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Consumer and Business Buying Behavior

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Consumer Buying Behavior

Consumer Buying Behavior refers to the buying behavior of final consumers -individuals & households who buy goods and services for personal consumption.

All these consumers make up the consumer market

The central question for marketers is: “How do consumers respond to various

marketing efforts the company might use?”

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Model of Buyer Behavior

Marketing and Other Stimuli

MarketingProductPricePlacePromotionOtherEconomicTechnologicalPoliticalCultural

Buyer’s Black Box

Buyer CharacteristicsBuyer Decision Process

Buyer Responses

Product ChoiceBrand ChoiceDealer Choice

Purchase TimingPurchase Amount

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Factors Influencing Consumer Behavior

Social

Referencegroups

Family

Rolesand

status

Personal

Age andlife-cycle

OccupationEconomicsituationLifestyle

Personalityand

self-concept

Psycho-logical

MotivationPerceptionLearning

Beliefs andattitudes

Buyer

Culture

Sub-culture

Socialclass

Culture

Sub-culture

Socialclass

Cultural

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Factors Affecting Consumer Behavior: Culture

Subculture• Group of people with

shared value systems based on common life experiences.

Culture is the Most Basic Cause of a Person's Wants and Behavior.

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Factors Affecting Consumer Behavior: Culture

Culture is the Set of Values, Perceptions, Wants & Behavior Learned by a Member of

Society from Family. Social Class• Society’s relatively

permanent & ordered divisions whose members share similar values, interests, and behaviors.

• Measured by: Occupation, Income, Education, Wealth and Other Variables.

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Groups• Membership• Reference

Groups• Membership• Reference

Family (most important)• Husband, wife, kids• Influencer, buyer, user

Family (most important)• Husband, wife, kids• Influencer, buyer, user

Roles and StatusRoles and Status

Social FactorsSocial Factors

Factors Affecting Consumer Behavior: Social

Family Buying Influence

Children can exert astrong influence onfamily buying decisions.Johnson & Johnson remindscustomer’s of its commitmentto the American Family.

What other companies usechildren to influencefamily buying decisions?

Click or pre ss spacebar to return

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Personal InfluencesPersonal Influences

Age and Life Cycle Stage

Age and Life Cycle Stage OccupationOccupation Personality &

Self-ConceptPersonality & Self-Concept

Economic Situation

Economic Situation

ActivitiesActivities InterestsInterests

Lifestyle IdentificationLifestyle Identification

OpinionsOpinions

Factors Affecting Consumer Behavior: Personal

Personal factors: Age & life cycle stage – Tastes in food,

clothes, furniture, recreation change with age

Occupation – e.g. purchase of rugged clothes by a laborer

Economic situation Life style – Lifestyle of a celebrity Personality & self-concept

Characteristics affecting consumer behavior

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High Resources High Innovation

AchieversAchievers

ActualizersActualizers

StrugglersStrugglers

StriversStrivers

FulfilledsFulfilleds

BelieversBelievers

ExperiencersExperiencers

MakersMakers

SRI Values and Lifestyles (VALS)

Low Resources Low Innovation

Brand personality traits

Sincerity (down – earth, honest, cheerful) - e.g. Hallmark

Excitement (daring, spirited, imaginative) - e.g. MTV

Competence (reliable, intelligent & successful) – e.g. Hewlett-Packard

Sophistication (upper class & charming) - e.g. BMW

Ruggednes (outdoorsy & tough) - e.g. Levis

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Factors Affecting Consumer Behavior: Psychological

PsychologicalFactors

AffectingBuyers Choices

Motivation

Perception

Learning

Beliefs andAttitudes

Motives in buying

There are complex motives behind purchasing decisions:

Often the underlying motive is different from the stated motive.

Why do people buy Rolex watches?- For accurate time keeping?- OR as a status symbol? Motives can be analyzed using

Maslow’s hierarchy

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Physiological Needs(hunger, thirst)

Safety Needs(security, protection)

Social Needs (sense of belonging,

love)

Esteem Needs (self-esteem)

Self Actualization

(Self-development)

Maslow’s Hierarchy of Needs

Maslow’s hierarchy of needs

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HighInvolvement

Significantdifferences

betweenbrands

Fewdifferences

betweenbrands

LowInvolvement

Types of Buying Decision Behavior

ComplexBuying

Behavior

Variety-SeekingBehavior

Dissonance-Reducing Buying

Behavior

HabitualBuying

Behavior

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Buyer Decision Process

PostpurchaseBehavior

Purchase

Decision

Information

SearchNeed

Recognition

Evaluationof

Alternatives

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Buyer Decision ProcessStep 1. Need Recognition

State Where the Buyer’s Needs are Fulfilled and the Buyer is Satisfied.

Needs Arising From:

Internal Stimuli –

Hunger

External Stimuli-

Friends

Buyer Recognizes

a Problem

or a Need.

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•Family, friends, neighbors•Most effective source of information

•Advertising, salespeople•Receives most information from these sources

•Mass Media•Consumer-rating groups

•Handling the product•Examining the product•Using the product

Personal Sources Personal Sources

Commercial SourcesCommercial Sources

Public SourcesPublic Sources

Experiential SourcesExperiential Sources

The Buyer Decision ProcessStep 2. Information Search

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Consumer May Use Careful Calculations & Logical Thinking

Consumers May Buy on Impulse and Rely on Intuition

Consumers May Make Buying Decisionson Their Own.

Consumers May Make Buying DecisionsOnly After Consulting Others.

Marketers Must Study Buyers to Find Out How They Evaluate Brand

Alternatives

The Buyer Decision ProcessStep 3. Evaluation of Alternatives

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Purchase IntentionDesire to buy the most preferred brand

Purchase Decision

Unexpected

Situational Factors

Attitudes of Others

The Buyer Decision ProcessStep 4. Purchase Decision

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The Buyer Decision ProcessStep 5. Postpurchase Behavior

Consumer’s Expectations of Product’s Performance.

Product’s Perceived Performance.

Dissatisfied Customer

Satisfied Customer!

Cognit

ive D

isso

nan

ce

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Awareness: Consumer is aware of

product, but lacks information.

Interest: Consumer seeks Information about new product.

Evaluation: Consumer considerstrying new product.

Trial: Consumer tries new product on a small scale.

Adoption: Consumer decides to make regular use of product.

Stages in the Adoption Process

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Adopter CategoriesP

erc

en

tag

e o

f A

dop

ters

Time of AdoptionEarly Late

Inn

ovato

rs

Early Adopters

Early Majority

2.5%

13.5%

34% 34%

16%

Laggards

Late Majority

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DivisibilityCan the innovation

be used on a trial basis?

ComplexityIs the innovation

difficult tounderstand or use?

Communicability Can results be easily

observed or described to others?

CompatibilityDoes the innovation

fit the values and experience of the

target market?

Relative AdvantageIs the innovation

superior to existing products?

Influence of Product Characteristics on Rate of Adoption

Business Buying Behavior Business market : organizations that buy

goods and services for use in the production of other products and services that are sold rented, or supplied to others

Business buying process: the decision making process by which business buyers establish the need for purchased products and services and identify, evaluate and choose among alternative brands and suppliers

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Characteristics of business markets

Characters Characteristics of business markets

Marketing structure and demand

•Business markets contain fewer but larger buyers •Business customers are more geographically concentrated •Business buyer demand is derived from final consumer demand •Demand is more inelastic

Nature of the buying unit

•Business purchases involve more buyers •Business buying involves a more professional effort

Types of decisions and decision process

•Business buyers usually face more complex buying decision •The business buying process is more formalized •Buyers and sellers work more closely together and work on long run relationships

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The Environment Marketing stimuli

Other stimuli

Product Price PlacePromotion

PETCultural Competitive

The buying organization

Buyer Response

The Buying Center

Buying Decision Process

Organizational influences

Product /service choice

Supplier

Order quantities

Delivery times

Service terms

Payment

Model of business buyer behavior

Major types of buying situations

Types Explanation

Straight rebuy Buyer routinely reorders something without modifications

Modified rebuy Buyer wants to modify product specifications (price, terms)

New task Buyer purchases a product or service for the first time

Systems buying Buying a packaged solution to a problem from a single seller

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Participants in the Business buying process

Participants

Buying center The decision making unit of a buying organization

Users Members of org who will use the product/services

Influencers Technical personnel are important influencers , define specifications

Deciders Have formal/informal power to select or approve the final supplier

Gatekeepers Control the flow of information to others , technical persons, secretary, purchasing agents

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Major influences on business buyers

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OrganizationalEnvironmental

Interpersonal

Buyers

Individual Economic Developments

Supply conditions

Technological change

Competitive developments

Culture

Objectives

Policies

Procedures

Organizational structure

Systems

Authority

Status

Empathy

Persuasiveness

Age Education Job responsibility Personality Risk Attitudes

The business buying process Problem Recognition

Someone in the company finds a problem that can be met by acquiring a good/service

General need description

Stage in which company describes general characteristics and quantity of a needed item

Product specifications

Stage of BP, buying org decides or specifies best technical product characteristics for a needed item

Supplier search Buyer tries to find the best vendor

Proposal solicitations

Buyers invite qualified suppliers to submit proposal

Supplier selection Buyer review proposal and select a supplier or suppliers

Order routine specifications

Final order , listing the technical specifications (quantity, delivery, expected time, return policies, and warranties

Performance review

Buyer rates its satisfaction with suppliers (continue, modify and drop)

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