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Buying behavior of consumers and organi n n Consumers´ decision process and buying behavior Buying behavior of consumers and organi n n Consumers´ decision process and buying behavior Types of consumers´purchasing decisions Nature of organizational markets (b 2 b markets) and goods and services purchased Organizational buying behavior

Why do we need to study consumer behaviour? Failure rates of new products introduced Why do we need to study consumer behaviour? Failure rates of new products introduced Out of 11000 new products introduced by 77 companies, only 56% are present 5 years later. Only 8% of new product concepts offered by 112 leading companies reached the market. Out of that 83% failed to meet marketing objectives.

Consumer behaviour n n study of how people buy, what they buy, when they Consumer behaviour n n study of how people buy, what they buy, when they buy, why they buy. . where, with whom, with what… it blends elements from psychology, sociopsychology, anthropology and economics it attempts to understand the buyer decision processes/buyer decision making process it studies characteristics of consumers such as demographics, psychology, . . .

Definition of buyer/consumer behaviour n „Activities involved in obtaining, consuming, and disposing of products Definition of buyer/consumer behaviour n „Activities involved in obtaining, consuming, and disposing of products and services, including the decision processes that precede and follow these actions”

Buyer/consumer behaviour Buying roles: Initiator Influencer Decider Buyer User Consumer 4 Ps Marketing Environment Buyer/consumer behaviour Buying roles: Initiator Influencer Decider Buyer User Consumer 4 Ps Marketing Environment Buyer Characteristics Cultural, social, personal, psychological Culture Sub - culture Social Class Reference Groups Family Roles and Status Family Life Cycle Occupation and Economic circumstances Lifestyle Personality and self – concept Motivation Perception Learning Beliefs and Attitudes n n n Buyer Decision Process Buyer Decision Problem Recognition Information Search Evaluation of Alternatives Purchase Decision Consumption Postpurchase behaviour Product Choice Brand Choice Dealer Choice Purchase Timing Purchase Amount

Factors affecting consumer behavior: culture Culture is the Set of Values, Perceptions, Wants & Factors affecting consumer behavior: culture Culture is the Set of Values, Perceptions, Wants & Behavior Learned by a Member of Society from Family. Subculture Group of people with shared value systems based on common life experiences. Social Class Society’s relatively permanent & ordered divisions whose members share similar values, interests, and behaviors. Measured by: Occupation, Income, Education, Wealth and Other Variables.

Social factors affecting behaviour n n n Groups Membership Reference Family (most important) n Social factors affecting behaviour n n n Groups Membership Reference Family (most important) n mother-and-father families, single parent families unmarried couples, singles n n n Husband, wife, kids Influencer, buyer, user Roles and Status Social Factors

Reference groups/opinion leader n n reference group – people to whom an individual looks Reference groups/opinion leader n n reference group – people to whom an individual looks when forming attitudes about a particular topic opinion leader – a person who influences others (each social class and age group tends to have its own opinion leader)

Personal factors affecting behaviour Personal Influences Age and Life Cycle Stage Occupation Economic Situation Personal factors affecting behaviour Personal Influences Age and Life Cycle Stage Occupation Economic Situation Personality & Self-Concept single, married with children, „empty nest“, retired Lifestyle Identification Activities Interests Opinions

Psychological factors affecting behaviour Motivation Beliefs and Attitudes Psychological Factors Affecting Buyers Choices Learning Psychological factors affecting behaviour Motivation Beliefs and Attitudes Psychological Factors Affecting Buyers Choices Learning Perception

The PSSP Hierarchy of Needs Personal Needs Social Needs (sense of belonging, love) Safety The PSSP Hierarchy of Needs Personal Needs Social Needs (sense of belonging, love) Safety Needs (security, protection) Physiological Needs (hunger, thirst)

The Learning Process Drive Cues Reinforcement Response The Learning Process Drive Cues Reinforcement Response

Lifestyle Dimensions ? ? ? ? ? ? ? ? ? Activities Interests Opinions Lifestyle Dimensions ? ? ? ? ? ? ? ? ? Activities Interests Opinions

Social Class Dimensions Upper-class 1. 5% Upper-middle class 12. 5% 32% 38% 16% Lower-middle Social Class Dimensions Upper-class 1. 5% Upper-middle class 12. 5% 32% 38% 16% Lower-middle class Upper-lower (“working”) class Lower-lower class

The Consumer Problem Solving Process Marketing mixes and other stimuli Psychological Variables Person making The Consumer Problem Solving Process Marketing mixes and other stimuli Psychological Variables Person making decision Social Influences Purchase Situation Need-want Awareness Routinized Response Information Search Set Criteria Feedback of information as attitudes Decide on Solution Postpone Decision Purchase Product Response Postpurchase Evaluation

Types of Buying Decisions • Expensive • Risky • Infrequent • Self-Expressive Significant differences Types of Buying Decisions • Expensive • Risky • Infrequent • Self-Expressive Significant differences between brands Few differences between brands High Involvement Low Involvement Complex Buying Behaviour Variety. Seeking Behaviour Dissonance. Reducing Buying Behaviour Habitual Buying Behaviour • Low cost • Low risk • Frequent

The Adoption Process Awareness Interest Evaluation Trial Decision Confirmation The Adoption Process Awareness Interest Evaluation Trial Decision Confirmation

Early Majority Innovators Percentage of Adopters Adoption of Innovations Early Adopters 34% Late Majority Early Majority Innovators Percentage of Adopters Adoption of Innovations Early Adopters 34% Late Majority 34% Laggards 16% 13. 5% 2. 5% Early Time of Adoption Late

Organisational Buyer Behaviour ‘The decision-making process by which formal organisations establish the need for Organisational Buyer Behaviour ‘The decision-making process by which formal organisations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers’ Kotler and Armstrong 1989

n n n Few customers Big customers (size of contract) Strong relations in B n n n Few customers Big customers (size of contract) Strong relations in B 2 B related to B 2 C Professional teams of negotiators

Overlapping Needs Risk Innovation Job security Survival Comfort Individual’s Needs Career advancement Customer satisfaction Overlapping Needs Risk Innovation Job security Survival Comfort Individual’s Needs Career advancement Customer satisfaction Overlap in Needs Money-rewards Other needs Company’s Needs Growth Profit Other needs

Buying Center Buyers End Users Buying Center Gatekeepers Influencers Deciders Buying Center Buyers End Users Buying Center Gatekeepers Influencers Deciders

Organizational Buying Processes Type of Process Characteristics New-Task Buying Modified Rebuy Straight Rebuy Time Organizational Buying Processes Type of Process Characteristics New-Task Buying Modified Rebuy Straight Rebuy Time Required Much Medium Little Multiple Influences Much Some Little Review of Suppliers Much Some None Information Needed Much Some Little

Buyer-Seller Relationships Information sharing Linkages Finance R&D Cooperation Quality R&D Salesperson Purchasing manager Supplier Buyer-Seller Relationships Information sharing Linkages Finance R&D Cooperation Quality R&D Salesperson Purchasing manager Supplier Relationship Accounting Marketing Accounting Production Customer Production Engineering Legal bonds Adaptations

Conclusions n n Many variables influencing the behaviour of people The sum of variables Conclusions n n Many variables influencing the behaviour of people The sum of variables will result to a byuing decision Most purchasing has several steps, begins with a need and finished with reconfirmation Organizational behaviour is different as the motivation is different too