MKTG 1102 - Ch.6 Notes - Understanding Consumer and Business Buyer Behaviour PDF

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Ch.6 – P.195 - 228

Ch. 6 Understanding Consumer and Business Buyer Behaviour Use Passport for country lvl industry stats – good for graphs!!!! http://www.portal.euromonitor.com/portal/magazine/newhomemain

Consumer Markets and Consumer Buyer Behaviour Consumer buyer behaviour The buying behaviour of final consumers, individuals & households that buy goods & services for personal consumption  

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Study of individual buying behaviour An ongoing process o starts before consumer purchases a product / service o continues longs after individual consumed product Led to some Issues marketers must be aware in order to build brand loyalty & lasting relationship o See pg. 198 Figure 6.1 for example issues that arise during consumption process

Consumer market – individuals & households that buy or acquire goods and services for personal consumptions

4 Key Characteristics Affecting Consumer Behaviour

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Cultural – set of basic values, perceptions, wants, and behaviours learned by member of society from family to other important institutions  Most basic determinant of a person’s wants & behaviour  Most persistent value i. Subcultural – group of people with shared value systems based on common life experiences & situations  Cross-cultural marketing ii. Social Class Social i. Reference Groups  Groups – 2 or more people who interact to accomplish individual or mutual goals

Ch.6 – P.195 - 228

 Word-of-mouth influence – Impact of personal words & recommendations of trusted friends, associates, and other consumers on buying behaviours  Opinion leader – Person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts social influence on others  Online social networks – Online social communities – blogs, social networking websites, and other online communities – where people socialize or exchange information and opinion Family Roles & Status

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ii. iii. Personal i. Age & Life-cycle stage ii. Occupation iii. Economic Situation iv. Lifestyle – person’s pattern of living as expressed in his or her activities, interests, and opinions v. Personality & self-concept  Unique psychological characteristics that distinguish a person or group Psychological i. Motivation (drive) – A need that is sufficiently pressing to direct the person to seek satisfaction of the need ii. Perception – The process by which people select, organize, and interpret information to form a meaningful picture of the world iii. Learning – Changes in an individual’s behaviour arising from experience iv. Beliefs & attitudes  Belief = descriptive thought a person holds about something  Attitude = person’s consistently favourable or unfavourable evaluations, feelings, and tendencies toward an object or idea

Figure 6.3 Maslow’s hierarchy of Needs (Base  Physiological need s safety  social  esteem  self-actualization needs TOP)

Ch.6 – P.195 - 228

Buyer Decision Process for New Products New product – A good, service, or idea that is perceived by some potential customers as new. 

How customers learn about products for the first time & decision making

Adoption process – Mental process through which an individual pass from 1st hearing about an innovation to final adoption

Adoption Process stages 1. 2. 3. 4. 5.

Awareness (Need recognition) – Consumer becomes aware of new product but lacks information about it Interest (Info search) – seeks information about the new product Evaluation (Evaluation of alternative) – considers whether trying makes sense Trial (Purchase decision) – tries new product on small scale to improve his/her estimate of its value Adoption (postpurchase behaviour +) – decides to make full and regular use of new product a. Cognitive dissonance – buyer discomfort caused by postpurchase conflict i. every purchase involves compromise, so they feel at least some post purchase dissonance for every purchase

Individual Differences in Innovativeness People’s readiness to try new product 5 adopter groups 1. 2. 3. 4. 5.

Innovators – venturesome (2.5%) Early adopters – adopt new idea early but carefully. guided by respect, opinion leaders in communities (13.5) Early mainstream – deliberate. Adopt new idea before average person (34%) Late mainstream – skeptical. Adopt innovation only after majority tried it (34%) Lagging adopters – tradition bound. Suspicious of changes only adopt innovation when become something of tradition itself (16%)

Influence of Product Characteristics on Rate of Adoption 5 characteristics 1. 2. 3. 4. 5.

Relative advantage – the degree the innovation appears superior to existing products Compatibility – the degree the innovation fits the values and experiences of potential consumers Complexity – the degree the innovation is difficult to understand or use. Divisibility – degree the innovation may be tried on limited basis Communicability – degree the results of using the innovation can be observed or described to other

Business Markets & Business Buyer Behaviour (B2B) Business Buyer Behaviour: buying behaviour of 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 Similar to consumer market but differ in market structure & demand, nature of buying unit, and typs of decision & decision process involved

Market Structure and Demand Fewer but larger buyers Derived Demand – Business demand that ultimately derives from demand for consumer goods

Ch.6 – P.195 - 228

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Many business markets have inelastic & more fluctuating market o Not responsive to pricing but changes a lot Nature of the Buying Unit o Involves more decision participants & more professional purchasing effort

Types of Decisions & Decision Process 

More complex because involved o Large sum of money o Complex technical & economic consideration o Buyer seller more dependant on each other

Supplier development: Systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others

Major Types of Buying Situations 1. 2. 3. 4.

Straight rebuy – buyer routinely reorders something without modification Modified rebuy – buyer wants to modify product specifications, prices, terms, or suppliers New task – the buyer purchases a product / service for the 1st time Systems selling (or solutions selling)

Business Buying Process Decision process which business buyers determine which products and services their organizations need to purchase and then find, evaluate, and choose among alternative suppliers and brands 

Buying center – all individuals & units that play a role in the purchase decision-making process o Present major marketing challenge  Difficult to learn who participates in the decision, participant’s relative influence

Ch.6 – P.195 - 228

Major Influences on Business Buyers Business buyers respond to both economic and personal factors where emotion plays important role in buying decision. 

Environmental o

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o Technological change Political & regulatory developments Competitive developments Culture and customs

Objectives Policies Procedures

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Organizational Structure Systems

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Empathy Persuasiveness

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Job position Personality Risk Attitudes

Interpersonal o o

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Organizational o o o

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Economic developments  Primary demand, economy outlook Supply conditions

Authority Status

Individual o o o

Age Income Education

Product value analysis – carefully analyzing a product’s / service’s components to determine whether they can be redesigned & made more effectively & efficiently to provide greater value

E-Procurement & Online Purchasing E-Procurement: purchasing through electronic connections between buyers and sellers – usually online Key different between B2B and B2C?

Ch.6 – P.195 - 228

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What is consumer market? What are major factors that influence consumer buyer behaviour? What is buyer decision process and what are the stages? - Key terms: need recognition, information search stage, alternative evaluation, purchase decision, postpurchase behaviour What is adoption process and diffusion process? What are the stages? What is business market? What are the major factors that influence business buyer behaviour? - Key terms: buying situation, buying center, What is business buying decision process and the stages involve?

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Need for school Good service, cheap but good quality

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