?
On the flip side, if a person's purchase doesn't experience cognitive dissonance, and the price of that phone continues to rise after he buys it, then he's likely to buy the same phone next time. So a lot of companies have to think about how to deal with the post-purchase cognitive dissonance that customers may experience.
Customers are less likely to experience cognitive dissonance with functional and practical purchases, and more likely to experience cognitive dissonance with purchases that emphasize enjoyment.
So one of the things that companies need to do is to help the customer justify his purchases so that he thinks he's making the right purchase, that it's not going to be a problem, and that it's definitely not going to be something that he's going to regret.
One classic example is De Beers, the world's largest diamond distributor. Diamonds are so expensive, how do you get a customer to buy a diamond and not regret it, not feel guilty and dysfunctional?
So De Beers has been shouting a slogan for decades: diamonds are forever, a forever.
In this case a person, although he spends a lot of money, he can justify his purchase by saying, don't look at such a small stone, it can be passed on forever, and for a thing that will be passed on forever, isn't it justified for me to buy it?
This company also has a slogan: you can buy an eternal heirloom for only two months' salary, isn't that a small price to pay?
So before you even get to the point of buying the diamond, De Beers has already helped to defuse the cognitive dissonance, so people buy it happily, and then through word of mouth it can further drive more people to buy it.
In the age of digital marketing, companies can often address the cognitive dissonance that people may have in advance, through media campaigns that allow us to legitimize our choices at the information-seeking stage.
For example, in the case of medical aesthetics, because of public opinion and high prices, many people are easily disoriented and find it difficult to convince themselves to make such purchases. So if they are engaged in medical beauty services, they all have to think about how to dissolve people's cognitive dissonance, and legitimize people's purchases in advance.
For example, emphasizing the cost-effectiveness of a single visit and the benefits of long-lasting results makes it easier for people to accept.
Understanding the two main factors of customer behavior, why and how to buy, I would like to summarize in two sentences: the first sentence from Peter Drucker, who said that customers really buy is never the thing you think you are selling, then this sentence tells us to understand why customers buy, customers want to buy the thing in the end is what.
The second quote says that if you want to be successful and grow your business and your revenue, you have to match the way you market your product with the way your prospects learn about and buy your product. This is where the most basic idea of how people buy comes into play.
1. In order to understand and analyze how customers buy, we can start the analysis through a process model. It includes the following main links: problem identification, information search, alternative evaluation, decision-making, and post-purchase evaluation.
2. By understanding "Why do customers buy?"
2. By understanding "Why do customers buy?", we understand the real problem that customers want to solve, and then we have to identify the exact scenario of the problem in the "problem identification" stage, so as to target the actual marketing opportunity.
3. In the information-seeking stage, in addition to knowing the customer's preferred source of information channels, the marketer has to design different marketing communication strategies based on the differences in the timing of the perceived value of the product's search attributes, experience attributes, and confidence attributes.
4. In the alternative evaluation stage, consumers evaluate alternative products based on their value. Marketers need to understand the "theory of relativity" in value evaluation, and accordingly design a comparative advantage for their products.
5. In the decision-making phase, there may be multiple DMU's with different roles to play. Marketers need to identify these DMUS's and accordingly uncover possible marketing challenges and key business opportunities.
6. At the consumer post-purchase evaluation stage, companies need to anticipate the cognitive dissonance that can occur and provide the information needed to help legitimize the consumer to ensure that repeat purchases are made.
As you may have realized from the previous lesson and this one, there are many differences between consumers, and a deeper understanding of the consumer will help us to better shape our marketing strategies.
Next, we will introduce customer-based strategic decision making, and kick off the STP marketing theme of how to segment and select target segments for different customers.
<<<Study Notes for Business Outside the Lobby