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POMDA Chapter Lecture 02 — Transcript

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0:02In this chapter, we study the buying
0:04decision-making process and the factors
0:06that influence it. Along the way, we'll
0:09explore the impact of digital
0:10technologies on buyer behavior and what
0:12this means for
0:18marketers. In this chapter, we learn the
0:21answers to several questions, including
0:23what is buyer behavior and why do
0:25marketers seek to understand it? How are
0:28purchase decisions made? What factors
0:30and characteristics influence these
0:32behaviors? Why are customer journey maps
0:35used to describe consumer decision
0:37processes? What are moments of truth and
0:40micro moments? How do they relate to the
0:43growing importance of customer
0:44experience management? And what do we
0:47know about organizational buyer
0:49behaviors and the factors and
0:50characteristics that influence them?
0:56Marketers must understand the needs and
0:58wants of the market they wish to serve
1:00as well as the market's buying behavior.
1:02That is how prospective customers
1:04evaluate, select, buy, use, and dispose
1:08of products. Buying behavior encompasses
1:11the decision processes and acts of
1:13people involved in buying and using
1:15products. Acknowledging that buying
1:17behavior is influenced by individual
1:19characteristics, socioultural
1:21influences, and environmental factors,
1:23the American Marketing Association
1:25defined consumer behavior as the dynamic
1:28interaction of affect and cognition,
1:31behavior, and the environment by which
1:33human beings conduct the exchange
1:35aspects of their lives. Affect refers to
1:38the emotional aspects of attitude.
1:41Cognition captures beliefs and memory
1:44structures. Behavior includes choices
1:47and behavioral patterns such as
1:48searching for product information online
1:51or paying with a credit card. We capture
1:54these elements by focusing on what and
1:56why buyers think, feel, and do. The
2:00environment may include the situation
2:02and shopping context, micro
2:04environmental factors, and macro
2:06environmental factors.
2:13Why do marketers study buyer behavior?
2:16In short, understanding the thoughts,
2:18feelings, and actions of our target
2:20audiences helps marketers make better
2:23decisions. This understanding could lead
2:25to ideas for new products and product
2:27improvements, changes to service
2:29processes, messages used in marketing
2:32communications, pricing decisions, and
2:34more. Some possibilities of the kinds of
2:37questions we can gather answers to by
2:40studying buyer behavior are listed on
2:42the
2:47slide. When it comes to studying buyer
2:50behavior, who are the buyers? They may
2:53be individuals, groups, or
2:56organizations. Remember from chapter 1
2:59that BTOC marketers study the behavior
3:01of end consumers. B2B marketers study
3:04the behavior of organizational buyers.
3:07But we can also study the COC market to
3:10better understand peer-to-peer
3:12marketplaces like eBay and
3:21Etsy. Traditionally, the consumer
3:23decision-making model is depicted as
3:26five stages of activities a person
3:28experiences when making a purchase. This
3:30is shown in the figure on the slide. The
3:33stages include need recognition,
3:36information search, the evaluation of
3:38alternatives, purchase, and
3:40post-purchase outcomes. Each stage may
3:43be influenced by a person's individual
3:45characteristics such as personality and
3:47lifestyle, social influences including
3:50culture and family and friends and
3:52reference groups, and situational
3:54factors like the time available to make
3:56a decision and the degree of risk
3:58perceived.
4:07When it comes to the first stage, need
4:09recognition, we need to recognize that
4:11much of the time, consumers are passive
4:14rather than active participants in
4:16commerce. The average person goes about
4:18daily life until some stimulus triggers
4:20the need recognition stage. This is
4:23shown in the figure on the slide. Recall
4:25that we introduced the concept of unmet
4:27needs as motives that drive exchange
4:29between organizations and their
4:31customers in chapter 1. Consumer and
4:34business needs alike can be categorized
4:36as basic survival, security, social,
4:39esteem, cognitive, or self-actualization
4:42needs following Maslo's hierarchy of
4:44needs. A stimulus or trigger draws
4:48attention to a gap between the person's
4:50actual state and their desired state of
4:52being. This shifts the buyer from
4:55passive to active. Internal stimuli are
4:58those from within the individual, such
5:00as hunger, thirst, or desire. External
5:04stimuli are those from outside the
5:06person, such as advertising, the smell
5:08of food from a nearby restaurant, and a
5:10friend's recommendation. Needs can be
5:13recognized on impulse, or they might be
5:15anticipated and planned.
5:21A useful framework for
5:23understanding the needs that people have
5:26is the jobs to be done
5:28framework. From the customer's point of
5:30view, need recognition is simple. They
5:33need to get things done. They basically
5:35hire products to do the job. And this is
5:38the foundation of the jobs to be done
5:40theory. The job to be done represents a
5:43functional need. You might think of a
5:45few jobs that you need doing and think
5:47about the brand that you consider hiring
5:49them hiring to do those jobs for you. In
5:53each instance, you don't need the brand
5:55you named or even the product category
5:57in which the brand competes. You need to
5:59have a job done. Theodore Levit, one of
6:02the most influential marketing
6:03professors of all time, used this
6:05example. He said, "People don't want to
6:08buy a quarterinch drill. They want a
6:10quarterinch hole." These people may have
6:12purchased a drill, but the job to be
6:14done was to acquire a hole. So, a job is
6:18essentially shorthand for what the
6:19customer seeks to accomplish in a given
6:22circumstance. To identify customer needs
6:24using the jobs to be done framework,
6:26marketers use a process called job
6:28mapping. Job mapping deconstructs the
6:31steps customers complete as they seek to
6:33get the job done. A job map does not
6:36detail what the customer is is doing,
6:39but rather details what they are trying
6:40to accomplish. The resulting job map
6:43captures all of the customers needs,
6:45including experiential, social, and
6:48emotional dimensions.
6:50In the image on the slide, you can see
6:54that consumers hire a product to get a
6:58core functional job done and they have
7:01outcomes associated with this core
7:03functional job. But they also have
7:05related jobs, emotional jobs and
7:08consumption chain jobs. Consumption
7:10chain jobs are those jobs that they have
7:12to uh perform in order to get the core
7:16functional job done. So this image helps
7:20you to break apart all of the various
7:22needs that can be reflected after you've
7:24done a job map for the jobs to be done
7:27framework. But the basic concept is that
7:29we hire products to be able to get a job
7:32done. And this represents our basic need
7:35and need the need recognition stage.
7:41Now that we've talked about the first
7:43stage, need recognition, let's go
7:45through the remaining four stages,
7:47beginning with information search. The
7:50second stage is information search.
7:52During this stage, consumers identify
7:54possible alternatives to satisfy the
7:57need and gather information about those
7:59alternatives. The person might already
8:01be knowledgeable about possible options
8:04and rely on recalling information that's
8:06stored in their memory. This is called
8:08an internal source. Or they might turn
8:11to external information sources such as
8:14outside sources of information including
8:16search engine results, cataloges, online
8:18product reviews, buying guides and
8:21salespeople. This stage should produce a
8:23set of options called the evoked set or
8:26consideration
8:27set. The third stage is evaluation of
8:31alternatives. In this stage, the
8:33decision maker compares the alternatives
8:35in the consideration set using
8:38evaluative criteria. The criteria
8:41include important characteristics for
8:42meeting the need in question given the
8:45situation. Multi-attribute models
8:47capture the relative importance of the
8:49chosen criteria, the evaluation of each
8:51brand alternative on those criteria, and
8:54the resulting scores. They allow many
8:56pieces of information to be included in
8:58the evaluation of possible choices. The
9:01consumer arrives at an evaluation toward
9:04the various choices by evaluating each
9:07option on a set of attributes such as
9:10perceived quality, value, ability to
9:12perform the job and so
9:15on. In the fourth stage, a choice is
9:18made. This is called the purchase stage.
9:21To make a decision, people may rely upon
9:23huristics, which are also called rules
9:25of thumb, such as choosing a brand based
9:28on loyalty, lowest price, or highest
9:31rated. A compensatory decision rule is
9:34used when a person selects the brand
9:36with the best score based on waiting and
9:38evaluating the set of criteria that was
9:41used in the evaluation of alternative
9:43stage. A non-compensatory decision rule
9:46eliminates options that fail to meet a
9:48minimum requirement on any of the
9:50evaluative attributes. In other words,
9:53good performance on one attribute cannot
9:56compensate for poor performance on
9:59another. Does this sound as though
10:01purchase decisions are rational? It
10:04does, but remember that's not always the
10:06case. People frequently make decisions
10:08based on emotion and intuition even when
10:11the decision may seem decidedly
10:14irrational. The tenants of behavioral
10:16economics incorporate psychology and
10:18economics and helps us to understand
10:20these patterns in buyer
10:24decision-making. Lastly, we have
10:26post-purchase outcomes. This final stage
10:29captures the evaluations of behaviors
10:31following the purchase decisions. The
10:33buyer experiences the product and
10:35evaluates whether his or her
10:37expectations have been
10:43met. It's easy to think that our
10:45interest in the decision-making process
10:48might end with purchase, but it's also
10:50important to consider post-purchase
10:53outcomes. The buyer experiences the
10:56product and evaluates whether his or her
10:58expectations have been met. Customer
11:00satisfaction occurs if expectations are
11:03met or exceeded. Customer
11:05dissatisfaction occurs if expectations
11:08are not met. And cognitive dissonance
11:11may occur if there is a gap between the
11:14buyer's attitudes and the outcomes that
11:16they experienced after using the
11:19product. This stage may also include
11:21word of mouth communication such as
11:23sharing online reviews and rating the
11:25product as well as disposing of the
11:27product or the product's packaging.
11:30Disposable may be triggered by a new
11:33purchase. This is common in the
11:34electronics industry as consumers are
11:36encouraged to have the latest and
11:37greatest product on the market. This
11:39tactic is called planned obsolescence.
11:42Companies may take steps to make their
11:44products obsolete and unusable after a
11:46period of time to encourage sales of new
11:49products and reduce the time between
11:56purchases. The stages in the
11:58decision-making model can be influenced
12:00by a person's individual
12:02characteristics, social influences, and
12:05situational factors. Individual
12:07characteristics include unmet needs,
12:09wants, and motives, a person's
12:12attitudes, and perceptions, their
12:14personality characteristics such as need
12:16for variety, lifestyle, and demographic
12:19characteristics. They might also be
12:21influenced by social influences. These
12:24may include the attitudes and beliefs of
12:26people who are important to the decision
12:28maker such as family and friends or even
12:32family characteristics such as family
12:34life cycle stage, reference groups and
12:36influencers and culture and social class
12:39characteristics. Lastly, decisions can
12:42be influenced by situational factors.
12:45These may include temporal influences
12:47such as a lack of time, a purchase task
12:50such as selecting a gift, and
12:52dispositional variables like our mood
12:54and the characteristics of the shopping
13:01location. The classic model captures the
13:04basic stages people experience when
13:06making a purchase decision.
13:08Inherent in this illustration is
13:11marketing's objective to encourage
13:13prospects to activate the purchase
13:15process and move successfully through
13:17each stage of the process through
13:19purchase and post-purchase evaluation.
13:22Marketers can trigger and interrupt
13:24stages of the process with push
13:26communication such as advertising and
13:28special offers. For instance, a
13:30television commercial might serve as a
13:32stimulus to trigger a prospect's need
13:34recognition stage.
13:36The relationship between the classic
13:38decision-making process, marketing
13:40objectives, and marketing actions is
13:43illustrated as a funnel. This is
13:45sometimes called a marketing funnel, a
13:47sales funnel, or a conversion funnel.
13:49And an example is shown in the figure on
13:51the slide.
13:59Today's reality is better captured by
14:01describing consumer decision processes
14:03in the context of a digital ecosystem.
14:06Recognizing that we have a variety of
14:08influence sources, channels, behavior,
14:11decision points, and experiences. We
14:14call this expanded view of the consumer
14:16decision process a customer journey.
14:19Companies can engage in the research
14:21activity of customer journey mapping to
14:24capture the details of consumer
14:26decision-making and the resulting
14:28customer journey maps are then used
14:30along with other target audience
14:32insights to guide marketing
14:35decision-making. Just as we might
14:36describe a trip exploring the beaches
14:38along the Gulf Coast as a journey,
14:40customer journeys reflect how people
14:42travel through the decision stages,
14:44where decision points occur, and what
14:46the experience is like.
14:49Two common applications of customer
14:51journey mapping include taking a brand
14:53agnostic approach to understand how
14:55consumers receive information, what
14:57information sources are influential, and
15:00what specific behaviors they engage in
15:02when making purchase decisions, as well
15:04as capturing the series of interactions
15:06and touch points a customer has with a
15:08specific brand to accomplish specific
15:11tasks such as ordering, returning a
15:14product, or requesting a repair.
15:17A general customer journey map is shown
15:20on the
15:26slide. The concept of a customer journey
15:29map was first conceived by McKenzie and
15:31company in 2009 and the original diagram
15:35for a customer decision journey model is
15:37shown on the slide.
15:40The customer journey concept sought to
15:42more realistically reflect the digital
15:44path to purchase used by connected
15:46consumers. The ability for consumers to
15:49research relevant information and
15:51contribute product reviews and
15:52recommendations online sparked a
15:54paradigm shift in how consumers gather
15:57information, what information sources
15:59they seek out and trust, how many touch
16:01points and channels they use, and what
16:03they share with others. Journey maps can
16:06illustrate multi-devices, multi-
16:08channels, multissources, multi-purpose
16:11components of digital customer purchase
16:14experiences. McKenzie's research
16:17discovered that during active
16:18evaluation, the journey stage that
16:20encompasses the information search and
16:22alternative evaluation stages from the
16:24classic decision model, most of the
16:26influence sources are consumer initiated
16:30rather than marketing initiated. As
16:32consumers use their computing devices to
16:35search the web for brand information,
16:37reviews, and ratings, they were able to
16:39pull relevant information from a variety
16:41of sources. With the ease of online
16:43research, marketing initiated
16:46communications declined in its share of
16:48influence. McKenzie concluded that
16:51marketing efforts would be more
16:53effective if they focused on building
16:55brand awareness prior to the decision
16:57trigger to ensure the brand is included
16:59in a consumer's initial consideration
17:02set and that maximizing customer
17:05satisfaction with the experience after a
17:07purchase to encourage customer
17:09retention, brand loyalty, and online
17:11brand advocacy would be the best methods
17:14for marketers to use.
17:17In other words, because consumers
17:19controlled information and evaluation
17:21during the active stage, marketers could
17:24be most influential during the passive
17:26be periods before and after the purchase
17:31occurred. Importantly, McKenzie's
17:34conceptual model depicted a loyalty loop
17:36by which customers who were satisfied
17:38post- purchase developed brand loyalty
17:41leading to future brand purchases which
17:44bypass the evaluation stage.
17:52McKenzie's original conceptualization of
17:55the customer journey remains the
17:57foundation for our current understanding
17:59of customer journeys. In fact, it
18:01foreshadowed the rise of two critical
18:03developments in our understanding of
18:05what customers experience during and
18:07after a journey. These are known as
18:10moments of truth and customer experience
18:12management.
18:14What are moments of truth? Well, a
18:16moment of truth is a moment in the
18:18customer journey at which the
18:20relationship between the consumer and
18:22the brand is at stake. They are the
18:24critical moments of a customer journey.
18:27Moments that determine whether a brand
18:29wins the customer's business and whether
18:31the customer will be satisfied. Along
18:34the customer journey, four major moments
18:36of truth as well as micro moments occur
18:40during which buyers needs, attitudes,
18:42and perceptions guide their subsequent
18:44behavior. A study of buyer behavior
18:47would be incomplete without considering
18:49these moments. They are the first moment
18:52of truth or fot, second moment of truth
18:55or smot, third moment of truth or t or
18:59zero moment of truth or z. And of
19:03course, we also have micro moments as
19:05well. These major moments can be thought
19:08of as forks in the road the customer
19:11follows along his or her journey. This
19:14moment of truth concept is not new. It
19:16was first applied in services marketing.
19:19It entered the broader mark marketing
19:21lexicon when A.G. Laughafley, then CEO
19:23of Proctor and Gamble, used the term to
19:26explain two key decision points
19:27consumers face and what brands must do
19:30to win in those moments.
19:32The first moment of truth occurs when
19:34the customer is considering a product at
19:36the point of purchase and their decision
19:38is influenced by product
19:40characteristics, shelf placement, and
19:42display attributes and the mix of
19:44alternatives
19:45available. In the modern digital
19:48environment, the FMOT is not restricted
19:50to viewing products on shelves. It could
19:52occur in a variety of instances.
19:56The second moment of truth occurs
19:58post-purchase as the customer uses the
20:00product and evaluates whether the
20:02product delivered on the promises it had
20:05made. It is the ESOT that largely
20:08determines whether customers feel
20:09satisfaction or dis
20:12dissatisfaction, validation or cognitive
20:14dissonance and disgust or delight. This
20:17moment precedes and contributes to
20:19post-purchase behaviors including
20:21product returns, complaints, and repeat
20:24business.
20:27The third moment of truth captures the
20:29moment of customer feedback. This is the
20:32moment at which the product experience
20:34catalyzes an emotion such as curiosity,
20:38passion, or even anger to talk about the
20:42brand. We also have the zero moment of
20:45truth. This was proposed by Google in
20:472011. Consistent with McKenzie's
20:50discovery that online search patterns of
20:52empowered wired consumers had shifted
20:55the balance of power from marketing
20:57directed to consumer initiated
20:59information. Google explained that the
21:01online search for and discovery of
21:03information represented a critical
21:05moment prior to the FMOT. Google dubbed
21:08this the zero moment of truth or ZMO.
21:12Drawing upon research data, Google de
21:14demonstrated that a sizable increase in
21:17consumers researching products online
21:19prior to purchase using search engine
21:22queries and an increase in the average
21:25number of information sources that
21:26people used prior to making a purchase
21:34decision. We also have micro moments
21:36that influence the customer journey.
21:40Micro moments are intent driven moments
21:42of decision-making and preference
21:44shaping that occur throughout the entire
21:46consumer journey. They focus on the
21:49different motives and desires customers
21:51may experience on the path to purchase.
21:54During these need states, consumers
21:56spend short bursts of time discovering
21:59relevant information online, primarily
22:01using their smartphones. There are four
22:04essential micro moments that capture how
22:06motives shift throughout a journey and
22:08influence the process. These are I want
22:11to know moments, I want to go moments, I
22:14want to do moments, and I want to buy
22:16moments.
22:23So far, we've focused on end consumers
22:27and the decision-making considerations
22:29that we need to take when we're
22:31marketing in BTOC markets. But we must
22:34also consider B2B buyer behaviors and
22:36the factors that influence their
22:38journeys. B2B buyers differ from BTOC
22:41buyers because of the characteristics of
22:43the organization and the nature of the
22:45purchase task and situation. Some of the
22:48typical differences include the
22:49characteristics of the decision unit,
22:51the relevance of hard and soft costs,
22:54partner buying relationships, and mutual
22:56dependence. You see, in B2B buying,
22:59decisions may be made by individuals
23:01such as purchase managers, but are often
23:03made by buying centers. Buying centers
23:06are committees tasked with purchase
23:08decisions made up of employees with
23:10technical, economic, and
23:11performance-based expertise relevant to
23:14the purchase.
23:16In those cases, the purchase process
23:18will be guided by organizational rules,
23:21policies, and procedures. And these
23:23rules may influence the time required,
23:25the information required, and the number
23:27of alternatives
23:30considered. The B2B decision-making
23:33model is similar to that of end
23:36consumers, but also varies a little bit,
23:39and the steps in the B2B buyer
23:41decision-making model are shown on the
23:43slide. Step one is problem recognition,
23:46which is very similar to the need
23:48recognition stage for end consumers.
23:51Step two is that the specifications
23:54necessary to meet organizational needs
23:57are identified. This might be in the
23:59form of an RFP, also known as a request
24:02for proposal. In the third step, the
24:05buyer search for possible suppliers and
24:08related information. This is similar to
24:10the second step in the BTOC model. In
24:14the fourth step, there may be a
24:15solicitation of bids or proposals from
24:18possible suppliers. In the fifth step,
24:20there's the evaluation of alternatives.
24:23In the sixth step, the supplier is
24:25selected and an order is made. And in
24:27the seventh step, there's post-purchase
24:30evaluation. So, you can see that some of
24:32the basic stages are still present, but
24:35we also have suppliers participating in
24:38the information that's being provided to
24:41the B2B buyers.
24:48Now that you've read the chapter and
24:49watched this video, you should be able
24:51to answer the questions that are listed
24:53on the slide. You should understand what
24:56is meant by the term buyer behavior and
24:58what are the variables included in our
25:00understanding of buyer behavior. You
25:02should know the stages in the classic
25:04consumer decision-making model. And you
25:06should understand how that consumer
25:09decision-making model relates to what we
25:11call the classic marketing funnel or
25:15sales
25:16funnel. You should also understand what
25:19is a customer journey and how it's
25:21different but similar to the
25:23decision-making model. You should know
25:25the four moments of truth and the
25:27meaning of micro moments. You should
25:29also understand their relationship to
25:31customer experience management as
25:33marketers seek to manage these moments
25:35of truth and micro moments. Lastly, you
25:39should know how organizational buyers
25:41differ from consumers as well as are
25:44somewhat similar in the steps of their
25:46decision-making process.

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