TOPIC 4:

Analyzing Consumer and Business

Markets

What influence consumer

behaviour?

What major psychological

processes influence consumer behaviour?

How do consumers make

purchasing decisions?

What is organizational

buying?

Who participate in the business buying

process?What are stages in

the buying process?

Cultural

Personal Social Motivation Perception

Learning

Memory

The 5 stage model

Characteristics of business

market

Buying situation

8 stages

The buying center

A) Influences in Consumer Behaviour Cultural

is the fundamental determinant of a person’s wants and behaviors

Social

Subcultures based on nationalities,

religions, racial, geographical

E.g. feng shui-Hong Kong’s disneyland, Malaysia ‘ang pau’

Reference groups (e.g. membership group-direct influences, secondary group – professional/ trade union, aspirational group –they did not join, dissociative group -whose values or behaviour

individual rejects)

Family E.g. (1) family of orientation – parents and siblings which influence

toward religion, politics (2) family of procreation – more direct

influence from one’s spouse and children.

Social rolesConsists of the activities a person is expected to perform

Statusesthe position of an individual in relation to another or others,

especially in regard to social or professional standing.

Consumer behaviour is how

individuals, groups select, buy, use, and

dispose of goods, services, ideas, experience to

satisfy their needs and wants

A) Influences in Consumer Behaviour-continue

Age & Stage in the Life Cycle

Occupation & Economic Circumstances

Personality & Self Concept

Lifestyle & Values

e.g. critical life events/ transition such as marriage, childbirth

e.g. type of occupation, saving, debt, attitudes towards spending

Brand Personality

Sincerity Hello kitty

Excitement MTV

Competence Sony

Sophistication Shiseido

Ruggedness Timberland

Passion Zara

Peacefulness Yamaha

Lifestyle = a person’s pattern of living + expressed in activities, opinion. Shaped by money/time constrainedCore values = the belief system underlie consumer attitudes & behaviours. E.g. quality, community, commitment

B) Key Psychological Processes

Freud’s

TheoryBehaviour is guided

by subconscious

motivations

Maslow’s

Hierarchy

of NeedsBehaviour is driven

by lowest, unmet

need

Herzberg’s

Two-Factor

TheoryBehaviour is guided

by the dissatisfaction

+ satisfaction

Brand’s shape, size, weight capable to trigger certain consumer association +emotion In-depth interview is used to uncover deeper motivation

MOTIVATION

E.g. Computer with/ without warranty + other benefit.

Seller should:-Avoid dissatisfiers-The major satisfiers

Perception Individual selects,

organizes + interprets

info into

meaningful picture

LearningChanges in behaviour

due to experience

MemoryAll the information +

experiences will end

up in the memory

Selective attention-notice only selected stimuli Selective distortion – tendency to interpret info with prior product/ brand beliefs.Selective retention-remember good points about product consumer like.

PERCEPTION, LEARNING AND MEMORY

Memory encoding – how + where info gets into memory. Marketers have to strengthen their brand association (feel, thought, experience, belief)

Memory retrieval – how info get out of memory. Marketers have : to create more cues, aware the presence of other product, underlay exposure time

Drive – strong internal stimulus impelling action. E.g buy computerCues- minor stimuli that determine where, when and how a person respond. E.g. brand, product featuresDiscrimination –recognize diff. in a set of similar stimuli

C) The Buying Decision Process: The 5-Stage Model

Problem Recognition

Information Search

Evaluation of alternatives

Purchase Decision

Postpurchase Behavior

Personal (family, friends)Commercial (advert, web sites)Public (mass media, consumer rating orgExperiential (using the product)

Market partitioning – marketers need to identify the hierarchy of attributes that guide consumer. E.g. nation/brand –dominant hierarchy,

C) The Buying Decision Process: The 5-Stage Model-continue

Problem Recognition

Information Search

Evaluation of alternatives

Purchase Decision

Postpurchase Behavior

The expectancy-value model = attitude formation put forward that consumer evaluate products and services by combining their brand beliefs according to importance

Marketer strategies :Redesign the productAlter belief of brandAlter belief of competitors brand Alter the importance weightsCall attention to neglected attributesShift the buyer’s ideal levels for more attributes

C) The Buying Decision Process: The 5-Stage Model-continue

Postpurchase Behavior

Postpurchase satisfaction (satisfied, dissatisfied, delighted)Postpurchase actions (purchase, complaining, warning friend

D) Organizational BuyingDef: Organizational buying refers to the decision-making process by which formal organizations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers

• Fewer buyers

• Close supplier-customer relationships

• Professional purchasing

• Many buying influences

• Multiple sales calls

• Derived demand

• Inelastic demand

• Fluctuating demand

• Geographically concentrated buyers

• Direct purchasing

Characteristics

Straight Rebuy(re-orders on a routine

basis)

Modified Rebuy(modify product, price,

delivery)

New Task(buy first time, greater risk and longer time)

Buying Situation

E) Participants in the Business Buying ProcessThe Buying Center

Initiators Users or others in the organization

Users Those who will use the product/service. Initiate the buying proposal +define product

Influencers People who influence the buying decision. E.g. technical personnel

Deciders Decide on product / supplier

Approvers People who authorize the proposed actions of deciders/buyers

Buyers People who have formal authority to select the supplier and arrange the purchase term

Gatekeepers People who have the power to prevent sellers or info from reaching members of the buying center. E.g. Purchasing agents, telephone operators.

F) Stages in the Buying Process

Problem recognition Internal – machine breakdown, new product development.External – get new idea from the trade show

General need description

Complex item – buyer will work with expert to define characteristics such as price, durability

Product specification Define the component needed for that product

Supplier search Via trade directories, contact with other companies, trade advertisement, trade show

Proposal solicitation Invite qualified suppliers to submit proposal

Supplier selection Use supplier evaluation model based on attributes and important weights, rating scale

Order-routine specification

Negotiate the final order, expected time of delivery, return policies, warranties

Performance review Review the supplier performance either contact the end user and ask for the evaluation, buyer rate supplier on weighted score or buyer aggregate the cost of poor performance.

-End -