Consumer Buying Behavior

Involvement is the level of perceived personal

importance and/or interest evoked stimulus within a specific situation.

by

What is Consumer Behaviour?

Those activities directly involved in obtaining , consuming and disposing of products and services, including the decision processes that precede and follow these actions

Consumer (Buyer) Behavior Definition The definition of consumer behavior includes the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society (Cited by the consumer psychologists website). The definition also extends to include factors such as the use and disposal of products along with the fact that services and ideas are just as important to consumers as physical products.

The advice to footwear salesmen should be Dont sell shoes sell lovely feet
Marketers must contend with small changing segments of highly selective buyers intent on receiving genuine value at the lowest price

Goals of the Lecture

Marketers must strive to understand how organizations in their chosen markets reach the buying decision. Second, the roles assumed by people who impact the buying decision. These people, taken as a group, are called the buying center. You should become familiar with these roles and be able to understand how they would be expressed in a group-buying scenario. To provide some simple tools that can be used for thinking about consumers, speculating about their possible behaviors, To present a simple model of consumer decision-making process. To consider how consumers learn about products and services from their environment and how they use this information to direct their behavior.

Types of Relationships a Person May Have With a Product:

Self-Concept Attachment
Helps to Establish the Users Identity

Nostalgic Attachment
Serves as a Link With a Past Self

Interdependence
Part of the Users Daily Routine

Love
Elicits Bonds of Warmth, Passion, or Other Strong Emotion

Consumption Typology Explores the Different Ways That Products and Experiences Can Provide Meaning to People. There Are 4 Distinct Types of Consumption Activities:
Consuming as Experience An Emotional or Aesthetic Reaction to Consumption Objects

Consuming as Integration

Express Aspects of Self or Society Communicate Their Association With Objects, Both to Self/ Others Participate in a Mutual Experience and Merge Self With Group(Movies)

Consuming as Classification

Consuming as Play

Aamir Khan Avant Garde in its true Essence !!!

Innovative Solutions With Potential Must Be Nurtured And Rapidly Applied

His promotion of Lagaan was quite innovative. Even after the film was declared a hit he organized cricket matches with the Lagaan team. Taare Zameen Par saw Aamir becoming one of the pioneers of blogging. He went ahead giving a day to day account of the film and thus kept people interested as well as updated about himself and his film TZP. It proved to be blockbuster and affirmed Aamir's faith in publicity through the web. For Peepli Live the approach was totally different. Aamir highlighted in the media through reality shows most of the cast, introduced each one of them and showed clippings of scenes which focused on each one of them. This was an intelligent move that converted the so called initial disadvantage of having a debutant director and unknown actors into an advantage Such efforts obviously create a curiosity. After all isnt advertising and marketing all about evoking curiosity and creating an interest in the product?

No doubt its Aamir Khan who raises the bar every time when it comes to promoting his films

All managers must become astute analysts of Consumer motivation and Behaviour
Three foundations for marketing decisions Experience Intuition Research

Why is this important?

Out of 11000 products launched by 77 companies, only 56% are present five years later Kuczmaski & Associates Only 8% of new product concepts offered by 112 leading companies reached the market. Out of this 83% failed to reach marketing objectives Group EFO Ltd., Marketing
News, Feb 1, 1993, Pg 2

Stages in the Adoption Process

Awareness Interest

Evaluation
Trial Adoption

Stages in the Adoption Process

1. Awareness: Consumer becomes aware of the new
product, but lacks information about it. product.

2. Interest: Consumer seeks information about new

3. Evaluation: Consumer considers whether trying
the new product makes sense.

4. Trial: Consumer tries new product on a small

regular use of the new product.

scale to improve his or her estimate of its value.

5. Adoption: Consumer decides to make full and

Levels of Consumer Decisions

The process by which a person is required to make a choice from various alternative options is referred to as decision-making.

Child: Horlicks is an old persons drink and I drink it only because mama forces me to do so.

CHANGE IS THE ESSENCE OF LIFE!!!!!!!

Mother: My kids drink whatever they feel like, and I wish they would ask for Horlicks. The 130-year old Horlicks was beginning to lose its sheen and GSK felt that it was time to give its Rs 800-crore brand a facelift. While Tata Elxsi has designed the product packaging, J. Walter Thomson has done the pack designing.

Adoption of Innovations
Percentage of Adopters

Early Majority Innovators

Late Majority

Early Adopters
13.5%

34%

34%

Laggards

16%

2.5%

Time of Adoption

Early

Late

Influences on the Rate of Adoption of New Products

Communicability
Can results be easily observed or described to others?

Relative Advantage
Is the innovation superior to existing products?

Divisibility
Can the innovation be used on a trial basis?

Product Characteristics

Compatibility
Does the innovation fit the values and experience of the target market?

Complexity
Is the innovation difficult to understand or use?

The best a Man can Get!!!!!

Indians still strop their own razors of visit a barber shop for a shave rather than going in for electric and safety razors. Average shave by Indian Men around only 3 times a week. Gillette is still struggling in the mass market. Why???

Successful Relationships

Customer Value

Customer Retention

Customer Satisfaction

Consumer Behavior Model (Stages of Buying Process)

Consumer Problems and Recognition

Consumer problem:
Discrepancy between ideal and actual state--e.g., consumer:
Has insufficient hair Is hungry Has run out of ink in his or her inkjet cartridge

Problems can be solved in several ways--e.g.,

stress reduction <----vacation, movie, hot bath, medication

Approaches to Search for Problem Solutions

INTERNAL
Memory Thinking

EXTERNAL
Word of mouth, media, store visits, trial
CATALOG

REMINDER
For low involvement products, efforts aimed at affecting internal search tend to be more effective the consumer is usually not willing to expend energy on external search. External search is more likely for higher involvement products.

Options Identified and Considered

UNIVERSAL SET

All possible options

Awareness Set

Options that readily come to mind

EVOKED SET

Options that will be considered by the consumer

Note: Retrieved and evoked sets will vary among different consumers

Awareness set all brands that the customer is aware of Evoked set all those brands that the customer remembers at decision-making time Consideration set those brands in the evoked set that the customer will consider buying

Consumer Behavior Model (Stages of Buying Process)

Decision Making Issues

Involvement level
Temporary Enduring

Consumer locus of control

Internal External

Product category complexity Consumer knowledge

Decision Making Models

An Economic View- Also known as Economic Man theory. Consumer Behaves Rationally. Assumes Perfect Competition. A Passive View- Submissive to Internal & External stimuli and people are considered to be irrational and impulse purchasers. Cognitive View- Thinking Problem solver. Consumer is viewed as information processors which leads to formation of preferences and purchase intentions.

Emotional View- Consumer makes use of emotional impulses while decision making like joy, grief etc.

TYPES OF DECISION
Basic Purchase/ Consumption Decision Brand Purchase/ Consumption Decision. Channel Purchase Decision Payment Option Decision.

How we buy (a rational view)

functional emotional current v/s desired situation relative importance need inhibitors
Need recognition, problem-awareness Information search Evaluate alternatives are they aware of need ? can we mediate need inhibitors? can we stimulate awareness & action

internal search (memory) external search (personal sources, commercial sources third party reports (e.g. Which) personal observation/testing

Window-shop simmering interests

Shape desire, want

Information search

Evoked set

Evaluate alternatives (against evoked set) Buy Post-purchase evaluation

Buy Post-purchase evaluation

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CONSUMER DECISIONS:
Theory and Reality in Consumer Buying

PROBLEM RECOGNITION

INFORMATION SEARCH

EVALUATION OF ALTERNATIVES PURCHASE POSTPURCHASE EVALUATION/ BEHAVIORS

Theory Complications

Stages in Consumer Decision Making and Evaluation of Services

ROLES OF A BUYER
initiator this person first recognizes the need for the product or service and may or may not have a say in the purchase decision. user this person will be responsible for operating the product that is bought or consuming the service that is purchased. Again, this person may or may not have a say in what is purchased. influencer this persons role may be only tangential to product use, but s/he will still have an impact on the purchase decision. buyer this person is responsible for obtaining the product, though s/he may or may not have any impact on what is purchased. decider this person is responsible for the final determination of what will be purchased.

The Buyer Decision Process

Step 1. Need Recognition
Need Recognition
Difference between an actual state and a desired state

Internal Stimuli Hunger

Thirst

External Stimuli
TV advertising

Magazine ad

A persons normal needs

Radio slogan
Stimuli in the environment

Consumer Behavior Model (Stages of Buying Process)

Passive Information Gathering Receiving and processing of information regarding existence, quality, services, stores, convenience, pricing, advertising that consumer might consider in making a purchase

Consumer Behavior Model (Stages of Buying Process)

Passive Information Gathering Receiving and processing of information regarding existence, quality, services, stores, convenience, pricing, advertising that consumer might consider in making a purchase Need Recognition - Consumer recognizes a need or desire for the product or service. When the need is high relative to barriers to resolving need there is a shop trigger event

1. PROBLEM RECOGNITION
Difference between the desired state and the actual condition. Example: By seeing a commercial for a new pair of shoes, stimulates your recognition that you need a new pair of shoes. Hunger stimulates your need to eat.

The Buyer Decision Process

Step 2. Information Search
Personal Sources Commercial Sources
Family, friends, neighbors Most influential source of information Advertising, salespeople Receives most information from these sources Mass Media Consumer-rating groups Handling the product Examining the product Using the product

Public Sources

Experiential Sources

FACTORS LIKELY TO INCREASE PREPURCHASE SEARCH.

Product Factors Situational Factors- Experience, Social Acceptability, Value related considerations. Personal Factors- Demographic, Personality.

2. INFORMATION SEARCH
Internal Search: --- Memory External Search: --- Friends and Relatives A successful information search leaves a buyer with possible alternatives, the evoked set. Example: Hungry, want to go out and eat, evoked set is Chinese food Indian food Burger king

The Buyer Decision Process

Step 3. Evaluation of Alternatives
Product Attributes
Evaluation of Quality, Price, & Features

Degree of Importance
Which attributes matter most to me?

Brand Beliefs
What do I believe about each available brand? Based on what Im looking for, how satisfied would I be with each product?

Total Product Satisfaction

Evaluation Procedures
Choosing a product (and brand) based on one or more attributes.

3. EVALUATION OF ALTERNATIVES

Need to establish criteria for evaluation, features the buyer wants or does not want. Rank/weight alternatives.

Example: If you want to eat something spicy, then Indian food gets the highest rank etc

The Buyer Decision Process

Step 4. Purchase Decision
Purchase Intention Desire to buy the most preferred brand

Attitudes of others

Unexpected situational factors

Purchase Decision

4. PURCHASE DECISION

Choose buying alternative, includes product, package, store, method of purchase etc. 5. PURCHASE : May differ from decision, time lapse between purchase decision and the actual purchase, product availability.

The Buyer Decision Process

Step 5. Postpurchase Behavior
Consumers Expectations of Products Performance Products Perceived Performance

Satisfied Customer!

Dissatisfied Customer
Cognitive Dissonance

Buying Decision Process

Cognitive dissonance: a buyers doubts
shortly after a purchase about whether it was the right decision.

Buying Decision Process

Consumer satisfaction is a function of consumer expectations and perceived product performance.
Performance < Expectations Disappointment

Performance = Expectations

Satisfaction

Performance > Expectations

Delight

6. POST-PURCHASE EVALUATION

It is the outcome Satisfaction or Dissatisfaction. This can be reduced by warranties, after sales communication etc.
Example: After eating an Indian meal, you may think that really you wanted a Chinese meal instead.

Organizational Buyers
Types
Industrial Reseller Government and non-profit organizations

Characteristics
Greater involvement Bureaucracy Long term relationships Price is important but may not be the most important factor

Purchase types
Straight rebuy Limited decision making/ Modified Rebuy Extended decision making/ New Task

ROLES:
2 Additional Approvers Gate keepers

The Business Buying Process

Major Types of Buying Situations

Straight Re-buy
The buyer routinely reorders something without any modifications.

Modified Re-buy

The buyer wants to modify product specifications, prices, terms, or suppliers.

New Task

The buyer purchases a product or service for the first time.

Business Buying Situations

New Task Buying Involved Decision Making

Modified Re-buy

Straight Re-buy

Examples of Products Purchased Using the Buy-Class

Straight Rebuy
Office Supplies Vehicles

Modified Rebuy
Consulting Services

New Buy
Installations

Pure routine
Electricity Gas/Water Bulk Chemicals

Electrical Components

Complete negotiation
Computer Systems
Moon Shot Insurance

Forces Influencing Organizational Buying Behavior Economic Outlook:

A projected change in business conditions can drastically alter buying plan.
Organizational Buying Behavior Environmental Forces Organizational Forces Group Forces Individual Forces

Domestic & Global Pace of Technological Change Global Trade Relations Goals, Objectives, and Strategies Organizational Position of Purchasing

Roles, relative influence, and patterns of interaction of buying decision participants Job function, past experience, and buying motives of individual decision participants

The Organizational Buying Process

Market Structure and Demand
Organizational demand is derived demand; it comes ultimately from the demand for consumer goods or services

The Organizational Buying Process

Organizational buying decisions tend to be more complex than consumer decisions
The organizational buying process tends to be more formal than the consumer process

Participants in the Organizational Buying Process

A buying center is all those individuals and groups who participate in the purchasing decision-making process, who share common goals and the risks arising from the decisions

Participants in the Organizational Buying Process

Users
Making Unit of a Buying Organization is Called Its Buying Attitudes Center. of Others Unexpected Situational Factors
Influencers Deciders

Ethical Decision-

Roles Include

Approvers

Gatekeepers

Buyers

Major Influences on Organizational Buyers

Organizational Buying Decisions

1. Problem Recognition
2. General Need Description 3. Product Specification 4. Supplier Research

5. Proposal Solution
6. Supplier Selection 7. Order-Routine Specification 8. Performance Review

Problem Recognition
Problem recognition is when someone in a company recognizes a problem or need that can be met by acquiring a good or a service
Problem recognition can occur because of internal and external stimuli

General Need Description

General need description is when a company describes the general characteristics and quantity of a needed item

Product Specification
Product specification is when the buying organization decides on and specifies the best technical product characteristics for a needed item

Supplier Search
Supplier search is when a buyer tries to find the best vendor

Proposal Solution
Proposal solution is when qualified suppliers are invited to submit proposals

Supplier Selection
Supplier selection is when a buyer receives proposals and selects a supplier or suppliers

Order-Routine Specification
Order-routine specification when a buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies, warranties, and so on

Performance Review
Performance review is when a buyer rates its satisfaction with suppliers, deciding whether to continue, modify, or drop the relationship

ROLE OF MARKETER
Active Information Gathering Comparison of different products, brands, colors, capabilities, etc.

ROLE OF MARKETER
Active Information Gathering Comparison of different products, brands, colors, capabilities, etc. Purchase Decision Two decisions. First is buy or no-buy. If decision is to buy then timing of purchase is second decision.

ROLE OF MARKETER

ROLE OF MARKETER
Transaction - Final negotiation as to Price, Store, Credit or Cash, etc. An opportunity for retailers to market extras.

ROLE OF MARKETER
Transaction - Final negotiation as to Price, Store, Credit or Cash, etc. An opportunity for retailers to market extras. Post Purchase Evaluation - Did the product and retail experience meet the consumers expectations

Summary
Selling the better mousetrap is not enough In order to succeed, YOU must be aware of the patterns and trends effecting the environment. Failure to keep up with trends will cause YOU to locate in the wrong locations, sell the wrong product and fail to meet the customers needs Many factors influence the consumers purchase decision including psychological, personal and social factors

INTERNAL DETERMINANTS OF CONSUMER BEHAVIOUR MotivesA motive is an internal energizing force that orients a person's activities toward satisfying a need or achieving a goal. According to W.J. Stanton: A motive can be defined as a drive or an urge for which an individual seeks satisfaction. It becomes a buying motive when the individual seeks satisfaction through the purchase of something Actions are effected by a set of motives, not just one. If marketers can identify motives then they can better develop a marketing mix. MASLOW hierarchy of needs!! Physiological Safety Love and Belonging Esteem & Self Actualization Need to determine what level of the hierarchy the consumers are at to determine what motivates their purchases.

Roger Wolcott Sperry (August 20, 1913 April 17, 1994) was a neuropsychologist, neurobiologist and Nobel laureate who, together with David Hunter Hubel and Torsten Nils Wiesel, won the 1981 Nobel Prize in Medicine for his work with split-brain research

All these motives are not equally forceful. Here we describe only important buying motives: 1. Freedom from fear and danger: Fear is a negative motive but is a very powerful one. The most basic instinct of a human being is self-preservation. Fear is a very powerful and compelling force in human affair. The marketing man must ascertain the possible fear of death, fear of loss and fear for the future, fear can sell anything like hair oil through fear of getting bald. 2. Desire for economy: Persons desire money to satisfy their other desires. The businessman wants money to make more profits or lower costs. The manufacturers make purchase of high priced heavy machinery to lower down their cost of production and thereby increases profits. In the same way every customer likes his money's worth. 3. Vanity: Women spend much time, thought and money on their personal appearance like cosmetics, hairdo and new styles. Hence vanity is a powerful motive in the hands of the marketing man being the safest appeal that may be used. 4. Appreciation: Everybody desires to be appreciated and complimented. He likes to be recognized as an important person. Because of this human intrait, it may be useful to use indirect method in place of direct methods that might prove offensive. 5. Fashion: It is the desire of everyone to imitate what others are doing. This may also be called imitation motive. It is closely linked with pride or desire for importance. This motive can be well exploited by the marketer.

Possession: The instincts of possession or a desire to call things as mine' leads persons to hoard and collect things. Some persons collect postage stamps and old coins. 7. Romance: Fancy clothes, cosmetics, perfumes, etc. are in great demand on account of the instinct of a desire to attract the opposite sex. It is no wonder why this instinct is very often used by marketing men. 8. Love of others: This motive plays an important part when parents purchase all kinds of things for their children like toy, fancy garments and other presents, may go in for life insurance to make provision for their future. A bachelor going to marry will purchase numerous domestic articles. Therefore, this particular motive is as time described as that of home building.' This instinct is also related to comfort and convenience motive. 9. Health or physical well-being: Many persons purchase health foods, vitamin tablets and patent medicines to maintain their health and physique well-being. 10. Comfort and convenience: Most people don't like to exert much. Hence this motive may be well exploited by the marketing particularly for selling luxury items like motor, cars, sofa sets, furniture, vacuum cleaners, washing machine, television sets, etc. The sale of air conditioners and water coolers, fans is motivated in summer by this motive for comfort. Using buying motives in marketing Human behavior is fundamentally related to instincts. It is these instincts which make a person behave differently at different times. The appropriate motive must be crystallized if the marketing program is to be effective and appropriate
6.

Theories of motivation also help marketers in understanding how consumers' consumption is influenced by their needs. Abraham Maslow tried to arrange such significant needs into a hierarchy of five levels, depending on the relative importance of the needs to a person. The five levels of needs given by him are 1) physiological needs, 2) safety needs, 3) social needs, 4) egoistic or self esteem needs and finally 5) self actualization needs. The trio of needs (another theory of motivation) deal with three kinds of needs viz., need for power, need for affiliation and need for achievement. These needs play an important role in influencing consumer behavior. Motivational conflict is a concept which deals with the conflicting motives of the customers. Here the marketer tries to project the product as a solution to such conflicts.