Chapter 5: Understanding Consumer and Business Buyer Behavior Marketing II Chapter 5: Understanding Consumer and Business Buyer Behavior

Objectives Review This chapter is the last of three chapters that address understanding the marketplace and consumers. Here, we’ve looked closely at consumer and business buyer behavior. The American consumer market consists of more than 310 million people who consume more than $10 trillion worth of goods and services each year, making it one of the most attractive consumer markets in the world. The world consumer market consists of more than 6.9 billion people. The business market involves even more dollars and items than the consumer market. Understanding buyer behavior is one of the biggest challenges marketers face.

Consumer Market The consumer market consists of all the individuals and households who buy or acquire goods and services for personal consumption. A simple model of consumer behavior suggests that marketing stimuli and other major forces enter the consumer’s black box. This black box has two parts: buyer characteristics buyer’s decision process. Once in the black box, the inputs result in buyer responses, such as buying attitudes and preferences and purchase behavior.

Consumer Buyer Behavior Consumer buyer behavior is influenced by four key sets of buyer characteristics: cultural social personal psychological Understanding these factors can help marketers to identify interested buyers and to shape products and appeals to serve consumer needs better.

Consumer Buyer Behavior Culture is the most basic determinant of a person’s wants and behavior. People in different cultural, subcultural, and social class groups have different product and brand preferences. Social factors – such as small group, social network, and family influences – strongly affect product and brand choices. As do personal characteristics - such as age, life cycle stage, occupation, economic circumstances, lifestyle, and personality. Finally consumer buying behavior is influenced by four major sets of psychological factors – motivation, perception, learning, and beliefs and attitudes. Each of these factors provides a different perspective for understanding the workings of the buyer’s black box.

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 post purchase behavior The marketer’s job is to understand the buyer’s behavior at each stage and the influences that are operating.

Buyer Decision Process During need recognition, the consumer recognizes a problem or need that could be satisfied by a product or services. Once the need is recognized, the consumer moves into the information search stage. With information in hand, the consumer proceeds to alternative evaluation and assesses brands in the choice set. From there, the consumer makes a purchase decision and actually buys the product. In the final stage of the buyer decision process, post-purchase behavior, the consumer takes action based on satisfaction or dissatisfaction.

Adoption Process The product adoption process is made up of five stages: Awareness Interest Evaluation Trial Adoption New-product marketers must think about how to help consumers move through these stages.

Diffusion Process With regard to the diffusion process for new products, consumers respond at different rates, depending on consumer and product characteristics. Consumers may be innovators, early adopters, early majority, late majority, or laggards. Each group may require different marketing approaches. Marketers often try to bring their new products to the attention of potential early adopters, especially those who are opinion leaders.

Business Market The business market comprises all organizations that buy goods and services for use in the production of other products and services or for the purpose of reselling or renting them to others at a profit. As compared to consumer markets, business markets usually have fewer, larger buyers who are more geographically concentrated. Business demand is derived demand, and the business buying decision usually involves more, and more professional buyers.

Business Buyer Behavior Business buyers make decisions that vary with the three types of buying situations: straight rebuys, modified rebuys, and new tasks. The decision-making unit of a buying organization-the buying center- can consists of many different persons playing many different roles.

Business Marketers The business marketer needs to know the following: Who are the major buying center participants? In what decisions do they exercise influence and to what degree? What evaluation criteria does each decision participant use? The business marketer also needs to understand the major environmental, organizational, interpersonal, and individual influences on the buying process.

Business Buying Decision Process The business buying decision process itself can be quite involved, with eight basic stages; problem recognition general need description product specification supplier search proposal solicitation supplier selection order-routine specification performance review

Business Buyer Decision Process Buyers who face a new-task buying situation usually go through all stages of the buying process. Buyers making modified or straight rebuys, in contrast, may skip some of the stages. Companies must manage the overall customer relationship, which often includes many different buying decisions in various stages of the buying decision process. Recent advances in information technology have given birth to e-procurement, by which business buyers are purchasing all kinds of products and services online. Business marketers are increasingly connecting with customers online to share marketing information, sell products and services, provide customer support services, and maintain ongoing customer relationships.