Consumer Markets and Consumer Buying Behavior Chapter 5 Consumer Markets and Consumer Buying Behavior

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?”

Model of Buyer Behavior (Fig. 5.1) Marketing and Other Stimuli Marketing Product Price Place Promotion Other Economic Technological Political Cultural Buyer’s Black Box Buyer Characteristics Buyer Decision Process Buyer Responses Product Choice Brand Choice Dealer Choice Purchase Timing Purchase Amount

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)

Factors Influencing Consumer Behavior (Fig. 5.2) Culture Sub- culture Social class Cultural Social Reference groups Family Roles and status Personal Age and life-cycle Occupation Economic situation Lifestyle Personality and self-concept Psycho- logical Motivation Perception Learning Beliefs and attitudes Buyer

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. Hispanic Consumers African American Consumers Asian American Consumers Mature Consumers

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.

Factors Affecting Consumer Behavior: Social Groups Membership Reference 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. Family (most important) Husband, wife, kids Influencer, buyer, user Social Factors Roles and Status

Factors Affecting Consumer Behavior: Personal Personal Influences Age and Life Cycle Stage Occupation Personality & Self-Concept Economic Situation Activities Interests Lifestyle Identification Opinions Factors Affecting Consumer Behavior: Personal

Factors Affecting Consumer Behavior: Psychological Baloglu, S (1998). An Empirical Investigation of Attitude Theory for Tourist Destinations. Journal of Hospitality & Tourism Research, 22(3), 211-224. Motivation Psychological Factors Affecting Buyers Choices Beliefs and Attitudes Perception Learning

Maslow’s Hierarchy of Needs (Fig. 5.4) Self Actualization (Self-development) Esteem Needs (self-esteem) Social Needs (sense of belonging, love) Safety Needs (security, protection) Physiological Needs (hunger, thirst)

- Perception is selective. - Perception is reality

Types of Buying Decision Behavior (Fig. 5.5) High Involvement Significant differences between brands Few Low Complex Buying Behavior Variety- Seeking Behavior Dissonance- Reducing Buying Behavior Habitual Buying Behavior

Buyer Decision Process (Fig. 5.6) Purchase Decision Evaluation of Alternatives Postpurchase Behavior Information Search Need Recognition

Buyer Decision Process Step 1. Need Recognition Buyer Recognizes a Problem or a Need. Needs Arising From: Internal Stimuli – Hunger External Stimuli- Friends State Where the Buyer’s Needs are Fulfilled and the Buyer is Satisfied.

The Buyer Decision Process Step 2. Information Search Personal Sources The Buyer Decision Process Step 2. Information Search Commercial Sources Public Sources Family, friends, neighbors Most effective source of information Advertising, salespeople Receives most information from these sources Experiential Sources Mass Media Consumer-rating groups Handling the product Examining the product Using the product

The Buyer Decision Process Step 4. 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

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

The Buyer Decision Process Step 5. Purchase Decision Purchase Intention Desire to buy the most preferred brand Attitudes of Others Unexpected Situational Factors Purchase Decision

The Buyer Decision Process Step 6. Postpurchase Behavior Cognitive Dissonance Satisfied Customer! Consumer’s Expectations of Product’s Performance. Product’s Perceived Performance. Dissatisfied Customer

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.

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.

Adopter Categories (Fig. 5.7) Early Majority Late Majority Innovators Early Adopters Percentage of Adopters Laggards 34% 34% 13.5% 16% 2.5% Time of Adoption Early Late

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

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.

Business Markets and Business Buyer Behavior Chapter 6 Business Markets and Business Buyer Behavior

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.

Characteristics of Business Markets Contain fewer, but larger buyers Characteristics of Business Markets Customers are more geographically concentrated Buyer demand is derived from final consumer demand Marketing Structure and Demand Demand is often more inelastic Demand often fluctuates more, and more quickly

Characteristics of Business Markets Nature of the Buying Unit Business purchases involve more buyers. Business buying involves a more professional purchasing effort.

Characteristics of Business Markets Types of Decisions and the Decision Process Business buyers usually face more complex buying decisions. Business buying process is more formalized. In business buying, buyers and sellers work more closely together. Build Long-Term Partnerships

Model of Business Buyer Behavior (Fig. 6.1) Buyer Responses Product or service choice Supplier Choice Order Quantities Delivery terms and times Service terms Payment The Environment Marketing Stimuli: 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)

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.

Major Types of Buying Situations New Task Buying Involved Decision Making Modified Rebuy Straight Rebuy

Participants in the Business Buying Process Factors Situational Unexpected Users Ethical Influencers Decision-Making Unit of a Buying Organization is Called Its Buying Center. Roles Include Buyers Attitudes of Others Deciders Gatekeepers

Major Influences on Business Buyer Behavior (Fig. 6.2) Environmental Economic developments Supply Conditions Technological change Political and regulatory Competitive Developments Culture and customs Organizational Objectives Policies Procedures Structure Systems Interpersonal Authority Status Empathy Persuasiveness Individual Age Education Job Position Personality Risk Attitudes Buyers

The Business Buying Process Stage 1. Problem Recognition Stage 2. General Need Description Stage 3. Product Specification Stage 4. Supplier Search The Business Buying Process Stage 5. Proposal Solicitation Stage 6. Supplier Selection Stage 7. Order-Routine Specification Stage 8. Performance Review

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.

Benefits and Problems Created by Buying on the Internet 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

Institutional and Government Markets Low Budgets Captive Patrons Institutional Markets Public Review Red Tape is Common Government Markets Noneconomic Criteria Negotiated Contracts Some Buying Online

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.