Consumer & Business Buyer Behaviour Chapter 6

What’s Happening in Marketing? DETROIT (AdAge.com) -- Volvo is boldly going where no other advertiser has gone. Volvo Cars of North America said it will unveil an online sweepstakes for a chance to win a trip into space during its first ad buy ever on the Super Bowl. Richard Branson appears in the Super Bowl Volvo ad as an astronaut. The Ford Motor Co.-owned brand teamed with Richard Branson's Virgin Galactic, which is planning its first commercial space flight in two or three years. Does such an initiative demonstrate that Volvo understands its customers?

Think about Starbucks Why are consumers willing to pay $2.00 for a cup of coffee? Who are Starbucks’ target markets? What is the marketing communication message Starbucks wants to convey? Why has Starbucks been successful?

Please refer to Page 234 of your Text Think about a specific major purchase you’ve made recently. What buying process did you follow? What major factors influenced your decision?

Understanding the Consumer Market Product Price Place Promotion Economic Technological Political Cultural Buyer’s Black Box Buyer Characteristics Buying Decision Process Buyer’s Responses Product choice Brand choice Dealer choice Purchase timing Purchase amount Figure 6-1 Marketing and other stimuli

Traditional factors affecting consumer purchasing behaviors Demographics (age, gender, income, etc.) Heredity and home environment Family life cycle Life changing events Cultural environment Social environment Situational environment Psychological Factors

Maslow’s Hierarchy of Needs different types of needs drive behaviour to satisfy those needs in an order of precedence Most basic needs fulfilled first To what needs do the following ads appeal? Physiological Self- Actualization Esteem Social Safety

Consumer Decision-Making Process Problem Recognition Information Search Evaluation of Alternatives Purchase Decision Postpurchase Evaluation

Information Search Two ways of gathering information: 1.Internally 2. Externally Types of info sources: Commercial Public Personal Experiential

Postpurchase Evaluation Evaluation of product performance. Cognitive dissonance. Impacts future purchases. Impacts word-of-mouth communications.

Stages in the New Product Adoption Process Adoption process: – the mental process through which an individual passes from first hearing about an innovation to final adoption Consists of 5 Stages (These are exactly as they indicate): – Awareness – Interest – Evaluation – Trial – Adoption

New Product Adoption Rates Time of adoption of innovations 2.5% Innovators 34% Early majority 34% Late majority Early adopters 13.5% 16% Laggards Source: reprinted with permission of the Free Press, a Division of Simon & Schuster, from Diffusion of Innovations, Fourth Edition, by E.M. Rugers, Figure 6-5

Influences on the Rate of Adoption Relative advantage – How much better than existing alternatives? Compatibility – Fit current values and experiences? Complexity – Ease of understanding? Divisibility – Can it be tried on a limited basis? Communicability – Can the innovation be observed and communicated?

Distinguishing Characteristics of Business Markets Concentrated Demand Derived Demand Higher Levels of Demand Fluctuation Purchasing Professionals Multiple Buying Influences Close Buyer-Seller Relationships

Business-to-Business Buying Process Identification of a need Establishment of specifications. Identification of alternatives. Identification of vendors. Evaluation of vendors. Selection of vendors. Negotiate purchase terms.

Influences on the Business Buying Organization – Buying centre, structure and systems, resources, goals, environment and policies Individual – Position, age, education, social situation, attitude about risk, etc. Environmental – Demand for the product, other external environmental factors (i.e., regulatory, technology, competition)

Characteristics of the Three Types of Buying Decisions Newness of Problem or Need Information Requirements Information Search Consideration of New Alternatives Multiple Buying Influence Financial Risks Straight Rebuy Low Minimal Minimal None Very Small Low Routine response Modified Rebuy Medium Moderate Limited Limited Moderate Moderate Limited prob. solving New Task High Maximum Extensive Extensive Large High Extended prob solving

5. Increasingly, business buyers are purchasing all kinds of products and services electronically, either through electronic data interchange links (EDI) or on the Internet. List the benefits of “cyberpurchasing” and “e- procurement.” Illustrate your view with an example from the Internet. Cyberpurchasing gives buyers access to new suppliers, lowers purchasing costs, and hastens order processing and delivery. In turn, business marketers are connecting with customers online to share marketing information, sell products and services, provide customer-support services, and maintain ongoing customer relationships. In addition to constructing their own Web pages on the Internet, they are establishing extranets that link a company’s communications and data with its regular suppliers and distributors. Most of the products bought so far using this new form of purchasing are MROs (maintenance, repair, and operations). To summarize benefits, include the following items: shave transaction costs for both buyers and suppliers; reduce time between order and delivery; create more efficient purchasing systems; forge more intimate relationships between partners and buyers; and level the playing field between large and small suppliers. The rapidly expanding use of cybersourcing, however, also presents some problems. These may be summarized as being: cuts purchasing jobs for millions of clerks and order processors; erodes supplier-buyer loyalty; and creates potential security disasters.