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Chapter 5 Consumer & Business Buyer Behavior. Professor Marshall Queens College. 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:

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chapter 5 consumer business buyer behavior

Chapter 5Consumer & Business Buyer Behavior

Professor Marshall

Queens College

consumer buying behavior
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?”
consider
Consider
  • People who buy Harley Davidson motorcycles
  • People who buy Mercedes
  • What is the buying behavior of these two types of people?
  • Would the same marketing strategy work for both groups?
culture
Culture
  • Culture is the Most Basic Cause of a Person's Wants and Behavior.
  • Culture is learned from family, church, school, peers, colleagues.
  • Culture includes basic values, perceptions, wants, and behaviors.
culture1
Culture
  • Subculture
    • Groups of people with shared value systems based on common life experiences.
  • Major Groups
    • Hispanic Consumers
    • African-American Consumers
    • Asian-American Consumers
    • Generational: ex Mature Consumers
    • Gay/Lesbian Consumers
social class
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.
social class1
Social Class

Upper Class

Upper Upper: Social elite who live on inherited wealth

Lower Upper: Earned high income or wealth through exceptional ability

Middle Class

Upper Middle: professionals, independent business people,

& corporate managers - believe in education

Middle: Average pay white & blue collar who live on the ‘better side of town’

Working Class

Lead a ‘working class lifestyle’ irrespective of income, education, or job.

Depend on relatives for economic and emotional support

Lower Class

Upper Lower: The working poor. They lack education and are poorly

paid for unskilled work. They strive toward a higher class.

Lower Lower: Visibly poor. Often out of work and some depend

on public assistance. Live day-to-day.

social class affects purchasing decisions
Social Class affects Purchasing Decisions
  • Class attitudes are reflected in what we buy
  • Cars, magazines, and even types of bread are consumed based on social lines.

For a game designed to test your social class awareness:

http://www.pbs.org/peoplelikeus/games/index.html

social factors
Social Factors
  • Groups:
    • Membership (direct membership, ex AARP)
    • Reference (indirect points of comparison, ex sports team)
      • Opinion Leaders – people with special skill, knowledge or personality, who exert influence on others
      • Aspirational – a group which someday one hopes to belong
  • Family:
    • Most important consumer buying organization
  • Roles & Status:
    • Role = Expected activities
    • Status = Esteem given to role by society
personal factors
Age and Life-Cycle Stage

Occupation

Economic Situation

These personal characteristics also affect buyers’ decisions.

Personal Factors
personal factors1
Personal Factors
  • Lifestyle:
    • Pattern of living as expressed in psychographics
      • Activities
      • Interests
      • Opinions
sri consulting s values lifestyles vals
SRI Consulting’s Values & Lifestyles (VALS)
  • Need-Driven
    • Survivor lifestyle – most disadvantaged
    • Sustainer lifestyle – still disadvantaged
  • Outer-Directed
    • Belonger lifestyle – comfortable middle class
    • Emulator lifestyle – strive to be achievers
    • Achiever lifestyle – leaders of business & government
  • Inner-Directed
    • I-Am-Me lifestyle – egocentric, young and individualistic
    • Experiential lifestyle – want experience and involvement
    • Societally Conscious lifestyle – sense of social responsibility
  • Combined Outer- and Inner-Directed
    • Integrated lifestyle – they have put it all together

Source: http://www.context.org/ICLIB/IC03/SRIVALS.htm

personality self concept
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 (or self-image) suggests that people’s possessions contribute to and reflect their identities.
maslow s hierarchy of needs
Maslow’s Hierarchy of Needs

Self-actualization needs (self development & realization)

Only when the rest have been satisfied,

can a person make the most of his

or her unique abilities & be at peace.

Esteem needs (self esteem, recognition, status)

Social needs (love, sense of belonging)

Safety needs (security, protection)

Physiological needs (hunger, thirst)

Must satisfy these needs first

perception
Perception

Smell

The process by which people select, organize, and interpret information.

Hearing

Taste

Sight

Touch

Information Inputs

Selective Exposure

Selective Distortion

Selective Retention

Interpretation

learning
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.
beliefs attitudes
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.
buying decision process
Buying Decision Process

The buying process starts long before purchase and lasts long after.

Need Recognition

Evaluation of Alternatives

Purchase Decision

Postpurchase Behavior

Information Search

Triggered by internal or external stimuli

Personal sources, commercial sources, public sources (consumer rating sources), experiential sources (testing it out)

Depends on the individual & the specific buying situation

Two factors can come between the purchase intention & the purchase decision: attitudes of others & unexpected situational factors

Satisfied or dissatisfied with the purchase?

A routine purchase (ex milk, or toothpaste) might skip from need recognition to purchase decision.

buying decision process1
Buying Decision Process
  • Consumer satisfaction is a function of consumer expectations and perceived product performance.
  • Performance < Expectations ----- Disappointment
  • Performance = Expectations ----- Satisfaction
  • Performance > Expectations ----- Delight
buying decision process2
Buying Decision Process
  • Cognitive dissonance: a buyer’s doubts shortly after a purchase about whether it was the right decision.
stages in the adoption process
Stages in the Adoption Process

34%Early Majority

34%Late Majority

2.5% Innovators

13.5%Early Adopters

16%Laggards

X - 2σX - σ X X + σ

Time of adoption of innovations

Suspicious of change

Try new ideas at some risk.

Before the average person

Opinion Leaders – adopt new ideas early but carefully

Only after majority has tried it

influence of product characteristics on rate of adoption
Influence of Product Characteristics on Rate of Adoption

Example: HDTV

  • 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?

Picture quality & ease of viewing

Programming & broadcasting systems are not very compatible

HDTV is not complex

HDTVs are expensive, but leasing extends the adoption

Lends itself to demonstration

business markets business buyer behavior
Business Markets & Business Buyer Behavior
  • The business market is vast and involves far more dollars and items than do consumer markets.
    • Many sets of business purchases are often necessary just to prepare for one customer purchase
  • 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.

Most large companies sell to other companies (B2B). Examples: Boeing, Cisco Systems, even things like milk and bread have to be sold to retailers.

business markets
Market Structure and Demand:

Contains far fewer but larger buyers.

Customers are more geographically concentrated (CA, NY, OH, IL, MI, TX, PA, NJ).

Business demand is derived from consumer demand (derived demand).

Business Markets
  • Nature of the Buying Unit:
    • Business purchases involve more decision participants.
    • Business buying involves a more professional purchasing effort (purchasing agents or buying committees are usually in charge of business purchases – the field is known as supply management or procurement).

Think back to Intel. They increased demand for Intel chips inside PCs. They promoted their product directly to consumers even though the result was an increase in business demand because Dell and other PC manufacturers had to buy more Intel chips.

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.

Types of Decisions and the Decision Process
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.

Participants in the Business Buying Process
  • Buying Center Members:
    • Users
    • Deciders
    • Influencers
    • Buyers
    • Gatekeepers

The buying center is made up of all of the people involved in the buying decision (users, purchasers, people who influence the decision, even legal or accounting personnel depending on purchase).

model of business buyer behavior
Model of Business Buyer Behavior

The buying Organization

The buying center

Buying Decision Process

(interpersonal & individual preferences)

(Organizational influences)

The environment

Buyer Responses

Product of service choice

Supplier choice

Order Quantities

Delivery Terms & times

Service Terms

Payment

Marketing Stimuli

Product

Price

Place

Promotion

Other Stimuli

Economic

Technological

Political

Cultural

Competitive

What buying decisions do business buyers make?

Who participates in the buying process?

What are the major influences on buyers?

How do business buyers make their buying decisions?

types of buying situations
Types of Buying Situations
  • Straight rebuy – reorders something with no modifications (fewest decisions)
  • Modified rebuy – modifies price, terms, or suppliers (more decisions making than a straight rebuy)
  • New Task – buying a product or service for the first time (greatest cost/risk, large number of decision participants, large amount of information must be collected).
influences on business buyer behavior
Influences on Business Buyer Behavior
  • Environmental – economic developments, supply conditions, technological change, regulatory environments
  • Organizational, objectives, policies, procedures, organizational structure
  • Interpersonal – authority, status, persuasiveness
  • Individual – age, income, job position, personality & risk attitudes
the business buying process
The Business Buying Process

Problem recognition

Product Specification

Supplier Search

General Need Description

Proposal Solicitation

Supplier Selection

Order-routine Specification

Performance Review

e procurement
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

GE set up Global eXchange Services Network for all GE business units to make

purchases online. It is now open to other companies:

http://www.gxs.com/ see Services, Trading Grid to

video case

Video Case

Sony Metreon

(8 minutes)

thoughts
Thoughts
  • Do you think that a kid playing at Metreon’s Playstation bar will eventually buy the game he liked or is he just taking advantage of Sony’s hospitality?
  • To what type of people do these stores appeal?
  • What is the relationship between a store like Sony Metreon and the types of people discussed in the model of “adoption of innovations”?