Chapter 3

Understanding the market

Consumer and Business Buyer
Behavior

1
 Chapter objective
 Define the consumer market and major factors that influence
consumer buyer behavior.
 Understand the stages in the buyer decision process.

 Describe the adoption and diffusion process for new

products.
 Define the business market and explain how business
markets differ from consumer markets.
 Identify the major factors that influence business buyer
behavior.

ong SHAO USTB

 What is a Market
The concepts of exchange and relationships
lead to the concept of a market.
A market is the set of actual and potential
buyers of a product or service.
These buyers share a particular need or want
that can be satisfied through exchange
relationships.
Major markets:
Consumer
ong SHAO USTBBusiness Market

 Consumer Buying
Behavior
 refers to the buying behavior of final
consumers -individuals & households
who buy goods and services for
personal consumption.

 All these consumers make up the

consumer market.
“How do consumers respond to various
marketing efforts the company might
use?”
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 Model of
Consumer Behavior
Marketing and Buyer’s Black Box Buyer Responses
Other Stimuli
Product Choice
Marketing Buyer Characteristics
Product Brand Choice
Price
Place Dealer Choice
Promotion
Other Buyer Decision Purchase Timing
Economic
Process
Technological Purchase Amount
Political
Cultural

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 Factors Influencing
Consumer Behavior
Cultural
Social
Personal Psycho-
Reference Age & Logical
Culture
Culture groups life-cycle Motivation
Occupation
Sub- Economic
Perception Buyer
Sub- Family situation
culture
culture Learning
Lifestyle
Personality Beliefs &
Roles attitudes
Social
Social & self-concept
class
class status
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 Factors Affecting
Consumer Behavior-Personal
Personal
PersonalInfluences
Influences

Age
Age and
and Life
Life Economic
Economic Personality
Personality &&
Occupation
Occupation Situation Self-Concept
Cycle
Cycle Stage
Stage Situation Self-Concept

Lifestyle
LifestyleIdentification
Identification

Activities
Activities Interests
Interests Opinions
Opinions

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 Factors Affecting Consumer
Behavior -Psychological

Motivation

Psychological
Factors
Beliefs and Affecting Perception
Attitudes Buyers
Choices

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Learning
 Factors Affecting Consumer
Behavior -Psychological
Perception Includes:
Selective Attention(注意 )
 Consumers screen out information
Selective Distortion(曲解 )
 People interpret to support beliefs
Selective Retention(保留 )
 People retain points to support attitudes

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 Maslow’s
Hierarchy of Needs

Self
Actualization
(Self-development)

Esteem Needs
(self-esteem)

Social Needs
(sense of belonging, love)

Safety Needs
(security, protection)
Physiological Needs
(hunger, thirst)
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 Types of Buying
Decision Behavior

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 Types of Buying
Decision Behavior
High Low
Involvement Involvement
Significant Complex Variety-
differences Buying Seeking
between
brands
Behavior Behavior

Dissonance- Habitual
Few
differences Reducing Buying Buying
between Behavior Behavior
brands

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 Buyer Decision Process
Purchase
Decision
Evaluation Postpurchase
of Alternatives Behavior
Information
Search
Need
Recognition
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 Step 1 Need Recognition

Buyer
Recognizes
Needs Arising
State Where the a
From:
Buyer’s Needs Problem
are Fulfilled and or a Need. Internal Stimuli –
the Buyer is
Satisfied. Hunger
External Stimuli-
Friends
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 Step 2 Information
Search

Personal •Family, friends, neighbors

Personal Sources
Sources •Most effective source of
information
•Advertising, salespeople
Commercial
Commercial Sources
Sources •Receives most information from
these sources

Public
Public Sources
Sources •Mass Media
•Consumer-rating groups

•Handling the product

Experiential
Experiential Sources
Sources •Examining the product
•Using the product
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 Step 3 Evaluation of
Alternatives
Product
ProductAttributes
Attributes
Evaluation
Evaluationof
ofQuality,
Quality,Price,
Price,&&Features
Features

Degree
Degreeof
of Importance
Importance
Which
Whichattributes
attributesmatter
mattermost
mostto
tome?
me?

Brand
BrandBeliefs
Beliefs
What
Whatdo
doIIbelieve
believeabout
abouteach
eachavailable brand??
availablebrand

Total
Total Product
ProductSatisfaction
Satisfaction
Based
Basedon
onwhat
whatI’m
I’mlooking
lookingfor,
for,how
howsatisfied
satisfied
would
wouldIIbe
bewith
witheach
eachproduct?
product?
Evaluation
EvaluationProcedures
Procedures
Choosing
Choosingaaproduct
product(and
(andbrand)
brand)based
basedon
onone
one
ong SHAO USTB or
ormore
moreattributes.
attributes.
 Step 3 Evaluation of
Alternatives
Consumer May Use Careful
Calculations & Logical Thinking

Consumers May Buy on Impulse and

Rely on Intuition

Consumers May Make Buying Decisions

on Their Own.

Consumers May Make Buying Decisions

Only After Consulting Others.

Marketers Must Study Buyers to Find Out How They

ong SHAO USTB Evaluate Brand Alternatives
 Step 4 Purchase Decision

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 Step 4 Purchase Decision

Purchase Intention
Desire to buy the most preferred brand

Attitudes Unexpected
of Others Situational
Factors

Purchase Decision
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 Step 5 Postpurchase
Behavior

Satisfied Customer

Consumer’s
Expectations of Product’s Performance
&
Product’s Perceived
Performance.

Dissatisfied
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Customer
 Discussion
Question 3

Discuss a specific major purchase that you has made

recently.

What type of buying decision was it?

Discuss the Buyer Decision Process and what major

factors influenced your decisions.

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 Stages in the
Adoption Process
Awareness: Consumer is aware of
product, but lacks information.
Interest: Consumer seeks
Information about new product.

Evaluation: Consumer considers

trying new product.
Trial: Consumer tries new
product on a small scale.

Adoption: Consumer decides

to make regular use of product.
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 Adopter Categories
Percentage of Adopters

Early Majority Late Majority

Innovators

Early Laggards
34% 34%
Adopters

13.5% 16%
2.5%
Early Late
Time of Adoption

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 Influence of Product Characteristics
on Rate of Adoption
Communicability Relative Advantage
Can results be easily
observed or described Is the innovation
superior to existing
to others?
products?

Divisibility Compatibility
Can the innovation Does the innovation
be used on a fit the values and
trial basis? experience of the
target market?
Complexity
Is the innovation
difficult to
understand or use?
ong SHAO USTB
 What is a
Business Market?

Comprises 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 goods than do consumer markets.

ong SHAO USTB

 Characteristics of
Business Markets
Contain fewer,
Contain fewer, but
but
larger
larger buyers
buyers
Customers
Customers areare more
more
geographically
geographically concentrated
concentrated
Buyer demand isis derived
Buyer demand derived from
from
final
final consumer
consumer demand
demand
Demand is often more
inelastic
Demand often fluctuates
more, and more quickly
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 Model of Business
Buyer Behavior

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 Major Types of
Buying Situations

New
New Task
Task Buying
Buying
Involved Decision

Modified
Modified Rebuy
Rebuy
Making

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Straight
Straight Rebuy
Rebuy
 Participants in the Business Buying
Process

Users
Decision-
Factors
Factors Influencers
Making Unit
Situational
Situational
Unexpected
of a Buying
Unexpected

Roles Organization Buyers

Include is Called Its
Attitudes
Buying
Attitudes
of
of
Center.
Others
Others Deciders
Gatekeepers
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 Major Influences on Business Buyer
Behavior
Environmental
Organizational
Economic
developments Objectives
Interpersonal
Individual
Supply Policies
Authority
Conditions Age Buyers
Procedures
Status Education
Technological Job Position
change Organizational
Empathy Personality
Structure
Risk Attitudes
Political and regulatory
Persuasiveness
developments Systems

Competitive
Developments

Culture
ong SHAO and customs
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 Business Buying Process

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 Review of Concept
Connections
 Define the consumer market and major factors that
influence consumer buyer behavior.
 Understand the stages in the buyer decision process.
 Describe the adoption and diffusion process for new
products.
 Define the business market and explain how business
markets differ from consumer markets.
 Identify the major factors that influence business
buyer behavior.

ong SHAO USTB

 Evolution of consumer
behavior
Supply chain:
all the organisations involved in taking a
product from inception to final consumption
- Manufacturers
- Wholesalers
- Retailers
- Facilitating organisations

Consumers’ increased influence on

business
 Evolution of consumer
behaviour
Consumers’ increasing influence

Wholesaler Manufacturer Retailer Consumer

Manufacturing Selling Marketing Consumer

Orientation Orientation Orientation Orientatio
n
US 1750-1850 1850-WWII 1970-2000
2000+

Europe 1750-1850 1760-WWII 1970-2000

2000+
 Evolution of consumer
behaviour
Manufacturing orientation
Selling orientation
Marketing orientation:
- Motivation research
- Positivism
- Postmodernism
Consumer orientation
 Consumer orientation
Beyond a marketing focus

How all organisations in a demand chain adapt to

changing consumer lifestyles and behaviors
bringing product design, logistics, manufacturing,
and retailing together

Role of consumers in shaping many aspects of

life – society, government, social programs,
health cares, and other areas
 Studying consumer behaviour:
Consumer research methods
Observation
Observing consumer behaviors in different
situations such as natural or artificial settings
In-home observation: examining how and when consumers use
and consume products in their households
Shadowing: following and observing consumers in the shopping
and consumption processes. Researchers may ask questions about
reasons for behaviors
Physiological methods: techniques borrowed from medicine,
psychology and other sciences including cameras to measure eye
movement, galvanic skin response, and MRI
 Consumer research methods
Interviews and surveys
Surveys: efficient method for gathering information from
a large sample of consumers by asking questions and
recording responses (telephone and Internet surveys, mall
intercepts, and mail questionnaires)
Focus groups: a group discussion led by a moderator
skilled in persuading consumers to thoroughly discuss a
topic of interest
Longitudinal studies: repeated measures of activities
over time to determine changes in opinions, buying, and
consumption behaviors
 Consumer research methods
Experimentation
Measuring cause-and-effect relationships by
manipulating independent variables to
determine the effects of changes on
dependent variables
- Laboratory experiment
- Field experiment
Independent variables might include number
of advertisements and package design
Dependent variables might include purchase
intent or behavior
 Consumer research methods
Consumption research builds on the three
primary research methods to examine how
people use products and services rather than
how they buy them
May use ethnographic tools to under-stand
how values and culture influence usage of
products and other behaviors
May identify new uses for existing products or
new product to satisfy unmet or changing
consumer needs
Understanding how consumers
use products
Underlying principles of
consumer behaviour
The consumer is sovereign
The consumer is global
Consumers are different
Consumers are alike
Consumers appear different but
respond in similar ways to
brands
 The Underlying Principles of
Consumer Behavior

The Consumer Is Sovereign

The Consumer Is Global
Consumers Are Different;
Consumers Are Alike
The Consumer Has Rights
 Consumer Bill of Rights

Refer to DOCEP (Department

of Consumer and Employment
Protection) in Western
Australia for information on
consumer rights. Remember
that consumer rights may vary
across countries in the South
East Asian region.
 Challenges for the future
Gathering and interpreting information that
organisations need to meet changing needs
of consumers
Developing effective consumer research
methods to capture changes in trends and
lifestyles
Understanding consumer behaviour from a
broader perspective as an important part of
life
 Review questions
Define the consumer market and describe the four
major sets of factors that influence consumer buyer
behavior. Which characteristics influenced your choice
when deciding on the school you would attend? Are
those the same characteristics that would influence you
when deciding what to do on Saturday night? Explain.
(AACSB:
Communication; Reflective Thinking)
5-2 What is a total market strategy, and why do
marketers use this approach? Provide a recent example
of a product or service that uses the total market
strategy approach and discuss the components that
make it effective or ineffective. (AACSB:
Communication, Diversity, Reflective
ong SHAOThinking)
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