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CONSUMER / INDUSTRIAL

BUYING BEHAVIOUR

Dr. Tandon Kamal

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WHAT IS CONSUMERBEHAVIOUR?

Those activities directly involved in obtaining ,

consuming and disposing of products and

services, including the decision processes that

precede and follow these actions

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NEED TO STUDY ?

You c ottakethe consumer forgrantedany more

Thereforea soundunderstandingof

con

sume

reha

viou

r ise

ssent

ia

l fo

rthe

long run success ofany marketingrogram

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A NEW PRODUCT MUST SATISFYCONSUMER NEEDS, NOT THE NEEDS

AND EXPECTATIONS OF

MANAGEMENT.

Understanding and adapting to consumer motivation and behaviour is

not an option it becomes a necessity for competitive survival

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CONSUMER BEHAVIOR

Psychological Influences

Personal Influences

Social Influences

Cultural Influences

Why doWhy doconsumersconsumers

purchase andpurchase and

consumeconsumeproducts?products?

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PostpurchaseEvaluation

PurchaseDecision

Evaluationof

Alternatives

THE CONSUMER BUYING PROCESS

InformationSeeking

ProblemRecognitio

n

Psychological Personal Social Cultural

Personal & Environmental FactorsPersonal & Environmental Factors

Product Pricing Promotion Place

Marketing FactorsMarketing Factors

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CONSUMER PROBLEMS AND

RECOGNITION

Consumer problem: Discrepancy betweenideal and actual state--e.g., consumer:

has insufficient hair

is hungry

has run out of ink in his or her inkjet cartridge

Problems can be solved in several ways--

e.g., stress reduction

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APPROACHES TO SEARCH FORPROBLEM SOLUTIONS

INTERNAL

EXTERNAL

Memory

Thinking

Word of mouth, media,

store visits, trialCATALOG

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COST VS. BENEFITS OF SEARCH

Market

Characteristics

Product

Characteristics

Consumer

Characteristics Situation

Characteristics

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DECISION ISSUES

Types of decisions

Routinized response (e.g.,

gas, sodas)

Limited problem solving (e.g.,

car service, fast food)

Extended problem solving

(e.g., new car, computer,

medical procedures)

Type of evaluation:

Compensatory: Decision based

on overall value of alternatives

(good attribute can outweigh

bad ones)

Non-compensatory: Absolutely

must meet at least one

important criterion (e.g., car

must have automatic

transmission)

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Variety Seeking and ImpulseVariety Seeking and Impulse

BuyingBuying Variety seeking

need varies among consumers

by optimal stimulation level(OSL)

Use innovativeness

Impulse purchases

Motivation

Consequences

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PSYCHOLOGICAL INFLUENCES Motivation

Personality

Perception

Attention and

competition for attention

Selective perception

Subliminal influence?

Perceived risk

Learning

Change in behavior

May or may not beconscious

Values, beliefs, andattitudes

Lifestylee.g., VALS2

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WHAT IS A BELIEF?

The perception of a relationship between two

objects or something and a characteristic of it

Bananas are yellow Physical activity is boring

Lawyers are dishonest

Attitudes are judgments. They develop on theABC model (affect, behavior, and cognition)

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THE RELATIONSHIP OF BELIEFS TO

ATTITUDES Beliefs are translated into attitudes through

values

BELIEF: Lawyers overcharge their clients VALUE: Fairness

ATTITUDE: I dont like lawyers

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ENVIRONMENT INFLUENCE OF CB

Culture

Sub Culture

Social Class Reference group

Family

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ONE-SIDED VS. TWO SIDED

APPEALS

One-sided: onlysaying what favors

your side Two-sided: stating

your case but alsoadmitting points

favoring the otherside

Why is this effective?

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ECONOMIC/MARKETING IMPLICATIONS OF

HOUSEHOLD CYCLES Income tends to

increase with time

But children/

obligations add cost

Divorce

increases costs

may change incomedistribution marriage

Product demand due to

singles with low expenses

new couples

divorced families

children

empty nesters --> more

income

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HOUSEHOLD DECISION MAKING

Roles/influence

Information

gatherers/holders

Influencers

Decision makers

Purchasers

Users

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Complete model of consumer behavior

Stimuli

(marketer

dominated,

other)

External

search

Memory

Internal

search

Exposure

Attention

Comprehension

Acceptance

Retention

Search

Need

recognition

Alternative

evaluation

Purchase

Outcomes

Dissatisfaction Satisfaction

Individual

differences

resources

motivation &

involvement knowledge

attitudes

personality,

values, lifestyle

Influences

culture

social class

family situation

Start

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ORGANIZATIONAL MARKETS

Industrial

Market

Government &

Institutional Market

Reseller

Market

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ORGANIZATIONAL BUYERS Types

Industrial

Reseller

Government and non-

profit organizations

Characteristics

Greater involvement

Bureaucracy

Long term relationships

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ORGANIZATIONAL BUYING BEHAVIOR Differences in buyers

Professionals

Specialists

Experts

Differences in buyer/seller relationships

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B2B PRODUCTS ORGANIZATIONAL

PROCUREMENT STARTS

More than one person involved

Buying process follows certain rules

Price comparison, standardisation, tenders

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MAIN TYPES OF BUYING SITUATIONS IN

B2B Straigtht rebuy routine decision, repetitive process (energy, office

supplies, raw materials, wood, cigarettes), component suppliers for the

automotive industry little or no new information

Modified rebuy more complicated but less sophisticated: cars, trucks,computers, consulting modified rebuys are often treated toouncautious

New task calls for thorough research industrial plant highest levelof uncertainty. Strategic new tasks are of extreme strategic and financialimportance (aircrafts, military equipment, infrastructure) re-evaluationof alternatives and search for new information and new alternatives

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BUYING PHASES

Problem recognition

General need description

Product specification

Supplier search

Proposal solicitation

Supplier selection

Order routine specification

Performance review

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STAGES OF DECISION IN B2B

PROCUREMENT Backhaus developed a widely usable model to distinguish

between 5 phases of procurement

Preliminary application (initiation phase)

Tender proposal

Negotiation

Processing of order

Warranty and services

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BUYING CENTER

Role keepers have different tasks notmandatory

Buyer

User

Initiator

Gatekeeper

Influencer

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Mag. Maria Peer

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BUYER

Formal authority to sign contracts

Member of purchasing department

Influences the vendor selection Not in technical details

Main criteria: price + terms and conditions of

the contract

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USER

Person working with the product

Interested in benefits and unobstructed

function of the product to buy

Large knowhow and preconceived opinion

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INFLUENCER

A person with high technical knowledge and

practical experience

definition of minimum requirements on

technical or company standards

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GATEKEEPER

Controls the flow of information within the

buying center

Assistant of decision maker

Influence by preparing the decision and the

relevant documents

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DECIDER

Right to say yes or no

Mightiest person

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SPECIFIC MARKETING

CONSIDERATIONS IN THE INDUSTRIALFACILITIES BUSINESS

Long decision taking process High risk

Complex buying center

The specific competitive situation

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PRODUCT POLICY

Focuses on innovation

Has to care for high flexibility in research and

development

And manufacturing and assembling

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PRICE

Strict bid and tender rules

High transparency

Add value with service offering to achieve adifferentiating position

Another aspect: financing and sourcing models

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DISTRIBUTION POLICY

Focus on negotiation phase

Provide excellent people in the selling center

High technical knowledge

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COMMUNICATION

Problem solver!

Proving success with comparable tasks

Reference projects!