1

Chapter 5

Consumer Markets and Consumer Buying Behavior

2

Consumer Buying Behavior

Consumer Buying Behavior refers to the buying behavior of final consumers -individuals & households who buy goods and services for personal consumption.

All these consumers make up the consumer market.

The central question for marketers is: “How do consumers respond to various

marketing efforts the company might use?”

3

Model of Buyer Behavior (Fig. 5.1)

Marketing and Other Stimuli

MarketingProductPricePlacePromotionOtherEconomicTechnologicalPoliticalCultural

Buyer’s Black Box

Buyer CharacteristicsBuyer Decision Process

Buyer Responses

Product ChoiceBrand ChoiceDealer Choice

Purchase TimingPurchase Amount

4

Understanding Consumer Behavior

Characteristics of consumers what needs (solutions) they seek? personal and interpersonal

characteristics affecting consumer behavior

The Buying Process Who makes the decision? Decision-Making Process Buying Context (Impulse vs Planned)

5

Factors Influencing Consumer Behavior (Fig. 5.2)

Social

Referencegroups

Family

Rolesand

status

Personal

Age andlife-cycle

OccupationEconomicsituationLifestyle

Personalityand

self-concept

Psycho-logical

MotivationPerceptionLearning

Beliefs andattitudes

Buyer

Culture

Sub-culture

Socialclass

Culture

Sub-culture

Socialclass

Cultural

6

Factors Affecting Consumer Behavior: Culture

Subculture• Group of people with

shared value systems based on common life experiences.

• Hispanic Consumers

• African American Consumers

• Asian American Consumers

• Mature Consumers

Culture is the Most Basic Cause of a Person's Wants and Behavior.

7

Factors Affecting Consumer Behavior: Culture

Culture is the Set of Values, Perceptions, Wants & Behavior Learned by a Member of

Society from Family. 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.

8

Groups• Membership• Reference

Groups• Membership• Reference

Family (most important)• Husband, wife, kids• Influencer, buyer, user

Family (most important)• Husband, wife, kids• Influencer, buyer, user

Roles and StatusRoles and Status

Social FactorsSocial Factors

Factors Affecting Consumer Behavior: Social

Family Buying Influence

Children can exert astrong influence onfamily buying decisions.Johnson & Johnson remindscustomer’s of its commitmentto the American Family.

What other companies usechildren to influencefamily buying decisions?

Click or pre ss spacebar to return

Groups and reference groups: serve as a point of reference in forming a person’s attitudes and behaviors.Roles and status: activities that a person is expected to perform according to the persons around him or her, and the esteem (status) given to the roles by society.

9

Personal InfluencesPersonal Influences

Age and Life Cycle Stage

Age and Life Cycle Stage OccupationOccupation Personality &

Self-ConceptPersonality & Self-Concept

Economic Situation

Economic Situation

ActivitiesActivities InterestsInterests

Lifestyle IdentificationLifestyle Identification

OpinionsOpinions

Factors Affecting Consumer Behavior: Personal

10

Factors Affecting Consumer Behavior: Psychological

PsychologicalFactors

AffectingBuyers Choices

Motivation

Perception

Learning

Beliefs andAttitudes

Baloglu, S (1998). An Empirical Investigation of Attitude Theory for Tourist Destinations. Journal of Hospitality & Tourism Research, 22(3), 211-224.

11

Physiological Needs(hunger, thirst)

Safety Needs(security, protection)

Social Needs (sense of belonging,

love)

Esteem Needs (self-esteem)

Self Actualization

(Self-development)

Maslow’s Hierarchy of Needs (Fig. 5.4)

12

- Perception is selective.

- Perception is reality

13

HighInvolvement

Significantdifferences

betweenbrands

Fewdifferences

betweenbrands

LowInvolvement

Types of Buying Decision Behavior (Fig. 5.5)

ComplexBuying

Behavior

Variety-SeekingBehavior

Dissonance-Reducing Buying

Behavior

HabitualBuying

Behavior

14

Buyer Decision Process (Fig. 5.6)

PostpurchaseBehavior

Purchase

Decision

Information

SearchNeed

Recognition

Evaluationof

Alternatives

15

Buyer Decision ProcessStep 1. Need Recognition

State Where the Buyer’s Needs are Fulfilled and the Buyer is Satisfied.

Needs Arising From:

Internal Stimuli –

Hunger

External Stimuli-

Friends

Buyer Recognizes

a Problem

or a Need.

16

•Family, friends, neighbors•Most effective source of information

•Advertising, salespeople•Receives most information from these sources

•Mass Media•Consumer-rating groups

•Handling the product•Examining the product•Using the product

Personal Sources Personal Sources

Commercial SourcesCommercial Sources

Public SourcesPublic Sources

Experiential SourcesExperiential Sources

The Buyer Decision ProcessStep 2. Information Search

17

Consumer May Use Careful Calculations & Logical Thinking

Consumers May Buy on Impulse and Rely on Intuition

Consumers May Make Buying Decisionson Their Own.

Consumers May Make Buying DecisionsOnly After Consulting Others.

Marketers Must Study Buyers to Find Out How They Evaluate Brand

Alternatives

The Buyer Decision ProcessStep 4. Evaluation of Alternatives

18

Alternative Evaluation

Value Convenient Location Fast Service Menu Variety Food Quality Employee Attitude Atmosphere

19

Purchase IntentionDesire to buy the most preferred brand

Purchase Decision

Unexpected

Situational Factors

Attitudes of Others

The Buyer Decision ProcessStep 5. Purchase Decision

20

The Buyer Decision ProcessStep 6. Postpurchase Behavior

Consumer’s Expectations of Product’s Performance.

Product’s Perceived Performance.

Dissatisfied Customer

Satisfied Customer!

Cognit

ive D

isso

nan

ce

Discussion Connections

Form small groups to discuss a specific major purchase that one of you has made recently. What type of buying decision was it? Discuss the Buyer Decision Process

and what major factors influenced your decisions.

22

Awareness: Consumer is aware of

product, but lacks information.

Interest: Consumer seeks Information about new product.

Evaluation: Consumer considerstrying new product.

Trial: Consumer tries new product on a small scale.

Adoption: Consumer decides to make regular use of product.

Stages in the Adoption Process

23

Adopter Categories (Fig. 5.7)

Perc

en

tag

e o

f A

dop

ters

Time of AdoptionEarly Late

Inn

ovato

rs

Early Adopters

Early Majority

2.5%

13.5%

34% 34%

16%

Laggards

Late Majority

24

DivisibilityCan the innovation

be used on a trial basis?

ComplexityIs the innovation

difficult tounderstand or use?

Communicability Can results be easily

observed or described to others?

CompatibilityDoes the innovation

fit the values and experience of the

target market?

Relative AdvantageIs the innovation

superior to existing products?

Influence of Product Characteristics on Rate of Adoption

25

Review of Concept Connections

Define the consumer market and construct a simple model of consumer buyer behavior.

Name the four major factors that influence consumer buyer behavior.

List and understand the stages in the buyer decision process.

Describe the adoption and diffusion process for new products.

26

Chapter 6

Business Markets and Business Buyer Behavior

27

What is a Business Market?

A business market comprises all 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.

The business market is huge and involves many more dollars and goods than do consumer markets.

28

Contain fewer, but larger buyers

Contain fewer, but larger buyers

Customers are more geographically concentrated

Customers are more geographically concentrated

Buyer demand is derived from final consumer demand

Buyer demand is derived from final consumer demand

Demand is often more inelastic

Demand often fluctuates more, and

more quickly

Characteristics of Business Markets

Marketing Structure and Demand

29

Characteristics of Business Markets

Nature of the Buying Unit Business purchases

involve more buyers. Business buying

involves a more professional purchasing effort.

30

Business buyers

usually face more

complex buying

decisions.

Characteristics of Business Markets

Business buying

process is more

formalized.

Types of Decisions and the Decision Process

In business buying,

buyers and sellers work more closely

together.To developlong-term partnerships,businessmarketers workclosely with their customers.

Fujitsu promises high-end support to go along with its high-tech products.

Click to return

31

Model of Business Buyer Behavior (Fig. 6.1)

This Unisys ad offers services from technological consulting to database setup and maintenance.

The Environment

MarketingStimuli:•Product•Price•Place•Promotion

Other Stimuli:•Economic•Technological•Political•Cultural•Competitive

The Buying Organization

The buying center

Buying decision process

(Interpersonal and individual influences)

(Organizational Influences)

Buyer Responses

Product or service choice

Supplier Choice

Order Quantities

Delivery terms and times

Service terms

Payment

32

Discussion Connections Although business markets are similar

in many ways to consumer markets, there are also significant differences.

What similarities and differences might Bilkent Hotel encounter in selling to the business market versus the consumer market.

33

New Task BuyingNew Task Buying

Involv

ed D

eci

sion

M

aki

ng Modified RebuyModified Rebuy

Major Types of Buying Situations

Straight RebuyStraight Rebuy

34

UnexpectedSituational

Factors

UnexpectedSituational

Factors

Attitudes of

Others

Attitudes of

Others

Participants in the Business Buying Process

EthicalDecision-Making

Unit of a Buying

Organization is

Called Its Buying Center.

UsersInfluencer

s

Buyers

DecidersGatekeepe

rs

Roles Include

35

Major Influences on Business Buyer Behavior (Fig. 6.2)

Environmental

Economic developments

Supply Conditions

Technological change

Political and regulatorydevelopments

Competitive Developments

Culture and customs

Organizational

Objectives

Policies

Procedures

OrganizationalStructure

Systems

Interpersonal

Authority

Status

Empathy

Persuasiveness

Individual

AgeEducationJob PositionPersonalityRisk Attitudes

Buyers

36

Stage 1. Problem Recognition

Stage 2. General Need Description

Stage 3. Product Specification

Stage 4. Supplier Search

Stage 5. Proposal Solicitation

Stage 6. Supplier Selection

Stage 7. Order-Routine Specification

Stage 8. Performance Review

The Business Buying Process

37

Business Buying on the Internet

Business buyers may purchase electronically by: Electronic data interchange

links (EDI) The Internet

Connecting to customers to: Share marketing information, Sell products & services, Provide customer support, and’ Maintain on-going relationships.

38

Benefits and Problems Created by Buying on the Internet

Benefits: Shave transaction

costs Reduce time between

order and delivery Create more efficient

purchasing systems Forge more intimate

relationships Level the playing field

Problems: Cut purchasing

jobs Erode supplier-

buyer loyalty Create potential

security disasters

39

Public ReviewPublic Review Red Tape is Common

Red Tape is Common

Government MarketsGovernment Markets

NoneconomicCriteria

NoneconomicCriteria

NegotiatedContracts

NegotiatedContracts

Some BuyingOnline

Some BuyingOnline

Institutional and Government Markets

Low BudgetsLow Budgets Captive PatronsCaptive Patrons

Institutional MarketsInstitutional Markets

40

Review of Concept Connections

Define the business market and explain how business markets differ from consumer markets.

Identify the major factors that influence business buyer behavior.

List and define the steps in the business buying decision process.

Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions.