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Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University.

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Presentation on theme: "Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University."— Presentation transcript:

1 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University 2 CHAPTER 5 Consumer Behaviour, Organisational Markets and Buyer Behaviour 5 - 1

2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Outline the stages in the consumer decision process. Distinguish among three variations of the consumer decision process: routine, limited, and extended problem solving. Explain how psychological influences affect consumer behaviour, particularly purchase decision processes. After reading this chapter you should be able to: 5 - 2

3 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University -7 Identify major sociocultural influences on consumer behaviour and their effects on purchase decisions. Recognise how marketers can use knowledge of consumer behaviour to better understand and influence individual and family purchases. Distinguish among industrial, reseller, and government markets. After reading this chapter you should be able to: 5 - 3

4 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University After reading this chapter you should be able to: Recognise key characteristics of organisational buying that make it different from consumer buying. Understand how buying centres and buying situations influence organisational purchasing. Recognise the growing importance of online buying in industrial, reseller, and government markets. 5 - 4

5 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Consumer Behaviour This chapter examines consumer behaviour, the actions a person takes in purchasing and using products and services, including the mental and social processes that come before and after these actions. It is a very complex chapter so please read the chapter carefully and use the concept checks to ensure that you understand the theory. 5 - 5

6 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Consumer Decision Making Process Behind the visible act of making a purchase lies an important decision process. The stages a buyer passes through in making choices about which products and services to buy is the purchase decision process. This process has the five stages shown in Figure 5.1: 1.problem recognition, 2.information search, 3.alternative evaluation, 4.purchase decision and 5.postpurchase behaviour. 5 - 6

7 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Consumer Purchase Decision Process 5 - 7

8 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Problem Recognition: Perceiving a Need Problem recognition, the initial step in the purchase decision, occurs when a person realises that the difference between what he or she has and what he or she would like to have is big enough to actually do something about it. The process may be triggered by a situation as simple as opening up the refrigerator and discovering that you’ve run out of orange juice or it could be more complex such as deciding what university to go to or car to buy. Marketers try to stimulate problem recognition by using a variety of strategies and tactics. 5 - 8

9 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Information Search: Seeking Value After recognising a problem, a consumer begins to search for information about what product or service might satisfy the newly discovered need. First, you may scan your memory for previous experiences with products or brands. This action is called internal search. For frequently purchased products such as soap and toothpaste, this may be enough. Or a consumer may undertake an external search for information, using personal, public or marketer sources of information. This is especially needed when one does not have much past experience or knowledge, the physical, social or financial risk of making a bad decision is high, and the cost of gathering information is low. 5 - 9

10 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Alternative Evaluation: Assessing Value The information search stage clarifies the problem for the consumer by (1) suggesting criteria, or points to consider, for the purchase, (2) providing brand names that might meet the criteria and (3) developing consumer value perceptions. A consumer’s evaluative criteria represents both the objective attributes of a brand (such as a video display screen) and the subjective ones (such as prestige) you use to compare different products and brands. Firms try to identify and make the most of both types of evaluative criteria to create the best value for consumers. These criteria are often emphasised in advertisements. Companies aim to be in the consumer’s evoked set for a product, rather than the inept set. 5 - 10

11 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Purchase Decision: Buying Value Having examined the alternatives in the evoked set, you are almost ready to make a purchase decision. Two choices remain: (1) from whom to buy and (2) when to buy. The choice of which seller to buy from will depend on such considerations as the seller’s location, your past experience buying from the seller, and the return and/or exchange policy. Deciding when to buy is frequently determined by a number of factors. Use of the Internet to gather information, evaluate alternatives and make buying decisions has added a technological dimension to the consumer purchase decision process. 5 - 11

12 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Postpurchase Behaviour: Value in Consumption or Use After buying a product, the consumer compares it with his or her expectations and is either satisfied or dissatisfied. A company’s sensitivity to a customer’s consumption experience strongly affects the value a customer perceives after the purchase. Studies show that satisfaction or dissatisfaction affects consumer communications and repeat purchase behaviour. Many firms now provide customer feedback toll free phone lines for consumer’s to provide feedback on products and services. 5 - 12

13 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Involvement and Problem-Solving Variations Sometimes consumers don’t engage in the five-step purchase decision process. Instead, they skip or minimise one or more steps depending on the level of involvement. The level of involvement that a consumer has in a particular purchase depends on the personal, social and economic consequences of that purchase to the consumer. Products are classified as either low involvement, or requiring little thought by the consumer about the purchase process, or high involvement where the consumer is highly involved in all aspects of purchasing the product. 5 - 13

14 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Consumer Involvement 5 - 14

15 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Situational Influences Often the purchase situation will affect the purchase decision process. Five situational influences have an impact on your purchase decision process: 1.the purchase task, 2.social surroundings, 3.physical surroundings, 4.temporal effects and; 5.antecedent states. 5 - 15

16 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Influences on the consumer purchase decision process 5 - 16

17 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.What is the first step in the consumer purchase decision process? 2.The brands a consumer considers buying out of the set of brands in a product class of which the consumer is aware is called the ____________. 1. Problem Recognition 2. Evoked Set 5 - 17

18 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Psychological Influences on Consumer Behaviour Psychology helps marketers understand why and how consumers behave as they do. In particular, concepts such as motivation and personality; perception; learning; values, beliefs and attitudes; and lifestyle are useful for interpreting buying processes and directing marketing efforts. 5 - 18

19 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Motivation and Personality Motivation is the energising force that stimulates behaviour to satisfy a particular need. As consumer needs are the focus of the marketing concept, marketers try to stimulate these needs. Maslow’s hierarchy of needs is the central theory for marketers in needs theory. Personality refers to a person’s consistent behaviours or responses to recurring situations. Although numerous personality theories exist, most identify key traits such as assertiveness, extroversion, compliance, dominance and aggression, among others. Personality characteristics are often revealed in a person’s self- concept, which is the way people see themselves and the way they believe others see them. 5 - 19

20 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Maslow’s Hierarchy of Needs 5 - 20

21 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Perception Perception is the process by which an individual selects, organises and interprets information to create a meaningful picture of the world. The average consumer operates in a complex, information-rich environment. The human brain organises and interprets all this information with a process called selective perception, which filters the information so that only some of it is understood or remembered or even available to the conscious mind. Selective perception is linked with selective exposure, selective retention, selective comprehension and perceived risk. 5 - 21

22 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Learning Much consumer behaviour is learned. Consumers learn which sources to use for information about products and services, which evaluative criteria to use when assessing alternatives, and how to make purchase decisions. Learning refers to those behaviours that result from (1) repeated experience and (2) reasoning. Some of the key learning theories are: –Behavioural learning –Cognitive learning –Brand loyalty 5 - 22

23 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Values, Beliefs and Attitudes Values, beliefs and attitudes play a central role in consumer decision making. An attitude is a ‘learned predisposition to respond to an object or class of objects in a consistently favourable or unfavourable way’. Attitudes are shaped by our values and beliefs, which we develop in the process of growing up. Beliefs also play a part in attitude formation. Beliefs are one’s perception of how a product or brand performs on different attributes. Beliefs are based on personal experience, advertising, and discussions with other people. 5 - 23

24 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Lifestyle Lifestyle is a way of living that is identified by how people spend their time and resources (activities), what they consider important in their environment (interests), and what they think of themselves and the world around them (opinions). The analysis of consumer lifestyles, called psychographics, has produced many insights into consumer behaviour. For example, lifestyle analysis has proven useful in segmenting and targeting consumers for new and existing products. Tools such as VALS™ are useful in analysing how a consumer’s lifestyle impacts their decision making process. 5 - 24

25 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.The problem with the Mountain Buggy infant stroller was an example of selective __________. 2.What three attitude-change approaches are most common? 3.What does lifestyle mean? 1. Comprehension 2. (1) Change beliefs about the extent to which a brand has certain attributes, (2) Change the perceived importance of attributes, and (3) Add new attributes to the product. 3. Lifestyle is a way of living that is identified by how people spend their time and resources (activities), what they consider important in their environment (interests), and what they think of themselves and the world around them (opinions). 5 - 25

26 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Sociocultural Influences on Consumer Behaviour Sociocultural influences, which evolve from a consumer’s formal and informal relationships with other people, also have an impact on consumer behaviour. These include personal influence, reference groups, the family, culture and subculture. 5 - 26

27 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Personal Influence A consumer’s purchases are often influenced by the views, opinions or behaviours of others. Two aspects of personal influence are important to marketing: opinion leadership and word-of-mouth activity. Opinion leaders are individuals who have social influence over others in their purchase decisions. Opinion leaders are more likely to be important for products that provide a form of self-expression People influencing each other during conversations is called word of mouth. Word of mouth is perhaps the most powerful information source for consumers because it typically involves friends viewed as trustworthy. 5 - 27

28 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Reference Groups Reference groups are people to whom an individual looks as a basis for self appraisal or as a source of personal standards. Reference groups affect consumer purchases because they influence the information, attitudes and aspiration levels that help set a consumer’s standards. The different types of reference groups are: –Membership groups –Aspiration groups –Dissociative groups 5 - 28

29 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Family Influence Family influences on consumer behaviour result from three sources: –consumer socialisation.  This the process by which people acquire the skills, knowledge and attitudes necessary to function as consumers. –passage through the family life cycle.  The family life cycle concept describes the distinct phases that a family progresses through from formation to retirement, each phase bringing with it identifiable purchasing behaviours. –decision making within the family or household.  Two decision making styles exist: spouse-dominant and joint decision-making. With a joint decision-making style, both husband and wife make most decisions. Spouse-dominant decisions are those for which either the husband or the wife is responsible. 5 - 29

30 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Culture and Subculture Culture refers to the set of values, ideas and attitudes that are learned and shared among the members of a group. Subgroups within the larger, or national, culture with unique values, ideas and attitudes are referred to as subcultures. 5 - 30

31 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.What are the two primary forms of personal influence? 2.Within Australia and New Zealand there is a pronounced and diverse Asian subculture. Can one make generalisations about the buying patterns of Chinese, Japanese, Filipinos, Koreans, Malaysians, Vietnamese and Thais in Australasia? 1.Opinion leadership and word of mouth. 2.No as each of these groups exhibits sophisticated social and cultural behaviours that affect their buying patterns 5 - 31

32 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Organisational Buying 5 - 32

33 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Organisational Markets and Buyer Behaviour Understanding organisational markets and buying behaviour is necessary for effective business marketing. Business marketing is the marketing of products to companies, governments or not-for-profit organisations for use in the creation of goods and services that they then produce and market to others. Organisational buyers are those manufacturers, wholesalers, retailers and government agencies that buy goods and services for their own use or for resale. Organisational buyers are divided into three different markets: 1.industrial, 2.reseller and 3.government markets. 5 - 33

34 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Measuring Industrial, Reseller and Government Markets The measurement of industrial, reseller and government markets is an important first step for a firm interested in determining the size of one, two or all three of these markets around the world. This task has been made easier with the Australian and New Zealand Standard Industrial Classification (ANZSIC). 5 - 34

35 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.What are the three main types of organisational buyers? 2.What is the Australian and New Zealand Standard Industrial Classification (ANZSIC)? 1. Industrial firms, resellers, and government units. 2. The ANZSIC is a list of common industry definitions for Australia and New Zealand, which make easier the measurement of economic activity in the two member countries of the Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA). 5 - 35

36 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Characteristics of Organisational Buying Organisations are different from individuals, so buying for an organisation is different from buying for yourself or your family. Some of the key characteristics are: –Derived demand –Fewer customers but larger purchases –Organisational buying objectives –Organisational buying criteria –Buyer-seller relationships and supply partnerships 5 - 36

37 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Characteristics of Organisational Buying 5 - 37

38 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.What is derived demand? 2.A supply partnership exists when _____________. 1. Derived demand means that the demand for industrial products and services is driven by, or derived from, demand for consumer products and services. 2. A buyer and its supplier adopt mutually beneficial objectives, policies, and procedures for the purpose of lowering the cost or increasing the value of products and services delivered to the ultimate consumer. 5 - 38

39 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University The Organisational Buying Process and the Buying Centre Organisational buyers, like consumers, engage in a decision process when selecting products and services. Organisational buying behaviour is the decision- making process that organisations use to establish the need for products and services and identify, evaluate and choose among alternative brands and suppliers. There are important similarities and differences between the two decision-making processes, which can be seen by examining figure 5-14. 5 - 39

40 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Comparing the stages in consumer and organisational purchases 5 - 40

41 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University The Buying Centre: A Cross-Functional Group The buying centre is a group of people in an organisation who participate in the buying process of products for that organisation. Who makes up the buying centre in a given organisation depends on the specific item being bought. Researchers have identified five specific roles that an individual in a buying centre can play. In some purchases the same person may perform two or more of these roles. 5 - 41

42 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Roles in the Buying Centre Users are the people in the organisation who actually use the product or service, such as a secretary who will use a new word processor. Influencers affect the buying decision, usually by helping define the specifications for what is bought. Buyers have formal authority and responsibility to select the supplier and negotiate the terms of the contract. Deciders have the formal or informal power to select or approve the supplier that receives the contract. Gatekeepers control the flow of information in the buying centre. Purchasing personnel, technical experts and secretaries can all help or prevent salespeople (or information) from reaching people performing the other four roles. 5 - 42

43 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Buying Situations and the Buying Centre The number of people in the buying centre largely depends on the specific buying situation. Researchers who have studied organisational buying identify three types of buying situations, called buy classes. These buy classes vary from the routine reorder, or straight rebuy, to the completely new purchase, termed new buy. In between these extremes is the modified rebuy. 5 - 43

44 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.What one department is almost always represented by a person in the buying centre? 2.What are the three types of buying situations or buy classes? 1. Purchasing department 2. Straight rebuy, modified rebuy, and new buy 5 - 44

45 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Online Buying in Organisational Markets Organisational buying behaviour and business marketing continues to change with the use of Internet/Web technology. Organisations vastly outnumber consumers in terms of both online transactions made and purchase volume. A significant development in organisational buying has been the creation and growth of online trading communities, called e-marketplaces, that bring together buyers and supplier organisations. 5 - 45

46 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Online Auctions in Organisational Markets Online auctions have grown in popularity among organisational buyers and business marketers. Many e-marketplaces offer this service. Two general types of auctions are common: (1) a traditional auction and (2) a reverse auction. In a traditional auction a seller puts an item up for sale and would-be buyers are invited to bid in competition with each other. A reverse auction works in the opposite direction from a traditional auction. In a reverse auction, a buyer communicates a need for a product or service and would-be suppliers are invited to bid in competition with each other. As more would-be suppliers become involved, there is a downward pressure on bid prices for the buyer’s business. 5 - 46

47 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Checks 1.What are e-marketplaces? 2.In general, which type of online auction creates upward pressure on bid prices and which type creates downward pressure on bid prices? 1. E-marketplaces are online trading communities that bring together buyers and supplier organisations. 2. traditional auction; reverse auction. 5 - 47

48 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core,by Kerin et al Slides prepared by Andrew Hughes, Australian National University Finish Questions? 5 - 48


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