Chapter 4 Understanding Buyer Behavior 4- 1 4- Behavior of the individual consumer in the marketplace Multiple factors that influence consumer behavior Various principles of psychology, sociology, and social psychology – valuable in explaining consumer behavior Relationship of consumer behavior and marketing management decisions like target market selection, marketing mix design Difference between organizational market behavior and consumer market behavior How organizations make purchase decisions 2 • Understand the buyer both as an individual and as a member of society • Buyer’s needs must be met by the product offered by the marketer 4- 3 • Market exchange allows buyers and sellers to assess relative trade-offs that satisfy their respective needs and wants • Buyers and sellers have policies and objectives guiding their analysis of tradeoffs 4- 4 • Unlike organizations, buyers often don’t understand what prompts them to behave in a particular manner • Exchange process thus becomes unpredictable and difficult for marketers to understand • An understanding of the exchange process is critical in determining the offer that will attract buyers 4- 5 Target market selection and market offering design is influenced by How do potential buyers go about making purchase decisions? What factors influence their decision process and in what way? 6 4- • Consumers – individuals and groups • Organizations 4- 7 Consumer behavior: Purchase for personal, family, or group use Combination of efforts and results related to the consumer’s need to solve problems Triggered by identification of some unmet need – physical/psychological 4- 8 • Need: a basic deficiency given a particular essential item e.g., food, air, transportation • Want: placing a certain personal criterion as to how that need must be fulfilled e.g., when hungry having a specific food item in mind 4- 9 Need Identification Information search and processing Identification and evaluation of alternatives Products/service/outlet selection Purchase decision Post-purchase behavior 4- 10 • Complex: consumers go through all six stages in case of first-time purchase, buying highpriced, long-lasting infrequently purchased articles • Simple: habitual manner of repurchasing same brand, past reinforcement in learning experiences 4- 11 The magnitude of the discrepancy between what we have and what we need The importance of the problem Adequate definition of the problem Marketers sometimes need to activate problem recognition, shape its definition 4- 12 Information: Source can be external or internal Can come from family, friends, personal observation, Consumer Reports, salespeople, mass media Helps evaluate alternative products, services, outlets Involves mental, physical activities, time, energy, money, foregoing more desirable activities Can identify new needs Save money, improve quality of selection, reduce risks 4- 13 • Exposure: • Attention • Perception • Retention • Retrieval and application 4- 14 To a source of stimulation e.g., watching T.V., going to supermarket, receiving direct mail advertisements at home 4- 15 Focus mental resources on the stimuli e.g., relevant informational cues 4- 16 Classifying the incoming signals into meaningful categories, forming patterns, assigning names or images to them 4- 17 Storage of information for later reference e.g., heavy repetition, putting message to music 4- 18 Recovery of information from memory and putting it in right context 4- 19 Elaborate/Central: active manipulation of information; close attention to a message, develop thoughts in support of or counter to the information Non-elaborate/Peripheral: passive manipulation of information e.g., airline passengers reception of preflight safety procedures 4- 20 Critical factors: • Time and money costs • Amount of information the consumer already has • Amount of perceived risk if a wrong selection is made • Predisposition towards particular choices 4- 21 • Outlet selection influence product evaluation or product selection influence outlet evaluation e.g., if a desired brand is out-ofstock at a convenient outlet, the consumer may wait until the product comes in, accept a substitute, or go to another outlet 4- 22 Critical questions Solution 4- 23 • How much effort is the consumer willing to spend in shopping of the product? • What factors influence when the consumer will actually purchase? • Are there any conditions that would prohibit or delay purchase? 4- 24 • Provide basic product, price, location information through labels • Advertising, personal selling and public relations • Product sampling, coupons, rebates 4- 25 • Probing research that elicit real-life stories from customers about how they behave, what they truly feel, what their unspoken impulses are • Intuit software writers revolutionized the way Americans handle their money through consultation with storytelling customers 4- 26 Cognitive Dissonance: people strive for consistency among their cognitions – knowledge, attitudes, beliefs, values Inconsistencies result in dissonance Consumers may buy a brand being already aware of dissonance Consumers may feel dissonance from disturbing information received after purchase Solution: advertisements should stress positive attributes, confirm product’s popularity, personalized reinforcement 4- 27 Situation: buying task, market offerings, demographic influences External: culture, social class, reference groups, family Internal: learning and socialization, motivation, lifestyle 4- 28 Simple or complex depends on • Whether the decision is novel or routine • The extent of the consumer’s involvement with the decision High-involvement decisions: • Important to the buyer • Close ties to consumer’s ego and self-image • Risk – financial (high price), social (peer group pressure), psychological (anxiety in case of wrong decision) Low-involvement: straightforward, low risk, repetitive, habit, brand loyalty 4- 29 • Extent of product or brand choices available e.g., in the field of DVD some prominent brand names are Sony, Samsung, Panasonic • Wider choice helps tailor purchase to specific needs but can also confuse and frustrate leading to less than optimal choice 4- 30 • • • • • • • 4- Age Sex Income Education Occupation Marital Status Mobility 31 Large group of people with a similar heritage Beliefs: a proposition that reflects a person’s particular knowledge and assessment of something Values: general statements that guide behavior and influence beliefs, helps in choosing from alternatives Customs: overt modes of behavior that constitute culturally approved ways of behaving in specific situations e.g., buying presents for mother on Mother’s Day is an American custom 4- 32 • • • • • • Occupation Wealth Income Education Power Prestige 4- • Upper-upper: wealthy people • Lower-upper: locally prominent families • Upper-middle: professionals, business owners • Lower-middle: mid-level white collar workers like teachers • Upper-lower: blue-collar workers • Lower-lower: unskilled workers 33 Helps shape a person’s attitudes and behaviors Formal or informal Have individuals who are opinion leaders for the group Determines how roles are performed Creates conformity with group norms Group communication through opinion leaders like teachers, auto mechanics 4- 34 Types of Reference Groups Membership 4- Dissociation Aspiration 35 • Impacts attitude and behavior • Specific decisions makers for the purchase in question • Family lifecycle determined by age, marital status, parenthood e.g., bachelors, newly married, parents, empty nesters, solitary survivors 4- 36 Learning: • Changes on behavior resulting from previous experiences • Ongoing process that is dynamic, adaptive and subject to change • Practice Non-experiential learning: conceptualization of a potential experience 4- • Socialization: • Process by which persons acquire the knowledge, skills and dispositions that make them more or less able members of society • Behavior is acquired and modified over the person’s lifecycle • Socialization agents: person, organization, information source • Modeling, reinforcement and social interaction 37 Patronage motives: ► Consumers reasons for shopping at a particular outlet ► Price-conscious, convenience-oriented, service-oriented Motive: ► Inner drive to take action to satisfy a need ► Positive, negative, high-level, low-level goals Motive sources: ► Internal, environmental, psychological (Maslow’s “need hierarchy”) Personality: ► All traits that make an individual unique ► Introvert, Extrovert 4- 38 • Attitudes, interests, opinions of potential customer • Application – shopping orientation, cognitive, affective, behavioral attitude 4- 39 4- Multiple individuals involved in making buying decisions; rules for making decisions Motivation: rational and quantitative but also emotional Decisions involve a range of complex technical dimensions Decisions span considerable time creating a lag between initial contact with customer and purchasing decision; monitoring and adjusting to change is critical Each organization has unique personality and way of functioning Straight re-buy, modified re-buy, new task 40 • • • • • • Problem Recognition General Need Description Product Specification (technical) Supplier search (appropriate vendor) Proposal solicitation (from suppliers) Supplier Selection (delivery capability, consistent quality, fair price) • Order-routine specification (quantity, warranty) • Performance Review 4- 41 Neo Consumer Mind-set Shrinking Day Connectedness Craze Body vs. Soul Conundrum Triumph of Individualism 4- 42