1 Chapter 5 Consumer and Business Buyer Behavior

Jian Hong SHAO USTB Concept Connections Define the consumer market and major factors that influence consumer buyer behavior. Understand the stages in the buyer decision process. Describe the adoption and diffusion process for new products. Define the business market and explain how business markets differ from consumer markets. Identify the major factors that influence business buyer behavior.

Jian Hong SHAO USTB Consumer Buying Behavior refers to the buying behavior of final consumers -individuals & households who buy goods and services for personal consumption. All these consumers make up the consumer market. “How do consumers respond to various marketing efforts the company might use?”

Jian Hong SHAO USTB Model of Consumer Behavior Marketing and Other Stimuli Marketing Product Price Place Promotion Other Economic Technological Political Cultural Buyer’s Black Box Buyer Characteristics Buyer Decision Process Buyer Responses Product Choice Brand Choice Dealer Choice Purchase Timing Purchase Amount

Jian Hong SHAO USTB Factors Influencing Consumer Behavior Social Reference groups Family Roles & status Personal Age & life-cycle Occupation Economic situation Lifestyle Personality self-concept Psycho- Logical Motivation Perception Learning Beliefs & attitudes Buyer Culture Sub- culture Social class Culture Sub- culture Social class Cultural

Jian Hong SHAO USTB Personal Influences Age and Life Cycle Stage Occupation Personality & Self-Concept Economic Situation ActivitiesInterests Lifestyle Identification Opinions Factors Affecting Consumer Behavior -Personal

Jian Hong SHAO USTB Factors Affecting Consumer Behavior - Psychological Psychological Factors Affecting Buyers Choices Motivation Perception Learning Beliefs and Attitudes

Jian Hong SHAO USTB Perception Includes: Selective Attention ( 注意 ) Consumers screen out information Selective Distortion ( 曲解 ) People interpret to support beliefs Selective Retention ( 保留 ) People retain points to support attitudes Factors Affecting Consumer Behavior - Psychological

Jian Hong SHAO USTB Maslow’s Hierarchy of Needs Physiological Needs (hunger, thirst) Safety Needs (security, protection) Social Needs (sense of belonging, love) Esteem Needs ( self-esteem) Self Actualization (Self-development)

Jian Hong SHAO USTB Types of Buying Decision Behavior

Jian Hong SHAO USTB High Involvement Significant differences between brands Few differences between brands Low Involvement Types of Buying Decision Behavior Complex Buying Behavior Variety- Seeking Behavior Dissonance- Reducing Buying Behavior Habitual Buying Behavior

Jian Hong SHAO USTB Buyer Decision Process Postpurchase Behavior Purchase Decision Information Search Need Recognition Evaluation of Alternatives

Jian Hong SHAO USTB Step 1 Need Recognition State Where the Buyer’s Needs are Fulfilled and the Buyer is Satisfied. Needs Arising From: Internal Stimuli – Hunger External Stimuli- Friends Buyer Recognizes a Problem or a Need.

Jian Hong SHAO USTB Family, friends, neighbors Most effective source of information Advertising, salespeople Receives most information from these sources Mass Media Consumer-rating groups Handling the product Examining the product Using the product Personal Sources Commercial Sources Public Sources Experiential Sources Step 2 Information Search

Jian Hong SHAO USTB Step 3 Evaluation of Alternatives Product Attributes Evaluation of Quality, Price, & Features Product Attributes Evaluation of Quality, Price, & Features Degree of Importance Which attributes matter most to me? Degree of Importance Which attributes matter most to me? Brand Beliefs What do I believe about each available brand ? Brand Beliefs What do I believe about each available brand ? Total Product Satisfaction Based on what I’m looking for, how satisfied would I be with each product? Total Product Satisfaction Based on what I’m looking for, how satisfied would I be with each product? Evaluation Procedures Choosing a product (and brand) based on one or more attributes. Evaluation Procedures Choosing a product (and brand) based on one or more attributes.

Jian Hong SHAO USTB 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. Marketers Must Study Buyers to Find Out How They Evaluate Brand Alternatives Step 3 Evaluation of Alternatives

Jian Hong SHAO USTB Step 4 Purchase Decision

Jian Hong SHAO USTB Purchase Intention Desire to buy the most preferred brand Purchase Decision Unexpected Situational Factors Attitudes of Others Step 4 Purchase Decision

Jian Hong SHAO USTB Step 5 Postpurchase Behavior Consumer’s Expectations of Product’s Performance & Product’s Perceived Performance. Dissatisfied Customer Satisfied Customer

Jian Hong SHAO USTB Discussion Question 3 Discuss a specific major purchase that you has made recently. What type of buying decision was it? Discuss the Buyer Decision Process and what major factors influenced your decisions.

Jian Hong SHAO USTB Awareness: Consumer is aware of product, but lacks information. Interest: Consumer seeks Information about new product. Evaluation: Consumer considers trying new product. Trial: Consumer tries new product on a small scale. Adoption: Consumer decides to make regular use of product. Stages in the Adoption Process

Jian Hong SHAO USTB Adopter Categories Percentage of Adopters Time of Adoption Early Late Innovators Early Adopters Early Majority 2.5% 13.5% 34% 16% Laggards Late Majority

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

Jian Hong SHAO USTB What is a Business Market? Comprises 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. The business market is huge and involves many more dollars and goods than do consumer markets.

Jian Hong SHAO USTB Characteristics of Business Markets Contain fewer, but larger buyers Contain fewer, but larger buyers Customers are more geographically concentrated Customers are more geographically concentrated Buyer demand is derived from final consumer demand Buyer demand is derived from final consumer demand Demand is often more inelastic Demand often fluctuates more, and more quickly

Jian Hong SHAO USTB Model of Business Buyer Behavior

Jian Hong SHAO USTB Major Types of Buying Situations New Task Buying Involved Decision Making Modified Rebuy Straight Rebuy

Jian Hong SHAO USTB Participants in the Business Buying Process Unexpected Situational Factors Unexpected Situational Factors Attitudes of Others Attitudes of Others Users Roles Include Decision- Making Unit of a Buying Organization is Called Its Buying Center. Influencers Buyers Deciders Gatekeepers

Jian Hong SHAO USTB Major Influences on Business Buyer Behavior Environmental Economic developments Supply Conditions Technological change Political and regulatory developments Competitive Developments Culture and customs Organizational Objectives Policies Procedures Organizational Structure Systems Interpersonal Authority Status Empathy Persuasiveness Individual Age Education Job Position Personality Risk Attitudes Buyers

Jian Hong SHAO USTB Business Buying Process

Jian Hong SHAO USTB Review of Concept Connections Define the consumer market and major factors that influence consumer buyer behavior. Understand the stages in the buyer decision process. Describe the adoption and diffusion process for new products. Define the business market and explain how business markets differ from consumer markets. Identify the major factors that influence business buyer behavior.