MBA

Marketing Management
MKT 600
Consumer / Buyer behaviour
 Analysing Customer/Industrial
Markets
Lecture Overview
 Introduction
 Consumer/Buyer Behaviour
- Models of Consumer Behaviour
- Factors Influencing Behaviour
- Types of Buyer Behaviour
- The Adoption Process
 Organisational/Industrial Buyer Behaviour
- Characteristics of Business Markets
- Models of Organisational Buyer Behaviour
- What buying decisions do Organisational Buyers make?
- Who participates in the Buying Process?
- What are the main influences on Organisational Buyers?
INTRODUCTION
The process of buying goods or services is not as simple as it might seem. People in
organisations do not just go to their supplier without thinking carefully about what they
want. Wherever there is a choice, decisions are involved and these may be influenced
by complex motives.

Markets as we have seen in the previous lesson can fall into two broad categories
of consumer and organisational or industrial, and the buying patterns within each are
quite different.
For example, a consumer buying a television for their home may determine that the
size, shape and decorative design to be key characteristics or product attributes they
seek.

However, for a retail buyer, buying television sets for resale, the decision may be based
more on the quality or brand of the televisions in respect of their own retail image, the
price and discounts that can be obtained, delivery and often after sales service.
Businesses when buying must determine what products and services their potential
customers need and want and then make these items available to them. This is why
organisations require detailed knowledge about the age, sex, occupation, social
groupings and buying motives of their customers. Such details enable them to match
the needs of each group of their consumers with an appropriate product.
MODELS OF CONSUMER BEHAVIOUR
The 4 O’s model

In earlier times, marketers could understand consumers well through daily

experience of selling to them. But as organisations and markets have grown in
size, many marketing decision makers have lost contact with these customers and
have to turn to consumer research. The question they need answers are
demonstrated through the concept of the 4 O’s

 What do they buy? - Objects of purchase

 Why do they buy? - Objectives of purchase
 Who buys? - Operation of purchase
 How do they buy? - Organisation of purchase
 When do they buy? - Occasions of purchase

4 O’s frameworks to understanding buyer behaviour

MODELS OF CONSUMER BEHAVIOUR

 Objectives of purchase - Convenience, shopping, speciality goods/services

 Objectives of purchase - Economic, sociological, personal, psychological

 Organisations of purchase - Family, reference group, roles and status

 Operation of purchase - Buyer decision processes

The central question to the above is understanding how consumers respond to various
marketing stimuli that the company may use. The company that really understands how
consumers will respond to different product features, prices and advertising appeals
has a great advantage over its competitors.
STIMULUS RESPONSE MODEL

Stimuli Decision making Factors influencing

behaviour
Process
Macro forces Personal influences
Socio/cultural Problem recognition age and occupation
Technological psychological
Economic/competitive Information evaluation personality
Political perception
Motivation
Decision attitude

Marketing Mix Product choice Sociological influences

Product Brand choice culture/sub-culture
Price social class
Place Dealer choice reference groups
Promotion Purchase timing roles and status

Purchase amount
FACTORS INFLUENCING BEHAVIOUR
Sociological Influences
 Culture – this is the most basic cause of a persons wants and behaviour. Human
Behaviour is largely learned by growing up in a society and learning the basic
values, perceptions, wants and behaviours from the family and other institutions
(e.g. cultural behaviour in terms of the way we behave towards each other, rights
and wrongs, equality for all, healthy living.)
 Sub-culture – each culture contains smaller sub-cultures or groups of people with
shared value systems based on common life experiences. For example, religions
or racial groups, nationalities and geographic regions.
 Social class – almost all societies have some form of class structure. The classes
represent dimensions in society whose values, interests and behaviours are similar.
In Britain 6 social classes are widely used, as shown below.
 Reference groups – these groups serve as points of comparison or reference in
forming a persons attitudes or behaviour and include informal regular interaction with
religions, professional associations and even membership of a golf club
These groups are influenced by –
 Exposing the person to new behaviour and lifestyles
 Influencing their attitudes and self-concept because most of us want to ‘fit in’
 Creating pressure within us to conform and so accept the group wisdom for buying
a or b brand.
SOCIOLOGICAL INFLUENCES
 Roles and Status – a person belongs to many groups. The person’s positions
in each group can be defined in terms of both role and status. With your parents
You play the role of their daughter or son, but with your children you play the role
of a parent, while at work you may play the role as a brand manager.
The role consists of activities that people are expected to perform according to the
people around you and each role confers status which each of us needs to convey to
others.
Similarly, in the decision making process people may play more than one or more
roles as shown below.
 Initiator - person who suggest idea of buying product or brand
 Influencer - person whose view influences the purchase decision
 Decider - person who ultimately makes the buying decision
 Buyer - person who makes the purchase
 User - person who consumes the product or service

In deciding on joining the MBA programme what roles did you play? Did you play
all the roles or were some of the roles played by others that influenced your purchase
behaviour?
 Personal/Psychological
 Age and life cycle – people change the goods and services they buy over their life
times. Tastes in food, recreations and homes are often related. Buying is shaped by the
family life cycle as shown below.
 Family – sociologists often refer to the ‘nuclear’ family as a model for the modern
day family. This typically comprises of a mother, father and 2 children. The family life
cycle takes this concept one step further, by dividing the family into different life cycle
stages. It is useful for the leisure provider to be able to identify the stages of the family
life cycle as each stage has specific needs and characteristics.

Bachelor stage, Young couples, Full nest 1,

young single Single parent Full nest 2, older couples still
no children young couples families with dependent children
people with children

Empty nest: older Older single people, still

couple with no working or retired
children living with
them
 Economic – a persons economic situation will affect product choice.
Marketers of income sensitive goods closely watch trends in personal income,
savings and interest rates so that they can take steps to redesign, reposition and
reprice these products.

 Lifestyle – this represents a persons pattern of living as expressed in his or

her activities, interests and opinions. The technique for measuring lifestyles is
known as psychographics, from which lifestyle classification groups can be
developed according to whether consumers were inner directed (e.g. experiments),
outer directed (e.g. achievers, belongers) or drivers (e.g. survivors).

A bank found by using this classification, that the businessmen they were
targeting consisted mainly of achievers who were strongly competitive individuals.
The bank designed highly successful ads showing men taking part in solo sports
such as sailing, jogging and skiing.

 Motivation – a person has many needs at any given time. Some are biological,
arising from the tension such as hunger or thirst. Others are psychological arising
from the need for recognition, esteem and belonging.

 Level of Importance – for example, a starving man will not be interested in a

new painting or how he is seen by or esteemed by others. But as each important
need is satisfied, the next important need will come into play.
Maslow developed a model, ‘A Hierarchy of needs’, which arranged our
personal needs based on an order of importance, as shown below.

Level of
Importance
Self
5 actualisation needs
(self fulfilment/development
and realisation)

4
Esteem needs (self esteem- recognition, status)

3
Social needs (sense of belonging and love)

2 Safety needs (protection, security)

1
Physiological needs (basic drives), (thirst, hunger, warmth)
Perception
A motivated person is ready to act. How a person acts is however influenced by his
or her perception of the situation. Two people with the same motivation and in the
same situation may react differently because of perception. Perception is the process
by which people select, organise and interpret information to form a meaningful
picture of the world. Why? Because of,

Selective attention – we are all exposed to so much stimuli that we screen out
most of the information we are exposed to. Only that information that interests us
gets through.
Selective distortion – even the information that’s gets through can be
misinterpreted because of a persons mind-set. People tend to interpret information in
a way that supports what they already believe. To be effective our stimuli must
therefore understand the mind-set of the target audience.
Selective retention – most of us forget much of what we learn, but we tend to
retain information that supports our attitude and beliefs. Marketers very often have to
remind their customers why they should buy their products.
Beliefs and attitudes
Through doing and learning people acquire beliefs and attitudes. A belief is a descriptive
thought that a person has about something. Beliefs make up peoples views or images of
a product or brand. If a belief is wrong marketers must campaign to change the belief to
correct it.

An attitude describes a person's relatively consistent evaluation or feelings and

tendencies towards an object or idea. Attitudes put people in a frame of mind of liking or
disliking. Attitudes are difficult to change so companies need to try and fit its products into
existing attitudes rather than try to change attitudes.
TYPES OF BUYER BEHAVIOUR
Consumers decision making varies with the type of buying decision (i.e. what they buy).
The diagram below shows types of buyer behaviour based on the degree of buyer
Involvement.
High involvement Low involvement

Significant differences Complex buyer Variety seeking

between brands behaviour buyer behaviour
Few differences problem solving
between brands Dissonance Habitual buyer
reducing buyer behaviour
behaviour

Habitual – occurs under conditions of low consumer involvement and little or no significant
brand difference (e.g. convenience items such as salt, flour, coffee, bus fare etc). Here
consumers don’t actively seek information or evaluate brands, instead they passively receive
information as they watch TV or read magazines. Ad repetition creates brand familiarity
rather than brand conviction. Because buyers are not highly committed to any brand,
marketers use price and sales promotion to stimulate product trial. Gaining distribution and
attention at point of sale is crucial.
 Variety seeking – consumers are again characterised by low consumer
involvement, the difference being they perceive brand differences. Here
consumers often do a lot of brand switching. For example, buying a chocolate bar,
a consumer may hold some belief about the chocolate brand, such as Mars, or the
retail outlet, such as Thorntons. But the next time, the consumer might pick up
another brand out of boredom or the item not being immediately available.
In such cases, the market leader (Mars) my try to encourage habitual buying
behaviour by dominating shelf space, avoiding out of stock situations and running
frequent reminder advertising.

Challenger firms will encourage variety seeking by lowering price, deals, coupons
and free samples and by advertising reasons for trying something new.

 Dissonance reducing – this occurs when buyers are highly involved with an
expensive, often infrequent and possibly risky purchase, but see little difference
between brands. For example, buying a piece of furniture, carpet, electrical
appliance etc. Here buyers may consider brands based on the economic influence
of prices brands/range. They respond primarily to post-purchase dissonance when
they discover more favourable things about other brands or an even better price
deal. To counter, marketers should provide after sales communications to provide
evidence in support of their brand so as to make the consumers feel good about
their purchase.
 Complex – complex buying behaviour is heavily involved in the purchase of an
item because buyers perceive significant differences among brands, or when the
product is expensive, risky and purchased infrequently.

Marketers of high involvements (speciality products) must understand the

information gathering and evaluation behaviour of high involvement customers.
They need to help buyers learn about product attributes so they can differentiate
their brand from the competitors. Advertising will carry detailed messages and
reference groups including salespeople will be motivated to influence brand
choice.
 THE ADOPTION PROCESS
People differ greatly in their readiness to try new products. In each product area there
are pioneers and early adopters. But some people take a long time to try new products.
This has led to a classification of people into the adopter categories shown below.

2½% 13½% early 34% early 34% late 16%

innovations adoptions majority majority Laggards

Adopter categorisation, Rogers 1983

It is important for marketers to recognise who are the opinion leaders in each of these
groups who can influence the adoption of the new product
CHARACTERISTICS OF BUSINESS
/Industrial MARKETS
In some ways business markets are similar to consumer markets. Both involve people
who assume buying roles and make purchase decisions to satisfy needs. However,
business markets differ in terms of market structure and demand, the nature of buying
and the types of decision.

 Market structure and demand –

 Buyers are far fewer but often much larger.
 Business markets are more geographically concentrated.
 Business demand is derived demand.
 Many business markets have inelastic demand.

 Nature of buying –
 Business purchases usually involve more professional buyers or even buying
committees or buying centres.
 Business buying is often more complex and can involve many people at different
levels in the organisation i.e. more formalised.
 Decisions to buy can take some time
 The buying process may involve close working relations between the buyer and
the seller
CHARACTERISTICS OF BUSINESS
MARKETS

Other characteristics –

Buyers often buy directly from producers rather than through

Intermediaries.
Business buyers will often practice reciprocity, selecting suppliers who
also buy from them.
Business buyers are increasingly leasing equipment instead of buying
it outright.
MODELS OF BUSINESS BUYER BEHAVIOUR
As with consumer buying, marketers want to understand how business buyers will
respond to various marketing stimuli. As with consumer buying, the marketing
stimuli for business buying consists of the 4 P’s: product, price, place and
promotion. Other stimuli include influential forces in the environment as shown
below.
The environment The buying organisation Buyer Response

Marketing Other stimuli Product or service

stimuli The Buying Centre choice
Product Economic Buying Supplier choice
Place Technology decision Order quantity
Price Political process Delivery terms& times
Interpersonal& Service terms
Promotion Social
Individual influences
Competition Payment
Within the organisation, buying activity consists of 2 main parts, the buying centre made
up of the people involved in the buying decisions and the buying decision process –
Both of which are influenced by internal organisation, interpersonal and individual
factors as well as external environmental factors.
WHAT BUYING DECISIONS DO
ORGANISATIONAL BUYERS MAKE?

There are 3 main types of buying decision

1. Straight Rebuy – buyer reorders something on a routine basis.

2. Modified Rebuy – buyer wants to modify the product specification process,

prices, terms etc. this usually involves more decision participants.

3. New Task – buyers are buying something new for the first time. The greater
the cost or risk, the lager will be the number of participant decision makers
and the greater the effort to collect and evaluate the information.
WHO PARTCIPATES IN THE BUYING
PROCESS?
The decision making unit of a buying organisation is called its buying centre, defined
as all the individuals that participate in the business decision making process.
The buying centre includes members of the organisation who play any of the 5 roles in
the purchase process.

1. Users – members of the organisation who use the product or service.

2. Influences – members who help define specifications and provide information

for evaluating alternatives

3. People with the formal authority to select the supplier and arrange terms of
purchase

4. Deciders – people who have the power to select and approve final suppliers

5. Gatekeepers – people who control the flow of information to others (e.g.

purchasing agents, secretaries etc)
 WHAT ARE THE MAIN INFLUENCES ON
ORGANISATIONAL BUYERS?
These can be summarised below as follows:

Environmental Organisational Interpersonal Individual

Level of privacy Objectives Authority Age
Demand
Education
Economic Policies Status
outlook Buyers
Job
Cost positions
Structure Empathy
Supply
Personality
conditions
Political Systems Persuasiveness
Risk
Competition

Main influences on organisational buyer behaviour

 Lets not forget Institutional and Government markets

40% of the UK’s GNP is spent by public/government bodies. Despite this

the institutional markets (i.e. hospitals, schools, prisons etc) are characterised by
low budgets and captive patrons.

Like consumer and business buyers, government buyers are influenced by

environment, organisational and interpersonal factors. But one thing unique to
government in that all buying decisions are carefully watched by outside publics.
All spending decisions are therefore subject to public scrutiny involving mountains
of paperwork, bureaucracy and political sensitivities.