Topic 4 - Consumer And Business Behaviour: Understanding Buyer Behaviour

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This article is a topic within the subject Marketing Fundamentals.

Contents

Required Reading

Armstrong G., Adam S., Denize, S. and Kotler P.(2012) Principles of Marketing, 5th Edition, Sydney, Pearson/Prentice Hall., pp. 146-174.

Model Of Consumer Behaviour

[1] This models the buying behaviour of final consumers, the individuals that buy goods & services for consumption - consumer market. We can find out what, where & how people buy, but why is more important. People are diverse with different demographics & tastes etc.

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Characteristics Affecting Consumer Behaviour

[2]

Cultural Factors – Culture, Subculture (Cultural Groups), Social Class, Family

Culture is the set of basic values, perceptions, wants & behaviours learned by a member of society from family & other important institutions

  • Major influence on wants & general behaviour
  • Marketers must be aware of the diverse cultures in each market they intend to serve & adapt their marketing strategy
  • Marketers try to take advantage of cultural shifts/trends that impact product demand, E.g. healthier lifestyles trend.

Each Culture contains Cultural Groups or Subcultures. They are groups of people with shared value systems based on common life experiences & situations. These shared value systems can be due to ethnicity (Chinese), gender, age, religion etc & will affect food preferences, clothing choices & other product demands.

  • By 2015, Baby Boomers 50+ will control the largest share of wealth, income & consumption compared to other generations
    • Mature consumers are a very attractive market (project)  desire to look as young as they feel – health products to combat the effectiveness of ageing.

Social Class is the relatively permanent & ordered divisions in a society whose members share similar values, interests & behaviours. It is based on education/occupation/income/wealth - peer pressure. Reference Groups impact consumer behaviour.

Social Factors – Groups, Family, Social Roles And Social Status

Groups & Social Networks

  • Influence buyer behaviour – create pressure to conform particularly membership groups
    • Reference groups serve as points of comparison or reference in forming a person’s attitudes or behaviour
  • Opinion leaders (leading adopters) exert social influence on others due to skills, knowledge or personality
    • Brand Ambassadors – Buzz Marketing, are used to influence everyday customers
  • Marketers are using social networks to interact with consumers to become part of their lives

Family is the most important buying organisation in society. E.g. Children often get parents to buy toys, sweets & holidays

Roles & Status - people will buy products that suit their roles. E.g. Professionals will buy suits, mothers will buy kids stuff etc.

Personal Factors – Age & Life Cycle, Occupation, Education, Economic Situation, Lifestyle, Personality, Self Concept

  • Age & (Family) Life Cycle - Tastes in food, clothes & recreation change as people age & as the family age structure changes
    • E.g. Marriage, Children, Retirement
    • Marketers often segment their market by life-cycle stage – e.g. Cereal Brands
  • Occupation – Professionals buy suits, manual workers prefer more rugged loose clothing
  • Educationeducated tend to hold positions that influence dress standards & purchases such as computers & reading material
  • Economic Situationmeans constrain all buyer behaviour
  • LifestyleA persons pattern of living as expressed in his activities, interests & opinions (AIO) e.g. Harley Davidson Values
    • Psychographics – measuring AIO dimensions - profiles a person’s patterns of acting & interacting in the world
  • Personality & Self Conceptthe unique psychological characteristics that distinguish a person or group (personality)
    • Traits – self-confidence, dominance, sociability, autonomy, defensiveness are used to classify personalities
    • Consumers choose brand personalities that match their own – specific mix of human traits attributed to a brand.
      • Sincerity, Excitement, Competence, Sophistication & Ruggedness
    • Self Concept is self image. People’s purchases reflect their identities - we are what we have. ‘MAC Ads’

Psychological Factors – Motivation, Perception, Learning, Beliefs And Attitudes

  • Motivationthe internal urge directing a person to do something to satisfy the urge (an intense need)
    • Freud - people are unaware of the psychological forces shaping their behaviour
    • Maslow’s hierarchy of needs - physiological ( food), safety, social (love), esteem (status), self actualisation ( art)
  • Perceptionprocess by which people, select, organise & interpret information to form a meaningful picture of the world
    • Selective Attention: People screen out most information they are exposed to
    • Selective Distortion: Interpret information in a way to support what they already believe
    • Selective Retention: People are likely to remember good points about favoured brand’s & forget unfavoured +’s
      • People remember things that support existing attitudes & beliefs
  • Learning – changes in behaviour arising from experience
    • Product demand can be built by associating with a drive – a strong internal stimulus that calls for action, using motivating cues & providing positive reinforcement (good experience with a shoe)
  • Beliefs & AttitudesAcquired by doing & learning
    • Belief - a descriptive thought a person holds about something
    • Attitude - a person’s consistently favourable or unfavourable evaluations, feelings & tendencies towards an object
      • Difficult to change e.g. Japanese make the best electronics
      • Cognitive – beliefs & attitudes not influenced by emotion
      • Affective – emotional responses (liking or disliking)
      • Conative/Behavioural – intention to purchase

Consumer Buying Roles

Each person within a group (e.g. family) has a certain (or many roles) role in carrying consumptive responsibilities. For example, Pepsi marketed to mums (buys & decides for Kids).

  • Initiatorfirst thinks of or suggests the idea (e.g. run out of cereal)
  • Influencerpersons views & opinions carry weight in the final decision (e.g. Dr. Dietary Requirements)
  • Decidermakes any part of the buying decisions (whether to buy, what, how & where)
  • Buyermakes the actual purchase
  • Userconsume the good or service

Types Of Consumer Buying Decisions

  • Routine Response Behaviour - Buy 1st, evaluate later, quick decisions, little involvement, frequently low cost goods (pen)
  • Limited Decision Making - Low involvement, moderate cost goods, evaluation of a few brands, short decision (clothing)
  • Extensive Decision Making - High involvement, high cost of goods, evaluation of many brands, lengthy decision (house)

Buyer Decision Process

[3]

  1. Need Recognition – problems recognised when people sense a difference between actual & desired states
    • Triggered by internal stimuli (drive) or external stimuli (advertisement)
  2. Information Search – may or may not - depend on urgency/drive. Personal sources more influential than commercial
  3. Evaluation of Alternatives – compare product attributes with alternatives (weight each attribute according to need, belief)
  4. Purchase Decision – buy or not buy - attitudes of others & situational factors may change purchase intentions
  5. Post-Purchase Behaviour – satisfied? comparing products expected performance against perceived performance received
    • Cognitive Dissonance – discomfort cause by post purchase conflict - losing benefits that other products provide
    • Satisfaction = relationship with customer = customer life time value (pay less attention to other brands) = word of mouth

Adoption Process - Buyer Decision Process For New Products

[4] The Adoption Process is a mental process through which an individual passes from 1st learning about an innovation to final adoption (become a regular user).

Stages In The Adoption Process

  1. Awareness – becomes aware but lacks information
  2. Interest – seeks information
  3. Evaluation – considers whether trying the new product makes sense
  4. Trial – tries new product (on a small scale) to estimate its value
  5. Adoption – full & regular use

Influence Of Product Characteristics On The Rate of Adoption

  • Relative Advantage - degree to which the innovation appears superior to existing products. HDTV has better picture
  • Compatibility - degree to which innovation fits the values & experiences of potential consumers. 3DTV no channels yet
  • Complexity - degree to which innovation is difficult to understand or use. HDTV isn't complex to use (or much different)
  • Divisibility - degree to which innovation can be tried on a limited basis. HDTV’s used to be expensive – slowed adoption
  • Communicability - degree to which the results of the innovation can be observed/described to others. HDTV observable

Initial & ongoing costs, risk & uncertainty & social approval also affect the rate of adoption

Individual Differences in Buyer Readiness

People differ in their readiness to adopt a new product. Earlier adopters tend to be young, educated & have high income. They are more receptive to unfamiliar things & take more risks (rely of judgement).

  • Innovators – venturesome,
  • Early Adopters – opinion leaders,
  • Early Majority – adopt ideas before most
  • Late Majority – sceptical, adopt after most people have tried it
  • Laggards – suspicious of changes, adopt after it has become tradition

Business Markets

[5] Business markets are all the organisations that buy G&S to use them in production (or services) or for the purpose of supplying, renting or reselling. These include the industrial, reseller & institutional/govt markets. Business buyers determine which products are needed, find potential products & make an evaluation.

Market Structure And Demand

Business markets have far fewer but far larger buyers than consumer markets. There is more dependencies & a need for closer relationships. Demand is derived from consumer demand. Some markets are inelastic while some fluctuate more than consumer markets.

The Nature Of The Buying Unit

Business purchases involve more decision participants & a professional purchasing effort. Trained purchasing agents do most buying, so B2B marketers face a harder task.

Types of Decisions And Decision Processes

Business buyers face more complex buying decisions; they involve large sums of cash, technical & economic considerations & interaction among many people in different levels of the firm. This increases length of formalised purchasing decisions. Leasing instead of outright purchases is an option to conserve capital & get latest products (& tax advantages). Buyers/Sellers are more reliant upon one another. Must work closely with customers on all stages of the buying process (problems, solutions, after sale) for supplier development - the systematic development of networks of supplier-partners to ensure an appropriate & dependable supply. There is a reciprocity tendency in these direct purchases.

Business Buyer Behaviour

[6] Markets want to know how business buyers respond to various marketing & external stimuli. Many firm’s prefer a complete solution from 1 seller instead of buying many goods & services from many sellers - Systems (Solution) Selling.

Main Types of Buying Situations

  • Straight Re-buy - routinely re-order the same thing, suppliers maintain quality & try to create automatic reordering
  • Modified Re-buy - modifies product specifications, price, terms or suppliers. More decision participants
  • New Task - purchases a G/S for the 1st time. More decision participants

Participants in the Business Buying Process

The decision making unit of a buying organisation is the buying center. There are users, influencers, buyers (formal authority to select purchases), Deciders (approve the buyers), and gatekeepers (control flow of information).

Main Influences On Business Buying

  • Environmental – economic, technological, political, competitive & social & cultural developments. E.g. GFC – Value
  • Organisational – objectives, policies, procedures, structure, systems. How many people involved in the buying team
  • Interpersonal – authority, status, empathy, persuasiveness. Who influences the buying decision the most
  • Individual – age, income, education, position, personality, risk attitudes. Personal motives, preferences, friend?

Business Buying Process

[7]

  1. Problem Recognition – triggered by internal/external stimuli
  2. General Need Description – describes overall characteristics & quantities of needed item
  3. Product Specification – translate needs into product specifications (may need value analysis engineering team)
  4. Supplier Search – find best suppliers meeting product specifications
  5. Proposal Solicitation – invites qualified suppliers to submit proposals of terms of supply & support
  6. Supplier Selection – selects supplier based on technical competence, service record, reputation
  7. Order Routine Specification – specifies technical specifications, delivery terms, return policies & quantities
  8. Performance Review – continue, amend or drop supplier based on performance

End

This is the end of this topic. Click Marketing Fundamentals to go back to the main subject page for Marketing Fundamentals

References

Textbook refers to Armstrong G., Adam S., Denize, S. and Kotler P.(2012) Principles of Marketing, 5th Edition, Sydney, Pearson/Prentice Hall.

  1. Armstrong G., Adam S., Denize, S. and Kotler P.(2012) Principles of Marketing, 5th Edition, Sydney, Pearson/Prentice Hall., pp. 148
  2. Armstrong G., Adam S., Denize, S. and Kotler P.(2012) Principles of Marketing, 5th Edition, Sydney, Pearson/Prentice Hall., pp. 149-154
  3. Armstrong G., Adam S., Denize, S. and Kotler P.(2012) Principles of Marketing, 5th Edition, Sydney, Pearson/Prentice Hall., pp. 160
  4. Armstrong G., Adam S., Denize, S. and Kotler P.(2012) Principles of Marketing, 5th Edition, Sydney, Pearson/Prentice Hall., pp. 163
  5. Armstrong G., Adam S., Denize, S. and Kotler P.(2012) Principles of Marketing, 5th Edition, Sydney, Pearson/Prentice Hall., pp. 165-166
  6. Armstrong G., Adam S., Denize, S. and Kotler P.(2012) Principles of Marketing, 5th Edition, Sydney, Pearson/Prentice Hall., pp. 169-172
  7. Armstrong G., Adam S., Denize, S. and Kotler P.(2012) Principles of Marketing, 5th Edition, Sydney, Pearson/Prentice Hall., pp. 172
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