Consumer Buying Behavior

A. Model of consumer behavior: Consumers make many buying decisions every day. Most large companys research consumer buying decisions in great detail to answer questions about what consumers buy where they buy, how and how much they buy, when they buy, and why they buy. Processes a consumer uses to make purchase decisions, as well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and the product use.

1: Characteristics Affecting Buyer Consumers

Marketing stimuli consist of the four Ps: product, price, place, and promotion. Other stimuli include major forces and events in the buyer's environment: economic, technological, political, and cultural. All these inputs enter the buyer's black box, B. Factors influencing consumer behavior. Consumer behavior is influenced by the buyer's characteristics and by the buyer's decision process. Buyer characteristics include four Key major factors: cultural, social, personal, and psychological. We can say that following factors can influence the Buying decision of the buyer.

a. Cultural b. Social c. Personal d. Psychological A: Cultural Factors: Cultural factors exert the broadest and deepest influence on consumer behavior. The marketer needs to understand the role played by the buyer's culture, subculture, and social class. I. Culture: Every group or society has a culture, and cultural influences on buying behavior may vary greatly from country to country. Failure to adjust to these differences can result in ineffective marketing or embarrassing mistakes. II. Subculture: Each culture contains smaller subcultures or groups of people with shared value systems based on common life experiences and situations. Subcultures include nationalities, religions, racial groups, and geographic regions III. Social Class Almost every society has some form of social class structure. Social Classes are society's relatively permanent and ordered divisions whose members share similar values, interests, and behaviors. Social class is not determined by a single factor, such as income, but is measured as a combination of occupation, income, education, wealth, and other variables. B: Social Factors: A consumer's behavior also is influenced by social factors, such as the consumer's small groups, family, and social roles and status. I. Groups Many small groups influence a persons behavior. Groups that have a direct influence and to which a person belongs are called membership groups. II. Family Family members can strongly influence buyer behavior. The family is the most important consumer buying organization in society, and it has been researched extensively.

C: Personal Factors A buyer's decisions also are influenced by personal characteristics such as the buyer's age and lifecycle stage, occupation, economic situation, lifestyle, and personality and self-concept. I. Age and Life-Cycle Stage II. Occupation III. Economic Situation IV. Lifestyle V. Personality and Self-Concept D: Psychological Factors: A person's buying choices are further influenced by four major psychological factors: motivation, perception, learning, and beliefs and attitudes. 1. Motivation: A person has many needs at any given time. Some are biological, arising from states of tension such as hunger, thirst, or discomfort. Others are psychological, arising from the need for recognition, esteem, or belonging. Most of these needs will not be strong enough to motivate the person to act at a given point in time. A need becomes a motive when it is aroused to a sufficient level of intensity. A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction. 2. Perception: A motivated person is ready to act. How the person acts is influenced by his or her own perception of the situation. All of us learn by the flow of information through our five senses: sight, hearing, smell, touch, and taste. However, each of us receives, organizes, and interprets this sensory information in an individual way. Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world. I. Selective attention

The tendency for people to screen out most of the information to which they are exposed means that marketers have to work especially hard to attract the consumer's attention. Even noted stimuli do not always come across in the intended way. Each person fits incoming information into an existing mind-set. II. Selective distortion

The tendency of people to interpret information in a way that will support what they already believe. Selective distortion means that marketers must try to understand the mind-sets of consumers and how these will affect interpretations of advertising and sales information. 3. Learning: When people act, they learn. Learning describes changes in an individual's behavior arising from experience. Learning theorists say that most human behavior is learned. Learning occurs through the interplay of drives, stimuli, cues, responses, and reinforcement.

2: Types Buying Decision Behaviors

Question: Explain different types of buyer behavior? 1. Complex Buying Behavior Consumers undertake complex buying behavior when they are highly involved in a purchase and perceive significant differences among brands. Consumers may be highly involved when the product is expensive, risky, purchased infrequently, and highly self-expressive. Typically, the consumer has much to learn about the product category. 2. Dissonance-Reducing Buying Behavior Dissonance reducing buying behavior occurs when consumers are highly involved with an expensive, infrequent, or risky purchase, but see little difference among brands. The market leader should encourage customers to buy repeatedly. Make the product available and visible to the customer in the shopping places. The firm who are not market leader should come out with sales promotion techniques to encourage customer to purchase the product. 3. Habitual Buying Behavior The low involvement between the brands and few differences between the brands leads to the habitual buying behavior. Use price and sales promotions to stimulate product trial. Use more visual aspects than the wordings in the advertisements Television is the better media for this type of products. Use classical conditioning theory to create advertisements.

4. Variety-Seeking Buying Behavior Consumers undertake variety seeking buying behavior in situations characterized by low consumer involvement but significant perceived brand differences. In such cases, consumers often do a lot of brand switching.

3: The Buyer Decision Process Question: Discuss consumer decision process for new products? How do customers buy?
We are ready to look at how consumers make buying decisions. Figure shows that the buyer decision process consists of five stages: 1. Need recognition 2. Information search 3. Evaluation of alternatives 4. Purchase decision 5. Post purchase behavior

Need Recognition The buying process starts with need recognitionthe buyer recognizes a problem or need. The buyer senses a difference between his or her actual state and some desired state. Internal stimuli: when one of the person's normal needshunger, thirstrises to a level high enough to become a drive. External stimuli: At this stage, the marketer should research consumers to find out what kinds of needs or problems arise, what brought them about, and how they led the consumer to this particular product Information Search The consumer can obtain information from any of several sources.

1. 2. 3. 4.

Personal sources (family, friends, neighbors, acquaintances) Commercial sources (advertising, salespeople, dealers, packaging, displays, Web sites) Public sources (mass media, consumer-rating organizations) Experiential sources (handling, examining, using the product)

Evaluation of Alternatives We have seen how the consumer uses information to arrive at a set of final brand choices. How does the consumer choose among the alternative brands? The marketer needs to know about alternatives evaluationthat is, how the consumer processes information to arrive at brand choices the consumer arrives at attitudes toward different brands through some evaluation procedure. How consumers go about evaluating purchase alternatives depends on the individual consumer and the specific buying situation. Purchase Decision In the evaluation stage, the consumer ranks brands and forms purchase intentions. Generally, the consumer's purchase decision will be to buy the most preferred brand, but two factors can come between the purchase intention and the purchase decision. The first factor is the attitudes of others. The second factor is unexpected situational factors. The consumer may form a purchase intention based on factors such as expected income, expected price, and expected product benefits. However, unexpected events may change the purchase intention. Thus, preferences and even purchase intentions do not always result in actual purchase choice. Post purchase Behavior The marketer's job does not end when the product is bought. After purchasing the product, the consumer will be satisfied or dissatisfied and will engage in post purchase behavior of interest to the marketer. What determines whether the buyer is satisfied or dissatisfied with a purchase? The answer lies in the relationship between the consumer's expectations and the product's perceived performance. If the product falls short of expectations, the consumer is disappointed; if it meets expectations, the consumer is satisfied. A dissatisfied consumer responds differently. Whereas, on average, a satisfied customer tells 3 people about a good product experience, a dissatisfied customer gripes to 11 people. The Buyer Decision Process for New Products Much depends on the nature of the buyer, the product, and the buying situation. We now look at how buyers approach the purchase of new products. A new product is a good, service, or idea that is perceived by some potential customers as new. It may have been around for a while, but our interest is in how consumers learn about products for the first time and make decisions on whether to adopt them. We define the adoption process as "the mental process through which an

individual passes from first learning about an innovation to final adoption, and adoption as the decision by an individual to become a regular user of the product.

4: Stages in the Adoption Process

Consumers go through five stages in the process of adopting a new product:

(1) Awareness - the customer becomes aware of the new product, but lacks information about it. (2) Interest - the customer seeks information about the new product. (3) Evaluation - the customer considers whether trying the new product makes sense. (4) Trial - the customer tries the new product on a limited or small scale to assess the value of the product. (5) Adoption - the customer decides to make full and/or regular use of the new product.

5: Buyer behavior - social factors

Introduction A customers buying behavior is also influenced by social factors, such as the groups to which the customer belongs and social status. In a group, several individuals may interact to influence the purchase decision. The typical roles in such a group decision can be summarized as follows: Initiator The person who first suggests or thinks of the idea of buying a particular product or service Influencer A person whose view or advice influences the buying decision

 Decider The individual with the power and/or financial authority to make the ultimate choice regarding which product to buy Buyer The person who concludes the transaction User The person or (persons) who actually use the product or service the families unit is usually considered to be the most important buying organization in society. It has been researched extensively. Marketers are particularly interested in the roles and relative influence of the husband, wife and children on the purchase of a large variety of products and services. The challenge for a marketer is to understand how this might affect demand for products and services and how the promotional mix needs to be changed to attract male rather than female buyers.

6: Buying Motives
The thoughts, feelings, emotions and instincts that induces customer to buy a product are called as buying motives According to Prof D.J. Duncan buying motives are those influences or considerations which provide the impulse to buy, induce action and determine choice in the purchase of goods and services. Classification of buying motives: Question: Examine the buying motives and behavioral model?

1 Product buying motives are those influences and reasons which prompt a buyer to choose a particular product in preference to others. It may be design, shape, dimension, size, color, package etc Product buying motives are further classified as 1. Emotional product buying motive and

2. Rational product buying motive 2 Emotional product buying motives in which buyer decide to purchase a product without thinking over the matter logically and carefully. Buyer takes the decisions on the emotions. Following factors provides the list that influence the emotional product buying motives 1. Customer attaches the pride with the product. 2. Customer try to imitate form others 3. Purchase d the goods for affection on any family member. 4. Products that provide comfort are usually purchased on the emotions. 5. Sexual appeal products are brought on emotional product motives 6. The product those used as recreation, hunger or habit products are usually bought emotionally. 7. Products those provide distinctiveness or individuality. 3 Rational product buying motives when buyer examines pros and cons of purchasing a product and takes decisions then the behavior is called as rational product buying motives. Buyers will be looking for any of the following factors before taking rational decisions 1. The safety or security features provided by the product. 2. The value for money provided by the product. 3. Suitability and utility of the product. 4. Durability of the product. 5. Convenience of the product. 4 Patronage buying motives are those considerations or reasons that make a buyer patronage a particular shop in preference to other shops while buying a product. Patronage buying motives are classified into two categories. They are a. Emotional patronage buying motives. b. Rational patronage buying motives. b. Emotional patronage buying motives are patronizing the particular shop without logical thinking or reasoning. Emotional patronize buying motives include the following decisions

1. Appearance of the shop 2. Visual merchandising in the shop. 3. Reference groups influence about one particular shop. 4. Shopping in a big mall is a prestige issue. 5. Imitating the other reference groups members. 5 Rational patronage buying motive will arises after buyer analyzing the shop carefully and providing the information to reference group members. Rational patronage buying motives include the following 1. Convenience of the shop to the buyers. 2. Value for money provided by the shops. 3. Financial schemes and facilities provided by the shop. 4. Availability of wide range of goods. 5. Reputation of the shop in the area. 6. Sales force efficiency to convince the customer. 7. Services provided by the sales executives.

7: Involvement purchase
Question: How does the customer use the information obtained? An important determinant of the extent of evaluation is whether the customer feels involved in the product. By involvement, we mean the degree of perceived relevance and personal importance that accompanies the choice. Where a purchase is highly involving, the customer is likely to carry out extensive evaluation. High-involvement purchases include those involving high expenditure or personal risk for example buying a house, a car or making investments. Low involvement purchases (e.g. buying a soft drink, choosing some breakfast cereals in the supermarket) have very simple evaluation processes.

Marketing: Identify the need of the customers. Fulfill the needs your customers better than your competitors.

8: Marketing Communications Mix

Advertising

Consumers promotion Sales promotion Trade promotion

Product Price

Sales force Personal selling

Distributions channels

Consumers

Direct Marketing

Public Relation

Sales promotion - Short-term incentives to encourage the purchase or sale of a product or service. Personal selling - Personal presentation by the firms sales force for the purpose of making sales and building customer relationships. Public relations - Building good relationships with the companys various publics by obtaining favorable publicity, building up a good "corporate image", and handling or heading off unfavorable rumors, stories, and events. Direct marketing - Direct communications with carefully targeted individual consumers to obtain an immediate response and cultivate lasting customer relationships. Advertising - Any paid form of no personal presentation and promotion of ideas, goods, or services by an identified sponsor.

9: Competitive advantage
Competitive Advantage: A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices. Competitive Strategies The four strategies relate to the extent to which the scope of a business' activities are narrow versus broad and the extent to which a business seeks to differentiate its products. The four strategies are summarized in the figure below:

The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry. Differentiation: Differentiation strategy focuses on changing customer perception about a product, i.e., that the product is superior to other products Products will get a premium price Demand for products is less price elastic than that for competitors products It is an additional barrier to entry for competitors to enter the industry Features of Differentiation: Quality Innovation Design Credibility Brand name Reputation Environmental posture Customer service Integrated services

Cost Leadership: Strategy cost leadership organize value adding activities to be the lowest cost producer of a product in an industry

 Higher profits resulting from charging prices below that of competitors, because unit costs are lower Increase market share and sales by reducing the price below that charged by competitors (assuming price elasticity of demand) Ability to enter new markets by charging lower prices Features of cost leadership: Efficient scale Standardization Design for low production cost Control of overheads and R&D Avoid marginal customers Differentiation Focus: In the differentiation focus strategy, a business aims to differentiate within just one or a small number of target market segments. The special customer needs of the segment mean that there are opportunities to provide products that are clearly different from competitors who may be targeting a broader group of customers. Cost Focus: A business seeks a lower cost advantage in just one or a small number of market segments. The product will be basic perhaps a similar product to the higher-priced and featured market leader, but acceptable to sufficient consumers.

Marketing Channels
Communication channels: Deliver messages to and receive messages from target buyers. Includes traditional media, non-verbal communication, and store atmospherics. Distribution channels: Display or deliver the physical products or services to the buyer / user. Service channels:

Carry out transactions with potential buyers by facilitating the transaction.

Marketing Management Philosophies Customer-Driven:

Societal Marketing Concept: The societal marketing concept holds that the organizations task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumers and the societys well being. It addresses conflicts between consumers and firms short run wants and long term welfare. Marketing Concept: The key to achieving organizational goals consist in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors. And build profit through customer satisfaction and loyalty. Selling Concept: Consumers, if left alone, will not buy enough of companys products. Therefore, promote sales aggressively. And, build profit through quick turnover. Product Concept: Consumers will favor those products that offer the most quality, performance, or innovative features. Therefore, improve quality, performance and features. This would lead to increased sales and profits. Production Concept: Consumers will favor those products that are widely available and low in cost. Therefore increase production and cut down costs. Holistic Marketing Concept:

It is based on the development, design and implementation of marketing programmers, processes and activities that recognizes their breadth and interdependencies. Four components are: 1. Relationship marketing 2. Integrated marketing 3. Internal marketing 4. Social responsibility marketing

Competitive Advantage: Competitive advantage comes from performing better than competitors. Sustainable Competitive Advantage: Sustainable competitive advantage comes from performing better than competitors for a long time. Durable Valuable to the firm Exploiting weaknesses and neutralizing threats Unique Difficult for competitors to imitate Quality and quality of customer service Design Innovative product Customized product with integrated services Environmental friendly

Segmentation, Targeting & Positioning

A. Segmentation Variables

1. Geographic: Divide markets into different geographic units. 2. Demographic:

Age, Gender, Family Size, Family Life Cycle, Income, Occupation, Education, Race, And Religion. 3. Psychographic: Psychographic segmentation divides a market into different groups based on social class, lifestyle, or personality characteristics. 4. Behavioral: i. Occasion o Special promotions & labels for holidays. o Special products for special occasions. Benefits Sought o Different segments desire different benefits from the same products. Loyalty Status o Nonusers, ex-users, potential users, first-time users, regular users. iv. Usage Rate o Light, medium, heavy. B. Targeting Variable

ii. iii.

Undifferentiated (Mass) Marketing Ignores segmentation opportunities Differentiated (Segmented) Marketing Targets several segments and designs separate offers for each. Niche Marketing Targets one or a couple small segments Niches have very specialized interests Micro Marketing

Tailoring products and marketing programs to suit the tastes of specific individuals and/or locations. C. Positioning The intentional description of a product or service that creates a meaningful and long-lasting positive impression on the minds of target audiences the place a product occupies in consumers minds relative to competing products. Positioning Strategy Competitive advantages Points of Parity Points of Difference => Differentiation Positioning results from differentiation and competitive advantages. Positioning may change over time. Positioning Errors Under-positioning: Not positioning strongly enough. Over-positioning: Giving buyers too narrow a picture of the product. Muddled Positioning: Leaving buyers with a confused image of the product.

Push and Pull Strategy

A push strategy is directing the communication primarily at the middlemen that are the next link forward in the producers distribution channel. A pull strategy has the communication directed at the end users primarily consumers.

Goals and Objectives

Goal Setting:

Goals are what are to be achieved. They are generally broad in scope and represent the purpose to be achieved by the organization or the work unit. Specific Are More Effective Than Do Your Best Goals Meaningful To those Who Must Achieve the Goal Accepted By Those Who Must Achieve the Goal Realistic Yet Challenging Time Framed Frame Deadline for Achievement Objectives Setting: Objectives are similar to goals, but they are more specific. The dictionary defines objectives as having to do with a material object as distinguished from a mental concept. Objectives should be: Written Measurable, Clear, Specific Challenging but achievable

Three topics are missed: Competition ways Share of Mind, Heart and Market Comparative Advantage & sustainable comparative advantage