UNIT 2

Buyer Decision Process

The buyer decision process involves a series of steps consumers go through before making a
purchase.

Stages in the Buyer Decision Process:

1. Problem Recognition:
o The consumer identifies a need or problem that requires a solution.
o Example: A person realizes their phone is outdated and wants a new one.
2. Information Search:
o The consumer seeks information about products or services that can address their
problem.
o Sources: Online reviews, social media, recommendations, advertisements.
3. Evaluation of Alternatives:
o Consumers compare various options based on features, price, quality, and brand
reputation.
o Example: Comparing iPhone vs. Samsung Galaxy features.
4. Purchase Decision:
o The buyer selects the product and completes the transaction.
o Influenced by: Availability, discounts, and personal preferences.
5. Post-Purchase Behavior:
o The consumer evaluates their satisfaction with the purchase.
o Example: If expectations are met, it leads to brand loyalty; otherwise, dissatisfaction
can result in returns or negative feedback.

Buyer Behaviour
Buyer behavior explores how consumers make purchasing decisions and what influences
them.

Types of Buyer Behavior:

1. Complex Buying Behavior:

o High involvement in decision-making due to expensive or risky purchases.
o Example: Buying a car or home.
2. Dissonance-Reducing Buying Behavior:
o High involvement but few differences between brands.
o Example: Purchasing insurance.
3. Habitual Buying Behavior:
o Low involvement with frequently purchased items.
o Example: Buying groceries.
4. Variety-Seeking Buying Behavior:
o Low involvement but desire for variety leads to brand switching.
o Example: Trying different snack brands.
Factors Influencing Buyer Behavior:

1. Cultural Factors: Values, beliefs, and customs.

2. Social Factors: Family, friends, and social media influence.
3. Personal Factors: Age, occupation, and lifestyle.
4. Psychological Factors: Motivation, perception, and attitudes.

Buyer Behavior in Consumer Psychology

Buyer Behavior refers to the psychological, social, and cultural influences that affect how
individuals make purchase decisions. Key factors include:

 Cultural: Traditions and societal norms.

 Social: Family, friends, and peer influence.
 Personal: Age, income, lifestyle, and occupation.
 Psychological: Perceptions, attitudes, and motivation.

Market Segmentation

Definition: Market segmentation involves dividing a broad audience into smaller groups with
shared characteristics to target them more effectively.

Importance:

 Identifies unique customer groups.

 Enhances marketing effectiveness by tailoring campaigns.
 Improves resource allocation and ROI.

Criteria for Segmentation:

 Demographic: Age, gender, income.

 Geographic: Location-based preferences.
 Psychographic: Lifestyle, values, personality.
 Behavioral: Buying habits, brand loyalty.

Building Buyer Personas

A buyer persona is a detailed profile of your ideal customer.

Steps to Build Buyer Personas:

1. Research Your Audience:

o Collect data through surveys, interviews, and analytics.
o Identify demographics (age, gender, income, education).
2. Identify Goals and Challenges:
 oUnderstand what motivates your audience and what obstacles they face.
3. Segment Your Audience:
o Group customers based on common traits.
4. Create Detailed Profiles:
o Give each persona a name and story.
o Example: "Tech-Savvy Tina, age 28, uses online platforms for gadget
reviews."

Tools for Creating Buyer Personas:

 HubSpot’s Make My Persona

 Xtensio Persona Creator

Market Research

Purpose: To gather insights about the market, customers, and competition for informed
decision-making.

Primary Sources:

 Customer surveys and interviews.

 Observations and focus groups.

Secondary Sources:

 Industry reports.
 Competitor analysis.
 News articles.

Customer Validation in Startups

Goal: To verify product-market fit by gathering early customer feedback.

Importance:

 Reduces risks by identifying gaps early.

 Confirms demand for the product.

Steps in Customer Validation:

1. Define the target customer.

2. Build a prototype or MVP.
3. Gather feedback through interviews and usage.
4. Iterate the product based on insights.
Role of Feedback:

 Identifies areas for improvement.

 Ensures the product meets customer needs.

Example: Testing an AI-based learning platform with educators and students to refine
features before launch.

Prototyping and Marketing Strategies

Framework for Integration:

1. Buyer Personas: Identify the needs and preferences of target customers.

2. Prototyping: Develop early product versions to test with personas.
3. Marketing Strategies: Use insights to craft campaigns that resonate with identified
segments.

Example: An eco-friendly gadget startup might:

 Develop a prototype based on personas of environmentally conscious tech enthusiasts.

 Use social media campaigns targeting green technology advocates.

Business Model Canvas

The Business Model Canvas is a tool for structuring business plans. Value Proposition
represents the unique benefit offered to customers.

Example for Reusable Water Bottles:

 Value Proposition: Durable, stylish, and eco-friendly bottles that reduce plastic
waste.
 Customer Segments: Eco-conscious individuals, corporates promoting sustainability.
 Revenue Streams: Direct sales, bulk orders from businesses.

Strategies for Intellectual Property Protection

 Patents: Protect unique technologies or processes.

 Trademarks: Safeguard brand identity.
 NDAs: Secure confidentiality with partners and employees.
 Regular Monitoring: Track potential IP infringements.
Segmenting, Targeting, and Positioning (STP Framework)
Segmentation:

 Dividing the market into smaller, more manageable groups with similar needs or
characteristics.
 Criteria for Segmentation:
o Demographic: Age, gender, income.
o Geographic: Location, climate.
o Psychographic: Lifestyle, values.
o Behavioral: Usage rate, loyalty.

Targeting:

 Selecting one or more segments to focus your marketing efforts on.

 Strategies:
o Undifferentiated: Targeting the entire market.
o Differentiated: Creating tailored strategies for each segment.
o Concentrated: Focusing on one specific segment.
o Microtargeting: Personalizing marketing at an individual level.

Positioning:

 Crafting a unique image or value proposition in the target market’s mind.

 Steps for Effective Positioning:
o Identify differentiators.
o Develop a positioning statement.
o Consistently communicate the value.

Value Proposition (Business Model Canvas)

What is a Value Proposition?

 A value proposition explains why customers should choose your product over
competitors.
 Example: "Uber - The Smartest Way to Get Around."

Defining the Value Proposition in the Business Model Canvas:

1. Customer Segments: Who are you serving?

2. Value Offered: What problems do you solve or benefits do you provide?
3. Channels: How do you deliver value to customers?
4. Customer Relationships: How do you interact with customers to retain them?

Creating a Strong Value Proposition:

 1. Highlight Benefits: Clearly state how your product solves a problem or improves the
user’s life.
2. Focus on Differentiation: Show how your product is unique.
3. Use Simple Language: Be clear and concise.

Information Sourcing on Markets

Understanding the market requires collecting data from reliable sources.

Sources of Market Information:

1. Primary Sources:
o Surveys, interviews, focus groups.
o Advantage: Specific and firsthand data.
2. Secondary Sources:
o Industry reports, government publications, online articles.
o Advantage: Time-efficient and cost-effective.
3. Digital Analytics:
o Tools like Google Analytics for website traffic and audience behavior.
o Social media insights from platforms like Facebook and Instagram.
4. Competitor Analysis:
o Benchmarking against competitors’ products, pricing, and marketing
strategies.
5. Market Research Firms:
o Example: Nielsen, Gartner.

Customer Validation
What is Customer Validation?

Customer validation is the process of ensuring that your product or service meets the needs of
your target market before scaling.

Steps in Customer Validation:

1. Develop Hypotheses:
o Define assumptions about your customers' needs.
2. Engage with Customers:
o Conduct interviews or surveys to test these assumptions.
3. Create an MVP (Minimum Viable Product):
o Develop a basic version of your product to test customer interest.
4. Gather Feedback:
o Analyze customer responses to refine your product.
5. Iterate and Improve:
o Use insights to make necessary adjustments.
Tools for Customer Validation:

1. Feedback Platforms:
o UserTesting, Typeform.
2. Prototyping Tools:
o Marvel, Axure.
3. Social Media:
o Polls and direct engagement.