Understanding Consumer and Business Buyer Behavior

Consumer Markets and Consumer Buyer Behavior Buying behavior of final consumers Consumer buyer behavior All the individuals and households that buy or acquire goods and services for personal consumption Consumer market

Model of Buyer Behavior

Factors Influencing Consumer Behavior

Cultural Factors Set of basic values, perceptions, wants, and behaviors learned by an individual from family and other important institutions Culture Group of people with shared value systems based on common life experiences and situations Cross-cultural marketing: Including ethnic themes and cross- cultural perspectives within a brand’s mainstream marketing Subculture Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors Social class

Culture Culture is the most basic cause of a person’s wants and behavior Culture is learned from the society, family, and other institutions Culture reflects basic values, perceptions, wants, and behaviors Cultural shifts create opportunities for new products or may otherwise influence consumer behavior

Groups of people with shared value systems based on common life experiences and situations Subculture

Major subculture groups in the U.S. Hispanic consumers African-American consumers Asian-American consumers Mature consumers

Social Factors Groups Word-of- mouth influence Opinion leader Online social networks Family Roles and status

Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors Social class

The Major American Social Classes

Social Factors: Groups and Social Networks Membership, reference, and aspirational groups Marketers attempt to reach opinion leaders within groups important to the target market Opinion leaders are recruited as brand ambassadors or for buzz marketing

Opinion Leaders at JetBlue JetBlue CrewBlue program

Groups and Social Networks Online social networks allow marketers to interact with consumers Blendtec has developed a kind of cult following for its flood of “Will It Blend?” videos on YouTube, resulting in a fivefold increase in Blendtec’s sales

Social Factors Family Strongly influences buying behavior Gender stereotypes for certain types of purchases are relaxing in the U.S. Children are very influential, and have substantial disposable income of their own Roles and status Role = Expected activities Status = Esteem given to role by society

Personal Factors Age and life- cycle stage Occupation Economic situation Lifestyle Personality and self- concept

A person’s pattern of living as expressed in his or her activities, interests, opinions Lifestyle

Personal Factors People within the same subculture, social class, and occupation may have different lifestyles People buy the lifestyles represented by products or services

Personal Factors PersonicX 21 life-stage groupings lets marketers see customers as they really are and target them precisely

Personal Factors Triumph doesn’t just sell motorcycles; it sells an independent, “Go your own way” lifestyle

Personal Factors Personality Refers to the unique psychological characteristics that distinguish a person or group Generally defined in terms of traits Can be useful in analyzing consumer behavior for certain product or brand choices Brands may also have personalities

Psychological Factors MotivationPerception Learning Beliefs and Attitudes

A motive is a need that is sufficiently pressing to direct the person to seek satisfaction Motivation

Maslow’s Hierarchy of Needs

Process by which people select, organize, and interpret information to form a meaningful picture of the world Perception

Psychological Factors Learning Changes in an individual’s behavior arising from experience Occurs due to an interplay of drives, stimuli, cues, responses, and reinforcement Strongly impacted by the consequences of an individual’s behavior Behaviors with satisfying results tend to be repeated

A descriptive thought that a person holds about something Belief A person’s consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea Attitude

Beliefs and Attitudes Beliefs and attitudes: By matching today’s attitudes about life and healthful living, the SoBe brand has become a leader in the New Age beverage category

Buyer Decision Process

Need Recognition and Information Search Need recognition can be triggered by internal or external stimuli Advertising can be very helpful in stimulating need recognition

Need Recognition and Information Search Several sources of information may be used as part of the information search Personal sources Commercial sources Public sources Experiential sources

Evaluation of Alternatives and Purchase Decision Evaluation process is dependent upon the specific buying situation and the individual consumers Purchase decision - Two factors may interfere with realization of purchase intentions: Attitudes of others Unexpected situational factors

Post-Purchase Behavior Consumer satisfaction is a function of consumer expectations and perceived product performance Performance < Expectations --- Disappointment Performance = Expectations --- Satisfaction Performance > Expectations --- Delight

Stages in the Adoption Process AwarenessInterestEvaluation TrialAdoption

Adopter Categories Based on Relative Time of Adoption of Innovations

Product Characteristics That Influence the Rate of Adoption Is the innovation superior to existing products? Relative advantage Does the innovation fit the values and experience of the target market? Compatibility Is the innovation difficult to understand or use? Complexity Can the innovation be used on a limited basis? Divisibility Can results be easily observed or described to others? Communicability

Business Buyer Behavior Buying behavior of organizations Purchased goods and services are used in the production of other products and services that are sold, rented, or supplied to others. Business buying process: Determining which products and services an organization needs to purchase Finding, evaluating, and choosing among alternative suppliers and brands

Business Markets Business markets are huge and involve more money and items than consumer markets. Differ from consumer markets in terms of: Market structure and demand Nature of the buying unit Types of decisions and the decision process

Market Structure and Demand and Nature of the Buying Unit Market structure and demand Fewer but larger buyers Derived demand: Business demand that comes from the demand for consumer goods Inelastic and fluctuating demand Nature of the buying unit More decision participants More professional purchasing effort

Types of Decisions Business purchases More complex buying decisions Large sums of money Complex technical and economic considerations Interactions among people at many levels of the buyer’s organization

Decision Process Buying processes Longer and more formalized procedures Buyer and seller more dependent on each other Supplier development: Systematic development of networks of supplier- partners To ensure a dependable supply of products and materials

A Model of Business Buying Behavior

Types of Buying Situations Buyer routinely reorders something without any modifications Straight rebuy Buyer wants to modify product specifications, prices, terms, or suppliers New task: Buyer purchases a product or service for the first time Modified rebuy Buying a packaged solution to a problem from a single seller Avoids the separate decisions involved in a complex buying situation Systems selling (or solutions selling)

Participants in the Business Buying Process Buying center: All the individuals and units that play a role in the purchase decision- making process Actual users of the product or service People who make the buying decision People and units influencing the buying decision People who do the actual buying Individuals and units controlling the buying information

Major Influences on Business Buying Behavior

Stages of Business Buying Behavior

E-Procurement Purchasing through electronic connections between buyers and sellers–usually online E-procurement occurs through: Reverse auctions Online trading exchanges Company buying sites Extranet links with key suppliers

Benefits and Problems of E-Procurement Benefits Cuts transaction costs Results in efficient purchasing for both buyers and suppliers Reduces the time between order and delivery Helps an organization keep better track of all purchases Frees buyers from a lot of work and paperwork Problems Can affect the customer- supplier relationship Can create potential security concerns