Chapter three

Analyzing consumer markets

and buyer behavior
Chapter Objectives
• After completing this chapter you will be
able to:
▫ Understand how the buyer behavior is
influenced
▫ Identify the stages of the buying process
▫ Know the stages of the buying decision
process.
 Reflection
What comes in to your mind while hearing the
following words;
• Consumer
• Consumer behavior
• Classification of buying behavior
• Why study consumer behavior?
• Culture
• Internal and external consumer characteristics
• Abraham Maslow human needs order.
• Marketing strategy
• Marketing strategy based on Maslow's
hierarchy of needs.
• Beliefs and Attitude
• Consumer decision making processes
• The study of consumer behavior focuses on
understanding consumers as they purchase products
and service.

• Understanding of consumer behavior is the key for

dealing with customers and success of marketing.
 Consumer Buying
Behavior (B to C)
• Consumer Market include all
the individuals and
households who buy or
acquire goods and services
for personal consumption.
• Consumer buying behavior is
the study of the behavior of
individuals who buy goods
and services for personal
consumption
Business Buying
Behavior (B to B)
• Business Market include
(businesses, industries,
organizations, government etc.,)
who buy or acquire goods and
service for producing other
goods and services and sell
them.
• Business buying behavior is the
study of the behavior of
businesses who buy goods and
services for resale (direct) or
converting the goods and
services and sell.
Consumer Buying
Behavior (B to C)
 1. Consumer Behavior (B to C)
Factors that affect Consumer Behavior
Consumers are affected by external and internal
factors.

Internal External Characteristics

InternalCharacteristics
Characteristics

• Psychological • Culture
• Personal • Social Factors
 Internal factor
Internal Factors-Psychological
Internal Factors-Personal
 Internal
Psychological Factors Personal

1 Age
1. Motivation

2. Life Style
2. Perception
3. Education
Consum
er
3. Learning 4. Occupation

5. Economic
4. Beliefs &
Attitudes
7. Life style
 Internal Factors-Psychological

Motivation is a need that is sufficiently pressing

(sufficiently urgent) to direct the person to seek satisfaction
of the need.

Two most popular psychological theories are Sigmund

Freud, Abraham Maslow and Herzberg.
 Abraham Maslow
According to him the human needs are arranged in a
hierarchy from the most pressing at the bottom to the
least pressing at the top. From top to bottom Maslow’s
needs are
1.Self Actualization needs-(self development and
realization
2.Esteem needs (self esteem, recognition, status)
3.Social needs (sense of belonging, love)
4.Safety needs (security, protection)
5.Physiological needs (hunger, thirst)
People act (motivated) to fulfill unmet (deprived) needs.
When one need is satisfied they move up to the next level
need to be satisfied.
People experience needs in a specified
order from simple physiological needs
to complex needs

General Examples Organizational Examples

Achievement Self Challengi

actualization ng
Job
Job
Status Esteem title
Friends
Friendship Belongingness At work
Pension
Stability Security
plan

Food Physiology Base

Salary
 perception
• The process by which people select, organize and
interpret information to form meaningful of the
world. How people act and decide is influenced
by their perception.

• International Marketing personnel need to

understand how people perceive things.
Perception affects communication, motivation and
decision making of the consumer
People form different perceptions to the same
stimuli because of three(3) perceptual differences;
• Selective perception: people are more likely to
remember stimuli if they relate to current need
that they might have. (Other messages are filtered
and omitted)
• Selective Distortion: People tend to adapt
information to personal meanings rather to
other’s meanings. If a person have decided to buy
a certain brand he gives less attention to what
others say about another product.
• Selective retention: people tend to remember
things that support their attitudes, beliefs and
interests. (remembers about the good points of
what he has chosen rather than good points of
Learning: Changes in an individuals behavior arising from
experience. When people act, they learn.

If Aster buys a computer and chooses an IBM, and her

experience is rewarding her response to computers will be
positively reinforced.
A belief is a descriptive thought or conviction that a
person holds about something.

They can be based on fact or an opinion or act of faith

They may be correct or incorrect

An Attitude a person’s relatively consistent and

maintained evaluations, feelings and tendencies toward an
object or idea. People have attitudes towards a companies
product.
 Internal Factors-Personal
A buyer’s behavior is influenced by the buyer’s age and life-cycle
stage, occupation, education, economic situation, personality and
self concept and personality styles
• Age: Babies eat baby food and their diet changes as they grow
• Life-cycle: Single, married with out children, divorced with children
• Occupation: A person’s occupation affects what he is buying
• Education: A highly educated people put more emphasis and
importance on information and education
• Economic Situation: Income, interest and savings of a person Affects
his/her purchasing behavior.
• Personality and self-concept: each persons distinctive
personality his distinguishing psychological characteristic and
self concept i.e. how he sees himself affect his/her purchase.
• Consumer Lifestyle: Is a person’s Pattern of leaving as
expressed in his or her activities, interests and opinions.
Consumer lifestyle is the consumer’s pattern of leaving as
expressed in his or her psychographics
For marketing it involves measuring consumer’s Major AIO
dimensions:
•Activities: (for example, work, hobbies, shopping, sport)
•Interests (for example, food, fashion, family, recreation)
•Opinions( about themselves, social issues, business,
products).
Psychographics is the technique of measuring the lifestyles
and developing life style classifications; it involves
measuring the major AOI
 EXTERNAL FACTORS

• Cultural factor
• Social factor
 Cultural factor
•Culture: is a major influence on our wants and general
behavior. Culture is the set of basic values, perceptions,
wants, and behaviors learned by a member of society from
family and other important institutions.

Marketers try to find cultural shifts such as the western

trend toward the use of non-fat foods.

•Subculture: A group of people with shared value systems

based on common life experience, such as race, age,
gender, religion, geography, or lifestyles
 Social factor
A consumer’s behavior is influenced by social factors such
as household type, reference groups, social roles and
status
Household type: There are two types of household.
Family of orientation (home of buyer’s parents)
Family of procreation (buyers home with spouse and
children)
Groups: Members that have a direct influence on a
person’s behavior and to which a person belongs, for
example, family, friends, neighbors and co-workers.
Reference groups are groups that have direct or indirect
influence on a person’s attitudes or behaviors. Individuals
may be influenced by, but may not be part of the group
Opinion Leaders: Are people within reference group who
become of special skills, knowledge, personality or other
characteristics, exert influence on others.

Roles and Status: Everyone belongs to a large number of

groups such as family, clubs, schools and organizations.

A role consists of the activities people are expected to do

according to other people in the group. Each role carry a
status. People for example will buy the kind of clothing and
products that reflects their role and status.

Women and men have different roles in buying decision a

study for example that women made 60% of the decision
on the brand of house hold paint
 CONSUMER DECISION MAKING
PROCESSES
Consumer decision process involves a number of steps.
1. Problem Recognition
2. Information Search
3. Evaluation of Alternatives
4. Purchase Decision
5. Post Purchase Evaluation
The process is affected by internal and external factors of
the consumer .
 Internal Decision Steps External
Influence Influenc
e
1.Problem
Recognition
2. Information
Psychologic
Search
Cultura
al 3. Evaluation of
Alternatives l
Personal
Social
4. Purchase Decision

5. Post purchase
Evaluation
1. Problem Recognition: occurs when buyers perceive
a significant difference between their actual state
and their desired state. Thousands different stimuli
trigger the awareness of a need or a problem.
Marketers are very interested in the factors that
trigger a conscious recognition of a need.
2. Information Search
Looking for the thing that will satisfy the need.
• Internal Search: the consumer scans his or her
memory for alternatives that would satisfy the
need)
• External Search: the consumer actively engages in
a search for information that would assist in the
decision from outside self
In an active search, consumers are very likely to read
ads (commercial sources) and articles (public sources),
talk to friends and relatives (personal sources), and
visit a store (experiential sources).
Information search is affected by the level of credibility and
effort needed to acquire the information.

Information Effort Credibility

Source Required
Internal Low High

External

Friends & Low High

Families
Marketing High Low
Promotion
Public High Low
(Consumer
Information)
3, Evaluation of Alternatives:

Evaluation of alternatives involves establishing criteria

with which to evaluate each alternative before making
a purchase decision.

Marketers promise through their communication that

their product fulfils criteria and satisfies their needs.
4. Purchase decision is a series of related decisions consumers

must make before making a purchase. These decisions include

such things as specific features of the product or product
attributes, where and when to make the actual purchase, how to
take possession, and the method of payment.

Patronage motives are determined by such factors as location,

convenience, speed of service, merchandise accessibility,
prices, merchandise assortment, services offered, and sales
personnel. Successful marketers evaluate their customers’
patronage motives and carefully design the shopping
experience accordingly.
5. Post purchase Evaluation:
The purchase process does not end with the purchase. can
influence future purchases and what the buyers tell others about
the product. Purchasers may recommend the brand to everyone
who asks them about their purchase. Or, may tell everyone about
their unhappy experience with the product. In many purchases,
consumers may experience anxieties, known as cognitive
dissonance.
Cognitive dissonance occurs when there is inconsistency in a
person’s cognitions such as knowledge, attitudes, beliefs, and
values. It is a regret for buying a product that failed to meet
expectations.
Business Buying
Behavior (B to B)
1. Marketing Structure & Demand
2. Decision & Decision Process
3. Nature of the Buying Unit
Characteristics of
business buying
 Marketing Structure and demand
 Business Markets contain fewer but larger buyers
 Business buyers are more geographically concentrated
 Business buyer demand is derived from final consumer demand
 Demand in many business market is more inelastic-not affected as
much in a short run by price changes
 Demand in the business market fluctuates more and more quickly

Nature of the Buying Unit

 Business purchase involves many buying decision influencers
 Business purchases involves many professional purchasing effort

Types of Decision and the Decision Process

Business buyers usually face more complex buying decision
The Business buying process is more formalized
In business buying, buyers and sellers work more closely together
and build long-run relationships
1
 Members of Organizational
Buying Unit
Organizations have a buying units that influence their
purchase decisions. Number of units or people influence
the purchase decision.

Initiators
Users

Decision- Influence
Making rs
Roles
Unit of a
Buying Include
Organizati Buyers
on is
Called Its Deciders/
Buying Gatekeepers Approvers
Center.
• Initiators: People who request that something be
purchased, (can be users or others).
• Users: Those who will use the product or service;
often, users (production, stores etc.) write purchase
requisition, proposal and help define product
requirements.
• Influencers: People who influence the buying decision,
including technical personnel. They often help define
specifications and also provide information for
evaluating alternatives.
• Deciders: Those who decide on product requirements
or on suppliers.
• Approvers: People who authorize the proposed actions
of deciders or buyers.
• Buyers: People who have formal authority to select the
supplier and arrange the purchase terms, including
high-level managers. Buyers may help shape product
specifications, but their major role is selecting vendors
and negotiating.
• Gatekeepers: People who have the power to prevent
sellers or information from reaching members of the
buying center; examples are purchasing agents,
receptionists, and telephone operators.