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Nathan GeorgeNathan George

Consumer

and Business

Buyer Behavior

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Consumer Buying BehaviorConsumer Buying Behavior

• Consumer Buying Behavior Consumer Buying Behavior refers to the buying behavior of final consumers -individuals & households who buy goods and services for personal consumption.

• The central question for marketers is:

““How do consumers respond to various How do consumers respond to various marketing efforts the company might use?” marketing efforts the company might use?”

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Model of Buyer BehaviorModel of Buyer BehaviorMarketing andOther Stimuli

Marketing andOther Stimuli

Buyer’s Black BoxBuyer’s Black Box

Buyer’s ResponseBuyer’s Response

Product

Price

Place

Promotion

Economic

Technological

Political

Cultural

Buyer Characteristics

Buying Decision Process

Product Choice

Brand Choice

Dealer Choice

Purchase Timing

Purchase Amount

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Factors Influencing Consumer BehaviorFactors Influencing Consumer Behavior

Culture

Sub-culture

Socialclass

Social

Referencegroups

Family

Rolesand

status

PersonalAge andlife-cycle

OccupationEconomicsituationLifestyle

Personalityand

self-concept

Psycho-logical

MotivationPerceptionLearning

Beliefs andattitudes

Buyer

Cultural

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Factors Affecting Consumer Behavior:CultureFactors Affecting Consumer Behavior:Culture

Social Class• Society’s relatively permanent &

ordered divisions whose members share similar values, interests, and behaviors.

• Measured by: Occupation, Income, Education, Wealth and Other Variables.

Social Class• Society’s relatively permanent &

ordered divisions whose members share similar values, interests, and behaviors.

• Measured by: Occupation, Income, Education, Wealth and Other Variables.

Culture• Most basic cause of a person's wants and behavior.

• Values, Perceptions, Wants & Behavior

Culture• Most basic cause of a person's wants and behavior.

• Values, Perceptions, Wants & Behavior

Subculture• Groups of people with shared

value systems based on common life experiences.

• Hispanic Consumers

• African American Consumers

• Asian American Consumers

• Mature Consumers

Subculture• Groups of people with shared

value systems based on common life experiences.

• Hispanic Consumers

• African American Consumers

• Asian American Consumers

• Mature Consumers

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Groups• Membership• Reference

Groups• Membership• Reference

Factors Affecting Consumer Behavior:Social Factors Affecting Consumer Behavior:Social

Family• Husband, wife, kids• Influencer, buyer, user

Family• Husband, wife, kids• Influencer, buyer, user

Roles and StatusRoles and Status

Social FactorsSocial Factors

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Factors Affecting Consumer Behavior:PersonalFactors Affecting Consumer Behavior:Personal

Personal InfluencesPersonal Influences

Age and Life CycleStage

Age and Life CycleStage OccupationOccupation

Economic SituationEconomic Situation

Lifestyle IdentificationLifestyle Identification

ActivitiesActivities OpinionsOpinions

InterestsInterests

Personality & Self-ConceptPersonality & Self-Concept

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Factors Affecting Consumer Behavior:PsychologicalFactors Affecting Consumer Behavior:Psychological

Psychological Factors

MotivationMotivation

PerceptionPerception

LearningLearning

Beliefs and Attitudes

Beliefs and Attitudes

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PerceptionPerception

• Perception–Information Inputs–Interpretation–Selective Exposure–Selective Distortion–Selective Retention

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Maslow’s Hierarchy of NeedsMaslow’s Hierarchy of Needs

Esteem Needs(self-esteem, status)

Social Needs(sense of belonging, love)

Safety Needs(security, protection)

Physiological Needs(hunger, thirst)

Self Actualization

(Self-development)

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Need RecognitionNeed Recognition

Information SearchInformation Search

Evaluation of AlternativesEvaluation of Alternatives

Purchase DecisionPurchase Decision

Post-purchase BehaviorPost-purchase Behavior

The Buyer Decision ProcessThe Buyer Decision Process

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The Buyer Decision ProcessStep 1. Need Recognition

The Buyer Decision ProcessStep 1. Need Recognition

External Stimuli

• TV advertising• Magazine ad• Radio slogan•Stimuli in the environment

External Stimuli

• TV advertising• Magazine ad• Radio slogan•Stimuli in the environment

Internal Stimuli

• Hunger• Thirst• A person’s normal needs

Internal Stimuli

• Hunger• Thirst• A person’s normal needs

Need RecognitionBuyer Recognizes a Problem or Need

Need RecognitionBuyer Recognizes a Problem or Need

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The Buyer Decision ProcessStep 2. Information Search

The Buyer Decision ProcessStep 2. Information Search

•Family, friends, neighbors•Most effective source of information

•Advertising, salespeople•Receives most information from these sources

•Mass Media•Consumer-rating groups

•Handling the product•Examining the product•Using the product

Personal Sources Personal Sources

Commercial SourcesCommercial Sources

Public SourcesPublic Sources

Experiential SourcesExperiential Sources

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The Buyer Decision ProcessStep 3. Evaluation of Alternatives

The Buyer Decision ProcessStep 3. Evaluation of Alternatives

Consumer May Use Careful Calculations & Logical Thinking

Consumer May Use Careful Calculations & Logical Thinking

Consumers May Buy on Impulse and Rely on Intuition

Consumers May Buy on Impulse and Rely on Intuition

Consumers May Make Buying Decisionson Their Own.

Consumers May Make Buying Decisionson Their Own.

Consumers May Make Buying DecisionsOnly After Consulting Others.

Consumers May Make Buying DecisionsOnly After Consulting Others.

Marketers Must Study Buyers to Find Out How They Evaluate Brand Alternatives

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The Buyer Decision ProcessStep 4. Purchase Decision

The Buyer Decision ProcessStep 4. Purchase Decision

Purchase IntentionDesire to buy the most preferred brand

Purchase IntentionDesire to buy the most preferred brand

Purchase DecisionPurchase Decision

Attitudes of Others

UnexpectedSituational Factors

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The Buyer Decision ProcessStep 5. Post-purchase Behavior

The Buyer Decision ProcessStep 5. Post-purchase Behavior

Consumer’s Expectations of

Product’s Performance

Consumer’s Expectations of

Product’s Performance

Dissatisfied CustomerDissatisfied CustomerSatisfied Customer!Satisfied Customer!

Product’s Perceived Performance Product’s Perceived Performance

Cognitive DissonanceCognitive Dissonance

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Buying Decision ProcessBuying Decision Process

Consumer satisfaction is a function of consumer expectations and perceived product performance.

Performance < Expectations Disappointment

Performance = Expectations Satisfaction

Performance > Expectations Delight

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• Cognitive dissonance: a buyer’s doubts shortly after a purchase about whether it was the right decision.

Buying Decision ProcessBuying Decision Process

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Stages in the Adoption ProcessStages in the Adoption Process

AwarenessAwareness

InterestInterest

EvaluationEvaluation

TrialTrial

AdoptionAdoption

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Stages in the Adoption ProcessStages in the Adoption Process

1. Awareness: Consumer becomes aware of the new product, but lacks information about it.

2. Interest: Consumer seeks information about new product.

3. Evaluation: Consumer considers whether trying the new product makes sense.

4. Trial: Consumer tries new product on a small scale to improve his or her estimate of its value.

5. Adoption: Consumer decides to make full and regular use of the new product.

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Adopter CategoriesAdopter CategoriesP

erc

enta

ge

of

Ad

op

ters

Time of AdoptionEarly Late

Inn

ova

tors

Early Adopters

Early Majority

2.5%13.5%

34% 34%

16%

Laggards

Late Majority

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Influence of Product Characteristics

on Rate of Adoption

Influence of Product Characteristics

on Rate of Adoption

DivisibilityCan the innovation

be used on a trial basis?

CompatibilityDoes the innovation

fit the values and experience of the

target market?

ComplexityIs the innovation

difficult tounderstand or use?

Relative AdvantageIs the innovation superior

to existing products?

Communicability Can results be easily

observed or described to others?

ProductCharacteristics

ProductCharacteristics

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What is a Business Market?What is a Business Market?

• Business Buyer Behavior Business Buyer Behavior refers to the buying behavior of all 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.

• The business market is huge and involves many more dollars and items than do consumer markets.

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The Business Buying ProcessThe Business Buying Process

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Types of Decisions & the Decision Process

Types of Decisions & the Decision Process

Market Structure and DemandMarket Structure and Demand

• Fewer, larger buyers • Geographically concentrated• Demand derived from consumers • Fluctuating demand

• Fewer, larger buyers • Geographically concentrated• Demand derived from consumers • Fluctuating demand

Nature of the Buying UnitNature of the Buying Unit

• More members • More professional purchasing effort

• More members • More professional purchasing effort

• More complex decisions• Process is more formalized• Buyer and seller are more dependent on each other• Build close long-term relationships with customers

• More complex decisions• Process is more formalized• Buyer and seller are more dependent on each other• Build close long-term relationships with customers

Characteristics of Business MarketsCharacteristics of Business Markets

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Participants in the Business Buying Process

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

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Participants in the Business BuyingProcess: The Buying CenterParticipants in the Business BuyingProcess: The Buying Center

Buying CenterBuying Center

UsersGatekeepers

Buyers Deciders

Influencers

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The Buying OrganizationThe Buying Organization

Model of Business Buyer BehaviorModel of Business Buyer BehaviorMarketing andOther Stimuli

Marketing andOther Stimuli

Buyer’s ResponseBuyer’s Response

Product

Price

Place

Promotion

Economic

Technological

Political

Cultural

Interpersonal and Individual Influences

Organizational Influences

Product or Service Choice

Supplier Choice

Order Quantities

Delivery Terms and Times

Service Terms

Payment

The Buying Center

Buying DecisionProcess

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Major Influences on Business Buyer BehaviorMajor Influences on Business Buyer Behavior

EnvironmentalEconomic, Technological, Political, Competitive

EnvironmentalEconomic, Technological, Political, Competitive

OrganizationalObjectives, Policies, Procedures,

Structure, & Systems

OrganizationalObjectives, Policies, Procedures,

Structure, & Systems

InterpersonalAuthority, Status, Empathy &

Persuasiveness

InterpersonalAuthority, Status, Empathy &

Persuasiveness

IndividualAge, Education, Job Position, Personality &

Risk Attitudes

IndividualAge, Education, Job Position, Personality &

Risk Attitudes

BuyersBuyers

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Major Types of Buying SituationsMajor Types of Buying Situations

The buyer routinely reorders something without any modifications.

Straight Re-buy

Modified Re-buy

New Task

The buyer wants to modify product specifications, prices, terms, or suppliers.

The buyer purchases a product or service for the first time.

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Business Buying SituationsBusiness Buying Situations

Straight Re-buyStraight Re-buy

New Task BuyingNew Task Buying

Modified Re-buyModified Re-buy

Inv

olv

ed

De

cis

ion

Ma

kin

g

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Rest Stop:Reviewing the Concepts

Rest Stop:Reviewing the Concepts

• Understand the consumer market and the major factors that influence consumer buyer behavior.

• Identify and discuss the stages in the buyer decision process.

• Describe the adoption and diffusion process for new products.

• Define the business market and identify the major factors that influence business buyer behavior.

• List and define the steps in the business buying decision process.