Consumer Markets and Consumer Buying Behavior

What is Market A Market is a social arrangement that allows buyers and sellers to discover information and carry out a voluntary exchange

Consumer market All the individuals and households who buy or acquire goods and services for personal consumption

Requirements of a Market Must need or desire a particular product Must have the ability to purchase the product Must be willing to use their buying power Must have the authority to buy specific products

Types of Markets Consumer markets Industrial Markets International Markets

What to Ask in the Market What do the customers buy? Why do the customers buy? Who are the buyers? How do they buy? How much do they buy? Where do they buy from?

Consumer Behavior Consumer behavior - the actions a person takes in purchasing and using products and services, including the mental and social processes that come before and after these actions

Consumer Buying Behavior Refers to the buying behavior of final consumers (individuals & households) who buy goods and services for personal consumption

“How do consumers respond to marketing efforts the company might use?” Studying consumer behavior answers to: “How do consumers respond to marketing efforts the company might use?”

Model of Consumer Buying Behavior Marketing and Other Stimuli Model of Consumer Buying Behavior Model of Consumer Behavior This CTR corresponds to Figure 5-1 on p. 135 and to the material on pp. 134-135. Product Price Place Promotion Economic Technological Political Cultural Buyer’s Black Box Consumer Behavior Consumer behavior refers to the buying behavior of final consumers -- individuals and households who buy goods and services for personal consumption. Model of Consumer Behavior Marketers control the stimuli or inputs consisting of the four Ps: Product, Place, Price, and Promotion. Environmental and situational influences, though perhaps beyond the control of the marketer, also influence many consumer choices. But what happens between the marketing stimuli input and the buyer’s response or output? That “black box” processing is the central question for marketers. Teaching Tip: You may wish to discuss the “buyer’s black box” in more detail at this stage. Students sometimes become involved in the controversy regarding the presence or absence of consciousness in consumers. Consider using a two-side in-class discussion: Side A: Experimental psychologists argue that what we call consciousness is merely a set of complex learned responses -- an ordinary physiological function. Side B: Sociologists and social psychologists argue that consciousness is greater than the sum of its physiological parts. For marketers, the issue is sometimes linked to free will: Do marketers create needs by conditioning consumers? Do marketers offer need-fulfillers to needs consumer’s create in their “black box?” Buyer’s Decision Process Characteristics Affecting Consumer Behavior Buyer’s Response Purchase Timing Purchase Amount Product Choice Brand Choice Dealer Choice

Post-purchase Behavior Purchase Evaluation of Alternatives Assess value in consumption Purchase Buying value Evaluation of Alternatives Assessing value Information Search Seeking a value Need Recognition Perceiving a value Factors Cultural, Social Personal Psychological

Cultural Factors Culture Most basic cause of a person's wants and behavior. Values Perceptions

Subculture Groups of people with shared value systems based on common life experiences. Hispanic Consumers African American Consumers Asian American Consumers Mature Consumers

Social Class People within a social class tend to exhibit similar buying behavior. Combination of Occupation, Income, Education, Wealth

Social Factors Reference Groups Family Roles and Status

Personal Factors Age and Family Life Cycle Stage Occupation Economic Situation Lifestyle Personality & Self-Concept

Psychological Factors Motivation Perception Learning Beliefs and Attitudes

Maslow Needs Hierarchies

Consumer Decision Process

Need Recognition Marketing helps consumers recognize an imbalance between present status and preferred state

Information Search: Seeking Value Internal Search- Recall information from memory External Search information from outside environment

Alternative Evaluation Analyze product attributes Use cutoff criteria Rank attributes by importance

Purchase Decision Buying the most preferred brand Intention Unexpected situational factors

Post-purchase Behavior Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions Did I make a good decision? Did I buy the right product? Did I get a good value?

Involvement and Problem-Solving Variations More Involvement Less Routine Response Behavior Limited Decision Making Extensive

Routine Response Behavior Little involvement in selection process Frequently purchased low cost goods May stick with one brand Buy first/evaluate later Quick decision

Limited Decision Making Low levels of involvement Low to moderate cost goods Evaluation of a few alternative brands Short to moderate time to decide

Extensive Decision Making High levels of involvement High cost goods Evaluation of many brands Long time to decide May experience cognitive dissonance

Comparison of problem-solving variations

Quality: %40, Price:%30, Services: %20, Weight: %10 Brand Quality Price After Sales Services Weight A 10 5 7 6 D 8 Quality: %40, Price:%30, Services: %20, Weight: %10 For Brand A: (0.4 x10) + (0.3 x 5) + (0.2 x 7) + (0.1 x 6) = 7.5 For Brand D: (0.4 x 7) + (0.3 x 8) + (0.2 x 5) + (0.1 x 7) = 6.9

Buyer Decision Process for New Products Stages Awareness Interest Evaluation Trial Adoption

Business Markets Individuals or groups that purchase a specific kind of product for resale, direct use in producing other products, or use in general daily operations.

Characteristics of Business Markets Market Structure and Demand Nature of Buying Types of Decisions and the Decision Process

Market Structure and Demand Business markets contain fewer but larger buyers More geographically concentrated Demand in business markets is derived from final consumer demand Demand is more inelastic Demand fluctuates more and more quickly

Nature of the Buying Unit Business purchases involve more buyers Buying involve more professional purchasing effort

Types of Decision and the Decision Process Business buyers usually face more complex buying decision Business buying process is more formalized Buyers and sellers work more closely together and build close relationships