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BUSI 1004 Marketing Two Types of Buyers

Instructor: QIU Cheng  Consumer buyer:  Business buyer:


i di id l and
individuals d organizations
i ti th
thatt buy
b
households that buy goods and services for
goods and services for use in the production of
personal consumption. other products and
3.1 services or for resale to
 e.g., Asia is regarded a
very attractive others.

Buyer
B B
Behavior
h i consumer market k t with
a population of 3.5
ith

billion.
billion

Factors Affecting Consumer Behavior Cultural Factors


Cultural
Cu tu a Factors
acto s Social
Soc a Factors
acto s Personal
e so a Factors
acto s  Culture are the set of basic values,
perceptions, wants, and behaviors that are
learned and shared among gppeople
p in a
•Stimuli
Stim li in the C
Consumer
environment
society.
Behavior
 Culture factors can influence consumers’
consumers
including 4Ps reactions to all aspects of marketing program.
 Cultural diversity poses new challenge to
Buyer decision process model marketing.
 Psychological
y g insights
g
 Types of buyer decision process

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Cultural Factors: Subcultures Social Factors
 Subcultures are g
groups
p of p
people
p within a Groups and Social Networks
culture with shared value systems.  Types of group influence
e g COSPLAY
e.g.,  Membership groups are the actual groups to
 Subcultures may be a niche market to target. which a person belongs.

 Subcultures may provide inspirations for  Aspirational


A i ti l groups are groups to
t which
hi h an
designing marketing program. individual wishes to belong.
 Influence choice of products that are visible to
the group or the public

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Social Factors Social Factors


Groups
p and Social Networks Groups
p and Social Networks
 The impact of opinion leaders  Online social networks
People within a group with special skills, Blogs, social networking Web sites, or virtual
knowledge, personality, or other characteristics worlds – where people socialize or exchange
th t can exertt social
that i l influence
i fl on others.
th i f
information
ti and d opinions
i i
Identify or create opinion leaders to spread  Creating buzz is crucial
the word through social network.
 Be aware of the lack of control

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Social Factors Personal Factors
Family Age and Life-Cycle Stage
If a company targets married people: e.g., RBC Royal Bank identifies five life-stage
segments
g
 Husband-wife:
H b d if Wh Who makes
k ththe d
decision?
i i ?
1. The youth — younger than 18
 Kids’ influence 2 Getting started — 18
2. 18-35
35
 Spending on kids  first credit card, first loan
◙ e.g., it will
ill costt a middle
iddl class
l ffamily
il $286
$286,050
050 tto 3 Builders — 35-50
3. 35 50
raise a baby born in 2009 till age 18 in US  loan: housing, car
—US Department of Agriculture (USDA) 2010 4 Accumulators — 50-60
4. 50 60
◙ Kids influence choices of certain products: e.g.,  saving and investing
vacation,
i car 5 P
5. Preservers — over 60
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Personal Factors Personal Factors


Occupation Economic Situation
 Occupation may influence consumer wants for Changes in Consumer Spending Patterns
certain products, e.g., clothes.  Engel’s
g Law
 Marketers try to identify the occupational groups As income rises:
that have an above-average interest in their  Percentage spent on food declines
products.  Percentage spent on housing remains constant
 Percentage spent on savings increases
 Spending on necessity vs. luxury products
 Necessity: food
food, housing
housing, clothes
clothes, transportation
transportation,
health care, insurance
 Luxury: e.g.,
e g travel,
travel designer products
11 ◙ More income-sensitive 12
Personal Factors Factors Affecting Consumer Behavior
Cultural Factors Social Factors Personal Factors
Lifestyle
y
 Culture  Groups and  Age and life-cycle
life cycle
 A person’s pattern of living as expressed in  Subcultures social networks stage
 Family  Occupation
psychographics – measuring activities,
activities
 Economic situation
interests, and opinions.
 Lifestyle

 Marketers can market values and lifestyles


•Stimuli in the Consumer
instead of merely products
environment Behavior
 Look at patterns. Many products and services
seem to “go together”. including 4Ps

An analysis of these factors can help marketers


g market and how
decide who should be their target
to serve the target market.
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Buyer Decision Process 1 Need Recognition


1.
 Need recognition occurs
To better serve the 1. Need Recognition Problem
when the buyer recognizes a
Recognition
target market, problem or need
marketers also need 2. Information Search Information
 Be motivated to solve it
to understand the Search

buying decision 3. Alternative Evaluation  may be activated internally or


Alternative
process—the 5 Evaluation through external stimuli
stages a consumer 4. Purchase Decision
may go through in Purchase
Decision
deciding what to buy. 5. Postpurchase Behavior
Postpurchase
p
Behavior
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2 Information Search
2. 2 Information Search: Psychological Insight
2.
 Internal sources of information Behavioral Learning is the changes in an individual’s
Problem b h i arising
behavior i i ffrom experience
i
Recognition
 Existing knowledge
A strong internal stimulus that e.g.,
g , need for liquid
q
 Past experiences calls for actions to reduce a Di
Drive
Information  a thrist drive
which are acquired through need
Search
learning processes
Stimuli in the environment See Pepsi? Fanta?
Alternative
that determine how a person Cues Vita lemon tea?
Evaluation
responds
d
reinforcement
Purchase
Decision An effort to satisfy a drive Response Buy ______

Postpurchase
p
Behavior Cognitive Learning involves thinking
thinking, reading
reading, reasoning
reasoning.
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2 Information Search
2. 2 Information Search
2.
 External sources of information
 More search when there is
Problem Problem  Commercial sources: e.g.,
Recognition  insufficient experience and Recognition
advertising
knowledge
Information Information  Public sources: e.g., magazine
 high risk of making a bad decision
Search Search review, consumer report
 low cost of information search
 Experiential sources: handling,
Alternative  personal interest Alternative
Evaluation Evaluation
examining, using the product
 Personal sources: e.g., family,
Purchase Purchase friends
Decision External sources of information Decision
Impact of these different sources
Postpurchase
p Postpurchase
p on consumer decision?
Behavior Behavior * The learning process is also relevant to
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external information search.
2. Information Search: Psychological
y g Insight
g 2. Information Search: Psychological
y g Insight
g
The problem of selective attention The problem of selective distortion
The tendency for
f people to screen out much
Perception is the process by which people select,
of the information to which they are exposed.
organize, and interpret information to form a
organize
 Selective attention is influenced by meaningful picture of the world.
 People’s
p interests and motivation  Selective distortion: the tendency of people to
◙ Marketers need to choose the right target market interpret information in a way that will support
and the media to approach them what they already believe
believe.
◙ Marketers may link their offerings to things people
are interested in or concerned with.
 Distinctiveness of the external stimuli
◙ Marketers need to add unique elements to the
marketing program
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3 Alternative Evaluation
3. 3. Alternative Evaluation: Psychological Insight
Attitudes
Problem  How the consumer processes
Recognition Evaluations, feelings, and tendencies toward
information to form attitudes and
an object or idea – like/dislike,
like/dislike feel good/feel
Information arrive at brand choices. bad, approach/avoid
Search
 Influenced by factors such as
Alternative
Evaluation  Product features & importance
p of the features

Purchase
 Emotions
Decision

Postpurchase
p
Behavior
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3 Alternative Evaluation
3. 4 Purchase Decision
4.

Total set  C
Consideration
id ti sett  Decision  The act by the consumer to
Problem
Recognition buy the most preferred
Brand A Brand A ??
brand
brand.
Information
Brand B Brand C
Search  The purchase decision can
Brand C Brand D
Brand D b affected
be ff t d by
b situational
it ti l
Brand E
Brand F
Alternative factors.
Evaluation

Purchase
Decision

Postpurchase
p
Behavior
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Example of Situational Influence 5 Postpurchase Behavior


5.
Choice of microwave ovens:  Cognitive dissonance
Problem Consumers feel uneasy about acquiring
Scenario 1 Scenario 2 Recognition
the drawbacks of the chosen brand and
Emerson
Emerson
E Information
about losing the benefits of the brands not
UP $109.99
UP $109.99 Search purchased, especially in major purchases.
 Marketers can reduce cognitive
Panasonic
Alternative dissonance through
Evaluation
UP $179 99
$179.99 ◙ Make sure buyers know how to use the
Panasonic
Purchase
product
UP $179.99 Decision ◙ Reassure buyers
y through
g refund p
policy
y
and marketing communication
Panasonic Postpurchase ◙ Give quality after-sales service
UP $199
$199.99
99 Behavior
◙ Manage customer relationship
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5 Postpurchase Behavior
5.
Problem  Satisfaction leads to
Recognition
 Repeat purchase
Do consumers always go through the five
Information  Favorable
F bl wordd off mouth
th steps in their buying decision processes?
Search
 Less attention to competitors

Alternative  Purchase other products


Evaluation from the company

Purchase
Decision

Postpurchase
Behavior
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Types of Buying Decision Behavior Types of Buying Decision Behavior

 Degree
D off b
buyer iinvolvement
l t
 Depends on how important the decision is
 Is higher when the product is more expensive,
risky, self-expressive,
self expressive, related to hobbies
 Higher involvement leads to more information
search, and more product attributes and
brands being examined

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Types of Buying Decision Behavior Types of Buying Decision Behavior
 Habitual buying behavior occurs when  Variety seeking buying behavior occurs
Variety-seeking
consumers have low involvement and there is when consumers have low involvement and
little significant brand difference – low-cost, there are significant brand differences
differences.
frequently purchased products.  Market leaders should focus on dominating the
 Consumers passively receive product shelf space, running reminder ad, offering
information and spend little effort evaluating the variety of choices – encourage habitual buying.
products.  Challengers should focus on sales promotion
 Effective marketing communication involves
such as price discount, coupons, free samples,
◙ repetition of short message to trigger needs or and advertisingg that featuring
g something
g new.
remind
i d consumers off th
the b
brand
d
◙ sales promotion
 Distribution is important
◙ Make sure the products won’t be out of stock. 33 34

Types of Buying Decision Behavior Types of Buying Decision Behavior


 Dissonance
Dissonance-reducing
reducing buying behavior  Complex buying behavior occurs when
occurs when consumers are highly involved consumers are highly involved and perceive
but see little difference among brands. significant differences among brands
 Reduce dissonance is crucial to keeping the  Consumers has much to learn about the product
cus o e s
customers category
g y and marketers need to facilitate the
learning in information search and product
evaluation.
◙ Print media with rich information
◙ Sales people, product demonstration and trial
◙ Opinion leaders and social network

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In Summary…
Summary
Knowledge of consumer behavior can help
marketers design marketing strategy and
develop marketing program more effectively.
Buying Decision Process
Learning
1. Need Recognition
Selective Attention & Distortion
2. Information Search
Attitudes
3. Alternative Evaluation
4. Purchase Decision Personal factors
Social factors
5 Postpurchase Behavior
5. Cultural factors

4 Variations 37