296
Chapter Comm 6: Understanding Consumer and Business Buyer Behaviour
CONSUMER MARKETS AND CONSUMER BUYING BEHAVIOUR
Consumer buyer behaviour: buying behaviour of final consumers (individuals/households for personal consumption)
Consumer market: all individuals and households that buy or acquire goods/services for personal consumption
WHAT IS CONSUMER BEHAVIOUR?
Consumers make many purchase decisions
o What, where, how, how much, when, why they buy something
Given all the characteristics affecting consumer behaviour, how do we best design our marketing efforts to reach our
customers most effectively?
CHARACTERISTICS AFFECTING CONSUMER BEHAVIOUR
Cultural Factors
Culture: set of basic values, perceptions, wants and behaviours learned by a member of society from family and other important
institutions (eg government)
Every group or society has their own culture
Cultural influences on buying behaviour vary from group to group (countries may have overlapping cultures)
Marketers must identify cultural shifts to follow the trend and develop new products
o Eg cultural shift towards health and fitness emergence of industry for exercise equipment/clothing etc
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
4 important ones in Canada: regional subcultures (provinces), founding nations (English, French, Aboriginal), ethnic
subcultures (ethnic minorities Chinese, African American), mature consumers (aging population)
Social class: relatively permanent and ordered divisions in a society whose members share similar values, interests and behaviours
Measured by occupation, income, education, wealth
People can move up/down in social classes (not fixed)
People within a social class tend to have similar buying behaviours (distinct products/brand preferences)
Social Factors
Groups and Social Networks
Groups: two or more people who interact to accomplish individual or mutual goals
Membership groups: direct influence on person and directly belongs in it
Reference groups: direct/indirect points of comparison or reference in forming a persons behaviour
o Expose a person to new behaviours and lifestyles, influence attitudes and self-concept, conform persons
product/brand choices
Opinion leaders: people within a reference group who, because of special skills, knowledge, personality, or other characteristics,
exerts social influence on others
Buzz marketing: creating opinion leaders to serve as brand ambassadors who spread the word about their products
Online social networks: online communities (blogs, social networking websites, virtual worlds) where people socialize or
exchange information and opinions
Use social networks to interact with consumers (become part of conversation and their lives)
Results are difficult to measure and control
Family
Family members can strongly influence buyer behaviour
Most important consumer buying organization in society
Wife has traditionally been main purchasing agent for family (food, household products, clothing)
o Changing more men doing regular grocery shopping
o More women purchasing technology products
Children have strong influence on family buying decisions
Roles and Status
A persons position in each group
Comm 296
Chapter 6: Understanding Consumer and Business Buyer Behaviour
Role: activities people are expected to perform according to people around them
Status: reflects general esteem given to each role by society
Personal Factors
Age and Life-Cycle Stage
Buying behaviours change over lifetime tastes are often AGE-RELATED
Buying is also shaped by FAMILY LIFE CYCLE (stages a family passes through)
o Marketers define target markets in terms of life-cycle stage, develop appropriate products for each
PersonicX life-stage groups, Acxiom economic life-stages (pg 213)
Occupation
Company can specialize in making products needed by an occupational group
Marketers try to identify groups with an above-average interest in their products and services
Economic Situation
A persons economic situation will affect his/her store and product choices
Personal income, savings, interest rates
Recent economic slowdown has encouraged frugal spending
Lifestyle
Lifestyle: a persons pattern of living as expressed in his/her activities, interests and opinions
Activities, interests, opinions
Different from social class
People buy the values/lifestyles products represent
Personality and Self-Concept
Personality: unique psychological characteristics that distinguish a person or group
Self-confidence, dominance, sociability, autonomy, defensiveness, adaptability, aggressiveness
Consumers are likely to choose brands with personalities that match their own
Brand personality: specific mix of human traits that may be attributed to a particular brand
o Sincerity (honest, cheerful)
o Excitement (daring, imaginative, up-to-date)
o Competence (reliable, successful, intelligent)
o Sophistication (upper class, charming)
o Ruggedness (outdoorsy, tough)
Self-Concept: self-identities people buy what represent themselves (possessions)
Psychological Factors
Motivation
Motive (drive): a need that is sufficiently pressing to direct the person to seek satisfaction of the need
Sigmund Freud
o A persons buying decisions are affected by subconscious motives that buyer may not understand
Abraham Maslow
o Explain why people are driven by particular needs at particular times hierarchy
Motivation research: designed to probe consumers hidden, subconscious motivations
Interpretive consumer research: to dig deeper into consumer psyches and develop better marketing strategies
Perception
Perception: process by which people select, organize and interpret information to form a meaningful picture of the world
Selective attention: tendency for people to screen out most of info exposed to
Selective distortion: tendency of people to interpret info in a way that will support what they already believe
Selective retention: consumers are likely to remember good points made about a brand they favor and forget about competing
brands
Comm 296
Chapter 6: Understanding Consumer and Business Buyer Behaviour
Subliminal advertising: consumers affected by marketing messages without even knowing it no research to back it up
Learning
Learning: changes in an individuals behaviour arising from experience
Drive: strong internal stimulus that calls for action becomes a motive when directed toward a stimulus object
Cues: minor stimuli that determine when, where and how person responds
Positive reinforcement: reinforce consumers response if experience is rewarding
Beliefs and Attitudes
Belief: a descriptive thought that a person holds about something
Based on real knowledge, opinion, or faith; no emotional charge
Attitude: a persons consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or an idea
Drives if someone likes or dislikes something
Difficult to change market around existing attitudes
THE BUYER DECISION PROCESS
In routine purchases, consumers may skip or reverse stages
1. Need Recognition
Buyer recognizes a problem or need
Need can be triggered by:
o Internal stimuli (hunger, thirst, sex)
o External stimuli (external environment)
2. Information Search
If consumer is unfamiliar with brand/product, will undergo information search after recognizing need
Sources of information:
o Personal sources (family, friends)
Legitimize/evaluate products for buyers
o Commercial sources (advertising, salespeople, displays)
Controlled by marketer; inform buyer
o Public sources (mass media, Internet searches)
o Experiential sources (handling, examining, using product)
3. Evaluation of Alternatives
Alternative evaluation: how consumer processes information to arrive at brand choices
Depends on consumer: could be calculations or impulse/intuition or based on reviews
Ranks brands and forms purchase intentions
4. Purchase Decision
Buy most preferred brand
2 factors can come between purchase intention and purchase decision
o Attitudes of others: what others think influence decision
o Unexpected situational factors: unexpected events (eg change in come)
5. Postpurchase Behaviour
Whether customer is satisfied or dissatisfied
Depends on customers and expectations products perceived performance
o Either disappointed, meets expectations, delighted (exceed expectations)
Firms should only promise what brands can deliver so customers are satisfied
Cognitive dissonance: buyer discomfort caused by postpurchase conflict
Customer satisfaction is key to building profitable relationships with consumers reap customer lifetime value
Comm 296
Chapter 6: Understanding Consumer and Business Buyer Behaviour
o Aim to delight customer
THE BUYER DECISION PROCESS FOR NEW PRODUCTS
New product: a good, service or idea that is perceived by some potential customers as new
Adoption process: mental process individual passes from first hearing about an innovation to final adoption
Stages in the Adoption Process
Awareness: consumer is aware of product, lacks information of it
Interest: customer seeks info about new product
Evaluation: considers trying product
Trial: tries product on a small scale and evaluate value of product
Adoption: consumer decides to make full and regular use of new product
Individual Differences in Innovativeness
People differ in readiness to try new products
Innovators: venturesome, try ideas at some risk
Early adopters: opinion leaders, adopt new ideas but carefully
Early majority: rarely leaders, adopt new ideas before average person
Late majority: skeptical, adopt an innovation only after a majority of people have tried it
Laggards: tradition bound, suspicious of changes, only adopt after innovation becomes a tradition itself
Influence of Product Characteristics on Rate of Adoption
Characteristics and nature of product affect rate of adoption
Relative advantage: degree to which innovation seems superior to existing products
Compatibility: degree to which innovation fits with values and experiences of potential customers
Complexity: degree to which innovation is difficult to understand or use
Divisibility: degree to which innovation may be tried on a limited bases
Communicability: degree to which results of using the innovation can be observed or described to others
Initial costs, risk and uncertainty, social approval
BUSINESS MARKETS AND BUSINESS BUYER BEHAVIOUR
Business buyer behaviour: the buying behaviour 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 at a profit
Also includes retailing and wholesaling firms
Business buyers determine which products and services their organizations need to purchase and then find, evaluate and
choose among alternative suppliers and brands
Business-to-business (B-to-B) marketers need to build profitable relationships with business buyers
BUSINESS MARKETS
Business market is huge involves more money and items than consumer markets
o Many sets of business purchases bade for one set of consumer purchases
Eg Goodyear tires rubber, steel, equipment
Market Structure and Demand
Far fewer but larger buyers account for most of purchasing
Derived demand: business demand that ultimately comes from (derives from) the demand for consumer goods (business demand)
B-to-B marketers promote products directly to final consumers to increase business demand
Inelastic demand: total demand for many business products is not affected much by price changes (especially in short run)
Fluctuating demand: demand for many business goods and services tends to change more, and more quickly, than demand
for consumer goods and services does
o Small % increase in consumer demand can cause large increases in business demand
Nature of the Buying Unit
Comm 296
Chapter 6: Understanding Consumer and Business Buyer Behaviour
More decision participants, more professional purchasing effort
Buying committees technical experts and top management
Companies must have well-trained marketers and salespeople to deal with well-trained buyers
Types of Decisions and the Decision Process
Business buyers have more complex buying decisions
o Large sums of money, complex technical/economic considerations, interactions with organization
Business buying process is more formalized (more product research and formal orders)
Buyer and seller are more dependent on each other
o Seller assists buyer in pre, during and post purchase
o More customized offerings to customer needs
Supplier development: systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of
products and materials for use in making products or reselling them to others
BUSINESS BUYER BEHAVIOUR
Want to know how business buyers will respond to various marketing stimuli
Buying centre made up of people involved in buying decision
Buying decisions process
Major Types of Buying Situations
3 main types
Straight rebuy: a business-buying situation in which 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 (provide help/info, most decisions)
Buyer buys from most complete system for meeting customers needs and solving its problems
Systems selling (solutions selling): buying a packaged solution to a problem from a single seller, thus avoiding all the separate
decisions involved in a complex buying situation
Participants in the Business Buying Process
Buying centre: all the individuals and units that play a role in the purchase decision-making process
Actual users of product or service
Those who make buying decision
Those who influence buying decision
Those who do actual buying
Those who control buying information
o Marketer must find out who these participants are and appeal to them based on their criteria
Major Influences on Business Buyers
Economic cheapest price, best product, most service
Personal human, social, reasonable and emotional
Environmental (economic, technological, political, competitive, social, cultural)
Organizational (objectives, policies, procedures, structure, systems)
Interpersonal factors (authority, status, empathy, persuasiveness)
Individual (age, income, education, job position, personality, risk attitudes)
The Business Buying Process
1. Problem recognition
Recognize a need for a product
2. General need description
Describe characteristics and quantity of needed items or solutions
3. Product specification
Technical product specifications
Comm 296
Chapter 6: Understanding Consumer and Business Buyer Behaviour
Value analysis: carefully analyzing a products or services components to determine whether they can be redesigned
4.
5.
6.
7.
8.
and made more effectively and efficiently to provide greater value
Supplier search
Find best vendors
Proposal solicitation
Buyer invites qualified suppliers to submit proposals
Supplier selection
Buyer will consider many supplier attributes and their relative importance
May select one or many suppliers
Order-routine specification
Final order with chosen supplier(s) and lists items
Vendor-managed inventory: suppliers are responsible for ordering and inventory
Performance review
Buyer assesses suppliers performance and provides feedback
E-Procurement: Buying on the Internet
E-procurement: purchasing through electronic connections between buyers and sellers usually online
Gives buyers:
o Access to new suppliers
o Lower purchasing costs
o Hastens order processing and delivery
Marketers can connect with customers by:
o Sharing marketing information
o Sell products/services
o Provide customer support services
o Maintain ongoing customer relationships
Many ways of e-procurement:
o Reverse auctions: put purchasing requests online and invite suppliers to bid for the business
o Trading exchanges: companies work collectively to facilitate the trading process
o Company buying sites: companies conduct own e-procurement
o Extranet links: connect with key suppliers
Many benefits:
o Reduces transaction costs more efficient purchasing for both buyers and suppliers
Reduces time between order and deliver
Eliminates paperwork and ordering procedures
o Frees purchasing people from a lot of drudgery and paper work
Focus on more-strategic issues
Problems:
o Erode decades-old customer-supplier relationships
Now use power of the Web to pit suppliers against one another
Search out better deals, produces and turnaround times