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unit 3 marketing


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consumer market and consumer buying behavior

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unit 3 marketing

  1. 1. Consumer Market and consumer buyer Behavior Unit 3 Consumer Behavior 1
  2. 2. Who are the consumers???? Who is the customer???? Consumer Behavior 2
  3. 3. Who is a Consumer/Customer? •A customer is the one who actually purchases a product or service from the particular organisation or shop •Consumer is wider concept consisting of not only the buyer or customer but also all its users, i.e. consumers. There are two situations when the distinction between consumer and customer may occur • when the service or product is provided free, and • when the customer is not the actual user of the product or is only one of the many users. Consumer Behavior 3
  4. 4. •The two vital elements to remember in all consumer situations are: •the influence on purchase from other people and •the roles taken on by different people in consumer behaviour situations. Consumer Behavior 4
  5. 5. Some Consumer behavior role Consumer Behavior 5
  6. 6. Consumer Behavior Consumer Behavior 6
  7. 7. •“The behavior that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs.” -LEON G SCHIFFMAN •The process whereby individuals decide what, when, where, how and from whom to purchase goods and services •Buyers behavior is all the psychological, social and physical behavior of the potential customers as they become aware to evaluate purchase consume and tell other people about the product and services. Consumer Behavior 7
  8. 8. •Personal Consumer buys goods and services for personal, household, or for the use of a family member, or for a friend. •Organizational Customer: a business, government agency, or other institution (profit or nonprofit) that buys the goods, services, and/or equipment necessary for its function.
  9. 9. Model of consumer Behavior
  10. 10. 7.10 Four Types of Buying Decision Behavior
  11. 11. Types of Buying Decision Behavior 5-34 Complex Buying Behavior When consumers are highly motivated in a purchase and perceive significant differences among brands Purchasers are highly motivated when: • Product is expensive • Product is risky • Product is purchased infrequently • Product is highly self-expressive
  12. 12. Types of Buying Decision Behavior 5-35 Dissonance-reducing buying behavior occurs when consumers are highly involved with an expensive, infrequent, or risky purchase, but see little difference among brands Post-purchase dissonance occurs when the consumer notices certain disadvantages of the product purchased or hears favorable things about a product not purchased
  13. 13. Types of Buying Decision Behavior 5-36 Habitual buying behavior occurs when consumers have low involvement and there is little significant brand difference Variety-seeking buying behavior occurs when consumers have low involvement and there are significant brand differences
  14. 14. Characteristics Affecting Consumer Behavior 5-6 Cultural Factors •Buyer’s culture •Buyer’s subculture •Buyer’s social class Social Factors •Reference groups •Family •Roles and status Personal Factors •Age and life-cycle stage •Occupation •Economic situation •Lifestyle •Personality and self-concept Psychological Factors •Motivation •Perception •Learning •Beliefs and attitudes
  15. 15. Characteristics Affecting Consumer Behavior 5-8 Culture is the learned values, perceptions, wants, and behavior from family and other important institutions Subculture are groups of people within a culture with shared value systems based on common life experiences and situations. For e.g. youth subculture Eastern and western subculture
  16. 16. Characteristics Affecting Consumer Behavior 5-10 Social classes are society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors Social class is measured by a combination of occupation, income, education, wealth, and other variables • Upper class • Middle class • Working class • Lower class • On the basis of caste…..
  17. 17. Characteristics Affecting Consumer Behavior 5-12 Social Factors Groups Membership groups have a direct influence and to which a person belongs. Family group, religious group, professional group, trade union. Aspirational groups are groups to which an individual wishes to belong. Reference groups are groups that form a comparison or reference in forming attitudes or behavior
  18. 18. Characteristics Affecting Consumer Behavior 5-13 Social Factors Groups Opinion leaders are people within a reference group with special skills, knowledge, personality, or other characteristics that can exert social influence on others Buzz marketing enlists opinion leaders to spread the word Social networking is a new form of buzz marketing
  19. 19. Characteristics Affecting Consumer Behavior 5-14 Social Factor group Family is the most important consumer-buying organization in society Social roles and status are the groups, family, clubs, and organizations to which a person belongs that can define role and social status
  20. 20. Characteristics Affecting Consumer Behavior 5-15 Personal Factors •Personal characteristics •Age and life-cycle stage •Occupation •Economic situation •Lifestyle •Personality and self-concept
  21. 21. Characteristics Affecting Consumer Behavior 5-16 Personal Factors Age and life-cycle stage •RBC Royal Band stages: •Youth—younger than 18 •Getting started—18-35 •Builders—35-50 •Accumulators—50-60 •Preservers—over 60
  22. 22. Characteristics Affecting Consumer Behavior Personal Factors Occupation affects the goods and services bought by consumers Economic situation includes trends in: •Personal income •Savings •Interest rates 5-17
  23. 23. Characteristics Affecting Consumer Behavior 5-18 Personal Factors Lifestyle is a person’s pattern of living as expressed in his or her psychographics •Measures a consumer’s AIOs (activities, interests, and opinions) to capture information about a person’s pattern of acting and interacting in the environment
  24. 24. Characteristics Affecting Consumer Behavior 5-22 Personal Factors Personality and Self-Concept Personality refers to the unique psychological characteristics that lead to consistent and lasting responses to the consumer’s environment
  25. 25. Characteristics Affecting Consumer Behavior Personal Factors Personality and Self-Concept Brand personality refers to the specific mix of human traits that may be attributed to a particular brand • Sincerity • Excitement • Competence • Sophistication • Ruggedness 5-23
  26. 26. Characteristics Affecting Consumer Behavior 5-24 Personal Factors Personality and Self-Concept Self-concept refers to people’s possessions that contribute to and reflect their identities
  27. 27. Characteristics Affecting Consumer Behavior 5-25 Psychological Factors • Motivation • Perception • Learning • Beliefs and attitudes
  28. 28. Characteristics Affecting Consumer Behavior 5-26 Psychological Factors Motivation A motive is a need that is sufficiently pressing to direct the person to seek satisfaction Motivation research refers to qualitative research designed to probe consumers’ hidden, subconscious motivations
  29. 29. Maslow’s Hierarchy Of Needs
  30. 30. Characteristics Affecting Consumer Behavior 5-28 Psychological Factors Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world from three perceptual processes • Selective attention • Selective distortion • Selective retention
  31. 31. Characteristics Affecting Consumer Behavior 5-29 Psychological Factors Selective attention is the tendency for people to screen out most of the information to which they are exposed Selective distortion is the tendency for people to interpret information in a way that will support what they already believe Selective retention is the tendency to remember good points made about a brand they favor and to forget good points about competing brands
  32. 32. Characteristics Affecting Consumer Behavior 5-30 Psychological Factors Learning is the changes in an individual’s behavior arising from experience and occurs through interplay of: • Drives • Stimuli • Cues • Responses • Reinforcement
  33. 33. Characteristics Affecting Consumer Behavior 5-31 Psychological Factors Beliefs and Attitudes Belief is a descriptive thought that a person has about something based on: • Knowledge • Opinion • Faith Attitudes describe a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea
  34. 34. Consumer Buying Decision Process
  35. 35. The Buyer Decision Process Need Recognition Need recognition occurs when the buyer recognizes a problem or need triggered by: • Internal stimuli(hunger, thirst, sex, homes etctra) • External stimuli( surrounding) Difference between desired state and actual condition. 5-38
  36. 36. The Buyer Decision Process 5-39 Information Search Information search is the amount of information needed in the buying process and depends on the strength of the drive, the amount of information you start with, the ease of obtaining the information, the value placed on the additional information, and the satisfaction from searching
  37. 37. The Buyer Decision Process 5-40 Information Search Sources of information: Personal sources—family and friends Commercial sources—advertising, Internet Public sources—mass media, consumer organizations Experiential sources—handling, examining, using the product
  38. 38. The Buyer Decision Process 5-41 Evaluation of Alternatives • Evaluation of alternatives is how the consumer processes information to arrive at brand choices • Evaluation is done on the basis of product attributes, degree of importance, brand belief and satisfaction
  39. 39. The Buyer Decision Process 5-42 Purchase Decision The purchase decision is the act by the consumer to buy the most preferred brand The purchase decision can be affected by: • Attitudes of others • Unexpected situational factors
  40. 40. The Buyer Decision Process 5-43 Post-Purchase Decision The post-purchase decision is the satisfaction or dissatisfaction the consumer feels about the purchase Relationship between: • Consumer’s expectations • Product’s perceived performance
  41. 41. The Buyer Decision Process 5-44 Post-Purchase Decision The larger the gap between expectation and performance, the greater the consumer’s dissatisfaction Cognitive dissonance is the discomfort caused by a post-purchase conflict
  42. 42. The Buyer Decision Process Customer satisfaction is a key to building profitable relationships with consumers—to keeping and growing consumers and reaping their customer lifetime value 5-45 Post-Purchase Decision
  43. 43. Mktg Mgmt 43 Successive Sets Involved in Consumer Decision Making
  44. 44. Business buyer behavior •The buying behavior of 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 buying process •The decision process by which business buyers determine which products and services their organizations need to purchase and then find, evaluate, and choose among alternative suppliers and
  45. 45. Consumer or Organizational Products Why was the product purchased ? For personal or household use oFor use in the operation of a business or organization. oTo manufacture other products oFor resale to others Organizational PRODUCT CONSUMER PRODUCT
  46. 46. Some Examples of Organizational Buying Paper cups by McDonald's Computer chips by Toshiba Concrete by Local Authorities Oil by Electricity Generators Fertiliser by Farmers Accountancy services by Ltd. Companies TV’s by Comet or Dixons Furniture by LACM
  47. 47. Characteristics of Organizational Buying Derived demand Negotiations Risks Reciprocal buying Nature and size of customers Complexity of buying Economic and technical choice criteria Buying to specific requirements Organizational Purchases
  48. 48. Factors affecting organizational buying • Industrial buying are subject to many influences. • Some marketers assume that the major influences are economic. • They think buyers will favor the suppliers who offers the lowest price or the best product or the most service. There are some major influences listed below.
  49. 49. Major Factors Influencing Industrial Buying •Environmental •Organizational •Interpersonal •Individual
  50. 50. Environmental • Economic Developments • Technological Changes • Political and Regulatory developments • Competitive developments • Culture and Customs Organizational Factors • Objectives • Policies • Procedures • Organizational Structure • Systems Interpersonal • Authority • Status • Expertise • Persuasiveness Individual • Age • Income • Education • Job Position • Personality • Attitudes
  51. 51. Environmental Factors Business buyers are heavily influenced by factors in the current and expected economic environment , such as level of primary demand , the economic outlook etc. Business buyers are also affected by technological , political and competitive developments in the environment . The business buyers must watch these factors , determine how they will affect the buyer and try to turn these challenges into opportunities.
  52. 52. Organizational Factors Each buying organization has its own objectives , policies , procedures , structure and systems and the business marketer must understand these factors well. Questions can arise : how many people are involved in the buying decision ?; who are they ? What are the evaluative criteria ? What are the company’s policies and limits on its buyers ?
  53. 53. Interpersonal Factors The buying center usually includes many participants who influence each other , so interpersonal factors also influence the business buying process. Participants may influence the buying decision process because they control rewards and punishments , are well liked , have a special relationship with other important participants. Business marketers must try to understand these factors and design strategies that take them into account
  54. 54. Individual Factors Each participants in the business buying decision process brings in personal motives , perceptions and preferences. These individual factors are affected by personal characteristics such as age income ,education , professional identification , personality and attitudes towards risks.
  55. 55. Industrial Buying Decision Process It is also known as organizational buying process or business buying process. Industrial purchasing decision making involves more physical and observable stages. There are many decision makers involved in each of the eight stages as elaborated by the buy grid framework.
  56. 56. Phase 1 – Need or Recognition of a problem The purchasing /buying process begins when someone in company recognizes a problem or need that can be met by acquiring goods or services. The common events that lead to this phase could be – a machine break down and require replacement or new parts, company decides to diversify or expand business, the company decides to develop new products.
  57. 57. Phase 2 – Description of the need This phase involves determination of the characteristics and quantity needed of them. The general characteristics could be reliability , durability , price etc. and the marketer along with the purchasing manager ,engineers and users can describe the needs. The question can arise like – what type of goods /services should be considered, what quantities should be needed, what performance specification need to be met.
  58. 58. Phase 3- prepare Product specification Obtaining the input from the second phase , the buying organization has to develop the technical specifications of the needed items. In this phase, the product is broken down into items. The specification about product and items are listed. Companies do not encourage the supplier participation at this stage.
  59. 59. Phase 4 – Supplier Search This phase pertains to the search for the qualified suppliers among the potential sources. The marketer has to ensure that he is in the list of potential suppliers. For this to happen , he has to make periodic visits to all potential companies and create awareness. Brochures have to be circulated and advertisements placed in specific media like trade journals. This phase only involves making a list of qualified suppliers.
  60. 60. Phase 5- Proposal Solicitation The list of qualified suppliers are now further shortened based on some critical factors. Than the purchasing departments ask for proposals to be sent by each supplier. After evaluations , base on specified criteria , some firms are asked to come over for formal presentations. The proposal must include all specification like price , delivery period , charged taxes, and so on. For technically complex product and services , a lot of time spent in analyzing proposals in terms of comparison on product services , deliveries and the landed cost.
  61. 61. Phase 6- Supplier Selection Each of the supplier’s presentation are rated according to certain evaluation models. The buying organization may also attempt to negotiate with its preferred suppliers for better prices and terms before making a final decision. Various parameters like reliability , delivery ,flexibility, price, service etc. are used for supplier selection and their rating.
  62. 62. Phase 7- placing the purchase Order After the suppliers have been selected , the buyer negotiates the final order, listing the technical specifications , the quantity needed , the expected time of delivery etc. Buyers are increasingly moving towards Blanket contracting rather than periodic purchase orders.
  63. 63. Phase 8- post purchase evaluation The final phase in the purchasing process consists of a formal or informal review and feedback regarding product performance as well as vendor performance. The buyer may contact the end user and ask for their evaluations which are in turn given to the supplier or he may rate the supplier on several criteria using a weighted score method. The performance review might lead to the buyer to continue , improve or drop a supplier
  64. 64. Global consumer movements and consumer protection • The right to satisfaction of basic needs • Right to safety • Right to be informed • Right to choose • Right to be heard • Right to redress • Right to consumer education • Right to healthy environment