STUDENT NAME: AHMET BABAYEV

STUDENT ID: 0130VMVM0612

INTAKE: JUNE 2012

SUBJECT NAME: UNDERSTANDING CUSTOMERS

LECTURER: MS. REENA NADARAJAH

Table of Contents

1.0 Introduction.....................................................................................................................................3

1.1 Purpose..................................................................................................................................4

1.2 Objective and scope...............................................................................................................4

2.0 Internal and External factors...........................................................................................................4

2.1 CULTURAL FACTORS...................................................................................................4

2.1.1Culture.............................................................................................................................5

2.1.2 Subcultures.....................................................................................................................5

2.1.3 Social Class.....................................................................................................................5

2.2 SOCIAL FACTORS..............................................................................................................5

2.2.1 Reference Groups...........................................................................................................5

2.2.2 Family.............................................................................................................................6

2.2.3 Roles and Statuses..........................................................................................................6

2.3 PERSONAL FACTORS........................................................................................................6

2.3.1Age and Stages in the Life Cycle....................................................................................6

2.3.2 Occupation......................................................................................................................6

2.3.3 Lifestyle..........................................................................................................................6

2.3.4 Personality and Self-concept..........................................................................................7

2.4 PSYCHOLOGICAL FACTORS...........................................................................................7

2.4.1 Motivation.......................................................................................................................7

2.4.1Perception........................................................................................................................7

3.0 Maslow’s Theory of Motivation - Hierarchy of Needs...................................................................7

1.0 IntroductionNowadays, the habits of consumers are changing more often as it was decades ago. What was

“in” yesterday is “out” today. Being able to identify and understand the subliminal triggers that

are responsible for specific customer actions and reactions is a key factor for companies when

creating effective solutions.

There are many factors that influence human behaviour. The decision-making process is affected

by cultural and social factors, for example through the individual’s family and friends. Our

childhood, what we learned and how we perceived during this time, has a fulminant impact on

our decision. Moreover, it is influenced by the personnel characteristics (e.g. age, lifestyle) and

psychological factors (e.g. motivation, beliefs and attitudes).

Consumer behaviour refers to the process of acquiring and organizing information in the

direction of a purchase decision and of using and evaluating products and services. The Internet

is more the key which the customer can use to get information according to his attitudes. A major

factor for successful competing in today’s business word for a company is the understanding of

consumer behaviour.

To take adequate actions in the area of marketing, one must understand how people perceive for

example advertising, how they learn to consume, how they make decisions and how personality

affects those decisions.

One must also analyse what motivations influence the individuals’ decisions, how

attitudes are formed and how groups affect the consumer behaviour.

The analyses of these phenomena require the consideration of various processes, internal and

external to the individual.

Hence, to understand the purchasing behaviour one need to examine

Forming and changing of Consumer Attitudes and Behaviour the complex interaction of a lot of

elements, present at different stages, from arousal to decision, as well as from purchase to post-

purchase experiences.

1.1 Purpose

The aim of this report is to better understand, appreciate and empathise with customer

needs by experiencing it themselves. This would then in all probability contribute to

making us a more effective marketer in the future.

1.2 Objective and scope

Now we need to define the objectives of report.

So these are objectives:

Understand the importance, scope and economic theory of customer analysis through self-

reflection.

Critically analyse the decision making-process as part of customer behaviour theory through

self-evaluation of.

o Internal and external sources of influence

o Levels and degree of involvement

o Levels and degree of motivation

In their own purchase behaviour to better understands that of others.

2.0 Internal and External factorsThere are a lot of factors that control the consumer behavior process. Most of these are quite

impossible to influence for a marketer. Therefore they have to concentrate even more on the

factors they can influence. The most important factor one can use to influence is perception. The

stimuli that information gives are therefore the factor that initiates the process that leads to the

consumer’s decision. This makes it very important to formulate the message in the information

in the best possible way. There are many major factors that influence a consumer’s buying

behaviour. In the paragraphs below the model of Kotler should be described. Many of these

factors can used to segment the market.

2.1 CULTURAL FACTORS

The broadest and deepest influence on consumer behavior is cultural factors. Roles played by culture,

subculture and social class are of great importance.

2.1.1Culture

The most fundamental determinant of peoples wants and behavior is culture. While growing up one

acquires values, perception, preferences and behaviors by looking, listening and learning from

family, school, friends and so forth.

2.1.2 Subcultures

Subcultures are smaller proportions of cultures that provide a more specific identification and

socialization for its members. Examples of subcultures are:

Nationalities,

Religions,

Racial groups and Geographic regions.

The subculture identifications influence food preferences, recreation, career aspirations and more.

2.1.3 Social Class

All human societies have some degree of social stratification. The most common is social class.

“Social classes are relatively homogeneous and enduring divisions in a society, which are

hierarchically ordered and whose members share similar values, interest, and behavior.” Social class

reflects income, occupation, education and area of residence. Other characteristics may be difference

in the way people dress, speech patterns, recreational preferences and more.

A cluster of characteristics indicates a person’s social class. Social classes show distinct product and

brand preferences in many areas.14 Examples of this are home furnishing, clothing, and automobiles.

Media preferences also differ. Upper class prefers magazines and books whereas lower class likes

television.

2.2 SOCIAL FACTORS

In addition to cultural factors reference groups, family, roles and statues influence consumer

behavior.

2.2.1 Reference Groups

A number of groups influence buyer’s behavior. Groups that direct influence behaviors and attitudes

are called membership groups. Primary groups are family, friends, co-workers and so forth. In the

Secondary groups are people with a more formal interaction. The group includes organizations like

trade unions, religious groups and professional associations. Group pressure influences attitudes and

behavior much.

2.2.2 Family

A person’s family is the utter most influential reference group. One can divide the family into two

groups. The family of orientation deals with the influence that parents have had on their siblings

during the upbringing. When talking about the family of procreation one mean the influence people

who live together have on each other.

Husband and wife influence the buying of different products in different ways.

Husband Dominant: Automobile, television and insurance.

Wife Dominant: Furniture, kitchenware, and carpeting.

Equal: Vacation and outside domination.

2.2.3 Roles and Statuses

Role and status define a person’s position in each group. Roles – activities that a person is expected

to perform. Each role carries a status. Some products are considered to be status symbols, like Rolls

Royce.

2.3 PERSONAL FACTORS

The decision to buy is also influenced by personal characteristics such as age, stages in the life cycle,

occupation, economic circumstances, lifestyle, personality and self-concept.15

2.3.1Age and Stages in the Life Cycle

The taste in clothes, furniture, recreation and the need for different kinds of food, services is age

related. The consumption is also shaped by the family life cycle. The family’s financial situation and

product interest have impact on the buying behavior. Psychological life cycle stages –

transformations through life such as marriage and divorce.16

2.3.2 Occupation

Occupation influences a person’s consumption pattern. Managers buy suits. Carpenters buy working

clothes. Therefore marketers try to find the occupational groups who have above average interest in

their product.

2.3.3 Lifestyle

Even people coming from the same subcultures, social class and occupation can lead to different

lifestyles.

“A person’s lifestyle is the person’s pattern of living in the world as expressed in the person’s

activities, interests and opinions.”

2.3.4 Personality and Self-concept

Every individual has a distinct personality that influences his/her buying behaviour. Personality

characteristics are:

Self-confidence,

Dominance,

Autonomy,

Sociability,

Defensiveness and

Adaptability.

Personality is a useful variable when analyzing consumer behavior. Self-concept (Self-image) is

related to personality. This often differs from the actual self-concept (How one views oneself.) and

others-self-concept (How one thinks others see oneself).

2.4 PSYCHOLOGICAL FACTORS

Four major factors influence the buying choice - motivation, perception, learning and beliefs and

attitudes.

2.4.1 Motivation

Individuals have many needs at any given time. Physiological needs (Maslow’s Theory of

Motivation) like food and shelter is motivated by survival.22 Social and esteem needs like sense of

belonging and recognition is not intense enough to motivate a person immediately. It becomes a

motive when the need is aroused to a sufficient level of intensity.

2.4.1Perception

When a person is motivated he/she is ready to act. How one act is influenced by ones perception of

the situation.

“Perception is the process by which an individual selects, organizes and interprets information

inputs to create a meaningful picture of the world.”

Physical stimuli as well as stimuli are to the surrounding field and conditions within the individual

influences also the perception.

3.0 Maslow’s Theory of Motivation - Hierarchy of Needs

In 1943, Dr. Abraham Maslow's article, “A Theory of Human Motivation " appeared in the

Psychological Review, which were further expanded upon in his book:  Toward a psychology of

well-being, Abraham H. Maslow attempted to formulate a needs-based framework of human

motivation and based upon his clinical experiences with people, rather than as did the prior

psychology theories of his day from authors such as Freud and B.F. Skinner, which were largely

theoretical or based upon animal behavior.

The basis of Maslow's motivation theory is that human beings are motivated by unsatisfied

needs, and that certain lower factors need to be satisfied before higher needs can be satisfied.

According to Maslow, there are general types of needs (physiological, survival, safety, love, and

esteem) that must be satisfied before a person can act unselfishly. He called these needs

"deficiency needs." As long as we are motivated to satisfy these cravings, we are moving

towards growth, toward self-actualization. Satisfying needs is healthy, while preventing

gratification makes us sick or act evilly.

Maslow's model indicates that fundamental, lower-order needs like safety and physiological

requirements have to be satisfied in order to pursue higher-level motivators along the lines

of self-fulfillment. As depicted in the following hierarchical diagram, sometime called 'Maslow's

Needs Pyramid' or 'Maslow's Needs Triangle', after a need is satisfied it stops acting as a

motivator and the next need one rank higher starts to motivate.

AppendixDateItems Hair cutPrice RM 15Purchased from KIT, Subang JayaTime spent on making the decision

Immediate decision as I am a regular customer over the last year.

Effort put into decision making process

Low involvement

Other products that were considered/available

There are a significant number of salons in Subang Jaya but this is only the third salon I have visited in 2 years.

Factors that led to the choice I made

I have been a client of this salon for about 8 months. I previously had my haircut at a salon in AEON, but became dissatisfied at a perceived hair style from the staff. I walked past and saw a sign in the window at KIT with a particular stylist, and I was happy with her work and became a client from then on. I was recommended a man named Tan. He is very stylish but intensely focused and professional, which I value.

Maslow’s hierarchy of Needs:I was satisfied with the basic services (needs) offered which were convenient location, affordable, value-for-money and competitive pricing. The friendly environment also gave me a sense of belonging (associative needs) On top of that I was very satisfied with the professionalism shown and a hair cut that suit my style which did my self-esteem a lot of good.