1. Understanding Consumer and Business Buyer Behavior Chapter 5

2. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 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. Rest Stop: Previewing the Concepts

3. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 3 Understanding Tides Consumers First Stop Market Research  Goal: Use market research to understand and cultivate the deep connections that Tide has with its core consumers.  Research Technique: Two- week customer immersion experience, working, shopping, talking with women about lives, needs, and feelings.  Insights: Women are emotional about clothing and care for them well because they are filled with stories, feelings and memories. Implementation  Advertising: Award-winning “Tide Knows Fabrics Best” ad campaign sent message that Tide let women focus on life’s important things and did not focus on traditional side-by-side cleaning comparisons.  Results: 7% market share growth resulted after campaign implementation; Tide’s holds 43% of detergent market.  Key to Success: Use research to understand the true nature of customer relationship and shape it provide real value.

4. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 4 Consumer Buyer Behavior The buying behavior of individuals and households who buy goods and services for personal use. Final consumers make up the consumer market.

5. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 5 Consumer Buying Behavior  The central question for marketers is: –“How do consumers respond to the various marketing efforts the firm might use?”

6. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 6 Figure 5.1: Stimulus Response Model of Buyer Behavior

7. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 7 Figure 5.2: Factors Influencing Consumer Behavior

8. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 8 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.

9. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 9Subculture Groups of people with shared value systems based on common life experiences. Groups of people with shared value systems based on common life experiences. Subcultures include nationalities, religions, racial groups and geographic regions.

10. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 10  Major subculture groups: –Hispanic consumers –African-American consumers –Asian-American consumers –Mature consumers Subculture

11. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 11 Marketing in Action Toyota targets affluent Hispanics who appreciate refinement, art, and culture with a campaign that centers on art and design. Watch this CNBC clip on YouTube to learn how other firms have marketed successfully to Hispanics.CNBC clip

12. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 12 Social Class Society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors. People in the U.S. can change their social class easier than can those living in many other countries.

13. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 13 Figure 5.3: The American Social Classes

14. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 14 Social Factors  Groups and social networks: –Membership, reference, and aspirational groups. Marketers attempt to reach opinion leaders within groups important to target market. Opinion leaders are recruited as brand ambassadors or for buzz marketing (RepNation).RepNation

15. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 15 Fuel for Thought Brand ambassador recruiting firms such as RepNation reward carefully selected brand ambassadors with gifts and cash for their work. Ambassadors are encouraged to openly reveal their affiliation to others. Would learning that an acquaintance is a paid brand ambassador make you less likely to pay attention to or believe what they say? Why or why not?

16. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 16 Social Factors  Groups and social networks: –Online social networks allow marketers to interact with consumers. –P&G’s VocalPoint generates WOM buzz for brands. Visit the VocalPoint website!VocalPoint

17. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 17 Marketing in Action BlendTec developed a cult following after releasing several “Will it Blend” videos on YouTube. The result? A stunning five-fold increase in sales! BlendTec puts iPhones, Silly Putty, Golf Balls, Marbles and more to the test. View the videos on YouTube!videos

18. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 18 Social Factors  Family: –Strongly influences buying behavior. –Gender stereotypes for certain types of purchases are relaxing in the U.S. –Children are very influential, and have substantial disposable income of their own.  Roles and status: –Role = Expected activities. –Status = Esteem given to role by society.

19. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 19 Marketing in Action Family buying roles are changing. 65% of men grocery shop regularly while women influence 50% of new technology buys.

20. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 20 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. –Economic situation often influences choice of store as well.

21. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 21Lifestyle A person’s pattern of living as expressed in his or her activities, interests, opinions. Lifestyle is also called psychographics.

22. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 22  People within the same subculture, social class, and occupation may have different lifestyles.  People buy the lifestyles represented by products or services. –PersonicX 21 life-stage groupings lets marketers see customers as they really are and target them precisely. Personal Factors

23. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 23 Marketing in Action Consumers don’t just buy products, they buy the lifestyles and values those products represent. Merrell sells more than just rugged footwear, it sells a “Let’s Get Outside” lifestyle.

24. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 24  Personality: –Refers to the unique psychological characteristics that distinguish a person or group. –Generally defined in terms of traits. –Self-concept theory suggests that people’s possessions contribute to and reflect their identities. –Brands may also have personalities. Personal Factors

25. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 25  Motivation: –A motive is a need that is sufficiently pressing to direct the person to seek satisfaction. Personal Factors Aging baby boomers often buy sports cars to feel young again, even though they may articulate different reasons.

26. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 26 Figure 5.4: Maslow’s Hierarchy of Needs

27. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 27Perception Process by which people select, organize, and interpret information to form a meaningful picture of the world. Process by which people select, organize, and interpret information to form a meaningful picture of the world. Selective attention, selective distortion, and selective retention limit perception.

28. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 28 Marketing in Action Perception is selective: it’s simply impossible for people to pay attention to the thousands of ads they are exposed to each day.

29. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 29 Psychological Factors  Learning: –Defined as changes in an individual’s behavior arising from experience. –Occurs due to an interplay of drives, stimuli, cues, responses, and reinforcement. –Strongly impacted by the consequences of an individual’s behavior. Behaviors with satisfying results tend to be repeated.

30. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 30 Beliefs and Attitudes  Belief: –A descriptive thought that a person holds about something.  Attitude: –A person’s consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea. Fuze fits well with people’s attitudes about health and well-being.

31. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 31 Figure 5.5: Buyer Decision Process

32. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 32  Need recognition can be triggered by internal or external stimuli. –Advertising can be very helpful in stimulating need recognition. Need Recognition and Information Search

33. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 33  Several sources of information may be used as part of the information search: –Personal sources –Commercial sources –Public sources –Experiential sources Need Recognition and Information Search

34. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 34  Evaluation process is dependent upon the specific buying situation and the individual consumers.  Purchase decision - Two factors may interfere with realization of purchase intentions: –Attitudes of others –Unexpected situational factors Evaluation of Alternatives and Purchase Decision

35. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 35  Consumer satisfaction is a function of consumer expectations and perceived product performance. –Performance < Expectations --- Disappointment –Performance = Expectations --- Satisfaction –Performance > Expectations --- Delight Post Purchase Behavior How has the online media and social networking influenced customers post purchase behavior? Watch the Radian6 video to find out! Click filmstrip icon at left to play video

36. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 36 Fuel for Thought Cognitive dissonance occurs shortly after a purchase when a buyer doubts if he or she made the right decision. What actions can brand marketers take to minimize cognitive dissonance, or to reassure buyers that they made the correct choice?

37. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 37 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. Stages in the Adoption Process

38. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 38 Marketing in Action Hyundai’s assurance program protected customers from lost against lost jobs and lower incomes, and thus aided adoption.assurance program

39. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 39 Figure 5.6: Adopter Categorization

40. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 40  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? Product Characteristics That Influence the Rate of Adoption

41. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 41 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 or to resell or rent them to others for a profit. Refers to the buying behavior of the organizations that buy goods and services for use in the production of other products and services or to resell or rent them to others for a profit.

42. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 42 Business Markets  Business market is huge and involves far more dollars and items than do consumer markets.  Market structure and demand differs from consumer markets: –Contains far fewer but larger buyers. –Business demand is derived from consumer demand. –Business markets have more fluctuating demand.

43. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 43 Marketing in Action Intel relies on derived demand and advertises heavily to sell users on the virtues of its company and microprocessors.

44. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 44 Business Markets  Nature of the buying unit: –Business purchases involve more decision participants. –Business buying involves a more professional purchasing effort. Sales people often have to sell multiple individuals.

45. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 45 Business Markets  Key differences exist between business and consumer buying situations: –Business buyers usually face more complex buying decisions. –The business buying process tends to be more formalized. –Buyers and sellers are much more dependent on each other in business markets.

46. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 46 Figure 5.7: Business Buyer Behavior Model

47. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 47  Straight rebuy: –Buyer routinely reorders something without any modifications.  Modified rebuy: –Buyer wants to modify product specifications, prices, terms, or suppliers.  New task: –Buyer purchases a product or service for the first time.  Systems (solution) selling is becoming more common. Types of Buying Situations

48. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 48 Participants in the Business Buying Process  A buying center is all the individuals and units that participate in the business buying-decision process. –The buying center is not a fixed or formally identified unit. –Membership will vary for different products and different tasks.

49. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 49 Marketing in Action Cardinal health deals with buying centers that include hospital administrators, purchasing executives, and users such as surgeons and nurses.

50. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 50 Figure 5.8: Major Influences on Business Buyer Behavior

51. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 51 Figure 5.9: Stages of the Business Buying Process

52. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 52 Marketing in Action Sharp uses ads like this one to alert customers to potential problems and thus satisfy the first stage of the buying process. Of course, the ad also discusses how Sharp can provide solutions to the problem.

53. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 53 E-procurement  Online purchasing (e-procurement) can be implemented many ways: –Reverse auctions –Trading exchanges –Company buying sties –Extranet links with key suppliers  E-procurement presents several benefits and problems.

54. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 54 Marketing in Action This Cisco Systems site helps customers who want to purchase online by providing deep access to information about thousands of their products and services. The site personalizes the online experience for users and connects them with the appropriate Cisco partner reseller.

55. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 55 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. Rest Stop: Reviewing the Concepts

56. Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall5 - 56 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Pearson Education, Inc. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall