Purchasing behavior is triggered into action by the recognition of ‘needs’ or
‘wants’ which stimulate an urge or drive to take action which will lead to the
‘satisfaction’ of the need. This process is referred to as ‘motivation’. The process applies to the individual and in a more complex form in organizations.
Understanding how people are motivated therefore helps you to:
— identify future customer needs more effectively;
— improve your bank’s ability to communicate with potential customers in terms they can understand;
— emphasize those features of your bank’s service that will be likely to have the most appeal;
— plan marketing strategy to produce the desired results;
— obtain the confidence of customers by showing how your bank understands their point of view.
What you need to know is: Who buys? How do they buy? When do they buy?
Where do they buy? and Why do they buy? Changing technology and the development of alternative delivery systems are providing a growing choice of possibilities to both individual and corporate customers, making an under¬
standing of customer behavior even more important. As illustrated in Figure 5.1, buyers respond to external stimuli with specific patterns of behavior. The role of marketing is to understand the intervening process which influences buying decisions.
5.1.1 The Purchase Decision Process
Customer behavior is influenced by a number of cultural, social, personal and pyschological factors. For individual bank customers the emotional and pyschological factors tend to be more important, while industrial and corporate purchasing tends to be substantially more rational. It would be incorrect,
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External stimuli Buying process Buying behavior
Marketing Environment Service Choice
Product Social Buyer Buying Bank Choice
Price Political needs decision Service Timing
Place Technological objectives process Service Amount
Promotion Economic Service Frequency
Cultural
Figure 5.1 The buying decision process
however, to assume that emotional factors do not influence corporate buying behavior.
External factors influencing buying behavior include the following:
1. Culture. The society in which both the individual and corporations develop significantly influences behavior. Attitudes to risk, degree of competitive¬
ness, efficiency, degree of individualism, personal freedom, pursuit of success and the like are all key values significantly influenced by the culture in which we exist. Moreover, most of us also belong to subcultures within the wider society. For example, ethnic groups, regional differences, climatic and religious differences can all influence behavior. Similarly, each corporate organization tends to have its own internal subculture influenced by its own history, the participants, established norms and practices and company’s leadership.
2. Reference groups. Individuals and corporations are also usually members of various groups which in turn influence behavior. Primary groups with which an individual interacts regularly include family, neighbors and fellow workers. Secondary groups can include professional association memberships, trade unions, trade associations and industry confedera¬
tions. It is an important element in marketing strategy for banks to identify and reach those opinion leaders in appropriate reference groups for personal and corporate clients to gain service endorsements which can be used in the relevant personal or media communication channels.
3. Personal factors. Personal factors influence the type of service required, the location of purchase, the price to be paid and how to reach the individual. While personal factors are critical for retail banking, they also influence the corporate decision purchasing process. Significant personal factors include:
(a) age and life-cycle stage;
(b) occupation;
(c) economic status, including disposable income, savings and assets, borrowing power and attitude to spending vs saving;
(d) lifestyle.
4. Organizational factors. Each corporation has its own structure, systems, procedures, objectives, politics and individual personalities. These factors will all blend together to influence the corporate buying decision process.
The reasons for utilizing specific bank services reflect the desire to satisfy both rational and emotional needs on the part of both the individual and the corporation. The principal emotional motivators which apply in both individual and corporate purchase situations include the following:
1. Ego enhancement. Individuals have a need for achievement and personal recognition. People want to be appreciated, to be complimented, to be made to feel important.
2. Personal power and influence. Individuals have a need for personal power and influence; to be able to dominate and control their immediate environment and to achieve increased success.
3. Personal risk reduction. Organizational purchasers are by nature somewhat risk-averse and need to feel reassured that any services contemplated do not place them at an unacceptable level of personal risk.
4. Personal gain or profit. This can be an emotional as well as a rational motivation. The motive of pecuniary gain has two phases—the one prompts the buyer to spend money to make money, a positive implication, while the other is concerned with the saving of money, a negative implication.
5. Desire for affiliation. In addition to a desire to be recognized, individuals to a greater or lesser degree want to be liked and socially accepted by others.
6. Physical and aesthetic pleasure. The satisfaction of basic physical needs is the most fundamental human drive, while the satisfaction of aesthetic needs is one of a higher order but which can also be an important influence upon the individual.
Similarly, the key rational purchase motivations include:
1. Profit or economy. Profit is probably the dominant motive in most commercial enterprises. For non-profit organizations, while the concept of profit may not be relevant, economies will still be important motivators in the form of cost reductions or savings on existing operations. For individuals, costs and interest rate margins are also extremely important although the inertia effect tends to be much stronger.
2. Flexibility. Services which are flexible or can be adjusted and adapted to meet changing needs appeal to the motive of flexibility.
3. Speed. Services which increase speed of operation may be especially attractive to some corporations by reducing funding needs, improving cash flow and accelerating payments. The speed with which services can be introduced and benefits provided can also be an important motivator. Speed credits tend to be popular with consumers, but direct debits are not necessarily attractive unless accompanied by financial advantages like lower prices.
4. Service quality. Price or cost is by no means always the key determining factor in the choice of services purchased either by individuals or corporations. Perceived quality of service is one of the most important factors governing choice, and indeed in many cases too low a price might well have a negative effect on perceived service expectations.
5. Protection and security. Company personnel are influenced by service features which will protect the company’s property or its employees.
Individuals too need security and rely heavily on banks to be safe repositories for deposits.
6. Back-up service. Most companies are not merely concerned with the short term when purchasing banking services, but rather with a long-term relationship. As a result, back-up service is important to ensure that benefits obtained are continuous and not merely temporary.
7. Convenience. Geographic and/or organizational convenience may be secondary motivators in the choice of bank. This is especially true for mobile individuals.
8. Reputation and perceived technical skill. The reputation and perceived technical skill of a bank are important motivators in assessing whether its services are considered credible by both individuals and corporate accounts.
Most corporate decision-makers are by nature conservative and will not tend to take risks with institutions of unknown reputation in areas of activity such as banking services. Consumers tend to be even more risk-averse, although a fringe segment can usually be lured into making investments in dubious institutions. It is such investors that the regulatory authorities are always at pains to protect.