1. CONSUMER BUYING BEHAVIOR PRINCIPLES OF MARKETING WEEK 06/07

2. LEARNING OBJECTIVES Consumer Buying Behavior Decision Making Process Consumer Buying Process Other Influences

3. CONSUMER BUYING BEHAVIOR What is Consumer Buying Behavior? Buying behavior is the decision processes and acts of people involved in buying and using products. Important to understand: Why consumers make the purchases that they make? What factors influence consumer purchases? The changing factors in our society

4. CONSUMER BUYING BEHAVIOR Why Analyze Buying Behavior? Firms need to analyze buying behavior because of the following: Buyers reactions to marketing strategy has a huge impact on a company’s success The company must provide a satisfactory marketing mix and they must understand how, where, what, when and why consumers buy. Can predict how consumers will respond to marketing strategies.

5. CONSUMER BUYING BEHAVIOR What affects buying behavior? Affect Mood or emotion Effects on memory (sunny vs. cloudy day) Effects on judgment Effects on behavior Example? Motivation What motivates consumers to act? How strongly motivated are consumers to act? Intensity of motivation is guided by the consumers perception of the degree of personal relevance of an object or event Example?

6. CONSUMER BUYING BEHAVIOR Types of Consumer Buying Behavior Four types: Routine Response/Programmed Behavior Frequently purchased low cost items Little search necessary, purchased almost automatically Examples include snack foods, milk, etc. Limited Decision Making Buying product occasionally Requires a moderate level of involvement and information gathering Examples include clothes Extensive Decision Making

7. DECISION MAKING PROCESS Types of Purchases Deliberate Purchases Can involve repetitive, hedonistic, and symbolic purchase Spontaneous Purchases Usually a result of promotional interference, casual purchase behavior, impulse purchases, and exploratory purchases.

8. DECISION MAKING PROCESS Types of Purchase Motives Functional Problem solving Quality and Performance Price and Value Familiarity Convenience Normal Depletion Psycho Social Social approval Self Expression Variety and change Emotional stimulation Intellectual stimulation Sensory gratification

9. DECISION MAKING PROCESS Grid for Common Product Purchases HIGH INVOLVEMENT LOW INVOLVEMENT THINK FEEL Life Insurance Digital Camera Washer/Dryer Television Suntan Lotion Bleach Salad Dressing Disposable Razor Paper Towels Sports Car Stereo Component Expensive Watch Wine Jeans Toothpaste Greeting Card Beer Salty Snacks

10. DECISION MAKING PROCESS Need Arousal Affect

11. DECISION MAKING PROCESS Information Acquisition On Going Search Motivated by intrinsic enjoyment of the search process and the desire to build an information bank Example? Pre-purchase Search Motivated by the desire to make better purchase decisions Internal (experiences & attribute information) External

12. DECISION MAKING PROCESS Information Acquisition External Environmental and Situational Variable Number of Alternatives Product Differences Store Distance Time Pressure Product Characteristics Price Social Visibility (style and appearance) Perceived Risk Number of Crucial Attributes Consumer Characteristics Prior knowledge and Experience Involvement Positive Attitude toward search Education Income Age

13. DECISION MAKING PROCESS Alternative Evaluation In order for a product or store to be chosen, it has to be in the consumer’s consideration set Example Name the coffee/tea/drink that you bought this morning List all the brands in that category that you were aware of prior to making the purchase (awareness set) Which brands did you consider buying? (consideration set) Which brands were you indifferent to? (inert set) Which brands did you know you didn’t want (inept set) Think about the influences on those choices

14. CONSUMER BUYING PROCESS Stages of the Consumer Buying Process Six stages of the process—usually for complex decisions only. Not all decisions include all 6 stages. 1.Problem Recognition 2.Information Search 3.Evaluation of Alternatives 4.Purchase Decision 5.Purchase 6.Post Purchase Evaluation

15. CONSUMER BUYING PROCESS Stages of the Consumer Buying Process Problem Recognition Awareness of need Determining the difference between the desired state and actual condition. Hunger = Food Can be stimulated through product information Ie: commercial for a pair of shoes stimulates recognition that you need a new pair of shoes

16. CONSUMER BUYING PROCESS Stages of the Consumer Buying Process Information Search Internal search, memory External search if you need more information. Friends and relatives (word of mouth). Comparison shopping, public sources A successful information search leaves a buyer with possible alternatives: the evoked set. Example = Subway

17. CONSUMER BUYING PROCESS Stages of the Consumer Buying Process Evaluation of Alternatives Establish criteria for evaluation (features the buyer wants or does not want) Rank/weight alternatives Example Marketers attempt to influence by “framing” alternatives

18. CONSUMER BUYING PROCESS Stages of the Consumer Buying Process Purchase Decision Choose buying alternative Includes product, package, store, method of purchase, etc.

19. CONSUMER BUYING PROCESS Stages of the Consumer Buying Process Purchase May differ from decision, time lapse between 4 & 5 product availability Post Purchase Evaluation Outcome = Satisfaction or Dissatisfaction Cognitive Dissonance means have you made the right decision This can be reduced by warranties, after sales communication etc.

20. CONSUMER BUYING PROCESS Stages of the Consumer Buying Process Regret and Disappointment Regret Consumers are displeased with purchase because their selection turned out to be inferior—usually associated with self blame Disappointment/Dissatisfaction Consumers are displeased with a purchase because their pre-purchase expectations were not met, usually associated with other blame. Results?

21. CONSUMER BUYING PROCESS Types of Consumer Buying Behavior Types are determined by Level of involvement in purchase decision Importance and intensity of interest in a product or particular situation Buyers involvement determines why they are motivated to seek information about certain products and ignore others.

22. OTHER INFLUENCES Environment Physical Environment Collection of non-human elements that comprise the field in which consumer behavior occurs Social Environment Human activities and interactions Culture Subculture Social Class Reference Groups Family

23. OTHER INFLUENCES Subculture A segment of society that differs in significant ways from the parent culture as a whole Ethnic Groups Geographic Areas Age Groups Religious Affiliations Socio-economic groups

24. OTHER INFLUENCES Social Class A hierarchy of social status in a society leading to interactions of people as equals, superiors, and inferiors Influenced most by: Educational credentials Occupation Prestige level Income Area of Residence

25. OTHER INFLUENCES Reference Group A group of people that serves as a standard of reference in guiding an individual’s thoughts, feelings, and actions Families Families vs. Households Family is defined as two or more persons residing together who are related by blood, adoption, or marriage Household is one or more persons sharing the same housing unit. Consumer behavior varies over the family life cycle Age, marital status, number of children and their ages

26. OTHER INFLUENCES The Family Life Cycle young single8.2 % young married without children2.9 % other young married with children17.1 % divorced with kids1.9 % divorced with no kids0.1 % middle-aged (35-65) married with children33.0 % married with no dependent children5.5 % married with no children4.7 % divorced with no kids0.3 % divorced with kids1.9 % older (65+) married, spouse present5.2 % unmarried, no spouse present2.0 % all others17.2 %

27. HOMEWORK In this week’s homework you will be expected to complete the following: Industry Analysis A description that includes, but is not limited to a definition of the industry, industry life cycle (growth or decline), industry history (how old), historical financial performance, industry trends (cyclical or seasonal, increased competition etc), influential factors (does economy, government, competition affect industry), primary competitors, etc.

28. HOMEWORK In this week’s homework you will be expected to complete the following: Executive Summary A description or overview of the marketing plan. The executive summary briefly addresses each topic in the plan and gives a concise explanation of the marketing plan. It may also be used to provide information to people outside the organization, especially those who might be considering investing in the company.

29. FINAL PROJECT SPECS The final project is the culminating academic endeavor of the class’s research over the quarter. It will provide you with the opportunity to explore a problem or issue of particular personal or professional interest and to address it in a thorough focused study and applied research. This project should demonstrate your ability to synthesize and apply the knowledge and skills acquired through the class, and it should not only exemplify your ability to think critically, but should utilize the variety of research methods introduced to come to a cohesive and logical conclusion.

30. FINAL PROJECT SPECS » Sections Executive Summary Industry Analysis Marketing Research SWOTT Analysis Hypothesis/Problem Statement/Purpose Research Objectives Limitations Methodology Sample Questionnaire Data Analysis Conclusions