Consumer and Business Buyer Behavior 4/24/2017 Chapter Five Consumer and Business Buyer Behavior Copyright 2005 Brainy Betty, Inc.

What is Consumer Behavior? How did you decide what car to buy? How did you decide what shoes to wear today? What impacted what you had for breakfast this morning?

Consumer Buying Behavior 4/24/2017 Consumer Buying Behavior Refers to the buying behavior of people who buy goods and services for personal use. These people make up the consumer market. The central question for marketers is: “How do consumers respond to various marketing efforts the company might use?” Copyright 2007, Prentice Hall, Inc. Copyright 2005 Brainy Betty, Inc.

What is Consumer Behavior? 4/24/2017 What is Consumer Behavior? Black Box of the Consumer Marketing Response So hear we have marketing influencing the consumer and then the consumer responding. Since we don’t understand consumers, we think of them as a black box. Consumer behavior tries to get inside the black box and figure out what’s going on inside consumer’s heads. So going back to the case of ads, CB shows why seeing an ad too many times leads to lower sales. Since consumers see the same ads again and again, they habituate and get tired of them. They also start to be able to develop counterarguments to ad claims since they’ve seen them so many times and don’t need to devote processing to message anymore. This then leads to lower sales. Studies have shown that 3 exposures are best. In summary, CB looks at how consumers make decisions. The question that remains is what kind of decisions? 4 P’s Copyright 2007, Prentice Hall, Inc. 4 Copyright 2005 Brainy Betty, Inc. 4

Why do we need this information? Understand the consumer “Fit” our products to the needs (and desires) of the consumer Develop better marketing strategies Protect consumers Make better purchases Start with Review of Lecture 2—what is CB and why should we care. Mention that this is not a research methods course, but it’s important to understand different techniques people use to study consumer behavior and the pros/cons of each. Some of this is basic overview stuff, so if you know it, put your head down on your desk and nap, but otherwise this is stuff that everyone should be aware of. Marketing Implications of Consumer Behavior A. Developing a Customer-Oriented Strategy 1. Marketing research helps marketers design marketing activities that fulfill consumer needs. It allows them to pinpoint various segments and target offerings so as to meet that segment’s needs. 2. Consumer-oriented strategy guides strategic and tactical decisions regarding: a) How the market is segmented b) How profitable each segment of the market is c) The characteristics of consumers in each segment d) How satisfied customers are with existing offerings B. Selecting the Target Market 1. Understanding consumer behavior helps marketers determine the most viable targets for marketing tactics. C. Positioning 1. Consumer research can be used to determine product positioning in respect to the competition, customers’ needs, and changes in the marketplace. D. Developing Products and Services 1. Consumer research can be used to develop products and services by providing information about: a) Consumers’ ideas for new products b) Attributes that can be added or changed c) What to name the offering d) How to design the package and logo e) What type of warranty to include? E. Making Promotion Decisions 1. Consumer research can provide helpful information about advertising and sales promotion issues: a) What the advertising objectives should be; what the advertising should look like; where ads should be placed; when ads should be run; and has advertising been effective. b) How to achieve sales promotion objectives and tactics, when sales promotions should happen; whether sales promotions have been effective; how many sales people are needed to serve customers; and how salespeople can better serve customers. F. Making Pricing and Distribution Decisions 1. Consumer research aids in pricing and distribution decisions by providing useful information about: a) The price that should be charged, how sensitive customers are to price and price changes, and when certain pricing tactics should be used. b) Where target customers are likely to shop and how stores should be designed.

Copyright 2007, Prentice Hall, Inc. 4/24/2017 Influencing Factors Copyright 2007, Prentice Hall, Inc. Copyright 2005 Brainy Betty, Inc.

Consumer Buying Behavior 4/24/2017 Consumer Buying Behavior Factors influencing consumer behavior: Cultural factors: Culture, subculture, social class (upper, middle, working, lower classes) Social factors: Reference groups (direct points of comparison such as starts), family, roles and status Personal factors: Age/life-cycle, occupation, economic situation, lifestyle, personality and self-concept Psychological factors: Motivation, perception, learning, beliefs, and attitudes Copyright 2007, Prentice Hall, Inc. Copyright 2005 Brainy Betty, Inc.

Copyright 2007, Prentice Hall, Inc. 4/24/2017 Culture Subculture Groups of people with shared value systems based on common life experiences. Major Groups in USA Hispanic Consumers African-American Consumers Asian-American Consumers Mature Consumers Major Groups in Kuwait Kuwaiti Consumers Other Arab Consumers South Asian Consumers Iranian and other Consumers Copyright 2007, Prentice Hall, Inc. Copyright 2005 Brainy Betty, Inc.

4/24/2017 Social Class Society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors (lower class, working class, middle class, & upper class). Social class is measured by a combination of: occupation, income, education, wealth, and other variables. Example: middle class is average-pay workers, with good education, live on “the better side of city”, and own a nice home. Copyright 2005 Brainy Betty, Inc.

Social Factors Groups: Family: Roles and Status: 4/24/2017 Social Factors Groups: Membership, Reference (Opinion Leaders or influentials have special skills/knowledge), Aspirational Family: Most important consumer buying organization Roles and Status: Role consists of activities people are expected to perform Status reflects the general esteem given to role by society Copyright 2005 Brainy Betty, Inc.

Personal Factors Age and Life-Cycle Stage Occupation 4/24/2017 Personal Factors Age and Life-Cycle Stage People change the goods they buy over their lifetimes. Occupation Occupation influences the purchase of clothing and other goods. Economic Situation Some goods and services are especially income-sensitive (ex. buying luxury items declines in economic crisis). Copyright 2005 Brainy Betty, Inc.

Copyright 2007, Prentice Hall, Inc. 4/24/2017 Personal Factors Lifestyle: Pattern of living as expressed in psychographics It involves measuring consumers’ major AIO: Activities (work, hobbies, shopping, sports) Interests (food, fashion, family) Opinions (about themselves, social issues, products) Copyright 2007, Prentice Hall, Inc. Copyright 2005 Brainy Betty, Inc.

Psychological Factors: Personality & Self-Concept 4/24/2017 Psychological Factors: Personality & Self-Concept Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment. Generally defined in terms of traits. Self-concept suggests that people’s possessions contribute to and reflect their identities. A brand personality is the specific mix of human traits that may be attributed to a particular brand. One researcher identified five brand personality traits: Sincerity (down-to-earth, honest, wholesome, and cheerful) Excitement (daring, spirited, imaginative, and up-to-date) Competence (reliable, intelligent, and successful) Sophistication (upper class and charming) Ruggedness (outdoorsy and tough) Copyright 2007, Prentice Hall, Inc. Copyright 2005 Brainy Betty, Inc.

Maslow’s Hierarchy of Needs 4/24/2017 Maslow’s Hierarchy of Needs The psychologist Abraham Maslow proposed this approach to motivation. It was originally developed as a way to understand personal growth, but marketers have adapted it to understand consumer motivations. The hierarchical structure implies that the needs at the bottom have to be attained before the next, higher level is activated. It can help marketers identify what products someone might need depending on their development or the environment around them. 1. Physical or Physiological needs are those biogenic needs we discussed earlier- the need for water, food, air, etc. - easy to think what products are associated with these needs: food products! 2. Need for Safety- what products are associated with this need? homeowners insurance, burglar alarms, the club, 3. Belongingness/Social needs - facebook, myspace, USC!!, 4. Personal or Ego needs – a BMW, a Rolex, a yacht 5. Actualization: a trip to Europe, going for my PhD, etc. *One criticism of this characterization is that it may be western specific. Many Asian cultures value belongingness needs (fitting in with the group, working for good of the group), more than individual needs. Still, it’s helpful to marketers b/c it reminds us that consumers have different priorities in different situations and in different stages in their lives. Copyright 2007, Prentice Hall, Inc. 14 Copyright 2005 Brainy Betty, Inc. 14

Copyright 2007, Prentice Hall, Inc. 4/24/2017 Beliefs & Attitudes A belief is a descriptive thought that a person holds about something. An attitude is a person’s consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea. Beliefs -> Attitudes –> Intention –> Behavior (Fishbein and Ajzen 1975) Copyright 2007, Prentice Hall, Inc. 15 Copyright 2005 Brainy Betty, Inc. 15

Buying Decision Process 4/24/2017 Buying Decision Process All of these factors influence our buying decision process Buying decision process includes: Need recognition (internal or external stimuli) Information search Evaluation of alternatives Purchase decision Postpurchase behavior Copyright 2007, Prentice Hall, Inc. Copyright 2005 Brainy Betty, Inc.

Types of Buying Situations 4/24/2017 Types of Buying Situations Straight rebuy: Fairly routine purchase decision. Modified rebuy: Requires some research and modified product specifications, prices, terms, or suppliers. New task: Requires extensive research and evaluation of products, suppliers, etc. Copyright 2007, Prentice Hall, Inc. Copyright 2005 Brainy Betty, Inc.