Marketing Models for Understanding Customer Behaviour

Here we will talk about three marketing models which help us understand consumer behaviour while purchasing a product or a service. These three models are interlinked with each other, and when observed together, they may help us in answering some critical consumer decision-making behaviours.

What was your last impulse purchase? Have you started to buy more stuff online due to the lockdown and the fact that you are not able to step out as freely as before? What is the process by which a person realises that they have a ‘need’ for something? What are the brands that come to your mind when you think of buying a Laptop? Why only those brands? And how much effort would you put into researching different options, when you are purchasing a mobile phone as compared to a pair of shoes? And does your relationship with the brand gets over after you have purchased that product?

Now, I am not going to answer all these questions in this article, but I will tell you some useful frameworks which will help you to collate your thoughts in a structured way and will nudge you to think in the right direction. This article is inspired by Kevin Hartman’s 2020 book Digital Marketing Analytics: In Theory and In Practice, his Marketing Analytics course on Coursera and Avinash Kaushik’s phenomenal blog Occam’s Razor. There are references provided at the end of this article. For those of you who want to have a basic overview of Digital Marketing, I strongly recommend that you check out these links. Let’s begin-

Here’s a short intro about each of the three models-

  • P&G in 2005, introduced the Three-Step Model of Marketing which had the concept of a trigger, first moment of truth and second moment of truth.
  • Google came with the Zero Moment of Truth in 2011. ZMOT includes the fact that as the internet became ubiquitous, we started to have more and more information about the product we want to buy.
  • McKinsey in 2009 came up with the Consumer Decision Journey which looks like a more expanded version of the Three-Step Model, as given by P&G. This model beautifully incorporates the above two frameworks.

And then Kevin Hartman combines these models (using info from Avinash Kaushik’s blog) and tells us what analysis techniques we can use in each scenario to improve our website.

  1. Three-Step Model of Marketing

This is a straightforward yet compelling framework. It provides us with deep insights into consumer behaviour. See the image below-

First, we have the Stimulus of Trigger. Every purchase begins with this. Suppose you were browsing through your social media feed and saw someone you admire, maybe a sportsperson, promoting the latest NIKE Sneakers. You start to think about the shoes you have. You realise that apparently you really need a pair of sneakers. Before you could even realise what has happened, the need is created. The trigger has worked. Whatever amount that NIKE had paid to that sportsperson, has done half the job.

Now comes the First Moment of Truth (FMOT). This happens when the when, “The consumers are at the shelf, ready to purchase, and have several options for the products they want. With FMOT, consumers must choose brands based on their knowledge of the various offerings. Importantly, this was the point P&G identified as the first battleground for brands because they have to fight for attention.”

The third and final step, in this P&G model, is the Second Moment of Truth (SMOT). Expanding on the above example, after your NIKE sneakers have arrived, you start to compare it with the expectations you had before you ordered them. Are they looking the same as you had thought? Is the comfort level as you expected? In this step, the consumers “appraise products against the expectations they developed during their evaluation process. When products live up to SMOT expectations, brands can win customers for life. If products falter, however, the results can be catastrophic for brands. According to P&G, fulfilling consumers’ expectations was the second critical moment that brands must win.”

  • Zero Moment of Truth

Google came with ZMOT in 2011. This is the time between the trigger and the First Moment of Truth. “With ZMOT, Google captured the concept that the shopping dynamic had changed considerably. Now, consumers were going to the shelf while armed with significantly more information about the products and the brands they could purchase.” ZMOT is a messy place, to begin with. We are exposed to hundreds of advertisements per day, and it is very challenging for a brand to make a lasting impression on a user. But, this is also a critical moment for a brand, since they still have the power to influence your purchase decisions.

The image below shows where ZMOT is placed in the P&G Three-Step Model.

“Each ZMOT touchpoint represents an opportunity to interact with consumers and learn their reactions to specific brands and products. These new touchpoints provide opportunities for brands to influence consumers which requires brands to understand consumer needs – insights that could be gleaned through the collection of profile data, and online consumer behaviours. As a result, ZMOT offers advertisers many opportunities to influence consideration and learn whether their products satisfy consumers’ needs. For marketing analysts, ZMOT represents the most important opportunity to understand consumers. It’s where consumers reveal vital information about themselves.”

  • McKinsey’s Consumer Decision Journey

McKinsey came with this in 2009, “to help analysts make sense of the contemporary consumer path to purchase.” We all know about the traditional suspect, prospect and customer-based straight line funnel model of sales. This CDJ model by McKinsey was an alternative to the traditional funnel model.  “McKinsey’s CDJ illustrates the variety of influences on consumers through the purchase process. It identifies several critical moments that consumers experience before they buy and enables advertisers to use digital analytics to improve how they position and sell brands and products.”

The image below captures all the six essential elements in the Consumer Decision Journey.

Keep referencing the above image with the explanations below-

  1. Just like the P&G Three-Step Marketing Model, this model also begins with a trigger. Every purchase decision has a trigger. The trigger may not always be easily identified. And many a time, even the consumer won’t be able to explain what made them make a particular purchase. Isn’t it obvious why brands would like to know what made a consumer purchase a product?
  2. After a need for a product has been identified. The consumer starts to think of the possible brands that cater to that need. Let’s go back to our shoe example. Suppose I need a new pair of black oxford leather shoes. Now, which are the first brands that come to my mind? Van Heusen, Red Tape, Steve Madden, Code, Bata, Hush Puppies, Action, Louis Philippe, Allen Cooper, Khadim. It is clear how picky I am. This set of brands will be my Initial Consideration Set. Every brand wants to be a part of the Initial Consideration Set, for the products they sell. “To get on that ICS, brands must build awareness, recognition, and trust. Being a brand that a consumer recognises as a poor provider of the needed product may land that brand on the ICS but doesn’t bode well for converting that recognition into a purchase.”
  3. Now comes the stage of the Active Evaluation. This is synonymous with the Zero Moment of Truth that Google gave. Note that we still haven’t reached the First Moment of Truth that P&G talked about. This is “when consumers evaluate what products to buy, what brands to invest in, and where to purchase them. Significant amounts of information flow to and from consumers during this point. It’s a critical part of the decision journey and a key battleground for brands.” This is also an opportunity for those brands which were not in the initial consideration set. “It’s important for brands to understand consumers’ needs and how their products satisfy those needs. A brand should answer the question, “Am I positioned in a way that makes my products attractive to consumers?” Understanding what consumers are evaluating during that process is vitally important and a way for brands to win during ZMOT.” Now is the time for brands like Mochi, Alberto Toressi, Lee Cooper and Red Chief to reach me. Brand positioning comes in very handy at this point. Maybe I didn’t think of Red Chief in my ICS because I thought it doesn’t offer the exact variety of shoes that I want.
  4. Finally, we reach the Moment of Purchase. This is the First Moment of Truth that P&G talked about in the first model that we discussed. “At the Moment of Purchase, brands will ask many questions, including, “Are my sales efforts resulting in wins for my brand?” Brands should determine if the things they do at the shelf, in the store, and during checkout facilitate sales, so they can win at the Moment of Purchase.” After looking at the various options available on different platforms, I open the Amazon app and order a pair of shoes from Louis Philippe. Please note that another decision was made here, and that was whether the purchase would be made online and offline. And if it is going to be online, then what is the eCommerce app that I will use. For me, Amazon wins hands down.
  5. Then we have Postpurchase Experience. As you can guess, this is equivalent to the Second Moment of Truth in the P&G model. My shoes are delivered, and now I check them for quality, fitting and other things. In the case of some different categories of products, customer service plays a vital role in this case. In my case, let’s say that there are some quality issues with shoes delivered to me, and they are torn from somewhere. Amazon’s customer care is one of the best that I have experienced amongst all the eCommerce sites in India. The refund/replace the products as soon as you give them proof of damage. These days, the refund comes back within hours of processing. What is the purpose of all this?
  6. It creates a Loyalty Loop. This is how a brand creates a customer for life. Obviously, every brand wants to be here. If you see in the above image of CDJ, this Loyalty Loop is a shortcut from trigger to the Moment of Purchase. I have only one eCommerce app on my cell phone. That is Amazon. The primary reason for me to do this is, I am absolutely sure that my money is safe with them. Unlike some other eCommerce apps which don’t even have a customer care number, Amazon has one, and it is easily reachable all the time. “The Loyalty Loop’s benefits are obvious for a brand. Bain & Company research shows it can be five to 25 times more expensive for a brand to earn a new customer than to keep a current one.” Apple also has a loyalty loop with most of its customers. You’ll hardly ever see a Mac user switching to a Windows laptop. If you ask them, they will say, “It’s just not the same thing.” This is the kind of loyalty that has made Apple the most valuable company across the world. A little more and they will be worth more than India’s GDP. Isn’t this amazing?

Now, let’s see the framework, as given by Kevin Hartman, to understand which analysis technique to use in what part of the Consumer Decision Journey.

Step in the Consumer JourneyWhat Brands Want to KnowAnalysis Techniques to be used to get the Answers
TriggerWhat creates the consumer need?Clickstream Analysis. How are the customers interacting with you online? What has motivated them to come? Where are they coming from?
Initial Consideration SetDo customers recall and recognise my brand?Competitive Intelligence. Which brands are winding up on the consumer’s ICS?
Active Evaluation (ZMOT)Do my products satisfy consumer’s need?Experimentation/Testing. How are consumers reacting to my marketing activities? What is working for me and what isn’t?
Moment of Purchase (FMOT)Do my sales efforts result in wins for my brand?Outcomes Analysis. What were the factors that led to a consumer purchasing something?
Postpurchase Experience (SMOT)Do the experiences I deliver, fulfil the customer expectations? Customer Service, Solid Product, Reputable Brand Name, etc., comes into play here.Voice of Customer (Experience Survey) Vital for setting consumer expectations and delivering a better experience.
Loyalty LoopDo customers advocate for my brand?Voice of Customer (Brand Advocacy) Social Media is an excellent source to get such information.

I request you to go through the references and read some popular blogs by Avinash Kaushik to get a better idea of different web analytics metrics to be used under different situations.

Our discussion till now can be summed up in the following two images-

“Consumers’ digital lives are busy and complicated. To make sense of consumers’ purchase journeys, analysts need a framework that will allow them to organise associated data. McKinsey’s CDJ is an effective framework. At each step of the CDJ, brands have relevant questions and unique ways they can use data to answer them. The CDJ applies to all consumer purchase decisions and is an invaluable tool for analysts.”

“If I have seen further than others, it is by standing upon the shoulders of giants.” – Sir Issac Newton

References:

  • Kevin Hartman’s Intro- https://www.linkedin.com/in/kevinhartman1/
  • Kevin Hartman’s Book- https://www.amazon.in/Digital-Marketing-Analytics-Theory-Practice-ebook/dp/B086Q1QD7D
  • Avinash Kaushik’s Intro- https://www.linkedin.com/in/akaushik/
  • Avinash Kaushik’s Blog- https://www.kaushik.net/avinash/sitemap/
  • Avinash Kaushik’s Newsletter- https://www.kaushik.net/avinash/marketing-analytics-intersect-newsletter/
  • Avinash Kaushik- Best Web Metrics / KPIs for a Small, Medium or Large Sized Business- https://www.kaushik.net/avinash/best-web-metrics-kpis-small-medium-large-business/
  • Avinash Kaushik- Web Analytics- An Hour a Day- https://docs.google.com/viewer?a=v&pid=sites&srcid=ZGVmYXVsdGRvbWFpbnxlc3BtMjAxNWV4dHxneDoyZmE1OWVhMmY3NmZhNGFh
  • Eric T. Peterson- Web Analytics Demystified- http://www.webanalyticsdemystified.com/downloads/Web_Analytics_Demystified_by_Eric_Peterson.pdf
  • McKinsey’s Consumer Decision Journey- https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/the-consumer-decision-journey#
  • Google’s Zero Moment of Truth- https://www.thinkwithgoogle.com/marketing-resources/micro-moments/zero-moment-truth/ and https://www.thinkwithgoogle.com/_qs/documents/673/2011-winning-zmot-ebook_research-studies.pdf
  • Effects of Zero Moment of Truth on consumer buying decision: An exploratory
  • research in Turkey- https://www.researchgate.net/publication/315929690_Effects_of_Zero_Moment_of_Truth_on_consumer_buying_decision_An_exploratory_research_in_Turkey
  • For folks who are more curious about Digital Marketing and are ready to put in some serious effort, you can start with these- https://www.coursera.org/specializations/digital-marketing and https://www.linkedin.com/learning/paths/become-a-digital-marketing-specialist?utm_source=lookingformarketing&utm_medium=resources
  • https://knowitnowornever.wordpress.com/2017/03/02/3-step-model-of-marketing/
  • http://lovefordigital.com/zmot-contribution-to-traditional-marketing-model/#:~:text=Zero%20Moment%20of%20Truth%20(ZMOT)%20is%20Google’s%20addition%20to%20the,shelf%E2%80%9D%20with%20many%20brands%20to
Rajat Seth

About Rajat Seth

Rajat is an automobile engineer with two years of work experience in sales in the automotive industry, working with Mahindra and Mahindra. He is an avid book reader who is passionate about Formula 1 and loves to stay updated on the latest happenings around the world. Exploring how human behaviour affects various aspects of marketing and how the latest fintech innovations are making our lives easier keep him abreast of the latest trends.

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