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Chapter 5

Consumer & Business Buyer


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
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 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.

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
Societys 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 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.

U.S. Population by Class

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
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
Lifestyle:
Pattern of living as expressed in
psychographics
Activities
Interests
Opinions

SRI Consultings 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 refers to the unique
psychological characteristics that lead to
relatively consistent and lasting responses to
ones own environment.
Generally defined in terms of traits.
Self-concept (or self-image) suggests that
peoples possessions contribute to and
reflect their identities.

Maslows Hierarchy of Needs


Selfactualization
needs (self
development &
realization)
Esteem needs (self esteem,
recognition, status)
Social needs (love, sense of
belonging)
Safety needs (security, protection)

Physiological needs (hunger, thirst)

Perception
Smell
Hearing
Sight

Taste

The process by which people select, organize,


and interpret information.

Touch

Information
Inputs

Interpretation

Selective
Exposure

Selective
Distortion

Selective
Retention

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 individuals behavior
Behaviors with satisfying results tend to be
repeated.
Behaviors with unsatisfying results tend not to be
repeated.

Beliefs & Attitudes


A belief is a descriptive thought that a person
holds about something.
An attitude is a persons consistently
favorable or unfavorable evaluations, feelings,
and tendencies toward an object or idea.

Buying Decision Process


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

Need
Recognition

Triggered by
internal or
external stimuli

Information
Search

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

Evaluation of
Alternatives

Purchase
Decision

Postpurchase
Behavior

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 Process


Consumer satisfaction is a function of

consumer expectations and perceived


product performance.

Performance < Expectations ----- Disappointment

Performance = Expectations ----- Satisfaction

Performance > Expectations ----- Delight

Buying Decision Process


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

Stages in the Adoption Process

2.5%
Innovators

34%
Early
Majority

13.5%
Early
Adopters
X - 2

34%
Late
Majority
16%
Laggards

X-

X+

Time of adoption of innovations


Try new ideas at some risk.

Before the average person

Opinion Leaders adopt new


ideas early but carefully

Suspicious of change

Only after majority has tried it

Influence of Product Characteristics


on Rate of Adoption
Relative Advantage:
Advantage Is the
innovation superior to existing
products?
Compatibility:
Compatibility Does the
innovation fit the values and
experience of the target
market?
Complexity:
Complexity Is the innovation
difficult to understand or use?
Divisibility:
Divisibility Can the innovation
be used on a limited basis?
Communicability:
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
Most large companies sell to other companies (B2B).
Examples: Boeing, Cisco Systems, even things like milk
and bread have to be sold to retailers.
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.

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).

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.

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.

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


The environment
Marketing
Stimuli

The buying
Organization

Buyer Responses

Other
Stimuli

The buying
center

Product of service choice

Economic

Buying Decision
Process

Order Quantities

Product

Technological

Price

Political

Place

Cultural

Promotion

Competitive

(interpersonal &
individual
preferences)
(Organizational
influences)

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?

Supplier choice
Delivery Terms & times
Service Terms
Payment

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
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


Problem
recognition

General Need
Description

Proposal
Solicitation

Product
Specification

Supplier
Selection

Order-routine
Specification

Supplier
Search

Performance
Review

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
Sony Metreon
(8 minutes)

Thoughts
Do you think that a kid playing at Metreons
Playstation bar will eventually buy the game he
liked or is he just taking advantage of Sonys
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?