Consumer & Business Buyer Behaviour

Chapter 6

Agenda

Consumer Market and Major Factors that Influence Consumer Buying Behavior
– –

Consumer Buying Decision Process Adoption and Diffusion Process for New Products

Business Market and Major Factors that Influence Business Buyer Behavior

Business Buying Decision Process

 

Term Project and Term Project Proposal Next Class

Two Types of Markets:
 Consumer  Business

Think about Starbucks

 

Why are consumers willing to pay $2.00 for a cup of coffee? Who are Starbucks’ target markets? What is the marketing communication message Starbucks wants to convey? Why has Starbucks been successful?

Understanding the Consumer Market

Product Price Place Promotion Marketing and other stimuli Economic Technological Political Cultural

Buyer’s Black Box Buyer Characteristics Buying Decision Process

Buyer’s Responses

Product choice Brand choice Dealer choice Purchase timing Purchase amount

Figure 6-1

Traditional factors affecting consumer purchasing behaviors
       

Demographics (age, gender, income, etc.) Heredity and home environment Family life cycle Life changing events Cultural environment Social environment Situational environment Psychological Factors

Maslow’s Hierarchy of Needs
Different

types of needs drive behaviour to satisfy those needs in an order of precedence Most basic needs fulfilled first

SelfActualization Esteem Social Safety Physiological

Please refer to Question #3 on Page 250 of your Text
 Think

about a specific major purchase you’ve made recently.  What buying process did you follow?  What major factors influenced your decision?

Consumer Decision-Making Process
Problem Recognition Information Search Evaluation of Alternatives

Purchase Decision Postpurchase Evaluation

Information Search

Two ways of gathering information: 1. Internally 2. Externally

Types of info sources:
   

Commercial Public Personal Experiential

The Purchase Decision
Decision to purchase a particular product may be based on several factors: Attitudes of Others Unexpected Situational Factors other factors influence the Purchase Decision?
What

Postpurchase Evaluation

Evaluation of product performance. Cognitive dissonance. Impacts future purchases. Impacts word-of-mouth communications.

Stages in the New Product Adoption Process
 Adoption

process:

the mental process through which an individual passes from first hearing about an innovation to final adoption

 Consists
– – – – –

of 5 Stages (These are exactly as they indicate):
Awareness Interest Evaluation Trial Adoption

New Product Adoption RatesFigure 6-5 34% 34%
Early majority Late majority

13.5% 2.5%
Innovators Early adopters

16%
Laggards

Time of adoption of innovations
Source: reprinted with permission of the Free Press, a Division of Simon & Schuster, from Diffusion of Innovations, Fourth Edition, by E.M. Rugers, 1983.

Influences on the Rate of Adoption
    

Relative advantage

How much better than existing alternatives? Fit current values and experiences? Ease of understanding? Can it be tried on a limited basis? Can the innovation be observed and communicated?

Compatibility

Complexity

Divisibility

Communicability

Two Types of Markets:
 Consumer  Business

Distinguishing Characteristics of Business Markets
    

Concentrated Demand Derived Demand Purchasing Professionals Multiple Buying Influences Close Buyer-Seller Relationships

Business-to-Business Buying Process
 Identification

of a need  Establishment of specifications.  Identification of alternatives.  Identification of vendors.  Evaluation of vendors.  Selection of vendors.  Negotiate purchase terms.

Influences on the Business Buying
 Organization

Buying centre, structure and systems, resources, goals, environment and policies Position, age, education, social situation, attitude about risk, etc. Demand for the product, other external environmental factors (i.e., regulatory, technology, competition)

 Individual

 Environmental

Types of Purchasing Decisions

Straight Rebuy Buying Situation

Routine Response Behavior

Modified Rebuy Buying Situation

Limited Problem Solving

New Task Buying Situation

Extensive Problem Solving

Characteristics of the Three Types of Buying Decisions
Straight Modified Rebuy Rebuy
Newness of Problem or Need Low Information Requirements Minimal Information Search Minimal Consideration of New Alternatives None Multiple Buying Influence Very Small Financial Risks Low Routine response Medium Moderate Limited Limited Moderate Moderate Limited prob. solving

New Task
High Maximum Extensive Extensive Large High Extended prob solving

Multi-Attribute Model
The base score

Assessment of Product or Supplier Performance (P)

The weight

Assessing the Relative Importance of Each Characteristic (I)

Example of the Multi-Attribute Model Process
Vinyl Fabric Characteristi Performa Importanc PxI c nce e Score Weight Comfort Durability Guarantee Price Evaluation Score 5 7 7 10 9 8 8 6 45 56 56 60 217 Nylon Velvet Fabric Performa Importanc PxI nce e Score Weight 8 8 8 1 9 8 8 6 72 64 64 6 206

Next Class
 Read

Chapter 7: Market Segmentation, Targeting, and Positioning  Complete Exercises 1,2,and 3 on page 295