BM3108 INTRODUCTION TO MARKETING Lecture Four Consumer and Business Buyer Behavior

Overview
Describe the consumer market and the major factors that influence consumer, and buyer behavior Discuss the stages in the buyer decision process Describe the adoption and diffusion process for new products Define the business market and identify the major factors that influence business buyer behavior Define the steps in the business buying decision process

CONSUMER BUYING BEHAVIOR

Consumer buying behavior:
Refers to the buying behavior of people 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?

MODEL OF BUYING BEHAVIOR

Marketing mix factors and other external stimuli are inputs into the buyers black box
Stimuli are evaluated in light of the buyer decision process and the buyers characteristics Buyer responses influence attitudes and choice of the product, brand, vendor, as well as the timing and amount of purchase

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, occupation, economic situation, lifestyle, personality and self-concept

Psychological factors
Motivation, perception, learning, beliefs, attitudes

Scenario
Buy a new car? What brand of car? Who is the decision maker? Can you really afford it? What kind of psychological benefits do you get from it? Discuss the issue

CONSUMER BUYING BEHAVIOR

Culture
Culture is the most basic cause of a persons wants and behavior
Culture is learned from family, church, school, peers, colleagues Culture reflects basic values, perceptions, wants, and behaviors Cultural shifts create opportunities for new products or may otherwise influence consumer behavior

CONSUMER BUYING BEHAVIOR

Subculture
Groups of people with shared value systems based on common life experiences. Major subculture groups:
Hispanic consumers African-American consumers Asian-American consumers Mature consumers

CONSUMER BUYING BEHAVIOR

Social Class
Societys relatively permanent and ordered divisions whose members share similar values, interests and behaviors Measured by a combination of occupation, income, education, wealth and other variables Consist of upper class, middle class, working class and lower class

CONSUMER BUYING BEHAVIOR

Social Factors
Groups and social networks
Membership, reference, and aspirational groups Online social networks

Family
Most important consumer buying organization

Roles and status

Role: Expected activities Status: Esteem given to role by society

CONSUMER BUYING BEHAVIOR

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 incomesensitive

CONSUMER BUYING BEHAVIOR

Personal Factors
Lifestyle
Pattern of living as expressed in psychographics
Activities Interests Opinions

People within the same subculture, social class, and occupation may have different lifestyles

CONSUMER BUYING BEHAVIOR

Personal Factors
Personality and Self-Concept
Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to ones own environment Generally defined in terms of traits Self-concept theory suggests that peoples possessions contribute to and reflect their identities

CONSUMER BUYING BEHAVIOR

Psychological Factors
Motivation
A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction (example: rich people) Maslows hierarchy of needs explains why people are driven by needs at particular times Maslows hierarchy of needs implies that lower level needs must be satisfied prior to higher level needs

MASLOWS HIERARCHY OF NEEDS

CONSUMER BUYING BEHAVIOR

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 (consumer filter out most ads) Selective distortion (consumer retain the info to support their beliefs) Selective retention (consumer remember the good point of their favorite brand and forgot competitors brand)

CONSUMER BUYING BEHAVIOR

Psychological Factors
Learning
Defined as a relatively permanent change in behavior due to experience Occurs due to an interplay of drives, stimuli, cues, responses, and reinforcement Is strongly influenced by the consequences of an individuals behavior
Behaviors with satisfying results tend to be repeated Behaviors with unsatisfying results tend NOT to be repeated

CONSUMER BUYING BEHAVIOR

Psychological Factors
Belief
A descriptive thought that a person holds about something

Attitude
A persons consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea

BUYING DECISION PROCESS

Need Recognition Information Search

Evaluation of Alternatives Purchase Decision

Post-Purchase Behavior

BUYING DECISION PROCESS

Need Recognition And Information Search
Need recognition can be triggered by internal or external stimuli Several sources of information may used during information search:
Personal sources Commercial sources Public sources Experiential sources

BUYING DECISION PROCESS

Evaluation of Alternatives and Purchase Decision
Evaluation process is dependent upon the specific buying situation and the individual consumers Two factors that may interfere with realization of purchase intentions:
Attitudes of others Unexpected situational factors

BUYING DECISION PROCESS

Post Purchase Behavior
Consumer satisfaction is a function of consumer expectations and perceived product performance
Performance < Expectations Disappointment Performance = Expectations Satisfaction Performance > Expectations Delight

Cognitive Dissonance: A buyers doubts shortly after a purchase about whether it was the right decision

Scenario
When buying a new car, what sort of basic information you are looking for? Discuss

STAGES IN THE ADOPTION PROCESS FOR NEW PRODUCTS

Awareness: Consumer becomes aware of the new product, but lacks information about it Interest: Consumer seeks information about new product Evaluation: Consumer considers whether trying the new product makes sense Trial: Consumer tries new product on a small scale to improve his or her estimate of its value Adoption: Consumer decides to make full and regular use of the new product

New product
Google glasses project? What do you think this impact to our market? Video I really want my real life

ADOPTER CATEGORIZATION
Individual differences influence the speed with which people will try to new products, yielding five adopter categories:
Innovators Early adopters Early majority Late majority Laggards

ADOPTER CATEGORIZATION BASED ON TIME OF ADOPTION

PRODUCT CHARACTERISTICS THAT INFLUENCE THE RATE OF ADOPTION

Relative Advantage Compatibility
Complexity Divisibility Communicability
Is the innovation superior to existing products? Does the innovation fit the values and experience of the target market? Is the innovation difficult to understand or use?

Can the innovation be used on a limited basis? Can results be easily observed or described to others?

Scenario
Can Google glass survive in the market?

BUSINESS MARKETS AND BUSINESS BUYER BEHAVIOR

The business market is vast and involves far more dollars and items than do consumer markets Business buyer behavior:
Refers to the buying behavior of the organizations that buy goods and services for use in the production of other products and services or for the purpose of reselling, or renting them to others for a profit

BUSINESS MARKETS
Key differences exist between business and consumer buying situations:
Business buyers usually face more complex buying decisions The business buying process tends to be more formalized Buyers and sellers are much more dependent on each other in business markets

TYPES OF BUYING SITUATION

Straight Re-buy
Buyer routinely reorders something without any modifications

Modified Re-buy
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

MAJOR INFLUENCES ON BUSINESS BUYERS

Environmental Factors
Economic environment, culture and customs technological changes,

Organizational Factors
Objectives, policies, procedures and systems

Interpersonal Factors
Authority, status and empathy

Individual Factors
Age, income, education and job position

STAGES IN THE BUSINESS BUYING PROCESS

Problem Recognition

General Need Description

Product Specification

Supplier Selection

Proposal Solicitation

Supplier Search

OrderRoutine Specification

Performance Review