CONSUMER MARKETS & CONSUMER BUYER BEHAVIOR

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CONSUMER MARKETS & CONSUMER BUYER

BEHAVIORTOPIC 3

CONSUMER MARKETS AND CONSUMER BUYER BEHAVIOR

Consumer buyer behavior

Buying behavior of final consumers

Consumer market

All the individuals and households that buy or acquire goods and services for personal consumption

Consumer Behaviour Model

Factors Affecting Consumer Behavior

• Cultural

• Social

• Personal

• Psychological

• Buyer

Characteristics Affecting Consumer Behavior

Cultural

• Set of basic values, perceptions, wants, and behaviors learned by an individual from family and other important institutions

Culture

• Group of people with shared value systems based on common life experiences and situations

• Cross-cultural marketing: Including ethnic themes and cross-cultural perspectives within a brand’s mainstream marketing

Subculture

• Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors

• Measured as a combination of occupation, income, education, wealth, and other variables

Social class

Social

Groups and Social network

• Small groups influence a person’s behavior• Membership group - Groups with direct influence and to which a person belongs

• Aspirational Groups - Groups an individual wishes to belong to

• Reference Groups - Groups that form a comparison or reference in forming attitudes or behavior

• Word-of-mouth

• Opinion Leader

• Buzz Marketing

• Online Social Networks

Family

• the most important consumer-buying organization in society.

Roles and Status

• can be defined by a person’s position in a group

Personal

Age and Life-Cycle Stage

• Taste in Food, clothes etc are often age related

• Life-cycle stage – life changing event. Marriage, having children.

Occupation• Blue-collar workers

• Executives

Economic Situation• Personal Income, savings and

interest rates.

Lifestyle• is a person’s pattern of living as

expressed in his or her psychographics

Personality and Self-Concept

• Sincerity

• Excitement

• Competence

• Sophistication

• Ruggedness

Psychological

Motivation

• A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction of the need.

• Motivation research refers to qualitative research designed to probe consumers’ hidden, subconscious motivations.

Perception

• Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world.

Learning

•Learning is the change in an individual’s behavior arising from experience and occurs through the interplay of:

•Drives

•Stimuli

•Cues

•Responses

•Reinforcement

Beliefs and attitudes

•A belief is a descriptive thought that a person has about something based on:

•knowledge

•opinion

•Faith

•An attitude describes a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea.

Buyer Decision Process

PROBLEM RECOGNITION

Awareness of Problem/Need

Raised by:

• Routine depletion

• Change in circumstances

Problem

• Perceived as the difference between currentand desiredsituation

The Role of Advertising

• Sometimes, potential customers become aware of their problem through advertising.

The first stage of the buyer decision process, in which the consumer recognizes a problem or need triggered by:

INFORMATION SEARCH

Involves the Identification of Alternative Solutions by

SearchingInternal search

Relevant information from memory

Role of advertising and branding

External search

Friends, family, work colleagues

Commercial sources –adverts, brochures salespeople

Third party reports – media.

EVALUATION OF ALTERNATIVES

• Reduction of solutions to a manageable shortlistFirstly

• A shortlist of brands for careful evaluationEvoked set

• Cost

• Availability

• Suitability.

Secondly: Ranking of the Evoked Set

the stage of the buyer decision process in which the consumer

uses information to evaluate alternative brands in the choice set.

CHOICE CRITERIA

Reliability

Durability

Performance

Format

Technical

Value for money

Running costs

Residual value

Economic

Status

Social belonging

Convention

Fashion

Social

Self-image

Risk reduction

Ethics

Emotions

Personal

PURCHASE AND POST-PURCHASE

Selection of:

• Quantity

• Quality

• Exact product characteristics

• Brand

• Vendor and method of payment

The Transaction Outcome

• Satisfaction or dis-satisfaction?

• Reliability?

• Performance?

• Durability?

Purchase decision is the buyer’s decision about which brand to purchase.

Post-purchase behavior is the stage of the buyer decision process in which

consumers take further action after purchase, based on their satisfaction or

dissatisfaction.

BUSINESS MARKETS & BUSINESS BUYER

BEHAVIORTOPIC 3

Business Buyer Behavior

• Buying behavior of organizations • Purchased goods and services are used in the production of other

products and services that are sold, rented, or supplied to others.

• Business buying process: Determining which products and services an organization needs to purchase • Finding, evaluating, and choosing among alternative suppliers and brands

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Business Markets

• Business markets are huge and involve more money and items than consumer markets.

• Differ from consumer markets in terms of:• Market structure and demand

• Nature of the buying unit

• Types of decisions and the decision process

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Market Structure and Demand and Nature of the Buying Unit

• Market structure and demand• Fewer but larger buyers

• Derived demand: Business demand that comes from the demand for consumer goods

• Inelastic and fluctuating demand

• Nature of the buying unit• More decision participants

• More professional purchasing effort

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Types of Decisions

• Business purchases • More complex buying decisions

• Large sums of money

• Complex technical and economic considerations

• Interactions among people at many levels of the buyer’s organization

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Decision Process

• Buying processes • Longer and more formalized procedures

• Buyer and seller more dependent on each other

• Supplier development: Systematic development of networks of supplier-partners• To ensure a dependable supply of products and materials

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Figure 5.7 - A Model of Business Buying Behavior

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Types of Buying Situations

• Buyer routinely reorders something without any modifications

Straight rebuy

• Buyer wants to modify product specifications, prices, terms, or suppliers

• New task: Buyer purchases a product or service for the first time

Modified rebuy

• Buying a packaged solution to a problem from a single seller

• Avoids the separate decisions involved in a complex buying situation

Systems selling (or solutions selling)

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Participants in the Business Buying Process

• Buying center: All the individuals and units that play a role in the purchase decision-making process• Actual users of the product or service

• People who make the buying decision

• People and units influencing the buying decision

• People who do the actual buying

• Individuals and units controlling the buying information

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Figure 5.8 - Major Influences on Business Buying Behavior

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Figure 5.9 - Stages of Business Buying Behavior

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E-Procurement

• Purchasing through electronic connections between buyers and sellers–usually online

• E-procurement occurs through:• Reverse auctions

• Online trading exchanges

• Company buying sites

• Extranet links with key suppliers

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Benefits and Problems of E-Procurement

Benefits

• Cuts transaction costs

• Results in efficient purchasing for both buyers and suppliers

• Reduces the time between order and delivery

• Helps an organization keep better track of all purchases

• Frees buyers from a lot of work and paperwork

Problems

• Can affect the customer-supplier relationship

• Can create potential security concerns

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CONSUMER MARKETS & CONSUMER BUYER BEHAVIOR

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