unit 3 marketing

Consumer Market and consumer buyer Behavior
Unit 3
Consumer Behavior 1

Who are the consumers????
Who is the customer????
Consumer Behavior 2

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

•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

Some Consumer behavior role
Consumer Behavior 5

Consumer Behavior
Consumer Behavior 6

•“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

•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.

7.10
Four Types of Buying Decision Behavior

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

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

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

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

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

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…..

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

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
MySpace.com
Facebook.com

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

5-15
Personal Factors
•Personal characteristics
•Age and life-cycle stage
•Occupation
•Economic situation
•Lifestyle
•Personality and self-concept

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

Personal Factors
Occupation affects the goods and services bought by
consumers
Economic situation includes trends in:
•Personal income
•Savings
•Interest rates
5-17

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

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

Personal Factors
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

5-24
Personal Factors
Self-concept refers to people’s
possessions that contribute to and
reflect their identities

5-25
• Motivation
• Perception
• Learning
• Beliefs and attitudes

5-26
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

5-28
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

5-29
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

5-30
Learning is the changes in an individual’s behavior arising
from experience and occurs through interplay of:
• Drives
• Stimuli
• Cues
• Responses
• Reinforcement

5-31
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

Consumer Buying Decision Process

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

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

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

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

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

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

5-44
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

Customer satisfaction is a key to building
profitable relationships with consumers—to
keeping and growing consumers and reaping
their customer lifetime value
5-45

Mktg Mgmt 43
Successive Sets Involved in Consumer Decision Making

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

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

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

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

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.

Major Factors Influencing Industrial Buying
•Environmental
•Organizational
•Interpersonal
•Individual

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

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.

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 ?

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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

unit 3 marketing

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