Consumer (and Business) Buyer And Market Behaviour

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Trier 3Consumer (and business)buyer and market behaviour

Previewing concepts (1) Define the consumer market andconstruct a simple model of consumerbuyer behaviour Demonstrate how culture, subculture andsocial class influence consumer buyingbehaviour Describe how consumers’ personalcharacteristics and primary psychologicalfactors affect their buying decisions

Previewing concepts (2) List and understand the majortypes of buying decision behaviourand the stages in the buyer decisionprocess Discuss how consumer decision makingvaries with the type of buying decision

Previewing concepts (3) Define the business market and explainhow business markets differ fromconsumer markets List and define the steps in the businessbuying decision process

Harley-Davidson Motorfietsen

The brand - Harley-Davidson Most products and personalities comeand go but others, like the HarleyDavidson, achieve long-lasting cultstatus. Why do you think this occurs?Harley-Davidson makes motorcycles.What do Harley-Davidson owners buy?How do you think the buying process forbuying a Harley-Davidson differs frombuying other 20,000 products?

Harley-Davidson Harley has instilled a high degree of brandloyalty in its target market. The company researches its customer base tounderstand buyer behaviour. The research revealed seven core customertypes: 1) adventure-loving traditionalists, 2)sensitive pragmatists, 3) stylish status-seekers,4) laid-back campers, 5) classy capitalists, 6)cool-headed loners, and 7) cocky misfits.

Harley-Davidson– The Harley-Davidson example shows thatmany factors affect consumer buyingbehaviour.– Consumer buyer behaviour refers to thebuying behaviour of final consumers—individuals and households who buy goodsand services for personal consumption.

Analysing consumer behaviour:Kipling's six Q’s What doconsumers buy? Where do theybuy? When do they buy? Why do theybuy? How do they buy? Who buys?

Key Question! How do consumers respond to variousmarketing efforts? The starting point for answering thisquestion is the stimulus-response modelof buyer behaviour shown in Figure 5.1.

Figure 5.1 Stimulus-responseModel of buyer behaviourMarketingand stimuliBuyer’sblack boxBuyerresponses

Key Q - What is in the buyer’s ‘black box’? Marketing and other stimuli enter the consumer’s‘black box’ and produce certain responses.Marketing stimuli consist of the 4 Ps: product,price, place, and promotion.Other stimuli include major forces and events inthe buyer’s environment.The buyer’s characteristics influence how he orshe perceives and reacts to the stimuli.The buyer’s decision process itself affects thebuyer’s behaviour.

What is neuromarketing?Researchers are using technology to‘look inside the brain’Neuromarketing is the use of neurotechnology to improve marketingdecision making.

Factors InfluencingConsumer ltureFamilySocialclassRolesandstatusPersonalAge rceptionLearningBeliefs andattitudesBuyer

What is culture?Culture is the set of basic values,perceptions, wants and behaviourslearned by a member of society fromfamily and other important institutions.

Cultural factors Culture is the most basic cause of a person’swants and behaviour. Culture is the set of basicvalues, perceptions, wants and behaviourslearned by a member of society from family andother important institutions. Each culture contains smaller subcultures, orgroups of people with shared value systemsbased on common life experiences andsituations. Subcultures include nationalities,religions, racial groups, and geographic regions.

Influences on Culture

Subcultures NationalitiesReligionRacial groupsGeographic regionsHSBC is the first tooffer Islamic financial products.

Cultural factors (con’t) Social classes are society’s relatively permanentand ordered divisions whose members sharesimilar values, interests, and behaviours. Social class is not determined by a single factor,such as income, but is measured as a combinationof occupation, income, education, wealth, andother variables.

Social classes

Social factorsSocial factors can also affect consumer behaviour. Reference groups Family Roles and status

Think-Pair-Share Consider an item you bought which istypical of what your peers (a key referencegroup) buy, such as a compact disc, amountain bike or a brand of trainer. Were you conscious that your friendsowned something similar when you madethe purchase? Did this make you want theitem more or less? Why or why not?

What is an opinion leader? Opinion leaders are people within areference group who, because of specialskills, knowledge, personality, or othercharacteristics, exert influence on others. Manufacturers of products and brandssubjected to strong group influence mustfigure out how to reach opinion

Figure 5.3 Extent of group influenceon product and brand choice

Blogs and social networking sites Social networking, social interactioncarried out over Internet media,illustrates the importance of socialinfluence on consumer behaviour.;

VW’s Helga reliedon social networking for branding

Family members can strongly influence– The buyer’s parents make up the family of orientation.– The family of procreation (the buyer’s spouse andchildren) has a more direct influence on everydaybuying behaviour.» Husband-wife involvement varies widely by productcategory and by stage in the buying process» Children may also have a strong influence on familybuying decisions in the form of “pester power.”

Think-Pair-Share Now, think of brands that you currently usewhich your parents also use. Examplesmay include soap, tea, or butter/milk. Did you think through these purchases ascarefully as those influenced by your peersor were these purchases simply the resultof following old habits?

Figure 3.4 Family Life Cycle

Consumers’ buying roles InitiatorInfluencerDeciderBuyerUser

Decision-making unit (DMU)» The initiator is the person who first suggests orthinks of the idea of buying a particular product orservice.» The influencer is the person whose view or adviceinfluences buying decision.» The decider is the person who ultimately makes thebuying decision or any part of it.» The buyer is the person who makes the actualpurchase.

Role and Status– A person’s position within each group can bedetermined in terms of role and status.– A role consists of the activities that people are expectedto perform according to the persons around them.– Status is the general esteem given to a role by society.

Personal factors Buyer’s ageLifecycle stageOccupationEconomic situationLifestylePersonalitySelf-concept

Personal Factors Affecting Consumer Behaviour:Personal InfluencesAge and Life CycleStageOccupationEconomic SituationPersonality & Self-ConceptLifestyle IdentificationActivitiesOpinionsInterests

Family life-cycle stagesYoungMiddle-aged SingleMarried without childrenMarried with childrenDivorced with childrenOlder Older married Older unmarriedSingleMarried without childrenMarried with childrenMarried withoutdependent children Divorced without children Divorced with children Divorced withoutdependent children

Think-Pair-ShareHow should a marketer of bedroomfurniture consider life-cycle stage inhis/her strategy?Can you think of a furniture retailer thatplaces emphasis on a particular life-cyclestage?

Individual exercise Go to the VALS Web site at Take the VALS survey. Read andconsider the profiles that result from yoursurvey. What things do you agree with?Disagree with?What four products have high indexes foryour type? Do you buy these products?Do you think that an instrument such asthis has any value to marketers?

Think-Pair-ShareIn designing adverts for a soft drink, whichwould you find more helpful: informationabout demographics or lifestyles? Giveexamples.

What is personality?Personality is a person’sdistinguishing psychologicalcharacteristics that lead to relativelyconsistent and lasting responses to hisor her own environment.

PersonalityPersonality can play arole in consumerbehaviour, particularlywith high involvementproducts (e.g., choiceof holiday)Source: Hayes & Jarvis (Travel) Ltd

Brands have personalities etence

Personality and Self-Concept Related to personality is a person’s selfconcept. The basic self-concept premiseis that people’s possessions contribute toand reflect their identities. “We are what we have”- Visit somebody’s home/apartment?

Factors Affecting Consumer Behaviour:PsychologicalMotivationBeliefs andAttitudesPsychologicalFactorsLearningPerception

What is suggested byFreud’s theory of motivation?Freud suggested that aperson’s buying decisions areaffected by subconsciousmotives that even the buyermay not understand.

Figure 5.4Maslow’s hierarchy of needs

Exercise Study Maslow’s hierarchy of needs Cut out print ads that appear to be focusedon appealing to the different needs of thishierarchy. Find one ad for each level ofneeds.

PerceptionPerception is the process by whichpeople select, organise and interpretinformation to form a meaningfulpicture of the world


What is the difference betweenattitudes and beliefs?A belief is a descriptive thought aperson has about something.An attitude describes a person’sfavourable or unfavourable evaluations,feelings, and tendencies towards anobject or idea.

Skoda Responded toNegative Attitudes

PEER GROUP EFFECTS How do you getyoung people tochange their attitudesabout Clarks shoesfrom “Shoes theirparents would wear”to “Cool andmodern”?

Consumer decision processConsumer choice results from acomplex interplay of cultural, social,personal, and psychological factors.

Figure 5.5 Four types ofbuying behaviour

Buying decision behaviour Habitual buying behaviour– Characterised by low consumer involvementand few significant perceived branddifferences Variety seeking buying behaviour– Low consumer involvement but significantperceived brand differences

Endorsements from celebritiesincrease sales

What is dissonance-reducingbuying behaviour?Dissonance-reducing buyingbehaviour is consumer behaviour insituations characterised by highinvolvement but few perceiveddifferences among brands.

Dissonance-reducing buying behaviour Dissonance-reducing buying behaviour occurswhen consumers are highly involved with anexpensive, infrequent, or risky purchase, but seelittle difference among brands. After the purchase, consumers might experiencepostpurchase dissonance (after-sale discomfort)when they notice certain disadvantages of thepurchased brand or hear favorable things aboutbrands not purchased.

UNDERSTANDING BUYINGPROCESSES IS CRUCIAL Months of marketing planning can bedismissed in the few moments that a buyermakes a purchase decision

Figure 5.6The buyer decision processNeedrecognitionInformationsearchEvaluation r

The Buyer Decision ProcessStep 1. Need RecognitionNeed RecognitionBuyer Recognizes a Problem or NeedInternal StimuliExternal Stimuli Hunger TV advertising Thirst Magazine advert A person’s normal needs Radio slogan Stimuli in the environment

The Buyer Decision ProcessStep 2. Information SearchPersonal SourcesCommercial SourcesPublic SourcesExperiential Sources Family, friends, neighbours Most effective source ofinformation Advertising, salespeople Receives most information fromthese sources Mass Media Consumer-rating groups Handling the product Examining the product Using the product

Information Search What kind ofpurchase will addressproblem? How can the productbe obtained? What information isneeded?Source: C&G

What do consumers do duringthe alternative evaluation stage of thebuying process? Look for certain benefits that can beacquired by buying a product Attach degrees of importance to each attribute Develop brand beliefs about each brand Use a utility function for each attribute Arrive at attitudes toward each brand through anevaluation procedure

Interactive Decision Aids

Stages in adopting a new product AwarenessInterestEvaluationTrialAdoption

The Buyer Decision ProcessStep 5. Postpurchase BehaviourConsumer’s Expectations ofProduct’s PerformanceProduct’s Perceived PerformanceSatisfied Customer!Dissatisfied CustomerCognitive Dissonance

Post-Purchase Evaluation Affects likelihood ofrepeat purchase May evoke cognitivedissonance

Post-purchase evaluationHas the purchase lived up to its expectations?Marketers can help reduce cognitive dissonance by: Ensuring that customers’ needs and wants have beencarefully researched. Tailoring the marketing mix to suit the audience. Painting a realistic picture of the product/service in alladvertising literature. Making sure consumers’ expectations are rooted inreality - for example letting the consumer test theproduct/service before purchase. Good after sales care.

POST-PURCHASE EVALUATION Did our purchase live up toexpectations? If not, we could:– Return the product– Tell others– Rationalise our thoughts to overcome"cognitive dissonance"

Impact of Dissatisfied Customers“Dissatisfied customers can tell up to elevenother people about their bad experiences, whichis two to three times more people than asatisfied customer will talk to.”Smith, 1993

Review of theDecision-Making ProcessI’m hungryProblem recognitionWhat’s available?Information searchCakes or chocolate?Information evaluationSnickers!DecisionI should’ve had cake.Post-purchase evaluation

Consumer (and business) buyer and market behaviour Trier 3 . Previewing concepts (1) Define the consumer market and construct a simple model of consumer buyer behaviour Demonstrate how culture, subculture and social class influence consumer buying . – Consumer

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an (ex ante) expected utility of 0.25 for the buyer. Now define the signal set to be {hiдh,low}, and the buyer is said to have low value if his value is in [0,0.5]and hiдh otherwise. The mediator sends a signal to the seller after collecting the buyer's value: he sends signal low if the buyer has a low value and hiдh otherwise. The

an (ex ante) expected utility of 0.25 for the buyer. Now define the signal set to be {hiдh,low}, and the buyer is said to have low value if his value is in [0,0.5]and hiдh otherwise. The mediator sends a signal to the seller after collecting the buyer's value: he sends signal low if the buyer has a low value and hiдh otherwise. The

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