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CHAPTER 5 Consumer and Business Buyer Behavior CHAPTER 5 Consumer and Business Buyer Behavior

Roadmap: Previewing the Concepts § Understand the consumer market and the major § § Roadmap: Previewing the Concepts § Understand the consumer market and the major § § factors that influence consumer buyer behavior. Identify and 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. List and define the steps in the business buying decision process. Copyright 2007, Prentice-Hall Inc. 2

HARLEY-DAVIDSON – Devoted Consumers Building Success § Offers good bikes, § § upgraded showrooms HARLEY-DAVIDSON – Devoted Consumers Building Success § Offers good bikes, § § upgraded showrooms and sales tactics. Research has helped to understand customers’ emotions and motivation. Consumer emotions, motivations, and lifestyle have been translated into effective advertising. Copyright 2007, Prentice-Hall Inc. Measuring Success § Currently has 23% of all § § § U. S. bike sales and 50% of heavyweight segment. Demand above supply with waiting lists up to 2 years. Sales doubled in the past six years while earnings have tripled. 2005: 19 th straight year of record sales and income. 3

Consumer Buying Behavior § Refers to the buying behavior of people who buy goods 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? ” Copyright 2007, Prentice-Hall Inc. 4

Figure 5 -1 Model of Buyer Behavior Copyright 2007, Prentice-Hall Inc. 5 Figure 5 -1 Model of Buyer Behavior Copyright 2007, Prentice-Hall Inc. 5

Figure 5 -2 Factors Influencing Consumer Behavior Copyright 2007, Prentice-Hall Inc. 6 Figure 5 -2 Factors Influencing Consumer Behavior Copyright 2007, Prentice-Hall Inc. 6

Culture § Culture is the most basic cause of a person's wants and behavior. Culture § Culture is the most basic cause of a person's wants and behavior. – Culture is learned. – Culture reflects basic values, perceptions, wants, and behaviors. – Cultural shifts create opportunities for new products or may otherwise influence consumer behavior. – Subcultures are of interest to marketers. Copyright 2007, Prentice-Hall Inc. 7

Marketing in Action Marketing to Subcultures A subculture is a group of people who Marketing in Action Marketing to Subcultures A subculture is a group of people who share value systems based on common life experiences. Hispanics, Asians, African Americans, and mature consumers are increasingly targeted by marketers. Procter & Gamble targets Hispanics using print and TV. P&G has also developed special Spanish versions of some brands. Copyright 2007, Prentice-Hall Inc. 8

Social Class § Society’s relatively permanent and ordered divisions whose members share similar values, Social Class § Society’s 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. Copyright 2007, Prentice-Hall Inc. 9

Figure 5 -3 The Major American Social Classes Copyright 2007, Prentice-Hall Inc. 10 Figure 5 -3 The Major American Social Classes Copyright 2007, Prentice-Hall Inc. 10

Social Factors § Groups: – Membership, Reference (Opinion Leaders), Aspirational § Family: – Most Social Factors § Groups: – Membership, Reference (Opinion Leaders), Aspirational § Family: – Most important consumer buying organization § Roles and Status: – Role = Expected activities – Status = Esteem given to role by society Copyright 2007, Prentice-Hall Inc. 11

Marketing in Action Toyota caters to family buying influences. Copyright 2007, Prentice-Hall Inc. 12 Marketing in Action Toyota caters to family buying influences. Copyright 2007, Prentice-Hall Inc. 12

Personal Factors § Age and Life-Cycle Stage – People change the goods they buy 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 income-sensitive. Copyright 2007, Prentice-Hall Inc. 13

Personal Factors § Lifestyle: – Pattern of living as expressed via a person’s activities, Personal Factors § Lifestyle: – Pattern of living as expressed via a person’s activities, interests, and opinions. § VALS: – Widely used system – Classifies consumers with respect to how they spend their time and money. Copyright 2007, Prentice-Hall Inc. 14

Marketing in Action Lifestyle Marketing by American Express The “My Life, My Card” campaign Marketing in Action Lifestyle Marketing by American Express The “My Life, My Card” campaign invites consumers to choose the card and rewards that best fit their lifestyles. americanexpress. com Copyright 2007, Prentice-Hall Inc. 15

Personality and Self-Concept § Personality refers to the unique psychological characteristics that lead to Personality and Self-Concept § Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment. § Generally defined in terms of traits. § Self-concept suggests that people’s possessions contribute to and reflect their identities. Copyright 2007, Prentice-Hall Inc. 16

Psychological Factors § A motive (or drive) is § a need that is sufficiently Psychological Factors § A motive (or drive) is § a need that is sufficiently pressing to direct the person to seek satisfaction. Maslow’s hierarchy of needs explains why people are driven by needs at particular times. Copyright 2007, Prentice-Hall Inc. 17

Figure 5 -4 Maslow’s Hierarchy of Needs Copyright 2007, Prentice-Hall Inc. 18 Figure 5 -4 Maslow’s Hierarchy of Needs Copyright 2007, Prentice-Hall Inc. 18

Perception Process by which people select, organize, and interpret information to form a meaningful Perception Process by which people select, organize, and interpret information to form a meaningful picture of the world. People can form different perceptions of the same stimulus. Copyright 2007, Prentice-Hall Inc. 19

Selective Attention § People screen out most of the information to which they have Selective Attention § People screen out most of the information to which they have been exposed. Copyright 2007, Prentice-Hall Inc. 20

Selective Distortion vs. Retention § Selective Distortion – Tendency of people to interpret information Selective Distortion vs. Retention § Selective Distortion – Tendency of people to interpret information in a way that supports what they already believe. § Selective Retention – Consumers are likely to remember good points made about a brand they favor and to forget good points made about competing brands. Copyright 2007, Prentice-Hall Inc. 21

Learning § A relatively permanent change in behavior § § due to experience. Interplay Learning § A relatively permanent change in behavior § § due to experience. Interplay of drives, stimuli, cues, responses, and reinforcement. Strongly influenced by the consequences of an individual’s behavior – Behaviors with satisfying results tend to be repeated. – Behaviors with unsatisfying results tend not to be repeated. Copyright 2007, Prentice-Hall Inc. 22

Beliefs and Attitudes § A belief is a descriptive § thought that a person Beliefs and Attitudes § A belief is a descriptive § thought that a person holds about something. An attitude is a person’s consistently favorable or unfavorable feelings, evaluations, and tendencies toward an object or idea. Copyright 2007, Prentice-Hall Inc. 23

Let’s Talk! What types of attitudes and beliefs are the most difficult to change? Let’s Talk! What types of attitudes and beliefs are the most difficult to change? Is advertising the only way marketers can influence change? Explain. Copyright 2007, Prentice-Hall Inc. 24

Figure 5 -5 Buyer Decision Process Copyright 2007, Prentice-Hall Inc. 25 Figure 5 -5 Buyer Decision Process Copyright 2007, Prentice-Hall Inc. 25

Need Recognition Buyers recognize a need or problem as a result of internal or Need Recognition Buyers recognize a need or problem as a result of internal or external stimuli. Marketing communications often stimulate need recognition. Copyright 2007, Prentice-Hall Inc. 26

Marketing in Action Triggering Need Recognition Marketers can facilitate need recognition through their choice Marketing in Action Triggering Need Recognition Marketers can facilitate need recognition through their choice of media and the timing of their ad insertions. Restaurants frequently use billboards (above) in high traffic locations and run radio ads during meal hours. Copyright 2007, Prentice-Hall Inc. 27

Information Search § For some types of purchases, consumers will search for more information Information Search § For some types of purchases, consumers will search for more information before they are willing to make a decision. edmunds. com Copyright 2007, Prentice-Hall Inc. 28

Information Search § Information Sources – Personal § Family, friends, neighbors, and casual or Information Search § Information Sources – Personal § Family, friends, neighbors, and casual or work acquaintances – Commercial § Advertising, salespeople, dealers, Web sites, packaging, and displays Copyright 2007, Prentice-Hall Inc. – Public § Mass media articles or news programs, Internet searches, consumer rating organizations – Experiential § Using, handling, or examining the product 29

Evaluation of Alternatives § Some decisions involve a careful, logical, § § § and Evaluation of Alternatives § Some decisions involve a careful, logical, § § § and systematic evaluation by the consumer. Other decisions – such as impulse buys – are made with virtually no thought at all. Friends, consumers guides, or salespeople may or may not influence the decision. Marketers must study how targeted consumers make evaluations, so they will be in a better position to influence evaluations. Copyright 2007, Prentice-Hall Inc. 30

Purchase Decision § Intentions to purchase a particular brand are not always acted upon. Purchase Decision § Intentions to purchase a particular brand are not always acted upon. § Factors that influence the purchase decision: – Attitudes of others – Unexpected situational factors Copyright 2007, Prentice-Hall Inc. 31

Postpurchase Behavior § Consumer satisfaction is a function of consumer expectations and perceived product Postpurchase Behavior § Consumer satisfaction is a function of consumer expectations and perceived product performance. – If Performance Is BELOW Expectations = Disappointment – If Performance EQUALS Expectations = Satisfaction – Performance Is GREATER than Expectations = Delight Copyright 2007, Prentice-Hall Inc. 32

Cognitive Dissonance § Cognitive Dissonance: after making a § purchase, buyers often doubt whether Cognitive Dissonance § Cognitive Dissonance: after making a § purchase, buyers often doubt whether they made the right decision. Marketers can minimize dissonance by: – Reassuring consumers they made the right choice and minimizing the potential for product misuse (product literature and instructions). – Offering mechanisms for lodging complaints (1 -800 phone numbers, Web forms, etc. ). – Being responsive to problems and questions. Copyright 2007, Prentice-Hall Inc. 33

Stages in the Adoption Process 1. Awareness: Consumer becomes aware of the new product, Stages in the Adoption Process 1. Awareness: Consumer becomes aware of the new product, but lacks information about it. 2. Interest: Consumer seeks information about new product. 3. Evaluation: Consumer considers whether trying the new product makes sense. 4. Trial: Consumer tries new product on a small scale to improve his or her estimate of its value. 5. Adoption: Consumer decides to make full and regular use of the new product. Copyright 2007, Prentice-Hall Inc. 34

Figure 5 -6 Adopter Categorization Based on Time of Adoption Copyright 2007, Prentice-Hall Inc. Figure 5 -6 Adopter Categorization Based on Time of Adoption Copyright 2007, Prentice-Hall Inc. 35

Product Adopter Categories § Innovators: venturesome, try new ideas at § § some risk. Product Adopter Categories § Innovators: venturesome, try new ideas at § § some risk. Early adopters: opinion leaders who adopt new ideas early, but carefully. Early majority: deliberate adopters, who adopt before the average person. Late majority: skeptical, adopt only after the majority of people have tried a product. Laggards: last to adopt, tradition bound, and skeptical of change. Copyright 2007, Prentice-Hall Inc. 36

Let’s Talk! Which one of the adopter categories is most likely to be buying Let’s Talk! Which one of the adopter categories is most likely to be buying the Toyota Prius hybrid car now? www. toyota. com/prius/ Copyright 2007, Prentice-Hall Inc. 37

Product Characteristics That Influence the Rate of Adoption § Relative Advantage: Is the innovation Product Characteristics That Influence the Rate of Adoption § Relative Advantage: Is the innovation § § superior to existing products? Compatibility: Does the innovation fit the values and experience of the target market? Complexity: Is the innovation difficult to understand or use? Divisibility: Can the innovation be used on a limited basis? Communicability: Can results be easily observed or described to others? Copyright 2007, Prentice-Hall Inc. 38

Marketing in Action Rate This Product’s Characteristics! Color-a-Cookie Kits contain a cookie and four Marketing in Action Rate This Product’s Characteristics! Color-a-Cookie Kits contain a cookie and four nontoxic food coloring markers. No baking is required, and the food-color pens can be used to color macaroni, pop-tarts, bread, and more. How will key product characteristics influence the rate of adoption? Explain. www. coloracookie. com Copyright 2007, Prentice-Hall Inc. 39

International Consumer Behavior § Values, behaviors, and attitudes vary greatly. § Physical differences and International Consumer Behavior § Values, behaviors, and attitudes vary greatly. § Physical differences and cultural differences must also be understood. § Marketers must decide whether to adapt or standardize their marketing mix offering to other countries. Copyright 2007, Prentice-Hall Inc. 40

Business Markets and Business Buyer Behavior § The business market is vast and involves 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 that are sold, rented, or supplied to others. Copyright 2007, Prentice-Hall Inc. 41

Business Markets § Market Structure and Demand: – Contains far fewer but larger buyers. Business Markets § Market Structure and Demand: – Contains far fewer but larger buyers. – Buyers are more geographically concentrated. – Business demand is derived from consumer demand. Copyright 2007, Prentice-Hall Inc. § Nature of the Buying Unit: – Business purchases involve more decision participants. – Business buying involves a more professional purchasing effort. 42

Types of Decisions and the Decision Process § Business buyers usually face more complex Types of Decisions and the Decision Process § Business buyers usually face more complex buying decisions. § Business buying process tends to be more formalized. § Buyers and sellers are much more dependent on each other. Copyright 2007, Prentice-Hall Inc. 43

Marketing in Action Business to Business Ad Volvo stresses both practical and emotional concerns. Marketing in Action Business to Business Ad Volvo stresses both practical and emotional concerns. Copyright 2007, Prentice-Hall Inc. 44

Figure 5 -7 Model of Business Buyer Behavior Copyright 2007, Prentice-Hall Inc. 45 Figure 5 -7 Model of Business Buyer Behavior Copyright 2007, Prentice-Hall Inc. 45

Types of Buying Situations § Straight rebuy: – Fairly routine purchase decision. § Modified Types of Buying Situations § Straight rebuy: – Fairly routine purchase decision. § Modified rebuy: – Requires some research and modified product specifications, prices, terms, or suppliers. § New task: – Requires extensive research and evaluation of products, suppliers, etc. Copyright 2007, Prentice-Hall Inc. 46

Participants in the Business Buying Process § Buying center: The decisionmaking unit of a Participants in the Business Buying Process § Buying center: The decisionmaking unit of a buying firm. – Not fixed or formally identified unit. – Membership varies for different buying tasks and products. Copyright 2007, Prentice-Hall Inc. § Center members: – Users, deciders, influencers, buyers, gatekeepers § Members can play multiple roles. Video Snippet Eaton deals with many buying center members when selling to its business clients. 47

Marketing in Action Buying Centers Buying centers include all members within a firm that Marketing in Action Buying Centers Buying centers include all members within a firm that play a role in purchase decision process. Cardinal Health deals with a wide range of buying influences, from the purchasing executives and the hospital administrators to the surgeons who actually use the products. Copyright 2007, Prentice-Hall Inc. 48

Figure 5 -8 Major Influences on Business Behavior Copyright 2007, Prentice-Hall Inc. 49 Figure 5 -8 Major Influences on Business Behavior Copyright 2007, Prentice-Hall Inc. 49

Figure 5 -9 Stages in the Business Buying Process Copyright 2007, Prentice-Hall Inc. 50 Figure 5 -9 Stages in the Business Buying Process Copyright 2007, Prentice-Hall Inc. 50

e-Procurement § Key benefits: – Reduces costs to buyers and sellers, and makes for e-Procurement § Key benefits: – Reduces costs to buyers and sellers, and makes for more efficient purchasing. – Reduces the time between order and delivery. – Frees purchasing staff to focus on more strategic issues. – Share information – Sell products and services – Provide support services – Maintain relationships Copyright 2007, Prentice-Hall Inc. 51

Marketing in Action e-Procurement HP’s Web site offers product overviews, detailed information, purchasing solutions, Marketing in Action e-Procurement HP’s Web site offers product overviews, detailed information, purchasing solutions, and much more. Copyright 2007, Prentice-Hall Inc. 52

Rest Area: Reviewing the Concepts § Understand the consumer market and the § § Rest Area: Reviewing the Concepts § Understand the consumer market and the § § major factors that influence consumer buyer behavior. Identify and 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. List and define the steps in the business buying decision process. Copyright 2007, Prentice-Hall Inc. 53