MKTM028 Strategic Marketing Week 4 : Buying Behaviour Dr Stephen Castle Dr Elizabth Kim Iain Bromley

Learning Objectives Today we will: Consider human needs and the complexity of people Look at major factors affecting buyer/consumer behaviour Understand the buying process Highlight the difference between consumer and organisational buying

Customer Behaviour “It has long been recognised that marketing planning is ultimately driven by the marketing strategist’s perception of how and why customers behave as they do” Wilson et al (1992)

Human needs…. Food…. Clothes……… Shelter Maslow’s hierarchy of needs

The Complexity of People “The things people buy now have personal and social meanings, in addition to their functional attributes. Products are recognised as: Symbolic of personal attributes and goals. Symbolic of social patterns and strivings.” S.J.Levy.

Marketing as a “Synthetic” Discipline Sociology MARKETING Geography Law Anthropology Economics History Psychology Philosophy? Politics?

Who is the customer? Hooley et al. (2012)

Understanding customers – the key questions Hooley et al. (2012)

Major Factors in Buyer Behaviour Cultural Culture Subculture Social Class Social Reference groups Family Roles and status Personal Age Occupation Economic Lifestyle Personality Psychological Motivation Perception Learning Beliefs and Attitudes

Culture Influences Buyer Behavior Culture is the most fundamental determinant of a person’s wants and behaviors

Characteristics of Social Classes Within a class people tend to behave alike Social class conveys perceptions of inferior or superior position Class may be indicated by a cluster of variables (occupation, income, wealth) Class designation is mobile over time

Major Factors in Buyer Behaviour Cultural Culture Subculture Social Class Social Reference groups Family Roles and status

Reference Groups Membership groups Primary groups Secondary groups Aspirational groups Dissociative groups

Major Factors in Buyer Behaviour Cultural Culture Subculture Social Class Social Reference groups Family Roles and status Personal Age Occupation Economic Lifestyle Personality

Lifestyle influences Multitasking Time-starved Money-constrained

Major Factors in Buyer Behaviour Cultural Culture Subculture Social Class Social Reference groups Family Roles and status Personal Age Occupation Economic Lifestyle Personality Psychological Motivation Perception Learning Beliefs and Attitudes

Motivation Freud’s Theory Behavior is guided by subconscious motivations Maslow’s Hierarchy of Needs Behavior is driven by lowest, unmet need Herzberg’s Two-Factor Theory Behavior is guided by motivating and hygiene factors

Perception Selective attention Selective retention Selective distortion

Decision-making Processes

Level of Perceived Risk Risk - the uncertainty associated with consumer decisions and the outcomes of consumer decisions. Performance risk Financial risk Physical risk Social risk Psychological risk

Level of involvement The degree of personal relevance and risk perceived by members of the target audience in a particular purchase situation. (Rossiter et al, 1991) High involvement consumer decisions expensive, unfamiliar, infrequent, high in effort and risk. Low involvement consumer decisions low cost, familiar, frequently purchased, low in effort and risk.

Types of Buyer Behaviour High Involvement Low Involvement Significant Differences Variety Seeking Complex Few Differences Dissonance-reducing Habitual

Complex Buyer Decision-Making Need Recognition Information Search Evaluation of Alternatives Purchase Decision Postpurchase Behaviour

The Marketing Challenge Outside Stimuli Marketing: value offerings Environmental: economic social cultural Buyer’s Black Box Buyer characteristics psychology decision processes Buyer’s Purchase Decisions Product Brand Dealer Timing Amount

The Customer Dimension Organisational Buying

Business-to-Business Marketing: main characteristics Derived/inelastic demand Fewer, larger buyers/orders Decisions more complex – risk Customisation/negotiation Buying process formalised Mutual loyalties Distribution channels short More complex DMUs…………………...

The Decision-making Unit Influencer: “But it should be……..” The Purchase Decision Initiator: “We need……..” Buyer: “Please supply……..” User: “Put it here……..” Decider: “We’ll get……..” Gatekeeper: “You need to know..”

Factors in Organisational Buying Environmental Demand Economic outlook Interest rate Technology Political Competition Organisational Objectives Policies Procedures Structure, Systems Resources Interpersonal Individual Authority Status Empathy Persuasiveness Age Income Education Job position Personality Risk attitude

Three types of purchase decision: Routine purchase – items are familiar, frequently bought, low risk, from preferred suppliers, at a junior level or automatic re-ordering. Example – office stationery Implications for suppliers – existing: maintain product/service quality, close relationship, avoid complacency. New: break inertia. Participants Information Time/Risk Lo Hi

Three types of purchase decision: Limited problem-solving – rebuy with some change to spec, price, delivery, or supplier, product class familiar, quotations sought. Example – cars Implications for suppliers – existing: protect business, gear for competition. New: negotiate hard. Participants Information Time/Risk Lo Hi

Three types of purchase decision: Extensive problem-solving – no past experience, unfamiliar product, unfamiliar suppliers, high risk. Example – new machinery, buildings Implications for suppliers – new: identify members of DMU, criteria used. Participants Information Time/Risk Lo Hi

Purchase Decision- making Process Need recognition Product specification Supplier search Order Placed! Evaluation of proposals Supplier selection

Purchase Decision- making Process Need recognition Product specification Supplier search Order Placed! Evaluation of proposals Supplier selection Post-purchase evaluation

Learning Objectives Today we will: Consider human needs and the complexity of people Look at major factors affecting buyer/consumer behaviour Understand the buying process Highlight the difference between consumer and organisational buying