MRKT 341 Chapter 5 Notes PDF

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MRKT CHAPTER 5: CONSUMER BEHAVIOR AND BUSINESS BUYER BEHAVIOR Consumer Markets and Consumer Buyer Behavior Consumer buyer behavior: buying behavior of final consumers - individuals and households that buy goods and services for personal consumption Consumer market: all the individuals and households that buy or acquire goods and services for personal consumption ● Consumers around the world vary tremendously in age, income, education level, and tastes -- how diverse consumers relate to each other and with other elements of the world around them affects their choices among various products, services, and companies Models of Consumer Behavior ● Most large companies research customer buying decisions in great detail to answer what consumers buy, where, how/how much, when, and why they buy ○ Marketers can study actual consumer purchases to find out what, where, and how much -- but learning the whys behind consumer buying behavior isn’t as easy -- answers often locked in customer’s mind -- and don’t know themselves ● Central question is: how do consumers respond to various marketing efforts the company might use ● Model of buying behavior: starts w/ environment (marketing stimuli: product, price, place, and promotion -- other: economic, technological, social, and cultural) then goes to buyer’s black box (buyer’s characteristics and buyer’s decision process) then goes to buyer response (buying attitudes and preferences, purchase behavior: what the buyer buys, when, where, and how much, and brand engagements and relationships) ● Marketers want to understand how the stimuli are changed into responses inside the consumer’s black box Characteristics Affecting Consumer Behavior Consumer purchases are influenced strongly by cultural, social, personal, and psychological characteristics -- for most part they cannot control but must taken them into account Cultural Factors ● Culture: set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions -- ex like in US we learn: achievements, freedom, individualism, hard work, efficiency, and fitness -every group of society has a culture, and cultural influences on buying behavior vary greatly from both county to county and country to country -- markets always trying to spot cultural shifts to discover new products that might be wanted ● Subculture: group of people with shared value systems based on common life experiences and situations -- includes nationalities, religions, racial groups, and geographic regions -- many makeup important market segments, and marketers often design products and marketing programs tailored to their needs -- ex of important ones, Af/Am, Hispanics, and Asian Americans -- today’s marketers now embrace total market strategy (integrating ethnic themes and crosscultural perspectives within a brand’s mainstream marketing, appealing to consumers similarities across subcultural segments rather than differences)

African Americans: more price conscious, growing in affluence, heavy users of digital and social media ○ Hispanics: large, fast growing market -- within the market, many subsegments based on nationality, age, income, etc -- like mexicans, costa ricans, argentinians, or cubans -- deeply family oriented and make shopping a family affair, increasing price sensitivity and more active on mobile and social networks than other segments -- spanish ads and social media used ○ Asian Americans: most affluent US demographic segment -- well educated and second fastest growing segment -- different segments, Filipinos, Asian Indians, Vietnamese, Korean Americans, and Japanese Americans -- most brand conscious and brand loyal ● Social class: relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors -- upper upper, lower upper, upper middle, middle, working, upper lower, lower lower class (7) -measured by a combination of occupation, income, education, wealth, etc -marketers are interested in social class because they exhibit similar buying behavior -- show distinct product and brand preferences in areas such as clothing, home furnishings, travel, financial services, and automobiles Social Factors ● Groups and social networks: many small groups influence a person’s behavior membership groups: have direct influence -- reference groups: direct (face-toface interactions) or indirect points of comparison or reference in forming a person’s attitudes or behavior -- often influenced by reference groups they don’t belong to -- aspirational group: one individuals wish to belong to -- reference groups expose a person to new behaviors and lifestyles, influence the person’s attitudes and self concept, and create pressures to conform that may affect the person’s product and brand choices -- importance of group influence varies across products and brands, tends to be strongest when product is visible to others whom the buy respects -- word of mouth influence (impact of the personal words and recommendations of trusted friends, family, associates, and other consumers on buying behavior -- tend to be more credible -- most happens naturally but marketers can help to create positive conversations about their brands -- marketers of brands subjected to strong group influence must figure out how to reach opinion leaders aka influentials, or leading adopters (person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts social influence on others) -- marketers try to identify opinion leaders and direct marketing efforts towards them -- online social networks (online communities -- blogs, social networking web sites, and other online communities -- where people socialize or exchange information and opinions) working to use this as a way to promote their products and build closer customer relationships -- hope to use it as way to interact w/ customers ● Family: can strongly influence buyer behavior -- most important consumer buying organization in society -- marketers are interested in roles and influence ○

of the husband, wife, and children on the purchase of different products and services -- shifting role changes signal new marketing reality -- dads are starting to be included in grocery shopping ads -- children also have strong influence on family buying decisions from clothing, cars, and entertainment, restaurants, and vacations ● Roles and Status: a person’s position in each group -- role consists of activities people are expected to perform according to the people around them and each role carries a status reflecting the general self esteem given to it by society -- a mother who is a brand managers buys clothing to reflect her status in company, but also a sports fan so buys clothing to reflect being an avid sports fan Personal factors: buyers decisions influenced by personal characteristics ● Occupation: affects goods and services bought -- marketers try to identify the group that has an above average interest in their products and services or can even specialize in products needed by a given occupational group -- like clothing for blue collar vs white collar ● Age and life stage: people change the goods and services they buy over their lifetime -- tastes in food, clothes, furniture, and recreation are age related -- also life-cycle stages like marriage, having children,, purchasing home, divorce, college, etc. -- marketers often define their target markets in terms of life-cycle stage and develop appropriate products and marketing plans for each stage -armed with personal data, marketers can create targeted,actionable, personalized campaigns based on how people consume and interact w/ brands and world around them ● Economic situation: will affect store and product choices -- marketers watch trends in spending, personal income, savings, and interest rates -- today we are in more value conscious times so marketers have had to create more value or cut prices to keep up ● Lifestyle: person’s pattern of living as expressed in psychographics -- involves measuring activities (work, hobbies, shopping, sports, social) and interests (food, fashion, family, recreation) and opinions (about themselves, social issues, business, products) -- it profiles a person’s whole pattern of acting and interacting in the world -- consumers don’t just buy products, they buy values and lifestyles those products represents ● Personality and self concept: refers to unique psychological characteristics that distinguish a person or group -- traits such as self confidence, dominance, sociability, autonomy, defensiveness adaptability and aggressiveness -- there’s an idea that brands have personalities and consumers likely to pick one that matches their own -- like ford and “toughness” or apple and “excitement” -marketers play to the idea that “we are what we consume” -- thus to understand consumer behavior marketers must first understand the relationship between consumer self-concept and possessions Psychological Factors ● Motivation: a need that is sufficiently pressing ot direct the person to seek satisfaction like hunger or even recognition, esteem, belonging -- consumers

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often don’t know why they do things (like Freud’s hidden meanings) so companies employ psychologists, anthropologists, to carry out motivation research that probes the subconscious motivations -- Maslow on the other hand said people are driven by particular needs at particular times and said needs are arranged in a hierarchy -- physiological, safety, social, esteem, and self actualization needs -- explains why some people care about safety most while others engage in self actualizing art Perception: process by which people select, organize, and interpret information to form a meaningful picture of the world -- and people can form different perceptions based off of 3 perceptual processes -- some consumers worry about subliminal advertising where they are affected by marketing messages without even knowing it but research suggests it doesn’t affect us ○ Selective attention: tendency for people to miss most of the info to which they are exposed -- thus marketers must work especially hard to attract the consumers attention ○ Selective distortion: tendency for people to interpret data in a way that will support what they already people, we tend to retain info that supports our attitudes and beliefs and forget the rest ○ Selective retention: consumers likely to remember good points made about a brand they favor and forget good points about competing brand Learning: describes changes in individual’s behavior arising from experience -learning occurs through interplay of drives, cues, responses, and reinforcement -ex. A person’s drive for self actualization might motivate them to buy camera, and person’s response to idea of buying camera is conditioned by surrounding cues (minor stimuli that determines when, where, and how the person responds) -- like discussing camera w/ friend, spot several brands in a shop window or hear of a special sale price.. All cues that might influence a consumer’s response to his or her interest in buying a product -- if consumer like the brand and its rewarding they are reinforced and the next time they shop they will look for a similar product Beliefs and attitudes: through doing and learning people acquire these -- beliefs can be based on real knowledge, opinion , or faith and may or may not have emotional charge -- if some beliefs are wrong and prevent buying of a product marketers through campaign to fix it -- attitudes regarding religion, politics, clothes, music, food but people in a frame of mind of liking or disliking something -- attitudes are hard to change so make products fit existing attitudes is easier

Buyer’s Decision Process How consumers make buying decisions -- consists of 5 stages in order given -- marketers must focus on entire buying process rather than on the purchase decision only --all 5 needed for making new decision but routine purchases can skip steps

Need Recognition ● Buyer recognized problem or need -- can be triggered by internal stimuli (when a normal need such as thirst or hunger arises to a high enough level to become a drive) or triggered by external stimuli (like a discussion w/ friend might get you thinking about buying a car) -- marketer should research consumers to find out what kinds of needs or problems arise, what brought them about, and how they led the consumer to this particular product Information Search ● May or may not always search for more info -- if drive is strong and a satisfying product is nearby they might buy it -- but if not consumer may store eed in memfore and undertake an info search related to need -- like when deciding on car you pay more attention to car ads, and cars owned by friends -- when searching can include personal sources (family/friends), commercial sources (advertising, salespeople), public sources (mass media, consumer rating), and experimental sources (examining/using product) ● Commercial sources inform the buyer and personal sources legitimize or evaluate products for the buyer -- all of this arrives you at set of final brand choices ● A company must design its marketing mix to make prospects aware of and knowledgeable about itis brand and carefully identify consumers sources of information and the importance of each source Evaluation of alternatives ● Marketers need to know how consumers process information to choose among alternative brands -- but thats hard bc often several evaluation processes are at hand -also evaluation depends on individual consumer and specific buying situation -- in some cases, consumers use careful calculation and logical thinking and other times little to no evaluation -- most buyers consider several attributes, each with different importance -- if marketers know what evaluative processes go on, they can take steps to influence the buyer’s decision Purchase decision ● Will be to buy the most preferred brand, but two factors can come in between purchase intention, and purchase decision ● Attitudes of others -- if someone important to you thinks you should buy the lowest priced car then chances of buying more expensive goes out the window ● Unexpected situational factors -- consumer may form an opinion based on expected income, price, and expected product benefits -- so unexpected events may change the purchase intention -- ex. Economy taking bad turn or competitor dropping its price Post purchase behavior ● Consumer will either be satisfied or dissatisfied -- determined by consumers expectations and the product’s perceived performance -- should promise only what brand can deliver so customers are satisfied ● Cognitive dissonance: buyer discomfort caused by post purchase conflict -- almost all major purchases result in this -- consumers are satisfied w/ the benefits of chosen brand and glad to avoid the drawbacks of brands not bought but… every purchase involves compromise so consumers feel uneasy about acquiring the drawbacks of the chosen brand and about losing the benefits of the brands not purchased

Customer satisfaction is key to building profitable relationships w/ consumers -- keeping and growing customers w/ their lifetime value ● Dissatisfied customers respond differently by bad word -- which often travels faster and can quickly damage consumer attitudes about a company and its products -- but companies can’t wait for them to complain so they must measure customer satisfaction regularly and set up system to encourage customers to complain so they know where to improve Buyer Decision Process for New Products A good or service that is perceived by some potential customers as new -- adoption process (mental process through which an individual passes from first hearing about an innovation to final adoption) -- aka decision by individual to become a regular user of the product Stages in Adoption Process ● Awareness: aware of new product but lacks information about it ● Interest: seeks information about new product ● Evaluation: considers whether trying the new product makes sense ● Trial: tries new product on a small scale to improve his or her estimate of its value ● Adoption: decides to make full and regular us of new product Models suggests marketers should thing about how to help consumers through these stages -ex. Like honda saying consumer could return car w/ no cost or harm to credit rating if they lost their job in the following year -- this go them over the hump during economic meltdown Individual differences in innovativeness ● People differ greatly in readiness to try new products ● Time of adoption of innovation ○ Innovators (2.7%) → venturesome and try new ideas at some risk ○ Early adopters (13.5%) → guided by respect, opinion leaders in their communities and adopt new ideas early but carefully ○ Early mainstream (34%) → deliberate, rarely leaders but adopt new ideas before the average person ○ Late mainstream (34%) → skeptical, adopt innovation only after a majority of people have tried it ○ Lagging adopters (16%) → tradition bound, they are suspicious of changes and adopt innovation only when it becomes something of a tradition itself ● Suggests that innovating firms should research the characteristics of innovators and early adopters in their product categories and direct initial marketing efforts towards them ●

Influence of Product Characteristics on Rate of Adoption ● Characteristics important in influencing products rate of adoption ○ Relative advantage -- degree to which the innovation appears superior to existing products ○ Compatibility -- fits the values and experiences of potential customers

Complexity -- degree to which innovation is difficult to understand or use Divisibility --may be tried on a limited basis Communicability -- results of using innovation can be observed or described to others ● Other characteristics include initial and ongoing costs, risk and uncertainty, and social approval -- the new product marketer must research all these factors when developing the new product and its marketing program Business Markets and Business Buyer Behavior ● Business buyer behavior: buying behavior 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 -- includes retailing and wholesaling firms that acquire goods to resell or rent to others at profit ● Business buying process: process by which business buyers determine which products and services their organizations need to purchase and then find evaluate, and choose among alternative suppliers and brands ● Business to Business marketers (B to B) must understand these two elements and must engage business buyer behavior and build profitable relationships w/ them by creating superior customer value Business Markets ● Its huge -- may sets of business purchases are made for only one set of consumer purchases ● Business markets are similar to consumer markets w/ both involving people who assume buying roles and make purchase decisions to satisfy needs ● They also differ in market structure, nature of the buying unit, and types of decisions and the decision process involved Market Structure and Demand ● Business marketer normally deals w/ fewer but larger buyers than consumer marketers ● Many business markets have inelastic and more fluctuating demand total demand for many business products is not much affected by price changes, especially in the short run -- a drop in the price of leather will not cause shoe manufacturers to buy much more leather unless it results in lower show prices that, in turn, increase consumer demand for shoes ● Demand for many business goods and services tends to change more and more quickly than demand for consumer goods and services -- small percent increase in consumer demand can cause large increase in business demand ● Derived demand: business demand that ultimately comes from the demand for consumer goods -- therefore sometimes b2b markets promote their products directly to consumers to increase business demand Nature of buying unit ● A business purchase usually involves more decision participants and more professional purchasing effort -- often business buying is done b...