1. Professor Takada Consumer and Business Buyer Behavior ４

2. 5-2 Professor Takada ROAD MAP: Previewing the Concepts Major factors that influence consumer buyer behavior. Major factors that influence consumer buyer behavior. Buyer decision process. Buyer decision process. Adoption and diffusion process for new products. Adoption and diffusion process for new products. Business market: Business market: –Major factors that influence business buyer behavior. –Business buying decision process.

3. 5-3 Professor Takada Model of Buyer Behavior

4. 5-4 Professor Takada What Influences Consumer Behavior? Cultural Factors Social Factors Personal Factors

5. 5-5 Professor Takada Factors Influencing Consumer Behavior Cultural Culture Subculture Social Class Cultural Culture Subculture Social Class Social Reference Groups Family Roles & Status Social Reference Groups Family Roles & Status Personal Age & Life- Cycle Stage Occupation Economic Situation Lifestyle Personality & Self-Concept Personal Age & Life- Cycle Stage Occupation Economic Situation Lifestyle Personality & Self-Concept Psychological Motivation Perception Learning Beliefs & Attitudes Psychological Motivation Perception Learning Beliefs & Attitudes

6. 5-6 Professor Takada Culture Subculture Groups of people with shared value systems based on common life experiences. Major Groups Hispanic Consumers African-American Consumers Asian-American Consumers Mature Consumers

7. 5-7 Professor Takada Marketing to a Subculture Sears is widely considered one of the most successful marketers to the U.S. Hispanic population. Its Spanish-language Web site features content and events carefully tailored to Hispanic consumers.

8. 5-8 Professor Takada Social Classes Upper uppers Lower uppers Upper middles Middle class Working class Upper lowers Lower lowers

9. 5-9 Professor Takada Characteristics of Social Classes Within a class, people tend to behave alike Within a class, people tend to behave alike Social class conveys perceptions of inferior or superior position Social class conveys perceptions of inferior or superior position Class may be indicated by a cluster of variables (occupation, income, wealth) Class may be indicated by a cluster of variables (occupation, income, wealth) Class designation is mobile over time Class designation is mobile over time

10. 5-10 Professor Takada Social Factors Membership Reference (opinion leaders) Aspirational Groups Family Roles & Status Most important consumer buying organization Role =Expected activities Status = Esteem given to role by society

11. 5-11 Professor Takada Opinion Leaders Marketers use buzz marketing by enlisting or even creating opinion leaders to spread the word about their brands.

12. 5-12 Professor Takada Family Family of Orientation Family of Orientation –Religion –Politics –Economics Family of Procreation Family of Procreation –Everyday buying behavior

13. 5-13 Professor Takada Targeting Women and Their Families

14. 5-14 Professor Takada Personal Factors Activities Interests Lifestyle Opinions Pattern of Living as Expressed in Psychographics Pattern of Living as Expressed in Psychographics

15. 5-15 Professor Takada Behavior changes according to life cycle stage Family Psychological Critical life events

16. 5-16 Professor Takada Brand Personality Sincerity Excitement Competence Sophistication Ruggedness

17. 5-17 Professor Takada Lifestyle Influences Multi-tasking Time-starved Money-constrained

18. 5-18 Professor Takada Key Psychological Processes Motivation MemoryLearning Perception

19. 5-19 Professor Takada 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

20. 5-20 Professor Takada Maslow’s Hierarchy of Needs

21. 5-21 Professor Takada Herzberg’s Two-Factor Theory

22. 5-22 Professor Takada Perception Selective Attention Subliminal Perception Selective Retention Selective Distortion

23. 5-23 Professor Takada Encoding Brand Associations

24. 5-24 Professor Takada Learning, Beliefs & Attitudes Learning Learning is a relatively permanent change in behavior due to experience. belief A belief is a descriptive thought that a person holds about something. Attitude Attitude describes a person’s consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea.

25. 5-25 Professor Takada ROAD MAP Understand the consumer market and the major factors that influence consumer buyer behavior. Identify and discuss the stages in the buyer decision process. Identify and discuss the stages in the buyer decision process.

26. 5-26 Professor Takada Buying Decision Process

27. 5-27 Professor Takada Step #1 = Need Recognition Buyer becomes aware of a difference between a desired state and an actual condition. Buyer becomes aware of a difference between a desired state and an actual condition. Individual may be unaware of the problem or need. Individual may be unaware of the problem or need. Marketers may use sales personnel, advertising, and packaging to trigger recognition of needs or problems. Marketers may use sales personnel, advertising, and packaging to trigger recognition of needs or problems. Recognition speed can be slow or fast. Recognition speed can be slow or fast. Buying Decision Process

28. 5-28 Professor Takada Step #2 = Information Search This stage begins after the consumer becomes aware of the problem or need. This stage begins after the consumer becomes aware of the problem or need. The search for information about products will help resolve the problem or satisfy the need. The search for information about products will help resolve the problem or satisfy the need. There are various sources of information. There are various sources of information. Buying Decision Process

29. 5-29 Professor Takada Sources of Information - Most effective source - Family, friends, neighbors Personal Commercial Public - Advertising, salespeople - Receives the most information from these sources - Mass Media - Consumer-rating groups Experiential - Handling the product - Examining the product - Using the product

30. 5-30 Professor Takada Buying Decision Process Consumers May Use Careful Calculations & Logical Thinking Consumers May Buy on Impulse and Rely on Intuition Consumers May Make Buying Decisions on Their Own Consumer May Make Decisions After Talking With Others

31. 5-31 Professor Takada Buying Decision Process Factors That Influence Purchase Decision Attitudes Of Others Unexpected Situational Factors

32. 5-32 Professor Takada Buying Decision Process Consumer satisfaction is a function of consumer expectations and perceived product performance. Performance < Expectations Disappointment Performance = Expectations Satisfaction Performance > Expectations Delight Cognitive dissonance: a buyer ’ s doubts shortly after a purchase about whether it was the right decision.

33. 5-33 Professor Takada Successive Sets

34. 5-34 Professor Takada Evaluation of Attributes

35. 5-35 Professor Takada Stages between Evaluation of Alternatives and Purchase

36. 5-36 Professor Takada Non-compensatory Models of Choice Conjunctive Conjunctive Lexicographic Lexicographic Elimination-by-aspects Elimination-by-aspects

37. 5-37 Professor Takada Perceived Risk Functional Physical Financial Social Psychological Time

38. 5-38 Professor Takada Other Theories of Consumer Decision Making Involvement Elaboration Likelihood Model Elaboration Likelihood Model Low-involvement marketing strategies Low-involvement marketing strategies Variety-seeking buying behavior Variety-seeking buying behavior Decision Heuristics Availability Availability Representativeness Representativeness Anchoring and adjustment Anchoring and adjustment

39. 5-39 Professor Takada ROAD MAP Understand the consumer market and the major factors that influence consumer buyer behavior. Identify and discuss the stages in the buyer decision process. Adoption and diffusion process for new products. Adoption and diffusion process for new products.

40. 5-40 Professor Takada Stages in the Adoption Process 1. Awareness : Consumer becomes aware of the new product, but lacks information about it. 2. Interest : Consumer seeks information about new product. 3. Evaluation : Consumer considers whether trying the new product makes sense. 4. Trial : Consumer tries new product on a small scale to improve his or her estimate of its value. 5. Adoption : Consumer decides to make full and regular use of the new product.

41. 5-41 Professor Takada Adoption of Innovations Percentage of Adopters Time of Adoption Early Late Innovators Early Adopters Early Majority 2.5% 13.5% 34% 16% Laggards Late Majority

42. 5-42 Professor Takada Product Adopter Categories Group #1 - Innovators Innovators are the first adopters of new products. Innovators are the first adopters of new products. They are venturesome – they try new ideas at some risk. They are venturesome – they try new ideas at some risk. Group #2 – Early Adopters Early adopters are guided by respect. They are opinion leaders in their communities and adopt new ideas early but carefully.

43. 5-43 Professor Takada Influence of Product Characteristics on Rate of Adoption Relative Advantage Relative Advantage: Is the innovation superior to existing products? Compatibility Compatibility: Does the innovation fit the values and experience of the target market? Complexity Complexity: Is the innovation difficult to understand or use? Divisibility Divisibility: Can the innovation be used on a limited basis? Communicability Communicability: Can results be easily observed or described to others?

44. 5-44 Professor Takada Five Major Characteristics of Innovation Characteristics Relative Advantage Relative Advantage Compatibility Compatibility Complexity Complexity Divisibility Divisibility Communicability Communicability Diffusion Rate Marketing Mix

45. 5-45 Professor Takada New Product Adoption Rate Some products catch on almost overnight. Others, such as HDTV, take a long time to gain acceptance.

46. 5-46 Professor Takada Time Product Develop- ment Introduction Profits Sales GrowthMaturityDecline Losses/ Investments ($) Sales and Profits ($) Sales and Profits Over the Product’s Lifetime Product Life Cycle

47. 5-47 Professor Takada ROAD MAP: Major factors that influence consumer buyer behavior. Major factors that influence consumer buyer behavior. Buyer decision process. Buyer decision process. Adoption and diffusion process for new products. Adoption and diffusion process for new products. Business market: Business market: –Major factors that influence business buyer behavior. –Business buying decision process.

48. 5-48 Professor Takada Business Markets & Business Buyer Behavior The business market is vast and involves far more dollars and items than do consumer markets. Business buyer behavior refers to the buying behavior of the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.

49. 5-49 Professor Takada Business Markets Market Structure and Demand: Market Structure and Demand: – –Fewer but larger buyers. – –Customers geographically concentrated. – –Business demand derived from consumer demand. Nature of the Buying Unit: Nature of the Buying Unit: –More decision participants. –Professional purchasing.

50. 5-50 Professor Takada Types of Decisions and the Decision Process Business buyers usually face more complex buying decisions. Business buying process tends to be more formalized. Buyers and sellers are much more dependent on each other.

51. 5-51 Professor Takada Model of Business Buyer Behavior

52. 5-52 Professor Takada Major Types of Buying Situations The buyer routinely reorders something without any modifications. Straight Rebuy Modified Rebuy New Task The buyer wants to modify product specifications, prices, terms, or suppliers. The buyer purchases a product or service for the first time.

53. 5-53 Professor Takada Participants in the Business Buying Process Decision-making unit of a buying organization is called its buying center. Not a fixed and formally identified unit. Membership will vary for different products and buying situations. Buying Center Members: Buying Center Members: –Users –Deciders –Influencers –Buyers –Gatekeepers

54. 5-54 Professor Takada Major Influences on Business Buyer Behavior

55. 5-55 Professor Takada Business Buying Process

56. 5-56 Professor Takada e-Procurement Advantages for buyers: Advantages for buyers: –Access to new suppliers –Lowers purchasing costs –Hastens order processing and delivery Advantages for vendors: Advantages for vendors: –Share information with customers –Sell products and services –Provide customer support services –Maintain ongoing customer relationships

57. 5-57 Professor Takada Methods of e-Procurement Websites organized using vertical hubs Websites organized using vertical hubs Websites organized using functional hubs Websites organized using functional hubs Direct extranet links to major suppliers Direct extranet links to major suppliers Buying alliances Buying alliances Company buying sites Company buying sites

58. 5-58 Professor Takada Forms of Electronic Marketplaces Catalog sites Vertical markets Pure play auction sites Spot markets Private exchanges Barter markets Buying alliances

59. 5-59 Professor Takada Vendor Analysis

60. 5-60 Professor Takada Order Routine Specification and Inventory Stockless purchase plans Vendor-managed inventory Continuous replenishment

61. 5-61 Professor Takada Desirable Outcomes of a B2B transaction: OTIFNE OT On time NE No error IF In full

62. 5-62 Professor Takada Establishing Corporate Credibility Expertise LikeabilityTrustworthiness

63. 5-63 Professor Takada Rest Stop: Reviewing the Concepts 1. Describe the consumer market and the major factors that influence consumer buyer behavior. 2. Identify and discuss the stages in the buyer decision process. 3. Describe the adoption and diffusion process for new products. 4. Define the business market and identify the major factors that influence business buyer behavior. 5. List and define the steps in the business buying decision process.