Consumer behavior

Consumer Buyer Consumer Buyer BehaviourBehaviour

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Definitions

• Consumer Buying BehaviorConsumer Buying Behavior Buying behavior of individuals Buying behavior of individuals

and households that buy products and households that buy products for personal consumption.for personal consumption.

• Consumer MarketConsumer Market All individuals/households who All individuals/households who

buy products for personal buy products for personal consumption.consumption.

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• Stimulus Response ModelStimulus Response Model Marketing and other stimuli enter Marketing and other stimuli enter

the buyer’s “black box” and the buyer’s “black box” and produce certain choice/purchase produce certain choice/purchase responses.responses.

Marketers must figure out what is Marketers must figure out what is inside of the buyer’s “black box” inside of the buyer’s “black box” and how stimuli are changed to and how stimuli are changed to responses.responses.

Model of Consumer Behavior

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Characteristics Affecting Consumer

Behavior

• CulturalCultural

• SocialSocial

• PersonalPersonal

• PsychologicalPsychological

• CultureCulture

• SubcultureSubculture ReligionReligion EthnicEthnic

• Social ClassSocial Class Socio-economic Socio-economic

classclass (SEC)(SEC)

Key Factors Key Factors

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Culture

The fundamental determinant of a person’s wants and behaviors acquired through socialization

processes with familyand other key institutions.

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Fast Facts About American Culture

• The average AmericanThe average American chews 300 sticks of gum a yearchews 300 sticks of gum a year goes to the movies 9 times a goes to the movies 9 times a

yearyear takes 4 trips per year takes 4 trips per year attends a sporting event 7 times attends a sporting event 7 times

each yeareach year

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Behavior


• SocialSocial



• GroupsGroups MembershipMembership ReferenceReference

Aspirational groupsAspirational groups Opinion leadersOpinion leaders

• FamilyFamily Children can Children can

influenceinfluence

• Roles and StatusRoles and Status


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Behavior


• SocialSocial



• Age and life cycleAge and life cycle• OccupationOccupation• Economic situationEconomic situation• LifestyleLifestyle

Activities, interests, and Activities, interests, and opinionsopinions

Lifestyle segmentationLifestyle segmentation

• Personality and self-Personality and self-conceptconcept Brand personalityBrand personality


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Stages in the Family Life Cycle1. Bachelor stage: 1. Bachelor stage:

Young, single, not living Young, single, not living at homeat home

Few financial burdens. Fashion opinion leaders. Few financial burdens. Fashion opinion leaders. Recreation oriented. Buy: basic home equipment, Recreation oriented. Buy: basic home equipment, furniture, cars, equipment for the mating game; furniture, cars, equipment for the mating game; vacations.vacations.

2. Newly married 2. Newly married couples: couples:

Young, no childrenYoung, no children

Highest purchase rate and highest average Highest purchase rate and highest average purchase of durables: cars, appliances, furniture, purchase of durables: cars, appliances, furniture, vacations.vacations.

3. Full nest I: 3. Full nest I:

Youngest child under sixYoungest child under six

Home purchasing at peak. Liquid assets low. Home purchasing at peak. Liquid assets low. Interested in new products, advertised products. Interested in new products, advertised products. Buy: washers, dryers, TV, baby food, chest rubs Buy: washers, dryers, TV, baby food, chest rubs and cough medicines, vitamins, dolls, skates.and cough medicines, vitamins, dolls, skates.

4. Full nest II: 4. Full nest II:

Youngest child six or overYoungest child six or over

Financial position better. Less influenced by Financial position better. Less influenced by advertising. Buy larger-size packages, multiple-unit advertising. Buy larger-size packages, multiple-unit deals. Buy: many foods, cleaning materials, deals. Buy: many foods, cleaning materials, bicycles, music lessons, pianos.bicycles, music lessons, pianos.

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Brand Personality DimensionsBrand Personality Dimensions


Behavior

• SinceritySincerity

• RuggednessRuggedness

• ExcitementExcitement

• CompetenceCompetence

• SophisticatioSophisticationn

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Behavior


• SocialSocial



• MotivationMotivation Needs provide motives for Needs provide motives for

consumer behaviorconsumer behavior Motivation researchMotivation research Maslow’s hierarchy of needsMaslow’s hierarchy of needs

• PerceptionPerception Selective attention, selective Selective attention, selective

distortion, selective distortion, selective retentionretention

• LearningLearning Drives, stimuli, cues, Drives, stimuli, cues,

responses and reinforcementresponses and reinforcement

• Beliefs and attitudesBeliefs and attitudes


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Maslow’s Hierarchy of NeedsMaslow’s Hierarchy of Needs


Behavior

Self-actualizationSelf-actualization

Esteem NeedsEsteem Needs

Social NeedsSocial Needs

Safety NeedsSafety Needs

Physiological NeedsPhysiological Needs

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Types of Buying-Decision Behavior

Difference Difference between between brandsbrands

SignificantSignificantDifferencesDifferences

Complex Complex buying buying

behaviorbehavior

LowLow

FewFewDifferencesDifferences

Dissonance-Dissonance-reducing reducing buying buying

behaviorbehavior

Habitual Habitual buying buying

behaviorbehavior

Variety-Variety-seeking seeking buying buying

behaviorbehavior

HighHighInvolvement LevelInvolvement Level

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• Five Stages:Five Stages: Need recognitionNeed recognition Information searchInformation search Evaluation of alternativesEvaluation of alternatives Purchase decisionPurchase decision Postpurchase behaviorPostpurchase behavior

The Buyer Decision Process

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• Need recognitionNeed recognition

• Information searchInformation search

• Evaluation of Evaluation of alternativesalternatives

• Purchase decisionPurchase decision

• Postpurchase behaviorPostpurchase behavior

• Needs can be Needs can be triggered by:triggered by: Internal stimuliInternal stimuli

Normal needs Normal needs become strong become strong enough to drive enough to drive behaviorbehavior

External stimuliExternal stimuli AdvertisementsAdvertisements Friends of friendsFriends of friends

Process Process Stages Stages

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• Consumers exhibit Consumers exhibit heightened attention heightened attention or actively search for or actively search for information.information.

• Sources of information:Sources of information: PersonalPersonal CommercialCommercial PublicPublic ExperientialExperiential

• Word-of-mouthWord-of-mouth


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Successive Sets Involved in Customer Decision Making

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• Evaluation procedure Evaluation procedure depends on the consumer depends on the consumer and the buying situation.and the buying situation.

• Most buyers evaluate Most buyers evaluate multiple attributes, each multiple attributes, each of which is weighted of which is weighted differently.differently.

• At the end of the At the end of the evaluation stage, evaluation stage, purchase intentions are purchase intentions are formed.formed.


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• Two factors Two factors intercede between intercede between purchase purchase intentions and the intentions and the actual decision:actual decision: Attitudes of othersAttitudes of others Unexpected Unexpected

situational factorssituational factors


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• Satisfaction is Satisfaction is important:important: Delighted consumers Delighted consumers

engage in positive word-engage in positive word-of-mouth.of-mouth.

Unhappy customers tell Unhappy customers tell on average 11 other on average 11 other people.people.

It costs more to attract a It costs more to attract a new customer than it new customer than it does to retain an existing does to retain an existing customer.customer.

• Cognitive dissonance is Cognitive dissonance is commoncommon


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Buyer Decision Process for New

Products• New ProductsNew Products

Good, service or idea that is Good, service or idea that is perceived by customers as new.perceived by customers as new.

• Stages in the Adoption ProcessStages in the Adoption Process Marketers should help consumers Marketers should help consumers

move through these stages.move through these stages.

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Stages in the Adoption Stages in the Adoption ProcessProcess


Products

• AwarenessAwareness

• EvaluationEvaluation

• InterestInterest

• TrialTrial

• AdoptionAdoption

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Products• Individual Differences in Individual Differences in

InnovativenessInnovativeness Consumers can be classified into Consumers can be classified into

five adopter categories, each of five adopter categories, each of which behaves differently which behaves differently toward new products.toward new products.

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Adopter CategoriesAdopter Categories


Products

• InnovatorsInnovators EnthusiastsEnthusiasts

• Early MajorityEarly Majority PragmatistsPragmatists

• Early AdoptersEarly Adopters Opinion Opinion

leadersleaders

• Late MajorityLate Majority ConservativesConservatives• LaggardsLaggards

Business Buyer Business Buyer BehaviorBehavior

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Definition

• Business Buyer Behavior:Business Buyer Behavior: The buying behavior of The buying behavior of

organizations that buy goods and organizations that buy goods and services for use in the production services for use in the production of other products and services or of other products and services or for the purpose of reselling or for the purpose of reselling or renting them to others at a renting them to others at a profit.profit.

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• Characteristics of Business Characteristics of Business MarketsMarkets Sales in the business market far exceed Sales in the business market far exceed

sales in consumer markets.sales in consumer markets. Business markets differ from consumer Business markets differ from consumer

markets in many ways.markets in many ways.Marketing structure and demandMarketing structure and demandNature of the buying unitNature of the buying unitTypes of decisions and the decision processTypes of decisions and the decision process

Business Markets

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Business Markets

• Marketing Marketing Structure and Structure and DemandDemand

• Nature of the Nature of the Buying UnitBuying Unit

• Types of Decisions Types of Decisions and the Decision and the Decision ProcessProcess

• Compared to Compared to consumer markets:consumer markets: Business markets Business markets

have fewer but larger have fewer but larger customerscustomers

Business customers Business customers are more geographically are more geographically

concentratedconcentrated Demand is differentDemand is different

Demand is derived Demand is derived Demand is price Demand is price

inelasticinelastic Demand fluctuates more, Demand fluctuates more,

and changes moreand changes more quicklyquickly

CharacterisCharacteristics tics

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Business Markets




• Compared to Compared to consumer purchases:consumer purchases: Business purchases Business purchases

involve more buyers involve more buyers in the decision in the decision process.process.

Purchasing efforts are Purchasing efforts are undertaken by undertaken by professional buyers.professional buyers.


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Business Markets




• Compared to Compared to consumer purchases:consumer purchases: Business buyers face Business buyers face

more complex buying more complex buying decisions.decisions.

The buying process is The buying process is more formalized.more formalized.

Buyers and sellers Buyers and sellers work more closely work more closely together and build together and build long-term long-term relationships.relationships.


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• Major Types of Buying SituationsMajor Types of Buying Situations Straight rebuyStraight rebuy

Reordering without modificationReordering without modification Modified rebuyModified rebuy

Requires modification to prior Requires modification to prior purchasepurchase

New taskNew task First-time purchaseFirst-time purchase

Business Buyer Behavior

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Participants in the Participants in the Business Buying ProcessBusiness Buying Process

Business Buyer Behavior

• InitiatorsInitiators

• UsersUsers

• BuyersBuyers

• InfluencersInfluencers

• DecidersDeciders• ApproversApprovers

• GatekeepersGatekeepers

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Major Influences on Busi. Buyers’

decisions

• EnvironmentalEnvironmental

• OrganizationalOrganizational

• InterpersonalInterpersonal

• IndividualIndividual

• Economic trendsEconomic trends• Supply conditionsSupply conditions• Technological changeTechnological change• Regulatory and Regulatory and

political environmentspolitical environments• Competitive Competitive

developmentsdevelopments• Culture and customsCulture and customs


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decisions





• ObjectivesObjectives• PoliciesPolicies• ProceduresProcedures• Organizational Organizational

structurestructure• SystemsSystems


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decisions





• AuthorityAuthority

• StatusStatus

• EmpathyEmpathy

• PersuasivenessPersuasiveness


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decisions





• AuthorityAuthority• AgeAge• EducationEducation• Job positionJob position• PersonalityPersonality• Risk attitudesRisk attitudes


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• Eight Stages:Eight Stages: Stage 1: Problem RecognitionStage 1: Problem Recognition Stage 2: General Need DescriptionStage 2: General Need Description Stage 3: Product Specification Stage 3: Product Specification

Value analysis helps to reduce costsValue analysis helps to reduce costs Stage 4: Supplier SearchStage 4: Supplier Search

Supplier development Supplier development

Business Buying Process

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• Eight Stages:Eight Stages: Stage 5: Proposal SolicitationStage 5: Proposal Solicitation Stage 6: Supplier SelectionStage 6: Supplier Selection Stage 7: Order-Routine Stage 7: Order-Routine

Specification Specification Blanket contracts are often used for Blanket contracts are often used for

maintenance, repair and operating maintenance, repair and operating items.items.

Stage 8: Performance ReviewStage 8: Performance Review


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• Business Buying on the Business Buying on the InternetInternet E-procurement is growing rapidly.E-procurement is growing rapidly. Reverse auctions Reverse auctions E-procurement offers many benefits:E-procurement offers many benefits:

Access to new suppliersAccess to new suppliers Lower purchasing costsLower purchasing costs Quicker order processing and deliveryQuicker order processing and delivery


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• Institutional MarketsInstitutional Markets Consist of schools, hospitals, Consist of schools, hospitals,

and other institutions that and other institutions that provide goods and services to provide goods and services to people in their care.people in their care.

Institutional and Government Markets

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• Institutional MarketsInstitutional Markets Often characterized by low Often characterized by low

budgets and captive patrons.budgets and captive patrons. Marketers may develop Marketers may develop

separate divisions and separate divisions and marketing mixes to service marketing mixes to service institutional markets.institutional markets.


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• Government MarketsGovernment Markets Governmental units – central, Governmental units – central,

state, and local – that purchase state, and local – that purchase or rent goods and services for or rent goods and services for carrying out the main functions carrying out the main functions of government.of government.


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• Government MarketsGovernment Markets Government buyers often favor:Government buyers often favor:

Depressed business firms and areasDepressed business firms and areas Small businessesSmall businesses Minority-owned businessesMinority-owned businesses Firms which practice non-Firms which practice non-

discriminatory practicesdiscriminatory practices


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• Government MarketsGovernment Markets Most firms that sell to Most firms that sell to

government buyers are not government buyers are not marketing oriented.marketing oriented.

Some companies have separate Some companies have separate government marketing government marketing departments.departments.


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• Continuous & reliable product Continuous & reliable product performanceperformance

• Guaranteed deliveryGuaranteed delivery

• Technology fitTechnology fit

• PricePrice

• ServiceService

• Company sales forceCompany sales force

Factors considered by Indian Industry

Consumer behavior

Education

Transcript of Consumer behavior