Understanding Consumer and Business Buyer Behavior Chapter 5

Rest Stop: 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

Rest Stop: Previewing the Concepts 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

First Stop: Apple: The Keeper of All Things Cool Apple customers are intensely loyal Apple’s products work better and are simpler to use because Apple has deep understanding of consumer behavior Apple’s obsession with understanding customers and deepening their Apple experience shows in everything the company does It gives a life-feels-good experience to its consumers

The buying behavior of individuals and households who buy goods and services for personal consumption Consumer buying behavior

Figure 5.1 - Model of Buyer Behavior Note to Instructor: We can measure the whats, wheres, and whens of consumer buying behavior. But it’s very difficult to “see” inside the consumer’s head and figure out the whys of buying behavior (that’s why it’s called the black box). Marketers spend a lot of time and dollars trying to figure out what makes customers tick.

Figure 5.2 - Factors Influencing Consumer Behavior Note to Instructor: Cultural factors: Many brands now target specific subcultures—such as Hispanic American, African American, and Asian American consumers—with marketing programs tailored to their specific needs and preferences. For example, P&G’s CoverGirl Queen cosmetics line was inspired by Queen Latifah to “celebrate the beauty of women of color.” Personal factors: People’s buying decisions reflect and contribute to their lifestyles—their whole pattern of acting and interacting in the world. For example, Pottery Barn sells more than just home furnishings. It sells an upscale yet casual, family- and friend-focused lifestyle. An individual's buying decisions are affected by an incredibly complex combination of external and internal influences.

Culture Culture is the most basic cause of a person’s wants and behavior Culture is learned from the society, family, and other institutions Culture reflects basic values, perceptions, wants, and behaviors Cultural shifts create opportunities for new products or may otherwise influence consumer behavior

Groups of people with shared value systems based on common life experiences and situations Subculture Note to Instructor: Subcultures include nationalities, religions, racial groups and geographic regions. Ask students to research and list products from a single company that have multiple versions catering to more than one distinct subculture.

Subculture Major subculture groups in the U.S. Hispanic consumers African-American consumers Asian-American consumers Mature consumers

Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors Social class Note to Instructor: People in the U.S. can change their social class easier than can those living in many other countries. Discuss how this aspect of the U.S. population affects marketers.

Figure 5.3 - The Major American Social Classes Note to Instructor: Social class is not determined by a single factor but by a combination of all of these factors. America’s different social classes show distinct brand preferences.

Social Factors Groups and social networks Membership, reference, and aspirational groups Marketers attempt to reach opinion leaders within groups important to target market Opinion leaders are recruited as brand ambassadors or for buzz marketing

Opinion Leaders at JetBlue JetBlue CrewBlue program 5 - 14

Social Factors Groups and social networks: Online social networks allow marketers to interact with consumers Mountain Dew’s DEWmocracy campaign

Marketing at Work BlendTec developed a cult following after releasing several “Will it Blend” videos on YouTube Resulted in a stunning five-fold increase in sales BlendTec puts iPhones, Silly Putty, Golf Balls, Marbles and more to the test

Social Factors Family Roles and status Strongly influences buying behavior Gender stereotypes for certain types of purchases are relaxing in the U.S. Children are very influential, and have substantial disposable income of their own Roles and status Role = Expected activities Status = Esteem given to role by society

A person’s pattern of living as expressed in his or her activities, interests, opinions Lifestyle Note to Instructor: Lifestyle is expressed in terms of an individual’s psychographics.

Personal Factors People within the same subculture, social class, and occupation may have different lifestyles People buy the lifestyles represented by products or services 5 - 19

Personal Factors PersonicX 21 life-stage groupings lets marketers see customers as they really are and target them precisely

Marketing at Work Triumph doesn’t just sell motorcycles; it sells an independent, “Go your own way” lifestyle

Personal Factors Personality Refers to the unique psychological characteristics that distinguish a person or group Generally defined in terms of traits Can be useful in analyzing consumer behavior for certain product or brand choices Brands may also have personalities

A motive is a need that is sufficiently pressing to direct the person to seek satisfaction Motivation Note to Instructor: The term motivation research refers to qualitative research designed to probe consumers’ hidden, subconscious motivations. Consumers often don’t know or can’t describe why they act as they do. Thus, motivation researchers use a variety of probing techniques to uncover underlying emotions and attitudes toward brands and buying situations.

Figure 5.4 - Maslow’s Hierarchy of Needs Note to Instructor: According to Maslow, human needs are arranged in a hierarchy. Starving people will take little interest in the latest happenings in the art world.

Process by which people select, organize, and interpret information to form a meaningful picture of the world Perception Note to Instructor: Selective attention, selective distortion, and selective retention cause people to perceive differently.

Psychological Factors Learning Changes in an individual’s behavior arising from experience Occurs due to an interplay of drives, stimuli, cues, responses, and reinforcement Strongly impacted by the consequences of an individual’s behavior Behaviors with satisfying results tend to be repeated

A descriptive thought that a person holds about something Belief A person’s consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea Attitude

Beliefs and Attitudes Beliefs and attitudes: By matching today’s attitudes about life and healthful living, the SoBe brand has become a leader in the New Age beverage category

Figure 5.5 - Buyer Decision Process Note to Instructor: The buying process starts long before the actual purchase and continues long after. In fact, it might result in a decision not to buy. Therefore, marketers must focus on the entire buying process, not just the purchase decision.

Need Recognition and Information Search Need recognition can be triggered by internal or external stimuli Advertising can be very helpful in stimulating need recognition

Need Recognition and Information Search Several sources of information may be used as part of the information search Personal sources Commercial sources Public sources Experiential sources

Evaluation of Alternatives and Purchase Decision Evaluation process is dependent upon the specific buying situation and the individual consumers Purchase decision - Two factors may interfere with realization of purchase intentions: Attitudes of others Unexpected situational factors

Post-Purchase Behavior Consumer satisfaction is a function of consumer expectations and perceived product performance Performance < Expectations --- Disappointment Performance = Expectations --- Satisfaction Performance > Expectations --- Delight

Stages in the Adoption Process Consumer becomes aware of the new product, but lacks information about it Awareness Consumer seeks information about new product Interest: Consumer considers whether trying the new product makes sense Evaluation Consumer tries new product on a small scale to improve his or her estimate of its value Trial Consumer decides to make full and regular use of the new product Adoption

Figure 5.6 - Adopter Categorization Note to Instructor: New-product marketers often target innovators and early adopters, who in turn influence later adopters.

Product Characteristics That Influence the Rate of Adoption Is the innovation superior to existing products? Relative advantage Does the innovation fit the values and experience of the target market? Compatibility Is the innovation difficult to understand or use? Complexity Can the innovation be used on a limited basis? Divisibility Can results be easily observed or described to others? Communicability

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 Business Buyer Behavior

Business Markets Involve far more dollars and items than do consumer markets Market structure and demand differs from consumer markets: Contains far fewer but larger buyers Business demand is derived from consumer demand Business markets have more fluctuating demand

Business Markets Nature of the buying unit: Business purchases involve more decision participants Business buying involves a more professional purchasing effort

Business Markets Key differences exist between business and consumer buying situations: Business buyers usually face more complex buying decisions The business buying process tends to be more formalized Buyers and sellers are much more dependent on each other in business markets

Figure 5.7 - A Model of Business Buyer Behavior Note to Instructor: In some ways, business markets are similar to consumer markets—this model looks a lot like the model of consumer buyer behavior presented in Figure 5.1. But there are some major differences, especially in the nature of the buying unit, the types of decisions made, and the decision process.

Types of Buying Situations Buyer routinely reorders something without any modifications Straight rebuy Buyer wants to modify product specifications, prices, terms, or suppliers Modified rebuy Buyer purchases a product or service for the first time New task Becoming more common among companies Systems (solution) selling

Participants in the Business Buying Process Buying center: All the individuals and units that participate in the business buying-decision process The buying center is not a fixed or formally identified unit It is a set of buying roles assumed by different people for different purchases

Figure 5.8 - Major Influences on Business Buyer Behavior Note to Instructor: Like consumer buying decisions in Figure 5.2, business buying decisions are affected by an incredibly complex combination of environmental, interpersonal, and individual influences, but with an extra layer of organizational factors thrown into the mix.

Figure 5.9 - Stages of the Business Buying Process Note to Instructor: Buyers facing new, complex buying decisions usually go through all of these stages. Those making rebuys often skip some of the stages. Either way, the business buying process is usually much more complicated than this simple flow diagram suggests.

E-procurement Online purchasing (e-procurement) can be implemented in many ways: Reverse auctions Trading exchanges Company buying sties Extranet links with key suppliers E-procurement presents several benefits and problems

Marketing at Work The Shaw Floors site builds strong links with Shaw’s retailers It provides marketing ideas and tools that make retailers more effective in selling Shaw’s products to final customers

Rest Stop: 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

Rest Stop: Reviewing the Concepts 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

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