Chapter 5: Consumer Markets...Consumer Buying Behavior
Consumer Buying Behavior refers to the buying behavior of final consumers (individuals & households) who buy goods and services for personal consumption.
Study consumer behavior to answer:
“How do consumers respond to marketing efforts the company might use?”
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Product Choice
Brand Choice
Dealer Choice
Purchase Timing
Purchase Amount
Consumer Behavior
Consumer behavior refers to the buying behavior of final consumers -- individuals and households who buy goods and services for personal consumption.
Model of Consumer Behavior
Marketers control the stimuli or inputs consisting of the four Ps: Product, Place, Price, and Promotion. Environmental and situational influences, though perhaps beyond the control of the marketer, also influence many consumer choices. But what happens between the marketing stimuli input and the buyer’s response or output? That “black box” processing is the central question for marketers.
Teaching Tip: You may wish to discuss the “buyer’s black box” in more detail at this stage. Students sometimes become involved in the controversy regarding the presence or absence of consciousness in consumers. Consider using a two-side in-class discussion:
Side A: Experimental psychologists argue that what we call consciousness is merely a set of complex learned responses -- an ordinary physiological function.
Side B: Sociologists and social psychologists argue that consciousness is greater than the sum of its physiological parts. For marketers, the issue is sometimes linked to free will: Do marketers create needs by conditioning consumers? Do marketers offer need-fulfillers to needs consumer’s create in their “black box?”
Model of Consumer Behavior
This CTR corresponds to Figure 5-1 on p. 135 and to the material on pp. 134-135.
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Characteristics Affecting Consumer Behavior
This CTR relates to Figure 5-2 on p.135 and previews the material on pp. 135-150.
Influences on Consumers
Cultural. Culture is the most basic influence on a person's values, priorities, and beliefs. Cultural shifts make marketing opportunities although most such changes are in secondary rather than core cultural values. Subcultures are important markets as these groups are often significantly different in their needs to warrant different marketing approaches.
Social. Social class is determined by a combination of income, occupation, education, wealth and other variables. Social factors within one's class that affect consumer behavior include reference groups & aspirational groups. Families also exert strong social influences. Finally, each relationship a person has with his or her group carries with it certain roles and status that may carry consumptive responsibilities.
Personal. Major personal factors are age and life cycle stage, occupation, economic situation, life style and personality/self-concept. Texts vary in their treatment of the PLC stages but it is clear that singles buy different products than do young marrieds with small children. Occupations differ in time constraints and social pressures to conform that affect consumption decisions. Lifestyles measured by AIO or VALS typologies can reveal different consumption patterns across otherwise dissimilar groups. The unique characteristics of each person that make up their personality also affect behavior.
Psychological. Maslow's hierarchy reminds marketers that need states vary in their intensity or motivation. Perception is the process of organizing stimuli and is influenced by selective exposure, distortion, & retention. Learning occurs in response to the presentation of information linked to relevant drives, cues, responses, and reinforcement only some of which is under the control of the marketer. Beliefs and attitudes, though shaped by cultural and social forces, may vary considerably on the individual level.
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Values
Perceptions
Social Class
People within a social class tend to exhibit similar buying behavior.
Occupation
Income
Education
Wealth
Subculture
Groups of people with shared value systems based on common life experiences.
Hispanic Consumers
Group Influence on Brand Choice
Groups vary in their influence on product and brand purchases as illustrated on the CTR. Consumers belong to several different membership groups.
Primary Groups. Primary groups are those with which we have regular but informal interaction. These include family, friends, neighbors, and co-workers.
Secondary Groups. Secondary groups are those with which we have more formal and less regular interaction such as religious groups, professional associations, and trade unions.
Reference Groups. These groups serve as direct (face-to-face) or indirect points of comparison and evaluation in a person’s formation of attitudes or behavior.
Aspirational Groups. This type of group is one to which the individual wishes to belong and emulates in adopting behaviors appropriate to that group.
Opinion Leaders. These are people within a reference group who exert influence over others due to special knowledge, skill, personality, or other characteristic.
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Stage
Occupation
Personal
This CTR corresponds to Table 5-2 on p. 142 and the material on pp. 142-146.
Personal Factors
Age and Family Life-Cycle Stage. Buyers’ choices are affected by changes in their age and family structure over time. Young singles have different tastes in clothes, furniture, food, and recreation than do middle aged persons with their own children. Older consumers continue to change in their preferences and additionally acquire new buyer needs such as increased health care needs.
Occupation. A person’s occupation carries with it distinct consumptive needs. White collar workers need different clothes than blue collar workers. Also, occupations usually carry their own subcultural norms and values that influence buyer behavior.
Economic Situation. Means constrain buyer behavior for almost everyone except for the most wealthy.
Personality and Self-Concept. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting response to one’s own environment. Self-concept is the basic perception that people have about who they are.
Lifestyle
Lifestyle is a person’s pattern of living as expressed in her or his activities, interests, and opinions. Determining lifestyle involves measuring AIO dimensions -- the Activities, Interests, and Opinions of consumers.
Psychographics. Lifestyle measures combined with demographic information can identify distinct market segments for consumer products and services. The best known of these methods, VALS 2, is addressed on the following CTR.
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VALS 2 Segments
This CTR corresponds to Figure 5-3 on p. 144 and relates to the material on pp. 143-145.
VALS 2 Segments
The VALS 2 Segmentation by lifestyle incorporates both psychological aspects such as principles, status, and action orientations as well as resource-based orientations (abundant versus minimal). Descriptions of each area include:
Fulfilleds. Fulfilleds are principles oriented individuals who are mature responsible well-educated professionals. Leisure centers around the home but they are also well-informed about the world. High income but practical, value-oriented consumers.
Believers. Believers principles oriented individuals who have more modest incomes, are conservative and predictable consumers who favor American products.
Achievers. Achievers are status oriented individuals who get satisfaction from jobs and families. Conservatives who respect authority. Products show off success.
Strivers. Strivers are status oriented individuals who seek to emulate achievers but have fewer resources.
Experiencers. Experiencers are action oriented individuals who like to affect the environment in tangible ways. This group is active and outgoing and likes new things.
Makers. Makers are action oriented individuals who also like to affect their environment but in more practical ways. They value self-sufficiency, family, and have little interest in the larger world.
Actualizers. Actualizers are resource oriented individuals with the highest incomes and so many resources that they can indulge any or all self-orientations. Image is an expression of taste, independence, and character. They can buy anything; need nothing.
Strugglers. Strugglers are resource oriented individuals who have the lowest income and tend to be brand loyal. Strugglers are concerned with survival.
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Esteem Needs
(self-esteem, status)
Social Needs
Maslow’s Hierarchy of Needs
Maslow suggests that lower level needs must be satisfied before individuals become motivated to satisfy higher level needs. Thus consumers will respond to lower level products and promotions until those needs are met. Only then can other marketing offers be of interest. Needs include:
Physiological. Physical needs such as hunger, thirst, and bodily functions are the lowest level need and require satisfaction before other needs become important to the individual. Sometimes this helps students understand the difference between needs and wants. A thirsty person may still want an expensive car but if thirsty enough will take a drink of water.
Safety. Safety needs for security and protection are the next level needs in the hierarchy. So long as physiological needs are met, safety needs will take precedence over other needs. Fear appeals for consumer products are often linked to safety needs.
Social. Human beings are social, gregarious animals. We group together in part to fulfill physiological and safety needs but also because we enjoy and need the company of others. Going to malls to "hang out" fulfills social needs.
Esteem. To be recognized as an individual fulfills esteem needs. Self-esteem is the value a person places on himself or herself. As lower level needs become more stable, esteem needs become more important to the individual.
Self-actualization. Beyond esteem needs very successful people may still be driven to improve themselves and "accomplish something." These people are driven to self-actualize their potential.
Maslow’s Hierarchy of Needs
This CTR relates to the material on p. 146-147 and corresponds to Figure 5-4.
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Types of Buying Decisions
This CTR corresponds to Figure 5-5 on p. 151 and relates to the material on pp. 151-152.
Types of Buying Decision Behavior
Complex Buying Behavior. Consumers undertake this type of behavior when they are highly involved in a purchase and perceive differences among brands. Involvement increases with the product is expensive, infrequently purchased, risky, and highly self-expressive.
Dissonance-Reducing Buying Behavior. Consumers engage in this behavior when they are highly involved with an expensive, infrequent, or risky purchase, but see little difference among brands. Without objective differentiation to confirm the purchase, buyers often seek support to reduce postpurchase dissonance -- the feeling they may have made the wrong decision.
Habitual Buying Behavior. This behavior occurs under conditions of low consumer involvement and little significant brand differences. Consumers do not search extensively for information about brands. Brand familiarity aids in promoting products under essentially passive learning conditions.
Variety-Seeking Buying Behavior. Consumers may seek variety when involvement is low and there are significant perceived differences among brands. Differences may be product features -- new taste, improvements, extra ingredients -- or promotional benefits such as coupons, rebates, and price reductions.
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The Buyer Decision Making Process
This CTR corresponds to Figure 5-6 on p. 153 and relates to the material on pp. 152-156.
Teaching Tip: Consider asking students to describe some of their purchases decisions made at the beginning of the term and link them to steps in the process.
Stages in the Buyer Decision Process
Need Recognition. Problems are recognized when people sense a difference between an actual state and some desired state. Problem recognition can be triggered by either internal or external stimuli.
Information Search. Consumers vary in the amount of information search they conduct. Information search may be a survey of information stored in memory or may be based upon information available externally. Search effort varies from heightened awareness corresponding to increased receptivity for relevant information to active information search modes where the person expends some energy to obtain information that is desired. External information vary in their informational and legitimizing characteristics. Riskier decisions usually elicit more search behavior than non-risky decisions.
Evaluation of Alternatives. Following information search, the person compares decisional alternatives available. Criterion for evaluation compares product attributes of the alternatives against degrees of importance each attribute has in meeting needs, beliefs about the product or brand's ability and utility, and an evaluation procedure that ranks the alternatives by preference that forms an intention to buy.
Purchase Decision. - The individual buys a product. Purchasing other than the intended product may be due to attitudes of others exerted after the evaluation of alternatives is completed or unexpected situational factors such as point of purchases promotions that affect the alternatives' ranking.
Post-purchase Behavior. This involves comparing the expected performance of the product against the perceived performance received. Cognitive dissonance describes the tendency to accentuate benefits and downplay shortcomings.
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Product Attributes
(Product as a bundle of attributes)
Degree of Importance
Brand Beliefs
(A set of belief is Brand Image)
Total Product Satisfaction
would I be with each product?-(Utility Function)
Evaluation Procedures
or more attributes.(Judgement/Preference)
Purchase Decision
Purchase Decision
Attitude of others: The extent to which person’s attitude reduces one’s preferred alternative depends upon…
…..Intensity of other’s Negative Attitude towards consumer’s preferred alternative.
…..Consumer’s motivation to comply with the other person’s wishes.
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Unanticipated Situational Factors: Consumer forms a Purchase Intention on the basis of many expected factors..
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Purchase Decision
i.e. family income, expected benefits to be derived out from the products…. But some time Unanticipated Situational Factors may erupt to change the Purchase Intention… It is heavily influenced by Perceived Risk…Uncertainty involved in Purchases. Consumers cannot be certain about the Purchase Outcome….it produces anxiety.
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Purchase Decision
A consumer, who decides to execute a purchase intention, will be making up to five Purchase Decisions:
Brand decision
Vendor decision
Quantity decision
Timing decision
Payment-method decision
Meeting Expectations…mounts satisfaction
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Organisation means the systematic coordination of the functions essential to achieving organisational objectives. The objective of a Sales organisation, therefore, is the performance of various activities necessary to promote sales. The functions of sales organisation can be classified as …
Planning
Administrative
Executive
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Sales Organisation
Designing the organisation effectively is very important to serve its customers.
Once the sales people know what their responsibilities are and who they report to, they can concentrate on doing their expected jobs to the best of their ability.
So..the basic problem of the company must be recognised and dealt with while structuring the organisation.
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Sales Organisation
There may be five types of sales organisation in order to deal various issues….
Formal and Informal organisations
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Span of Control
Trade selling …to….technical & Industrial Selling….more span of Control to less
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Decentralisation with the growth of the company
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Primary Activities & Secondary Activities
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Requirement of the Specialised functions
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Industrial Buying Behaviour
“Organisational buying is a process by which a company/organisation establishes a need for purchasing products and choose among competing brands and supplers”
---- Philip Kotler
Organisation makes purchase decision in order to satisfy their goods.
Organisation have goals of producing goods or services
Industry require goods which are either used in the production of another product or they are sold, rented or supplied to others.
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Buying buildings, P & M/c, Office equipments, Furniture, Packaging. Products for resale, and such services as Insurance, transportation, financing…..with having purpose to satisfying consumer.
Ice Cream…..Medicines…..Car……..
Industrial Consumers are those which consists of different types of Organisations.
Industrial Distributors/dealers
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Family Involment Social/ Psychological predominate Less Technical Non- personal Relation Unobservable mental stages
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Ultimate Consumer
Industrial Consumer
Volume of Sales Variety of Products offered Making products of buyer’s specifications No. of product suppliers Average size of purchase Nature of demand
Smaller than industrial market Virtually Unlimited Uncommon Mostly Large Small Derived from Industrial Goods Demand
Larger than ultimate consumer market Virtually Unlimited Very Common Mostly Small Very Large Derived from Ultimate Consumer Demand
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Advertising Personal Selling Trade Shows & Exhibits Rationality in decision making Purchasing Skills
Extensive use of mass media Very limited Minor Limited Limited
More selective use of mass media Very extensive Major Great Sophisticated
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Usually one Price to sell Limited
Often Negotiated Very Common
Often Destination Usually Market Approaches
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Interpersonal Variables
Who is the real Authority Who exerts maximum Authority Persuading Power to make other agree with his view point Knowledge of Group Dynamics helps to evolve selling strategy
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Industrial Variables