Principles of Marketing Chapter 5: Understanding Consumer & Business Buying Behavior.

Principles of Marketing

Chapter 5:Understanding

Consumer & BusinessBuying Behavior

Consumer Buying Behavior

• Consumer buying behavior:Refers to the buying behavior of individuals and

households who buy goods and services for personal use.

• These people make up the consumer market.

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

efforts the company might use?”

Dr. James Carver – Auburn University

Model of Consumer Behavior

• Marketing mix factors and other external stimuli are inputs into the “buyer’s black box.” Stimuli are evaluated in light of the buyer decision

process and the buyer’s characteristics.

Buyer responses include:• Formation of attitudes and preferences• Purchase(s), and • Development of a relationship with the brand or firm.


Consumer Buying Behavior

• Factors influencing consumer behavior:Cultural factors:

• Culture, subculture, social class

Social factors:• Reference groups, family, roles, and status

Personal factors:• Age/life-cycle stage, occupation, economic situation,

lifestyle, personality, and self-concept

Psychological factors:• Motivation, perception, learning, beliefs, and attitudes


Culture

• Culture is the most basic cause of a person’s wants and behavior.Culture:

• Is learned from family, church, school, peers, colleagues.• Reflects basic values, perceptions, wants, and behaviors.

Cultural shifts create opportunities for new products or may otherwise influence consumer behavior.


Subculture

• Subculture:Groups of people with shared value systems based

on common life experiences.

Examples of major subculture groups:• Hispanic consumers• Asian-American consumers• Mature consumers


Social Class

• Social class:Relatively permanent & ordered divisions who share

similar values, interests, & behaviorsMeasured by a combination of occupation, income,

education, wealth, and other variables.Class categories include:

• Upper class,• Middle class,• Working class, and• Lower class.


Social Factors

• Groups and social networks:Membership, reference, and aspirational groups.

Marketers attempt to reach opinion leaders within groups important to target market.

• Opinion leaders are recruited as brand ambassadors or for buzz marketing.

• Online social networks allow marketers to interact with consumers.


Social Factors

• Family:Strongly influences buying behavior.Gender stereotypes for certain types of purchases are

relaxing in the U.S.Children are very influential, and have substantial

disposable income of their own.

• Roles and status:Role = Expected activities.Status = Esteem given to role by society.


Personal Factors

• Age and life-cycle stage:• People change the goods they buy over their lifetimes.

• Occupation:• Occupation influences the purchase of clothing and

other goods.

• Economic situation:• Some goods and services are especially income-

sensitive.• Economic situation often influences choice of store as

well.


Personal Factors

• Yet,People within the same subculture, social class,

and occupation may have different lifestyles.

• Lifestyle:Pattern of living as expressed in his or her

activities, interests, opinions.People buy the lifestyles represented by products

or services.


Personal Factors

• Personality: Refers to the unique psychological characteristics

that distinguish a person or group.Generally defined in terms of traits.

Self-Concept theory:• Suggests that people’s possessions contribute to and

reflect their identities

Brands also have personalities, thus requiring a perceived “match” to be present


Psychological Factors

• Perception:Process by which people select, organize, and

interpret information to form a meaningful picture of the world.

Perception can be influenced by:• Selective attention

Screening out most of what one’s exposed to

• Selective distortion Interpret information so as to “support” what one believes true

• Selective retention Remember good points of “liked” brands but not of “unliked”


Psychological Factors

• Learning:Defined as changes in an individual’s behavior

arising from experience.

Occurs due to an interplay of drives, stimuli, cues, responses, and reinforcement.

• Strongly impacted by the consequences of an individual’s behavior.

Behaviors with satisfying results tend to be repeated.


Beliefs and Attitudes

• Belief: A descriptive thought that a person holds about

something.

• Attitude:A person’s consistently favorable or unfavorable

evaluations, feelings, and tendencies toward an object or idea.


Buying Decision Process

1. Need recognition

2. Information search

3. Evaluation of alternatives

4. Purchase decision

5. Post-purchase behavior


Need Recognition and Information Search

• Need recognition can be triggered by internal or external stimuli.Several sources of information may be used during

information search:• Personal sources

• Friends and family

• Commercial sources• Advertising, salespeople, etc.

• Public sources• Mass media, consumer ratings, etc.

• Experiential sources• Handling, examining, or using the product


Evaluation of Alternatives and Purchase Decision

• Evaluation is highly idiosyncraticDependent upon the specific buying situation and the

individual consumer.

• Purchase decisionTwo factors may interfere with realization of purchase

intentions:1. Attitudes of others

• Particularly those deemed “important”

2. Unexpected situational factors• In the economy, in one’s life (job loss), or even due to others’ experiences with

the product unknown prior


Post Purchase Behavior

• Consumer satisfactionFunction of consumer expectations and perceived

product performance.• Performance < Expectations ----- Disappointment• Performance = Expectations ----- Satisfaction• Performance > Expectations ----- Delight

Cognitive dissonance:• A buyer’s doubts shortly after a purchase about whether it

was the right decision due to inherent compromise in all buying decisions


Stages in the Adoption Process

Awareness• One becomes aware of existence but lacks info about

Interest• Consumer seeks information about new product.

Evaluation• Considering whether trying product makes sense

Trial• Small scale trial to improve one’s estimate of value

Adoption• Decision to make full and regular use of product


Adopter Categorization

• Speed to try a product is highly idiosyncraticLeads to five general “adopter” categories:

• Innovators• Venturesome & don’t mind risk

• Early adopters• Guided by respect; they’re opinion leaders who try early but “carefully”

• Early majority• Deliberate; rarely leaders but adopt before average person

• Late majority• Skeptical; adopt only after a majority have tried

• Laggards• Tradition-bound; suspicious of change & adopt once somewhat a tradition itself


Product Characteristics that Influence the Rate of Adoption

Relative advantage: Is the innovation superior to existing products?

Compatibility: Does the innovation fit or “work with” the existing products, uses,

values, or experience of the target market?

Complexity: Is the innovation difficult to understand or use?

Divisibility: Can the innovation be tried on a limited basis?

• (i.e., degree of commitment and applicability affects rate)

Communicability: Can results be easily observed or described to others?


Business Marketsand Business Buyer Behavior

• Business buyer behavior:The buying behavior of the organizations that buy

goods and services for use in the production of other products and services or for resell or rent to others for a profit.

The business market is significantly larger than the consumer market in terms of both dollars and items sold.


Characteristics of theBusiness to Business (b2b) Market

• Market structure and demand:

Far fewer buyers than b2c

Yet a larger in purchase size

Business demand is derived from consumer demand.

• Thus they have more fluctuating demand due to anticipating consumers then having to react

Inefficiency due to “peaks and valleys”


Nature of Business Buying Versus Consumer Buying

• Nature of the buying participants & process:Participants:

• Routinely involve more individuals• Much more lengthy and sophisticated that b2c

Process:• Business buyers usually face more complex buying

decisions• Thus, the business buying process tends to be more

formalized• Buyers and sellers are much more dependent on each other

in business markets due to number & timing


Types of Buying Situations

• Straight rebuy:• Buyer routinely reorders something without any

modifications.

• Modified rebuy:• Buyer wants to modify product specifications, prices,

terms, or suppliers.

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

• Systems (solution) selling is becoming more common.


Participants in theBusiness Buying Process

• The “Buying Center”All the actors that participate in the business (or

industrial) buying-decision process, and who are responsible for the consequences that result*

• Actors can, each, be an individual or unit of firm

Not a fixed or formally identified unit, but unique to each decision

In the consumer market, this decision-unit is often referred to as the “family buying unit”*

• Due to similar roles performed as in industrial buying


Six Roles of the “Buying Center”*

• Six roles must be performed1. Users

Member(s) of the unit that will use the product or service• Often initiate process & help define specifications

2. Influencers People who simply influence the buying decision

• Help define “specs” & provide info for evaluating alternatives• Technical individuals

3. Deciders People with ultimate power to decide on the product’s

requirements and/or on the suppliers that can be used


Six Roles of the “Buying Center”*

• Six roles must be performed (cont.)4. Buyers

People with the formal authority for selecting the supplier and arranging the terms of the purchase• Can have overlap with decider if only one supplier allowed ~ thus becoming

only the negotiator unless both performed by one individual

5. Approvers People who must authorize the proposed actions of the deciders

and/or buyers

6. Gatekeepers People with power to prevent sellers & information from reaching

members of the buying center.• Most common gatekeeper is the secretary or receptionist


The Business Buying Process

• Steps or stages (similar to consumers):1. Problem recognition

2. General need description

3. Product specification

4. Supplier search

5. Proposal solicitation

6. Supplier selection

7. Order-routine specification

8. Performance review


Principles of Marketing Chapter 5: Understanding Consumer & Business Buying Behavior.

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