CONSUMER AND BUSINESS BUYING BEHAVIOR by hanif1234

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									Consumer and Business Buying
         Behavior



                               1
        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?”
                                                    2
            Model of Buyer Behavior
Marketing and    Buyer’s Black Box        Buyer Responses
Other Stimuli

Marketing        Buyer Characteristics    Product Choice
Product          Buyer Decision Process   Brand Choice
Price                                     Dealer Choice
Place
Promotion
Other                                     Purchase Timing
Economic                                  Purchase Amount
Technological
Political
Cultural

                                                           3
          Factors Influencing
          Consumer Behavior
Cultural
             Social
                         Personal
                           Age and      Psycho-
Culture     Reference     life-cycle     logical
             groups
                        Occupation     Motivation
                          Economic     Perception    Buyer
 Sub-
culture      Family       situation     Learning
                          Lifestyle    Beliefs and
             Roles                      attitudes
 Social                  Personality
              and             and
 class       status     self-concept



                                                         4
      Factors Affecting Consumer
      Behavior: Culture
      Culture is the Most Basic Cause of a Person's
                   Wants and Behavior.
  Subculture
• Group of people with shared
  value systems based on
  common life experiences.




                                                      5
       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.



                                                      6
       Factors Affecting Consumer
       Behavior: Social
        Groups
•Membership
•Reference

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

                                      Family Buying Influence
                            Children can exert a
                            strong influence on



    Roles and Status
                            family buying decisions.
                            Johnson & Johnson reminds
                            customer’s of its commitment
                            to the American Family.



                            What other companies use
                            children to influence
                            family buying decisions?




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Factors Affecting Consumer Behavior: Personal
                       Personal Influences
                       Personal Influences


   Age and Life
   Age and Life                         Economic
                                        Economic      Personality &
                                                      Personality &
    Cycle Stage       Occupation
                      Occupation         Situation    Self-Concept
    Cycle Stage                          Situation     Self-Concept




                      Lifestyle Identification
                      Lifestyle Identification


         Activities
         Activities            Interests
                                Interests            Opinions
                                                     Opinions


                                                                8
      SRI Values and Lifestyles
     (VALS)
                 Actualizers   High Innovation
High Resources




   Fulfilleds    Achievers       Experiencers



   Believers      Strivers         Makers




                 Strugglers
 Low Resources                   Low Innovation
                                                 9
    Factors Affecting Consumer
    Behavior: Psychological
              Motivation



              Psychological
                 Factors
Beliefs and     Affecting     Perception
 Attitudes       Buyers
                Choices



               Learning
                                           10
Maslow’s Hierarchy of Needs

                Self
             Actualization
         (Self-development)
         Esteem Needs
         (self-esteem)

             Social Needs
       (sense of belonging, love)

          Safety Needs
       (security, protection)

         Physiological Needs
            (hunger, thirst)
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      Types of Buying Decision
      Behavior
                    High            Low
                Involvement     Involvement
Significant      Complex         Variety-
differences       Buying         Seeking
   between       Behavior        Behavior
     brands
        Few     Dissonance-      Habitual
differences   Reducing Buying     Buying
   between       Behavior        Behavior
     brands




                                              12
    Buyer Decision Process

                      Purchase
                      Decision
           Evaluation       Postpurchase
         of Alternatives      Behavior
     Information
        Search
   Need
Recognition                           13
 Buyer Decision Process
 Step 1. Need Recognition

                      Buyer
                    Recognizes   Needs Arising
State Where the                  From:
Buyer’s Needs           a
are Fulfilled and    Problem     Internal Stimuli –
the Buyer is           or a
                      Need.         Hunger
Satisfied.
                                 External Stimuli-
                                    Friends


                                                      14
The Buyer Decision Process
Step 2. Information Search

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

Commercial Sources     •Advertising, salespeople
                       •Receives most information from
                         these sources

  Public Sources       •Mass Media
                       •Consumer-rating groups

                       •Handling the product
Experiential Sources   •Examining the product
                       •Using the product

                                                     15
 The Buyer Decision Process
 Step 3. Evaluation of Alternatives
  Consumer May Use Careful
 Calculations & Logical Thinking

   Consumers May Buy on Impulse and
           Rely on Intuition
        Consumers May Make Buying Decisions
                  on Their Own.

             Consumers May Make Buying Decisions
                 Only After Consulting Others.

Marketers Must Study Buyers to Find Out
 How They Evaluate Brand Alternatives
                                                   16
The Buyer Decision Process
Step 4. Purchase Decision
         Purchase Intention
  Desire to buy the most preferred brand


  Attitudes                  Unexpected
  of Others                  Situational
                               Factors




          Purchase Decision
                                           17
The Buyer Decision Process
Step 5. Postpurchase Behavior

           Satisfied Customer!



               Consumer’s




                                           Cognitive Dissonance
  Expectations of Product’s Performance.
            Product’s Perceived
               Performance.



          Dissatisfied Customer
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      Stages in the Adoption
      Process
                             Awareness: Consumer is aware of
                               product, but lacks information.
                          Interest: Consumer seeks
                        Information about new product.

                Evaluation: Consumer considers
                      trying new product.
           Trial: Consumer tries new
           product on a small scale.

 Adoption: Consumer decides
to make regular use of product.

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                         Adopter Categories
Percentage of Adopters




                                         Early Majority          Late Majority
                         Innovators




                                        Early
                                                      34%       34%              Laggards
                                       Adopters


                                          13.5%                           16%
                                2.5%               Time of Adoption
                              Early                                              Late




                                                                                            20
    Influence of Product Characteristics
    on Rate of Adoption
 Communicability                            Relative Advantage
   Can results be easily
                                                 Is the innovation
  observed or described
        to others?                              superior to existing
                                                     products?




 Divisibility                                          Compatibility
Can the innovation                                  Does the innovation
  be used on a                                       fit the values and
   trial basis?                                      experience of the
                                                        target market?
                            Complexity
                            Is the innovation
                                difficult to
                           understand or use?
                                                                          21
Business Buying Behavior
   Business market : organizations that
    buy goods and services for use in the
    production of other products and
    services that are sold rented, or
    supplied to others

   Business buying process: the
    decision making process by which
    business buyers establish the need for
                                         22
 Characteristics of business
 markets
Characters          Characteristics of business markets
Marketing           •Business markets contain fewer but larger buyers
structure and       •Business customers are more geographically
demand              concentrated
                    •Business buyer demand is derived from final consumer
                    demand
                    •Demand is more inelastic
Nature of the       •Business purchases involve more buyers
buying unit         •Business buying involves a more professional effort

Types of decisions •Business buyers usually face more complex buying
and decision       decision
process            •The business buying process is more formalized
                   •Buyers and sellers work more closely together and
                   work on long run relationships

                                                                            23
   Model of business
   buyer behavior
The                       The buying                  Buyer
Environme                 organization                Respons
                             The Buying                Product /service
nt
Marketing Other                 Center                echoice
stimuli   stimuli
                                                       Supplier
            PET                    Buying
                                   Decision            Order quantities
            Cultural
            Competitive            Process
                                                       Delivery times
Product
Price                                                  Service terms
Place
Promotion
                                                       Payment
                          Organizational influences




                                                                          24
        Major types of buying situations
Types            Explanation


Straight rebuy   Buyer routinely reorders something without modifications


Modified rebuy   Buyer wants to modify product specifications (price, terms)


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


Systems buying   Buying a packaged solution to a problem from a single seller




                                                                            25
        Participants in the Business
        buying process
Participants

Buying center   The decision making unit of a buying organization

Users           Members of org who will use the product/services

Influencers     Technical personnel are important influencers , define
                specifications

Deciders        Have formal/informal power to select or approve the final
                supplier

Gatekeepers     Control the flow of information to others , technical persons,
                secretary, purchasing agents


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      Major influences on business
      buyers
Environmental    Organizational
 Economic                          Interpersonal
 Developments     Objectives                         Individual

 Supply           Policies          Authority        Age
 conditions                                          Education
                  Procedures        Status           Job
 Technological                                       responsibility   Buyer
 change           Organizational    Empathy          Personality
                  structure                          Risk Attitudes   s
 Competitive                        Persuasiveness
 developments     Systems

 Culture




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The business buying process
Problem Recognition Someone in the company finds a problem that can be
                    met by acquiring a good/service
General need           Stage in which company describes general
description            characteristics and quantity of a needed item
Product                Stage of BP, buying org decides or specifies best
specifications         technical product characteristics for a needed item
Supplier search        Buyer tries to find the best vendor
Proposal solicitations Buyers invite qualified suppliers to submit proposal
Supplier selection     Buyer review proposal and select a supplier or suppliers
Order routine          Final order , listing the technical specifications
specifications         (quantity, delivery, expected time, return policies, and
                       warranties
Performance review     Buyer rates its satisfaction with suppliers (continue,
                       modify and drop)
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