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3. Consumer And Business Buyer Behavior1


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3. Consumer And Business Buyer Behavior1

  1. 1. Nathan George Consumer and Business Buyer Behavior
  2. 2. Consumer Buying Behavior <ul><li>Consumer Buying Behavior refers to the buying behavior of final consumers -individuals & households who buy goods and services for personal consumption. </li></ul><ul><li>The central question for marketers is: </li></ul><ul><li>“ How do consumers respond to various marketing efforts the company might use?” </li></ul>
  3. 3. Model of Buyer Behavior Marketing and Other Stimuli Buyer’s Black Box Buyer’s Response Product Price Place Promotion Economic Technological Political Cultural Buyer Characteristics Buying Decision Process Product Choice Brand Choice Dealer Choice Purchase Timing Purchase Amount
  4. 4. Factors Influencing Consumer Behavior Culture Sub- culture Social class 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 Cultural
  5. 5. Factors Affecting Consumer Behavior: Culture <ul><li>Culture </li></ul><ul><li>Most basic cause of a person's wants and behavior. </li></ul><ul><li>Values, Perceptions, Wants & Behavior </li></ul><ul><li>Social Class </li></ul><ul><li>Society’s relatively permanent & ordered divisions whose members share similar values, interests, and behaviors. </li></ul><ul><li>Measured by: Occupation, Income, Education, Wealth and Other Variables. </li></ul><ul><li>Subculture </li></ul><ul><li>Groups of people with shared value systems based on common life experiences. </li></ul><ul><li>Hispanic Consumers </li></ul><ul><li>African American Consumers </li></ul><ul><li>Asian American Consumers </li></ul><ul><li>Mature Consumers </li></ul>
  6. 6. Factors Affecting Consumer Behavior: Social <ul><li>Groups </li></ul><ul><li>Membership </li></ul><ul><li>Reference </li></ul><ul><li>Family </li></ul><ul><li>Husband, wife, kids </li></ul><ul><li>Influencer, buyer, user </li></ul>Roles and Status Social Factors
  7. 7. Factors Affecting Consumer Behavior: Personal Personal Influences Age and Life Cycle Stage Occupation Economic Situation Lifestyle Identification Activities Opinions Interests Personality & Self-Concept
  8. 8. Factors Affecting Consumer Behavior: Psychological Psychological Factors Motivation Perception Learning Beliefs and Attitudes
  9. 9. Perception <ul><li>Perception </li></ul><ul><ul><li>Information Inputs </li></ul></ul><ul><ul><li>Interpretation </li></ul></ul><ul><ul><li>Selective Exposure </li></ul></ul><ul><ul><li>Selective Distortion </li></ul></ul><ul><ul><li>Selective Retention </li></ul></ul>
  10. 10. Maslow’s Hierarchy of Needs Esteem Needs ( self-esteem, status) Social Needs (sense of belonging, love) Safety Needs (security, protection) Physiological Needs (hunger, thirst) Self Actualization (Self-development )
  11. 11. The Buyer Decision Process Need Recognition Information Search Evaluation of Alternatives Purchase Decision Post-purchase Behavior
  12. 12. The Buyer Decision Process Step 1. Need Recognition <ul><li>External Stimuli </li></ul><ul><li>TV advertising </li></ul><ul><li>Magazine ad </li></ul><ul><li>Radio slogan </li></ul><ul><li>Stimuli in the environment </li></ul><ul><li>Internal Stimuli </li></ul><ul><li>Hunger </li></ul><ul><li>Thirst </li></ul><ul><li>A person’s normal needs </li></ul>Need Recognition Buyer Recognizes a Problem or Need
  13. 13. The Buyer Decision Process Step 2. Information Search <ul><li>Family, friends, neighbors </li></ul><ul><li>Most effective source of </li></ul><ul><li>information </li></ul><ul><li>Advertising, salespeople </li></ul><ul><li>Receives most information from </li></ul><ul><li>these sources </li></ul><ul><li>Mass Media </li></ul><ul><li>Consumer-rating groups </li></ul><ul><li>Handling the product </li></ul><ul><li>Examining the product </li></ul><ul><li>Using the product </li></ul>Personal Sources Commercial Sources Public Sources Experiential Sources
  14. 14. Marketers Must Study Buyers to Find Out How They Evaluate Brand Alternatives The Buyer Decision Process Step 3. 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 .
  15. 15. The Buyer Decision Process Step 4. Purchase Decision Purchase Intention Desire to buy the most preferred brand Purchase Decision Attitudes of Others Unexpected Situational Factors
  16. 16. The Buyer Decision Process Step 5. Post-purchase Behavior <ul><li>Consumer’s Expectations of </li></ul><ul><li>Product’s Performance </li></ul>Dissatisfied Customer Satisfied Customer! <ul><li>Product’s Perceived Performance </li></ul>Cognitive Dissonance
  17. 17. Buying Decision Process Consumer satisfaction is a function of consumer expectations and perceived product performance. Performance < Expectations Disappointment Performance = Expectations Satisfaction Performance > Expectations Delight
  18. 18. <ul><li>Cognitive dissonance: a buyer’s doubts shortly after a purchase about whether it was the right decision. </li></ul>Buying Decision Process
  19. 19. Stages in the Adoption Process Awareness Interest Evaluation Trial Adoption
  20. 20. Stages in the Adoption Process <ul><li>Awareness : Consumer becomes aware of the new product, but lacks information about it. </li></ul><ul><li>Interest : Consumer seeks information about new product. </li></ul><ul><li>Evaluation : Consumer considers whether trying the new product makes sense. </li></ul><ul><li>Trial : Consumer tries new product on a small scale to improve his or her estimate of its value. </li></ul><ul><li>Adoption : Consumer decides to make full and regular use of the new product. </li></ul>
  21. 21. Adopter Categories Percentage of Adopters Time of Adoption Early Late Innovators Early Adopters Early Majority 2.5% 13.5% 34% 34% 16% Laggards Late Majority
  22. 22. Influence of Product Characteristics on Rate of Adoption 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? Relative Advantage Is the innovation superior to existing products? Communicability Can results be easily observed or described to others? Product Characteristics
  23. 23. What is a Business Market? <ul><li>Business Buyer Behavior refers to the buying behavior of 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. </li></ul><ul><li>The business market is huge and involves many more dollars and items than do consumer markets. </li></ul>
  24. 24. The Business Buying Process
  25. 25. Types of Decisions & the Decision Process Market Structure and Demand <ul><li>Fewer, larger buyers </li></ul><ul><li>Geographically concentrated </li></ul><ul><li>Demand derived from consumers </li></ul><ul><li>Fluctuating demand </li></ul>Nature of the Buying Unit <ul><li>More members </li></ul><ul><li>More professional purchasing </li></ul><ul><li>effort </li></ul><ul><li>More complex decisions </li></ul><ul><li>Process is more formalized </li></ul><ul><li>Buyer and seller are more </li></ul><ul><li>dependent on each other </li></ul><ul><li>Build close long-term relationships </li></ul><ul><li>with customers </li></ul>Characteristics of Business Markets
  26. 26. Participants in the Business Buying Process <ul><li>Decision-making unit of a buying organization is called its buying center . </li></ul><ul><li>Not a fixed and formally identified unit. </li></ul><ul><li>Membership will vary for different products and buying situations. </li></ul><ul><li>Buying Center Members: </li></ul><ul><ul><li>Users </li></ul></ul><ul><ul><li>Deciders </li></ul></ul><ul><ul><li>Influencers </li></ul></ul><ul><ul><li>Buyers </li></ul></ul><ul><ul><li>Gatekeepers </li></ul></ul>
  27. 27. Participants in the Business Buying Process: The Buying Center Buying Center Users Gatekeepers Buyers Deciders Influencers
  28. 28. The Buying Organization Model of Business Buyer Behavior Marketing and Other Stimuli Buyer’s Response Product Price Place Promotion Economic Technological Political Cultural Interpersonal and Individual Influences Organizational Influences Product or Service Choice Supplier Choice Order Quantities Delivery Terms and Times Service Terms Payment The Buying Center Buying Decision Process
  29. 29. Major Influences on Business Buyer Behavior Environmental Economic, Technological, Political, Competitive Organizational Objectives, Policies, Procedures, Structure, & Systems Interpersonal Authority, Status, Empathy & Persuasiveness Individual Age, Education, Job Position, Personality & Risk Attitudes Buyers
  30. 30. Major Types of Buying Situations <ul><li>The buyer routinely reorders </li></ul><ul><li>something without any </li></ul><ul><li>modifications. </li></ul><ul><li>Straight Re-buy </li></ul><ul><li>Modified Re-buy </li></ul><ul><li>New Task </li></ul><ul><li>The buyer wants to modify </li></ul><ul><li>product specifications, </li></ul><ul><li>prices, terms, or suppliers. </li></ul><ul><li>The buyer purchases a </li></ul><ul><li>product or service for the </li></ul><ul><li>first time. </li></ul>
  31. 31. Business Buying Situations Straight Re-buy New Task Buying Modified Re-buy Involved Decision Making
  32. 32. Rest Stop: Reviewing the Concepts <ul><li>Understand the consumer market and the major factors that influence consumer buyer behavior. </li></ul><ul><li>Identify and discuss the stages in the buyer decision process. </li></ul><ul><li>Describe the adoption and diffusion process for new products. </li></ul><ul><li>Define the business market and identify the major factors that influence business buyer behavior. </li></ul><ul><li>List and define the steps in the business buying decision process. </li></ul>