Buying behaviour & promotions
The highlighted coffee account enjoys one of the most loyal customer base in the world. In average their shoppers are visiting them 18 times per month, making it approximately once per day per working week. This is not only due to great coffee, but also their ambience, design and service. Their bars are like a warm third home for many people.
Their Christmas promo is a real success among shoppers. To get their annual bespoke planner is a true hit, year after year. People want it, and hence buy more coffee at a higher price.
So, an average shopper is buying 18 cups per month, which also happens to be the magic number for the loyalty program. The monthly spend is amounting to PhP 2,700,- for all Non-Christmas months. For shoppers to take part in the Christmas promo, the monthly average increases to PhP 2,970,-. The additional PhP 270,- is due to the nine mandatory cups Christmas Coffee at a PhP 30 premium (9 x 30 = 270).
There is something called Christmas Magic, and this promotion is part of that magic. The additional PhP 270,- is funding the ‘free’ planner, and it makes sense to the bottom line for the account. The Christmas recipes are just in and out for the season, and are hence sought after when they are released. All in all there were five different Christmas versions, with all sorts of sprinkle, flavours and cream.
The effect of the promotion are many, and here are a few of them:
They build loyalty through the 18 cups
They build extra value through the additional PhP 30 per Christmas brew
They account are perceived to be generous, when free planners are received (though they are indirectly paid for)
The planners include monthly offers for the coming year; and hence secure revisits in the new year
Through the planners, people are daily reminded about the account in many possible ways
The account secures a positive impression about themselves (ref: PPAI study shown below)
Three types of promotion
In simplistic terms, we can say there are three types of promotions, that stimulate shoppers to buy products.
Price-cuts without any conditions (e.g. Price offs, Discounts, Rebates etc.)
Price-cuts with conditions (e.g. ‘3 for 2’, BOGOF, Multi Packs)
Value Creation Promotions; (e.g. Value Added, Loyalty Programs, Gift with Purchase)
A Value Generating Promotion creates more value today, and in the long run.
Value Added Promotions with instant ‘win’
Cat Man Fan Boys prefer promotions where shoppers pay full price, but get a relevant item as an instant win.
First of all, the retailers maintain the value in the category. Secondly they do not destroy the reference price for the item in the market. The third reason why this is an ideal approach, is that the promotional ‘gifts’ are kept for longer period. In that sense, the promotion last much longer than the shopping trip itself.
Did you know that 58% of respondents keep a promotional item anywhere from one year to more than four years? After getting the items, they are in average used once a week. Wow, that means a brand interaction of 52 times a year, or a potential of 208 items if kept more than 4 years.
On top of this, 59% of the ‘item owners’ had a more favourable impression of the brand after receiving the promotional item. PPAI Studies has many more insights regarding Promotional Item Effectiveness. Gift with purchase is a great way of promoting brands, as it enables the brand owner to continuously building the brand. They just need to be relevant, elegant and within respective marketing laws.
Purchase behaviour
Buying behaviour is the way people shop for your product, from product discovery to purchase and even to include repurchase. It includes the practical, personal, and social factors that influence a buyer’s purchase decision, including both rational and irrational decision drivers. Buying behaviour includes ‘insights’ like time of purchase, length of purchase, method of purchase, consumer preference for certain products, purchase frequency, and other similar metrics that measure how people shop for your products. These metrics can be grouped into different types of buying behaviour that describe how buyers engage with a purchase decision. By knowing these facts about shoppers, you can adapt and tailor effective route to market activities.
Henry Assael distinguished four types of consumer buying behavior based on the degree of buyer involvement and the degree of differences among brands. First published in 1992.
Complex Buying Behaviour
Complex buying behaviour is happening when consumers are buying an expensive product. Through this infrequent transaction, consumers are highly engaged in the purchase decision. Consumers will research thoroughly before committing to invest. Consumer act very different when buying an expensive product or a product that is unfamiliar to him. When the risk of buying a product is very high, a consumer consults friends, family and experts before making the decision. In this phase, the buyer will pass through a learning process. He will first develop beliefs about the product, then attitudes, and then making a thoughtful purchase choice. Example: Buying the first car (B2C) or Buying insurance (B2B).
Dissonance Reducing Buying Behaviour
In dissonance-reducing buying behaviour consumer involvement is very high. This might be due to high price and infrequent purchase. In addition, there is a low availability of choices with less significance variations among brands. In this type, a consumer buys a product that is easily available. Consumers will be forced to buy goods that do not have too many choices and therefore consumers will be left with limited decision making. Based on the products available, time limitation or the budget limitation, consumers buy certain products without a lot of research. Example: When buying paint for the house.
Habitual Buying Behaviour
Habitual Buying Behaviour is portrayed when a consumer has low involvement in a purchase decision. This happens when the consumer is perceiving only a few significant differences between brands. When consumers are buying products that they use for their daily routine, they do not put a lot of thought into the process. They either buy their favourite brand or the one that they use regularly – or the one available in the store or the one that costs the least. Consumer just go for it and buy it – there is no brand loyalty. Consumers do not research or need information regarding purchase of such products. Example: When buying my daily coffee.
Variety Seeking Behaviour
In Variety Seeking Consumer Behaviour, consumer involvement is low. There are considerable differences between brands. Here consumers often do a lot of brand shifting. The cost of shifting products is low, and hence consumers might want to try out new products just out of curiosity or monotony. Consumers here, generally buy different products not because of unhappiness but mainly with an urge to seek variety. Example: When rotating the Christmas coffee.
End Note
Rational factors like price, quality, and convenience all influence buying behaviour, as do irrational considerations like feelings and desires. Most purchase decisions include a combination of unique mental, emotional, and behavioural factors.
Mental (or “cognitive”) factors include rational considerations like product value.
Emotional (or “affective”) factors include irrational considerations like personal beliefs.
Behavioural (or “conative”) factors include buying patterns like brand loyalty.
Every buyer has a “black box” of mental, emotional, and behavioural factors that affect their buying behaviour. The contents of this box depends on the lifestyle, consumption habits, personal values, relationships, brand loyalties, personality, and demographics of the buyer. People ultimately choose to buy products based on their current needs and personal likings, as well as their exposure to marketing messages and social influences. Effective marketing messages and recommendations resonate with buyers in a mental or emotional way. Some of the factors that influence buying behaviour—like social trends, for example—are dynamic. As peer groups, societal norms, and cultural fads change, so does buying behaviour. Agile market research helps your businesses stay on top of shifting consumer behaviour.