1. Consumer & Business Buying Behavior Part 1 Marketing & Advertising Mr. Arbiter

2. Consumer Buyer Behavior The buying behavior of final consumers-individuals and households who buy goods and services for personal consumption All of these consumers combine to make up the consumer market The American consumer market consists of more than 300 million people who consume many trillions of dollars worth of goods and services each year The American consumer market is considered the most attractive consumer market in the world

3. Model of Consumer Behavior Consumers make many buying decisions each day Large companies spend millions of dollars each year analyzing questions about consumer behavior The central question becomes: How do consumers respond to various marketing efforts a company might use? The term Black box is often used to refer to the consumers’ response to various stimuli such as marketing stimuli (The 4 P’s) and to various external factors

4. Model of Buyer Behavior Marketing & other stimuli Marketing 4 P’s Other Economic Technological Political Cultural Buyers’ Black Box Buyer characteristics Buyer decision process Buyer responses Product choice Brand choice Dealer choice Purchase timing Purchase amount

5. Cultural Factors  Culture – The set of values, perceptions, wants and behaviors learned by a member of a society from family and other important institutions.

6. Factors Influencing Consumer Behavior Cultural Culture Subculture Social Class Social Reference groups Family Roles & status Personal Age and life- cycle stage OccupationWealthLifestylePersonality PsychologicalMotivationPerceptionLearning Beliefs & attitudes Buyer

7. Values Learned by American Children Achievement and success Activity and involvement Efficiency and practicality Material comfort Individualism Freedom Humanitarianism Youthfulness Fitness & health

8. Cultural Shifts Marketers are always trying to spot or predict cultural shifts in order to discover new products and services that will be in demand Greater concern about health and fitness Health and fitness services Fitness attire Fitness & exercise equipment More natural foods & diets Shift toward informality Casual clothing Simpler home furnishings Casual dining http://www.veoh.com/watch/v16781721J9Apcx88 http://www.youtube.com/watch?v=UNwnQkGpKPE

9. Subculture A group of people with shared value systems based on common life experiences and situations. Each culture contains smaller subcultures Nationalities Religions Racial groups Geographic regions Examples Hispanics African Americans Asian Mature consumers

10. Social Class Social class is not determined by a single factor such as wealth or education but is measured as a combination of up to four factors: Income Occupation Education Wealth Unlike other cultures, there are no strict lines between classes and while it may be difficult, people an move up the rung of social class.

11. American Social Classes Upper Class Upper Uppers-1 percent Lower Uppers-2 percent Middle Class Upper Middle-12 percent Middle Class-32 percent Working Class- 38 percent Lower Class Upper Lowers - 9 percent Lower Lowers -7 percent http://www.youtube.com/watch?v=nU5MtVM_zFs

12. Groups A person’s behavior is influenced by many small groups Groups are defined as two or more people who interact to accomplish individual or mutual goals. Membership groups have a direct influence and are groups that one joins. Reference groups serve as direct or indirect influence and are typically groups that one does not belong to.

13. Groups (continued) Marketers try to identify the reference groups of a target market Reference groups influence consumers in the following ways: Exposure to new behaviors and lifestyles Can change attitudes and self-concept Create pressure to conform Influence varies across products and brands Influence is the strongest when the product is visible to others

14. Opinion Leaders A person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts influence on others. Experts call these opinion leaders the influentials or leading adopters They represent 10% of Americans They drive trends Influence mass opinion They spread the buzz by way of a large circle of “followers”

15. The Family Group The family unit represents the most important consumer buying organization in our society. Marketers study the roles and influences of husbands, wives and children in the purchase process of a given product. As society evolves, buying roles change While women represent only 40% of drivers in America, they strongly influence more than 80% of car buying Once primarily considered a women’s domain, 40% of grocery shopping dollars are now spent by men

16. Groups – Roles and Status A person’s position in a group can be defined in terms of both role and status. Roles-Activities a member is expected to perform according to the other people in the group. Each role is associated with a status representing the general esteem given to it. People usually choose products appropriate to their role and status in a group. A person typically belongs to various groups and has different roles and status depending on the group. 135

17. Personal Factors Buyers’ decisions are also influenced by personal characteristics Age and life-cycle stage Occupation Economic situation Lifestyle Personality Self-concept

18. Age and Life-cycle People change the goods and services they buy over their lifetimes Tastes in various routine and non-routine purchases change with age and maturity levels Food Clothes Furniture Recreation Housing

19. Age and Life-cycle Traditional family units have changed and become more variable These units once included Young Young Singles Married with children Today’s more complex stages Unmarried couples Singles marrying later in life Childless couples Same-sex couples Single parents Extended parents (young adult children returning home)

20. Occupation A person’s occupation affects their choices in the goods and services they purchase A typical example is clothing The terms blue-collar and white-collar are societal representations of this type of purchase decision

21. Economic Situation Marketers must consider two aspects of economic situations Overall economy Individual economic situations Marketers of income sensitive goods watch economic trends so that they can quickly react to threats of recession Possible steps that can be taken Redesign Reposition Re-price Repackage

22. Elasticity of Demand A model used by economists and business people to determine the extend to which changes in price affect changes in demand. Staple products such as flour, sugar, milk, eggs and bread are considered elastic. Luxury items such as candy, cake and cookies are more inelastic. Price and disposable income are interchangeable concepts in this model.

23. Elasticity of Demand

24. Economic Situation Marketers also position their products to particular individual income levels Rolex markets watches ($6,000) “A tribute to elegance” “An object of passion” “A symbol for all time” Timex markets watches ($60) “Take a licking and keep on ticking”