CONCEPTS IN MARKETING
Understanding Consumer Behavior &
Organizational Behavior
WHY STUDY CONSUMER BEHAVIOR
Consumers make buying decisions all the time. The
Marketing Task is to understand
• What do th...
CONSUMER BEHAVIOR
• Consumer behavior can be defined as the
behavior that consumers display in
– searching for
– Purchasin...
CONSUMER BEHAVIOR & MARKETING
PLANNING
• As marketers, it is important for us to recognize why and
how individuals make th...
THE BUYER : an Enigma
• The consumer buying decision remains an enigma
for the marketer---sometimes responding the
way the...
THE BLACK BOX
Marketing Stimuli
•Product
•Price
•Place
•Promotion
Other Stimuli
•Economic
•Technological
•Political
•Cultu...
FACTORS INFLUENCING CONSUMER
BEHAVIOR
• Cultural : Culture, Sub-culture, Social class
• Social : Reference groups, family,...
Social class & typical consumption behavior
Social class
Upper-Upper
Lower-Upper
Upper-Middle
Lower-Middle
Upper-Lower
Low...
PSYCHOLOGICAL FACTORS
• Consumer buying choices are influenced by major
psychological factors---motivation, perception, be...
Theories of Motivation
• Sigmund Freud Theory of Motivation
• Maslow’s theory of Motivation
• Freud…suggests that a person...
MASLOWS HIERARCHY OF NEEDS
Self
Actualization
needs
Esteem Needs
Social needs
Safety needs
Physiological needs
Adapted fro...
THE BUYING DECISION PROCESS
• Buying roles -- who makes the buying decision
Initiator, Influencer, Decider, Buyer, User
• ...
Total
Set Aware-
ness
Set
Consid-
eration
Set
Choice
Set Decision
Decision Making Sets
BUYING DECISION BEHAVIOR
High involvement Low involvement
Significant
Difference
Between
brands
Few
differences
Between
br...
Organizational Buying Behavior
Organizational Buying Behavior
• Business Markets…. all organizations that buy goods & services
for use in the production ...
Characteristics of Business Markets
• Demand Characteristics - derived demand
- relatively inelastic
- erratic demand
• Ma...
Industrial Marketing vs Consumer goods
Marketing
Product
Price
Promotion
Distribution
Customer
relationships
Decision maki...
Characteristics of Organizational Buying
Process
Organizational
Buying Process
Multiple buying
influence
Technical
complex...
Business Buyer Behavior
• What buying decisions do business buyers make ?
• Who participates in the buying process ?
• Wha...
What buying decisions : Implications
of Buying situations
Buying situation
Straight re-buy
(no change in specs)
Modified r...
Buying motivations of Business
buyers
Rational & emotional factors influence decisions
• Rational factors - Price…base pri...
Forces influencing Organizational
buying behavior
• Environmental forces - economic, political,& legal, cultural,
physical...
Implications for Marketing Strategy
planning
• Environmental - how will the environment impact purchase
plans of the indus...
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6 cb & org buying

  1. 1. CONCEPTS IN MARKETING Understanding Consumer Behavior & Organizational Behavior
  2. 2. WHY STUDY CONSUMER BEHAVIOR Consumers make buying decisions all the time. The Marketing Task is to understand • What do they buy … Product & Services • Where do they buy … Channel decisions • When do they buy … Timing of purchase • Why do they buy … Motivation to purchase • How do they buy … Decision process • How often do they buy … Purchase cycle
  3. 3. CONSUMER BEHAVIOR • Consumer behavior can be defined as the behavior that consumers display in – searching for – Purchasing – Using – Evaluating and – Disposing off products and services that they expect will satisfy their needs and wants.
  4. 4. CONSUMER BEHAVIOR & MARKETING PLANNING • As marketers, it is important for us to recognize why and how individuals make their consumption decisions so that we can make better strategic decisions. • Marketing firms use their knowledge of consumer behavior to segment markets, to design marketing strategies and to measure marketing performance.
  5. 5. THE BUYER : an Enigma • The consumer buying decision remains an enigma for the marketer---sometimes responding the way the marketer wants/expects and on other occasions just refusing to buy the product from the same marketer. • The marketer provides certain stimuli– Product, Price, Place & Promotion, but is unsure whether the buyer will respond. • The consumers mind is another Black Box
  6. 6. THE BLACK BOX Marketing Stimuli •Product •Price •Place •Promotion Other Stimuli •Economic •Technological •Political •Cultural Buyers Characteristics Buyers Decision Process Not to Buy Buy Decision on •Product Choice •Brand •Dealer •Timing •QuantityResponse Evaluate & take Corrective action
  7. 7. FACTORS INFLUENCING CONSUMER BEHAVIOR • Cultural : Culture, Sub-culture, Social class • Social : Reference groups, family, roles & status • Personal : Age & life cycle, Occupation, Lifestyle, Personality, Economic • Psychological : Motivation, Perception, Learning, Beliefs & attitudes
  8. 8. Social class & typical consumption behavior Social class Upper-Upper Lower-Upper Upper-Middle Lower-Middle Upper-Lower Lower-Lower Characteristics Social elite, inheritance High income professionals, social position earned Career oriented professionals, highly educated Respectable, hard working, conscious re standards Blue collar, moderate education & skill Near poverty line Consumption behavior Consume high quality often become standards for others Conspicuous consumers of luxury products, innovators Hi-quality products that reflect success & position, gracious life style, experimenters. Influenced by standards, careful shoppers, price sensitive, home conscious Impulsive, brand loyal, self perception Unskilled shopper, purchase on credit & pays more
  9. 9. PSYCHOLOGICAL FACTORS • Consumer buying choices are influenced by major psychological factors---motivation, perception, beliefs & attitudes • Motive---is a need that is sufficiently pressing to drive the person to act • Needs could be – Biological…arising from state of hunger,thirst or comfort – Psychological…arising from need recognition, esteem, belonging A need becomes a motive when it is aroused to a sufficient level of intensity.
  10. 10. Theories of Motivation • Sigmund Freud Theory of Motivation • Maslow’s theory of Motivation • Freud…suggests that a person does not fully understand his or her motivation • E.g A consumer wanting to buy a Camera – Initial motive …..as a hobby or a career – Deeper level…….to impress others with creative talents – Still deeper level….to feel young & independent • Maslow believes that human needs are arranged in a hierarchy, from the most pressing to the least pressing.
  11. 11. MASLOWS HIERARCHY OF NEEDS Self Actualization needs Esteem Needs Social needs Safety needs Physiological needs Adapted from Principles of Marketing: Kotler & Armstrong. PHI, 9th edition Self development & realisation Self esteem, recognition status sense of belonging love security,protection hunger, thirst
  12. 12. THE BUYING DECISION PROCESS • Buying roles -- who makes the buying decision Initiator, Influencer, Decider, Buyer, User • Buying Decision behavior —buying decision varies with type of product – Complex Buying behavior • Buying Process -- how the decision is made Need recognition Search for information Evaluation of alternatives Purchase decision Post purchase behavior
  13. 13. Total Set Aware- ness Set Consid- eration Set Choice Set Decision Decision Making Sets
  14. 14. BUYING DECISION BEHAVIOR High involvement Low involvement Significant Difference Between brands Few differences Between brands Complex Buying behavior Variety seeking Buying behavior Dissonance Reducing Buying behavior Habitual Buying behavior Complex buying behavior
  15. 15. Organizational Buying Behavior
  16. 16. Organizational Buying Behavior • Business Markets…. all organizations that buy goods & services for use in the production of other products & services that are sold, rented or supplied to others. • Business buying process….the decision making process by which business buyers establish the need for purchased products & services and identify, evaluate and choose among alternative brands & suppliers
  17. 17. Characteristics of Business Markets • Demand Characteristics - derived demand - relatively inelastic - erratic demand • Market demographics - fewer but larger buyers - geographically concentrated • Buyer-Seller relationship - closer relationship - multiple buying influences - professional buyers buy - follow prescribed specifications/procedures
  18. 18. Industrial Marketing vs Consumer goods Marketing Product Price Promotion Distribution Customer relationships Decision making process Industrial marketing More tech in nature; accompanying services important; form may vary. Competitive bidding for specific items; list prices for standard items Personal selling Shorter channels; more direct selling Frequent & more enduring but complex Involves diverse group of organizational members Cons goods Marketing Standard form; service important but less. List prices Advertising Long chain of intermediaries Less frequent & shorter duration Individual or household decides
  19. 19. Characteristics of Organizational Buying Process Organizational Buying Process Multiple buying influence Technical complexities Time lags Rational & Emotional Buying motives Objectives & Distinctive character of organization
  20. 20. Business Buyer Behavior • What buying decisions do business buyers make ? • Who participates in the buying process ? • What are the major influences on buyers ? • How do business buyers make their buying decisions ?
  21. 21. What buying decisions : Implications of Buying situations Buying situation Straight re-buy (no change in specs) Modified re-buy (changes in specs/terms) New Task (first time purchase) IN Supplier Maintain quality; be alert to changing customer needs;initiate auto ordering; reinforce relationships. Respond quickly; reinforce relationships;preempt changes using CI Equal opportunity for both; info need is high;seller can influence specs OUT Supplier Offer something new/diff;exploit dissatisfaction;get foot in the door;ask to split order Opportunity to get in;offer alternatives; offer value addition;minimize risk of shifting
  22. 22. Buying motivations of Business buyers Rational & emotional factors influence decisions • Rational factors - Price…base price & price stability - Quality..reliability,consistency, quality-price relationship - Service…where intangibility high, scope for differentiation - Deliveries..continuity/reliability, may not have exclusive suppliers - Reciprocity…”you buy from me, I buy from you” • Emotional factors - Status & reward…motives of individual - Perceived risk…fear of wrong decision— displeasing boss or losing reward - Friendship/relationship…help a known supplier by providing information
  23. 23. Forces influencing Organizational buying behavior • Environmental forces - economic, political,& legal, cultural, physical & technological - uncertainty makes decision making complex • Organizational forces - Organizational climate & rules - avoid uncertainty, role of purchase- centralized/decentralized, ripe for personal selling • Group forces - group buying behavior-affected by influences of others, - goal conflict amongst members • Individual forces - Individuals not entities make buying decisions. - personal biases affect decision making, - background of individuals affects evaluation
  24. 24. Implications for Marketing Strategy planning • Environmental - how will the environment impact purchase plans of the industry/organization • Organizational - What unique company attributes (size, structure) influence buyer behavior • Product specific - how far has the firm progressed in the buying process - what is the likely buying situation - what is the extent of perceived risk • Group - Group or individual decision, if group who are the members - what is the relative influence of each • Individual - what criteria are important to each member in evaluating suppliers - how do buyers rate suppliers
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