1. Chapter Five Consumer and Business Buyer Behavior

2. Roadmap: Previewing the Concepts Copyright 2007, Prentice Hall, Inc.5-2 1.Understand 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.

3. Copyright 2007, Prentice Hall, Inc.5-3 Building Success  Offers good bikes, upgraded showrooms and sales tactics.  Research has helped to understand customers’ emotions and motivation.  Consumer emotions, motivations, and lifestyle have been translated into effective advertising. Harley-Davidson – Devoted Consumers Case Study Measuring Success  Currently has 23% of all U.S. bike sales and 50% of heavyweight segment.  Demand above supply with waiting lists up to 2 years.  Sales doubled in the past six years while earnings have tripled.  2005: 19 th straight year of record sales and income.

4. Copyright 2007, Prentice Hall, Inc.5-4 Consumer Buying Behavior  Refers to the buying behavior of people who buy goods and services for personal use.  These people make up the consumer market.  The central question for marketers is: –“How do consumers respond to various marketing efforts the company might use?”

5. Copyright 2007, Prentice Hall, Inc.5-5 Model of Buying Behavior  Marketing factors and other stimuli are inputs into the “buyer’s black box.”  Here, stimuli are evaluated in light of the buyer decision process and the buyer’s characteristics.  Buyer responses influence choice of the product, brand, vendor, as well as the timing and amount of purchase.

6. Copyright 2007, Prentice Hall, Inc.5-6 Culture  Culture is the most basic cause of a person's wants and behavior. –Culture is learned from family, church, school, peers, colleagues. –Culture reflects basic values, perceptions, wants, and behaviors. –Cultural shifts create opportunities for new products or may otherwise influence consumer behavior.

7. Copyright 2007, Prentice Hall, Inc.5-7 Consumer Buying Behavior  Factors influencing consumer behavior: –Cultural factors: Culture, subculture, social class –Social factors: Reference groups, family, roles and status –Personal factors: Age/life-cycle, occupation, economic situation, lifestyle, personality and self-concept –Psychological factors: Motivation, perception, learning, beliefs, and attitudes

8. Copyright 2007, Prentice Hall, Inc.5-8 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

9. Copyright 2007, Prentice Hall, Inc.5-9 Social Class  Society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors.  Measured by a combination of: occupation, income, education, wealth, and other variables.

10. Copyright 2007, Prentice Hall, Inc.5-10 Social Factors  Groups: –Membership, Reference (Opinion Leaders), Aspirational  Family: –Most important consumer buying organization  Roles and Status: –Role = Expected activities –Status = Esteem given to role by society

11. Copyright 2007, Prentice Hall, Inc.5-11 Personal Factors  Age and Life-Cycle Stage –People change the goods they buy over their lifetimes.  Occupation –Occupation influences the purchase of clothing and other goods.  Economic Situation –Some goods and services are especially income-sensitive.

12. Copyright 2007, Prentice Hall, Inc.5-12 Personal Factors  Lifestyle: –Pattern of living as expressed in psychographics Activities Interests Opinions

13. Copyright 2007, Prentice Hall, Inc.5-13 Personality & Self-Concept  Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment.  Generally defined in terms of traits.  Self-concept suggests that people’s possessions contribute to and reflect their identities.

14. Copyright 2007, Prentice Hall, Inc.5-14 Motives and Needs  Maslow’s hierarchy of needs implies that lower level needs must be satisfied prior to higher level needs. –Physiological needs –Safety needs –Social needs –Esteem needs –Self-Actualization  A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction.  Maslow’s hierarchy of needs explains why people are driven by needs at particular times.

15. Copyright 2007, Prentice Hall, Inc.5-15 Perception  Process by which people select, organize, and interpret information to form a meaningful picture of the world. –Selective attention –Selective distortion –Selective retention

16. Copyright 2007, Prentice Hall, Inc.5-16 Learning  A relatively permanent change in behavior due to experience.  Interplay of drives, stimuli, cues, responses, and reinforcement.  Strongly influenced by the consequences of an individual’s behavior –Behaviors with satisfying results tend to be repeated. –Behaviors with unsatisfying results tend not to be repeated.

17. Copyright 2007, Prentice Hall, Inc.5-17 Beliefs & Attitudes  A belief is a descriptive thought that a person holds about something.  An attitude is a person’s consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea.

18. Copyright 2007, Prentice Hall, Inc.5-18 Buying Decision Process  Need recognition  Information search  Evaluation of alternatives  Purchase decision  Postpurchase behavior

19. Copyright 2007, Prentice Hall, Inc.5-19 Sources of Information  Personal  Commercial  Public  Experiential

20. Copyright 2007, Prentice Hall, Inc.5-20 Buying Decision Process  Factors that influence purchase decision: –Attitudes of others –Unexpected situational factors

21. Copyright 2007, Prentice Hall, Inc.5-21 Buying Decision Process  Consumer satisfaction is a function of consumer expectations and perceived product performance. –Performance < Expectations ----- Disappointment –Performance = Expectations ----- Satisfaction –Performance > Expectations ----- Delight

22. Copyright 2007, Prentice Hall, Inc.5-22 Buying Decision Process  Cognitive dissonance: a buyer’s doubts shortly after a purchase about whether it was the right decision.

23. Copyright 2007, Prentice Hall, Inc.5-23 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.

24. Copyright 2007, Prentice Hall, Inc.5-24 Product Adopter Categories  Innovators  Early adopters  Early majority  Late majority  Laggards

25. Copyright 2007, Prentice Hall, Inc.5-25 Product Characteristics That Influence the Rate of Adoption  Relative Advantage: Is the innovation superior to existing products?  Compatibility: Does the innovation fit the values and experience of the target market?  Complexity: Is the innovation difficult to understand or use?  Divisibility: Can the innovation be used on a limited basis?  Communicability: Can results be easily observed or described to others?

26. Copyright 2007, Prentice Hall, Inc.5-26 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.

27. Copyright 2007, Prentice Hall, Inc.5-27 Business Markets  Market Structure and Demand: –Contains far fewer but larger buyers. –Buyers are more geographically concentrated. –Business demand is derived from consumer demand.  Nature of the Buying Unit: –Business purchases involve more decision participants. –Business buying involves a more professional purchasing effort.

28. Copyright 2007, Prentice Hall, Inc.5-28 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.

29. Copyright 2007, Prentice Hall, Inc.5-29 Types of Buying Situations  Straight rebuy: –Fairly routine purchase decision.  Modified rebuy: –Requires some research and modified product specifications, prices, terms, or suppliers.  New task: –Requires extensive research and evaluation of products, suppliers, etc.

30. Copyright 2007, Prentice Hall, Inc.5-30 Participants in the Business Buying Process  Buying center: The decision- making unit of a buying organization. –Not fixed or formally identified unit. –Membership will vary for different products and buying tasks.  Buying center members: –Users –Deciders –Influencers –Buyers –Gatekeepers  Members can play multiple roles.

31. Copyright 2007, Prentice Hall, Inc.5-31 Influences on Business Buyer Behavior  Environmental  Organizational  Interpersonal  Individual

32. Copyright 2007, Prentice Hall, Inc.5-32 The Business Buying Process 1.Problem recognition 2.General need description 3.Product specification 4.Supplier search 5.Proposal solicitation 6.Supplier selection 7.Order-routine specification 8.Performance review

33. Copyright 2007, Prentice Hall, Inc.5-33 e-Procurement  Advantages for buyers: –Access to new suppliers –Lowers purchasing costs –Hastens order processing and delivery  Advantages for vendors: –Share information with customers –Sell products and services –Provide customer support services –Maintain ongoing customer relationships

34. Copyright 2007, Prentice Hall, Inc.5-34 e-Procurement  Key benefits: –Reduces costs to buyers and sellers, and makes for more efficient purchasing. –Reduces the time between order and delivery. –Frees purchasing staff to focus on more strategic issues.

35. Rest Stop: Reviewing the Concepts Copyright 2007, Prentice Hall, Inc.5-35 1.Understand 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.