Buyer behavior overview 4 29-07

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Buyer behavior overview 4 29-07

  1. 1. So What is Buyer Behavior1. There are two forms of buying behavior often examined a. That of the consumer: i. The buying behavior of final consumers-individuals and households who buy goods and services for personal consumption b. That of a firm2. How does the consumer buying behavior model work a. Perhaps the most general, and sometimes most ambiguous model, to discuss consumer buying behavior is a stimulus-response model (e.g. something—a stimulus—hits the individuals brain— and a response happens) b. Often the stimuli that are examined include the four p’s of marketing and other dynamics (such as economic, technological, political and cultural forces). c. These stimuli enter into the consumer’s “black box” (e.g. your mind or brain) d. Then some sort of activity goes on in your brain, and a response occurs e. These responses may include: choosing a product, choosing a brand, deciding when to purchase, and deciding how much to purchase.3. However, consumer buying is really not as simple as the model alludes a. A number of characteristics within and around (i.e. the environment, be it the physical or social environment) also influence consumer’s behaviors b. The most often cited buyer characteristics are cultural, social, personal and psychological i. Culture: The set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions. 1. Subculture: A group of people with shared value systems based on common life experiences and situations. 2. Cultures are often divided by their individualistic or collectivistic orientation a. However, culture is multi-dimensional and ebbs and seeps through in a number of ways. ii. Social 1. social classes: Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors. 2. Group: Two or more people who interact to accomplish individual or mutual goals. 3. opinion leader : Person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts influence on others. iii. Lifestyle: A persons pattern of living as expressed in his or her activities, interests, and opinions. iv. Psychological factors—motivation, perception, learning, and beliefs and attitudes 1. personality: A persons distinguishing psychological characteristics that lead to relatively consistent and lasting responses to his or her own environment. 2. Motive (drive): A need that is sufficiently pressing to direct the person to seek satisfaction of the need. 3. Perception: The process by which people select, organize, and interpret, information to form a meaningful picture of the world. 4. Learning: Changes in an individuals behavior arising from experience. 5. Belief: A descriptive thought that a person holds about something. 6. Attitude: A persons consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea.Adapted from Armstrong and Kotler 2007 and Lamb and Hair 2004
  2. 2. 4. So how does it work? What steps does a consumer go through in order to acquire a product. a. Commonly a number of stages are outlined. However, this is the full process. Often we skip steps, or the steps occur in an automatic fashion (i.e. non-conscious) so we may not even know that we are proceeding through them. b. Stages in the buyer decision process. When making a purchase, the buyer goes through a decision process consisting of need recognition, information search, evaluation of alternatives, purchase decision, and postpurchase behavior. i. Need recognition: The first stage of the buyer decision process in which the consumer recognizes a problem or need. ii. Information search: The stage of the buyer decision process in which the consumer is aroused to search for more information; the consumer may simply have heightened attention or may go into active information search. iii. Alternative evaluation: The stage of the buyer decision process in which the consumer uses information to evaluate alternative brands in the choice set. iv. Purchase decision: The stage of the buyer decision process in which the consumer actually buys the product. v. Postpurchase behavior: The stage of the buyer decision process in which consumers take further action after purchase based their satisfaction or dissatisfaction. 1. Cognitive dissonance: Buyer discomfort caused by postpurchase conflict.5. There are different buying behaviors or buying situations: 1. Complex buying behavior: Consumer buying behavior in situations characterized by high consumer involvement in a purchase and significant perceived differences among brands. 2. Dissonance-reducing buying behavior: Consumer buying behavior in situations characterized by high involvement but few perceived differences among brands. 3. Habitual buying behavior: Consumer buying behavior in situations characterized by low consumer involvement and few significant perceived brand differences. 4. Variety-seeking buying behavior: Consumer buying behavior in situations characterized by low consumer involvement but significant perceived brand differences.How about firms or businesses: 1. Some may describe four classifications of business market or business customers a. Producer: Individuals and organizations that buy goods and services to produce other products, to become part of other products, or to facilitate the organization’s daily operations. b. Reseller market: Retail and wholesale businesses that buy finished goods and resell them for a profit. c. Government organizations: Federal, state, and local buying units d. Institutions: May have other goals than profit, market share and ROI; may include schools, hospitals, churches, civic clubs, and private nonprofit organizations. 2. What’s the difference between business and consumer markets? a. Business demand: derived from the demand for other products, is often price inelastic, may be jointly tied to other products, and is more volatile than consumer demand. b. Characteristics of business market: Large purchase volume, large number of customers, geographically concentrated customers, direct distribution, professional buyers, negotiation of purchasing prices and terms, the practice of reciprocity, leasing, and the emphasis on personal selling. 3. What the differences in consumer vs. business buying behavior? a. A business has a buying center, a nice word that really just encompasses all those persons in an organization who become involved in the purchase decisions of that organization.Adapted from Armstrong and Kotler 2007 and Lamb and Hair 2004
  3. 3. b. Membership and relative influence of the participants in the buying center vary widely from organization to organization. Buying centers do not appear on the formal organization chart, and many people may have informal yet important roles. c. Buying center roles include initiators, influencers/evaluators, gatekeepers, deciders, purchasers, and users. d. There are three buying situations which are often examined: e. New-buy situation: a good or service is purchased when a new need arises. f. Modified rebuy is normally less critical and time-consuming than new-buy purchasing. In a modified-rebuy situation, the purchaser wants something new or something added to the original good or service. g. Straight rebuy: order is placed on a routine basis, and the goods or services are provided just as in previous orders. 4. How does a buying process work with a firm (stages)? a. Multiple steps i. Recognition of a need, the definition of the type of product that will fill the need, development of product specifications, various potential suppliers/vendors are contacted, proposals are sought, comparison of vendors, select a source, negotiate terms, issue a purchase order, monitorAdapted from Armstrong and Kotler 2007 and Lamb and Hair 2004

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