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:
–
“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
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 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
Lower Lower
7%
Lower Upper
2%
Upper Middle
12%
Upper Lower
9%
Middle
32%
Working Class
38%
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 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 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
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 individual’s 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 person’s 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 buyer’s 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
16%
Laggards
X-σ
X - 2σ
34%
Late
Majority
X
X+σ
Time of adoption of innovations
Try new ideas at some risk.
Suspicious of change
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
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
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
Other
Stimuli
Economic
Product
Technological
Price
Political
Place
Cultural
Promotion
Competitive
Buyer Responses
The buying
center
Product of service choice
Buying Decision
Process
Order Quantities
(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 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”?