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CONSUMER
DECISION MAKING
7/16/2014
Marketing
1
unit 3
Analyzing Consumer Markets and Buying
Behavior
7/16/2014Marketing
2
 Know customers is never
simple
 They change in the last
minute
 Say one thing; do
another
 Companies profit from
understanding how and
why customers buy
Introduction
7/16/2014Marketing
3
Consumer behavior involves the acts of individual
in obtaining, using and disposing of economic
goods and services.
Behavior of individual includes the decision steps
that precede and determines theses acts.
How consumers around the world make their
choices among products embraces a fascinating
array of factors.
7/16/2014Marketing
4
What is Consumer behavior?
the study of
how individuals, groups and organizations
select, buy, use and dispose of
goods, services, ideas or experiences
to satisfy their needs and wants
Factors Affecting Buyer Behavior.
7/16/2014Marketing
5
a) Cultural.
- set of basic values, perceptions, wants, and behaviors learned by a
member of society, from family and other important institutions.
Subculture:
- A group of people with shared value system based on common life
experiences and situations.
- Eg: nationalities, religions, racial groups and geographic.
Social class:
- Permanents and ordered division in society whose members share
similar values, interest, and behavior.
- Distinct brand preference such as clothing, home furnishing,
automobiles etc.
-
Factors Affecting Buyer Behavior.
7/16/2014Marketing
6
UPPER CLASS
- upper-upper: inherited wealth
- lower uppers:
MIDDLE CLASS
- upper middles: professionals , businessman who possess neither family
status nor unusual wealth
- middle class: average pay white collar and blue collar worker
WORKING CLASS
- heavily depends for economic and emotionals support
LOWER CLASS
- Upper lowers: working poor. Lack of education. Poorly paid for unskilled
work.
- Lower-lowers: unskilled laborer. Often out of work.
Factors Affecting Buyer Behavior.
7/16/2014Marketing
7
b) Social.
 Social factors includes family and groups.
1. Family is the most important determinant of
consumer behavior because of the close,
continuing interactions among family members.
2. Groups refers to 2 or more people who interact to
accomplish individuals or mutual goals.
eg: Opinion leader - reference group with special
skills, knowledge, personality, or other
characteristics, exerts social influence on others.
3. Roles and status: roles consist of activities people
are expected to perform around them.
Factors Affecting Buyer Behavior.
7/16/2014Marketing
8
c) Personal.
1. Age and family life cycle stage.
 Consumer purchases of goods/services change
through their lifetime. Taste in food, clothing,
recreation are often related to age.
 Buying is also affected by the life cycle stage or phase
that the family is in.
 Husband and wife involvement
Factors Affecting Buyer Behavior.
7/16/2014Marketing
9
2. Occupation.
 A person’s job or career affects his choices of
products/services. A blue collar worker buys more casual
work clothes whereas a professional spends more on suits
or high priced/ quality work wear.
3. Lifestyle.
 Lifestyle is a person’s pattern of living as expressed in his or
her attitudes / opinion / activities.
 Customer don’t just buy product , but buy the value and
lifestyle those product represent.
 Involves measuring AIO dimension: activities (work,
hobbies) interest, (food, fashion) opinion (social issues,
product).
Factors Affecting Buyer Behavior.
7/16/2014Marketing
1
0
4. Economic situation
- Marketers watch trends in personal income,
savings, and interest rate.
- Recession: redesign, reposition, and re-price the
products.
Factors Affecting Buyer Behavior.
7/16/2014Marketing
1
1
d) Psychological factors.
Influence by 4 major psychological factor.
1) Motivation
– consumers are motivated to buy goods and services to
satisfy their needs.
 Motivation of consumers can be explained by using
Maslow’s hierarchy of needs.
Maslow’s Hierarchy of Needs
7/16/2014Marketing
1
2
Five levels of needs
1. Physiological – basic needs for food,
clothing, shelter
2. Security / safety – protection against danger
and uncertainty
3. Social – love and affection, sense of
belonging to a group
4. Esteem – respect of others and self-esteem
5. Self-actualization / self-fulfillment – to be
what one is capable of being
Factors Affecting Buyer Behavior.
7/16/2014Marketing
1
3
Self Actualization Needs
Esteem Needs
Social Needs
Security Needs
Physiological Needs
Maslow’s Hierarchy of Needs
Maslow’s Hierarchy of Needs
7/16/2014Marketing
1
4
As each need is satisfied, a higher need emerges.
When all other needs are met, employees will
become motivated by self-actualization i.e. They
will look for meaning and personal growth in
their work, and seek new responsibilities.
Some employees meet their self-actualization
need by producing work of high quality, creative
ideas.
Factors Affecting Buyer Behavior.
7/16/2014Marketing
1
5
2) Belief and Attitudes.
Attitudes:
- are a person’s enduring favorable or unfavorable
evaluations, emotional feelings with regard to an
object.
- They are formed over time and difficult to change.
- Attitude towards religion, politics, clothes, music,
food, etc.
- Marketer normally try to adjust the attitude, not to
change the attitude.
Factors Affecting Buyer Behavior.
7/16/2014Marketing
1
6
Beliefs:
- descriptive thought that a person has about
something – based on knowledge, opinion or
faith.
- If some of the beliefs are wrong and prevent
purchase, the marketer will want to launch a
campaign to correct them.
Factors Affecting Buyer Behavior.
7/16/2014Marketing
1
7
3) Learning.
 Learning refers to the changes in an individual’s
behavior arising from experience (satisfaction or
dissatisfaction).
 Occurs through interplay of drives, stimuli, cues,
responses and reinforcement.
Factors Affecting Buyer Behavior.
7/16/2014Marketing
1
8
4) Perception
- The process by which people select, organize, and
interprets information to form a meaningful
picture of the world.
- Different people with different interpretation via 5
senses: sight, hearing, smell, and taste.
- Marketer’s must work hard to get their messages
through.
Consumer Buying Roles.
7/16/2014Marketing
1
9
Marketers need to know what people
are involved in the buying decision
and the role that each one plays.
Buying Decision Process.
7/16/2014Marketing
2
0
Consumers go thru many stages in the process of
purchasing a product/service.
a) Problem recognition.
• Consumer first identifies the need for a particular
product/service/hunger/thirst
b) Information Search.
• Gathers information on how to satisfy need.
• Sources of information: personal (family, friends),
commercials(advertising, salespeople), public
(internet, mass media), experiential (examining,
using the products)
Buying Decision Process.
7/16/2014Marketing
2
1
c) Evaluation of alternatives.
• Uses a set of criteria to evaluate alternatives identified
during the search process.
• Depends on individual consumer and the specific buying
situation. Eg: Careful calculation/logical thinking/ little or
no evaluation etc.
d) Purchase decision.
• The end result of the search and evaluation is the actual
purchase of the product/service.
• The consumer now decides where, how and when to
purchase.
• 2 factors influenced: attitude of others and unexpected
situational factors.
Buying Decision Process.
7/16/2014Marketing
2
2
d) Post-purchase behavior.
• Relationship between consumer expectation and
product perceive performance.
• Consumers experience some post-purchase
anxieties, called cognitive dissonance. Marketers
can help to reduce this anxiety.
7/16/2014Marketing
2
3
BUSINESS MARKET
7/16/2014Marketing
2
4
 Business market includes firms that buy goods
and services in order to produce products and
services to sell to others.
 Derived from the demands of consumer goods.
 Involves more decision participants, and more
professional purchasing experts.
 more formalised – eg : details product
specifications and written purchasing orders.
 Buyer and seller work closely to each others –
more dependent
7/16/2014Marketing
2
5
Straight Rebuy
 This is a recurring purchase decision in which an
item that has performed satisfactorily is bought
again.
Modified Rebuy
 In this situation, the buyer will re-evaluate his
available options. The buyer may look for new
suppliers or make changes to the product
purchased.
New Task Buying
 This refers to first time or unique purchase
situations that require considerable effort on the
decision maker’s part.
Major type of buying situations
7/16/2014Marketing
2
6
Users are people in the organization who actually use
the product or service.
Influencers affect the buying decision, usually by
helping define the specifications for what is bought.
Eg: technical personnel
Buyers have formal authority and responsibility to
select the supplier and negotiate the terms of the
contract.
Deciders have the formal or informal power to select
or approve the supplier that receives the contract.
Gatekeepers control the flow of information in the
buying centre. Eg: technical personnel, secretaries.
Participants of Business Buying
Process
Business Buying Process.
7/16/2014Marketing
2
7
Problem recognition
General need description
Product Specification
Supplier search.
Proposal solicitation
Supplier selection
Order routine specification
Performance review.

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Unit 3 consumer_decision_making

  • 2. Analyzing Consumer Markets and Buying Behavior 7/16/2014Marketing 2  Know customers is never simple  They change in the last minute  Say one thing; do another  Companies profit from understanding how and why customers buy
  • 3. Introduction 7/16/2014Marketing 3 Consumer behavior involves the acts of individual in obtaining, using and disposing of economic goods and services. Behavior of individual includes the decision steps that precede and determines theses acts. How consumers around the world make their choices among products embraces a fascinating array of factors.
  • 4. 7/16/2014Marketing 4 What is Consumer behavior? the study of how individuals, groups and organizations select, buy, use and dispose of goods, services, ideas or experiences to satisfy their needs and wants
  • 5. Factors Affecting Buyer Behavior. 7/16/2014Marketing 5 a) Cultural. - set of basic values, perceptions, wants, and behaviors learned by a member of society, from family and other important institutions. Subculture: - A group of people with shared value system based on common life experiences and situations. - Eg: nationalities, religions, racial groups and geographic. Social class: - Permanents and ordered division in society whose members share similar values, interest, and behavior. - Distinct brand preference such as clothing, home furnishing, automobiles etc. -
  • 6. Factors Affecting Buyer Behavior. 7/16/2014Marketing 6 UPPER CLASS - upper-upper: inherited wealth - lower uppers: MIDDLE CLASS - upper middles: professionals , businessman who possess neither family status nor unusual wealth - middle class: average pay white collar and blue collar worker WORKING CLASS - heavily depends for economic and emotionals support LOWER CLASS - Upper lowers: working poor. Lack of education. Poorly paid for unskilled work. - Lower-lowers: unskilled laborer. Often out of work.
  • 7. Factors Affecting Buyer Behavior. 7/16/2014Marketing 7 b) Social.  Social factors includes family and groups. 1. Family is the most important determinant of consumer behavior because of the close, continuing interactions among family members. 2. Groups refers to 2 or more people who interact to accomplish individuals or mutual goals. eg: Opinion leader - reference group with special skills, knowledge, personality, or other characteristics, exerts social influence on others. 3. Roles and status: roles consist of activities people are expected to perform around them.
  • 8. Factors Affecting Buyer Behavior. 7/16/2014Marketing 8 c) Personal. 1. Age and family life cycle stage.  Consumer purchases of goods/services change through their lifetime. Taste in food, clothing, recreation are often related to age.  Buying is also affected by the life cycle stage or phase that the family is in.  Husband and wife involvement
  • 9. Factors Affecting Buyer Behavior. 7/16/2014Marketing 9 2. Occupation.  A person’s job or career affects his choices of products/services. A blue collar worker buys more casual work clothes whereas a professional spends more on suits or high priced/ quality work wear. 3. Lifestyle.  Lifestyle is a person’s pattern of living as expressed in his or her attitudes / opinion / activities.  Customer don’t just buy product , but buy the value and lifestyle those product represent.  Involves measuring AIO dimension: activities (work, hobbies) interest, (food, fashion) opinion (social issues, product).
  • 10. Factors Affecting Buyer Behavior. 7/16/2014Marketing 1 0 4. Economic situation - Marketers watch trends in personal income, savings, and interest rate. - Recession: redesign, reposition, and re-price the products.
  • 11. Factors Affecting Buyer Behavior. 7/16/2014Marketing 1 1 d) Psychological factors. Influence by 4 major psychological factor. 1) Motivation – consumers are motivated to buy goods and services to satisfy their needs.  Motivation of consumers can be explained by using Maslow’s hierarchy of needs.
  • 12. Maslow’s Hierarchy of Needs 7/16/2014Marketing 1 2 Five levels of needs 1. Physiological – basic needs for food, clothing, shelter 2. Security / safety – protection against danger and uncertainty 3. Social – love and affection, sense of belonging to a group 4. Esteem – respect of others and self-esteem 5. Self-actualization / self-fulfillment – to be what one is capable of being
  • 13. Factors Affecting Buyer Behavior. 7/16/2014Marketing 1 3 Self Actualization Needs Esteem Needs Social Needs Security Needs Physiological Needs Maslow’s Hierarchy of Needs
  • 14. Maslow’s Hierarchy of Needs 7/16/2014Marketing 1 4 As each need is satisfied, a higher need emerges. When all other needs are met, employees will become motivated by self-actualization i.e. They will look for meaning and personal growth in their work, and seek new responsibilities. Some employees meet their self-actualization need by producing work of high quality, creative ideas.
  • 15. Factors Affecting Buyer Behavior. 7/16/2014Marketing 1 5 2) Belief and Attitudes. Attitudes: - are a person’s enduring favorable or unfavorable evaluations, emotional feelings with regard to an object. - They are formed over time and difficult to change. - Attitude towards religion, politics, clothes, music, food, etc. - Marketer normally try to adjust the attitude, not to change the attitude.
  • 16. Factors Affecting Buyer Behavior. 7/16/2014Marketing 1 6 Beliefs: - descriptive thought that a person has about something – based on knowledge, opinion or faith. - If some of the beliefs are wrong and prevent purchase, the marketer will want to launch a campaign to correct them.
  • 17. Factors Affecting Buyer Behavior. 7/16/2014Marketing 1 7 3) Learning.  Learning refers to the changes in an individual’s behavior arising from experience (satisfaction or dissatisfaction).  Occurs through interplay of drives, stimuli, cues, responses and reinforcement.
  • 18. Factors Affecting Buyer Behavior. 7/16/2014Marketing 1 8 4) Perception - The process by which people select, organize, and interprets information to form a meaningful picture of the world. - Different people with different interpretation via 5 senses: sight, hearing, smell, and taste. - Marketer’s must work hard to get their messages through.
  • 19. Consumer Buying Roles. 7/16/2014Marketing 1 9 Marketers need to know what people are involved in the buying decision and the role that each one plays.
  • 20. Buying Decision Process. 7/16/2014Marketing 2 0 Consumers go thru many stages in the process of purchasing a product/service. a) Problem recognition. • Consumer first identifies the need for a particular product/service/hunger/thirst b) Information Search. • Gathers information on how to satisfy need. • Sources of information: personal (family, friends), commercials(advertising, salespeople), public (internet, mass media), experiential (examining, using the products)
  • 21. Buying Decision Process. 7/16/2014Marketing 2 1 c) Evaluation of alternatives. • Uses a set of criteria to evaluate alternatives identified during the search process. • Depends on individual consumer and the specific buying situation. Eg: Careful calculation/logical thinking/ little or no evaluation etc. d) Purchase decision. • The end result of the search and evaluation is the actual purchase of the product/service. • The consumer now decides where, how and when to purchase. • 2 factors influenced: attitude of others and unexpected situational factors.
  • 22. Buying Decision Process. 7/16/2014Marketing 2 2 d) Post-purchase behavior. • Relationship between consumer expectation and product perceive performance. • Consumers experience some post-purchase anxieties, called cognitive dissonance. Marketers can help to reduce this anxiety.
  • 24. BUSINESS MARKET 7/16/2014Marketing 2 4  Business market includes firms that buy goods and services in order to produce products and services to sell to others.  Derived from the demands of consumer goods.  Involves more decision participants, and more professional purchasing experts.  more formalised – eg : details product specifications and written purchasing orders.  Buyer and seller work closely to each others – more dependent
  • 25. 7/16/2014Marketing 2 5 Straight Rebuy  This is a recurring purchase decision in which an item that has performed satisfactorily is bought again. Modified Rebuy  In this situation, the buyer will re-evaluate his available options. The buyer may look for new suppliers or make changes to the product purchased. New Task Buying  This refers to first time or unique purchase situations that require considerable effort on the decision maker’s part. Major type of buying situations
  • 26. 7/16/2014Marketing 2 6 Users are people in the organization who actually use the product or service. Influencers affect the buying decision, usually by helping define the specifications for what is bought. Eg: technical personnel Buyers have formal authority and responsibility to select the supplier and negotiate the terms of the contract. Deciders have the formal or informal power to select or approve the supplier that receives the contract. Gatekeepers control the flow of information in the buying centre. Eg: technical personnel, secretaries. Participants of Business Buying Process
  • 27. Business Buying Process. 7/16/2014Marketing 2 7 Problem recognition General need description Product Specification Supplier search. Proposal solicitation Supplier selection Order routine specification Performance review.