Buying Behavior

By Alemu A. (PhD Candidate)

 Course Description

• This course introduces the influence that buyers

behavior has on marketing activities.
• Students will apply theoretical concepts to
marketing strategies and decision-making.
• Topics include consumer and marketing segments,
environmental influences, individual determinants,
decision processes, information research and
evaluation. 
 Course Objective
• The objective of this course is to familiarize the
students with the different facets of buyers
behavior so that they may make better strategic
marketing decision both in domestic and
international in domestic and international
businesses.
• The course includes introduction to buyers
behavior; motivation theories and perception;
models of attitudes; communication and decision
making and markets and consumer behavior
 UNIT ONE: CONSUMER BEHAVIOR IN THE MARKETPLACE

• Introduction to buyer behavior

• Types of buyers behavior
• Consumer behavior and marketing strategy
• Consumer behavior an interdisciplinary approach
• Understanding consumer behavior and marketing
segmentation
 UNIT TWO: CONSUMERS AS INDIVIDUALS

• Personality
• Self and self-identity
• Values
• Lifestyles
• Consumer Motivation and Involvement
• Attitudes
• Perceiving a customer’s internal assessment
• Consumer Learning
• Learning theories
 UNIT THREE: CONSUMERS AS DECISION MAKERS

• Buying Decision process

• Stage of the buying decision process
UNIT FOUR: Environmental influences on buying behavior

• Cultural Processes
• Subcultures
• Group influence & opinion leadership
• Class, age, and gender influences
 Unit Five: Industrial Buyer Behaviour
• Introduction to industrial buyer
• Characteristics of industrial buyers.
• Business to business or buying process
• Black Box model
• Howard-sheth model
• EKB(Engle-kollat-Blackwell) model and some others
• Economic models
 Evaluation Scheme
• Individual Assignment and Presentation 30%
• Group assignment and Presentations 20%
• Final Exam 50%
• Total 100%
 References
• Lindquist etal(2003), Consumer Behavior
Theory: Marketing Applications and Public
Policy Implications, biztantra, USA
 1.1 Introduction
• Market bridges between buyers and company
• Buyers can be consumers or industrial buyers
• A consumer is a person who identifies a need or a desire,
makes a purchase ,use, and then dispose of the product
• industrial buyer. individual in a business, government agency,
or association who makes purchase decisions regarding
services, raw materials, product components, or finished
goods
• Consumers may take the form of organization or groups
• Consumers are rational decision makers

• But purchasing decision is influenced by many factors

cont’d ….

• Consumers are unique in themselves; they have

needs and want which are varied and diverse from
one another; and they have different consumption
patterns and consumption behaviour.
The marketer helps satisfy these needs and wants
through product and service offerings.
For a firm to survive, compete and grow, it is
essential that the marketer identifies these needs
and wants, and provide product offerings more
effectively and efficiently than other competitors.
• The knowledge of consumers and their consumption
behaviour is essential for a firm to succeed.
Cont’d……
Recent definition of marketing revolves on
how to develop goods and services that
exactly match customer requirement and so
that companies generate profit from satisfied
customers.
• To that ends, it is advisable to know needs and
wants of the customers
• Identifying of the needs and wants of
consumers is not easy task because it is
affected by many factors. Some of the such
factors are:
Cont’d……

• Personal factors: these characteristics may include how a person

makes decisions, their unique habits and interests, and opinions.
• When considering personal factors, decisions are also influenced
by age, gender, background, culture, and other personal issues
etc.
• Psychological factors can include perception of a need or
situation, the person's ability to learn or understand information,
and an individual's attitude.
• Each person will respond to a marketing message based on their
perceptions and attitudes
• Socio-cultural variables: the third factor that has a significant
impact on consumer behaviour is social characteristics.
• Social influencers are quite diverse and can include a person's
family, social interaction, work or school communities, or any
group of people a person affiliates with.
 Definition
• The field of consumer behavior covers a lot
of ground: it is the study of the process
involved when individuals or groups select,
purchase, use or dispose of products,
services, ideas or experiences to meet
needs or desires.
• Consumer behavior is the study of how
people make decisions about what they buy,
want, need, or act in regards to a product,
service, or company.
 Different scholars define CB in various ways
• The behaviour that consumers display in searching for,
purchasing, using, evaluating and disposing of products,
services and ideas (Schiffman and Kanuk)
• A discipline dealing with how and why consumers
purchase (or do not purchase) goods and services
(Loudon and Bitta)
• Bagozzi and Zaltman defined CB as “ acts, processes, and
social relationships exhibited by individuals, groups, and
organizations in the obtainment, use of, and consequent
experience with product, services, and other resources”
• The study of consumers as they exchange something of
value for a product or service that satisfies their needs”(
Wells and Prensky)
Cont’d…..
• The dynamic interaction of affect and cognition,
behaviour, and environmental events by which
individuals conduct the exchange aspects of their
lives … the overt actions of consumers (American
Marketing Association).
• The expanded view of CB embraces much more
than the study of what and why we buy ; it also
focuses on how marketers influence consumers
and how they use products and services marketers
sell.
• From the definitions it can be understood that:
 CB involves the following questions
• What are the products people buy?
• Why they buy them?
• How they buy them?
• When they buy them?
• Where they buy them?
• How often they buy them?
• How is the decision process of the
consumer?
 1.2 Types of buyers behaviour
• Consumer decision-making varies with the type of buying
decision; decision to buy simple less costly product is
different from that of buying expensive product.
• Complex and expensive purchases are likely to involve
more buyer deliberation and more participants
• Depending on degree of buyer involvement and the
degree of differences among brands four types of
consumer behavior can be examined;
• Complex Buying Behavior
• Dissonance- reducing buying behavior
• Habitual buying behavior
• Variety seeking buying behavior
 1. Complex buying behaviour
• Complex buying behavior involves a three step-
process.
• First, the buyer develops beliefs about the product.
• Second, he/she develops attitudes about the
product.
• Third, he/she makes a attentive choice, consumers
engage in complex buying behavior when they are
highly involved in a purchase and aware of
significant differences among brands.
 Cont’d….
• This is usually the case when the product is expensive,
bought infrequently, risky, and highly self expressive.
• Typically, the consumer does not know much about
the product category.
• For example, a person buying a personal computer
may not know what attributes to look for.
• Many product features carry no meaning unless the
buyer has done some research.
The marketer needs to differentiate the brand's
features, use print media to describe the brands
benefits, and motivate store sales personnel and the
buyer's associates to influence the final brand choice.
 2. Dissonance reducing buying behaviour
• Sometimes the consumer is highly involved in a
purchase but sees little difference in brands. The
high involvement is based on the fact that the
purchase is expensive, infrequent and risky.
• In this case, the buyer will shop around to learn
what is available but will buy fairly quickly, perhaps
responding primarily to a good price or to purchase
convenience.
• For example, automobile buying is a high
involvement decision because carpeting is expensive
and self-expressive, yet the buyer may consider most
carpet brands in a given price range to be the same.
 Cont’d
• After the purchase, the consumer might
experience dissonance that steps from hearing
favorable things about other brands.
 3. Habitual buying behaviour
• Many products are bought under conditions of low
involvement and the absence of significant brand
differences.
• Consider salt, consumers have little involvement in
this product category.
• They go to the store and reach for the brand.
• If they keep reaching for the same brand, it is at of
habit, not strong brand loyalty.
• There is good evidence that consumers have low
involvement with most low-cost frequently
purchased products.
 Cont`d…
• Consumers do not search extensively for information,
evaluate characteristics and make a decision on which
brand to buy.
• Instead, they are passive recipients of information in
television or print ads.
• Ad repetition creates brand familiarity rather than
brand conviction.
• Marketers of such products find it effective to use price
and sales promotions to stimulate product trial.
• Television advertising is more effective than print
because it is a low-involvement medium that is suitable
for passive learning
 
 4. Variety seeking buying behaviour
• Some buying situations are characterized by low involvement
but significant brand differences. Here consumers often do a
lot of brand switching.
• Think about cookies.
• The consumer has some beliefs about cookies, chooses a
brand of cookies without much evaluation, and evaluates the
product during consumption.
• Next time, the consumer may reach for another brand out of
a wish for a different taste.
• Brand switching occurs for the sake of variety rather than
dissatisfaction.
 Cont’d
• The market leader and the minor brands in thus
product category have different marketing
strategies.
• The market leader will try to encourage habitual
buying behavior by dominating the shelf space,
avoiding out-of-stock conditions, and sponsoring
frequent reminder advertising.
• Competitor firms will encourage variety seeking by
offering lower prices, deals, coupon, free samples,
and advertising that presents reasons for trying
something new.
 Summary of 4 behaviours

 
High Involvement Low Involvement
1. Significant differences Complex buying Varity seeking buying
between brands behavior behavior

2. Few difference Dissonance reducing Habitual buying behavior

between brands buying behavior
 Why study buyers behaviour?
• The better the firm understands its consumers, the
more likely it becomes successful in the market
place.
• The management of famous US company Procter
and Gamble stated: “ Our business is based on
understanding the consumer and providing the
kind of products that the consumer wants.
• Second, the proof of establishing consumer
orientation in the marketing concept of the firm
depends on how marketing mix adopted satisfies
the consumers.
Cont’d…..

• Third, by gaining a better understanding of

the factors that affect buyers behaviour,
marketers are in a better position to predict
how buyers will respond to marketing
strategies.
• Selection and segmentation of target markets;
devising appropriate marketing strategies
most relevant to the target market segment;
evaluation of marketing programs, strategies,
and tactics; assessing the trends of change
and preparing the marketing plans to suit the
future changes
Cont’d…….
• Finally, buyer is the principal a priority of business.
• The efficiency with which a free market system
enterprise operates, depends upon the extent of
buyer understanding possessed by the business
community.
• A business community that is ignorant of consumer
preferences cannot possibly fulfil its obligations in
a meaningful and responsive manner.
• This is exactly the reason why buyer behaviour is
given importance in modern marketing. Moreover,
this is the era of marketing orientation.
 1.3 Consumer behaviour and marketing strategy
• Think about modern meaning of marketing
• Importance of marketing mix management in
serving consumer needs and wants.
• There is no marketing decision which doesn’t
concern consumer behaviour ;consumer behaviour
and marketing are two sides of one coin as they
significantly influence each other.
• So the study of consumer behaviour is vital to the
marketing mangers in formulating marketing
strategies
• Some of the important issues could be raised as
follows
Cont`d…
• Understanding of the consumer behaviour helps
marketers’ to produce the right product, set appropriate
price, use sense full mix of promotion and correctly
distribute their offering to end users
• Product needs to produced and marketed as per consumer
needs and wants.
• A marketer needs to design products or services that
would satisfy the unsatisfied needs or wants of consumers.
• Decisions taken for the product are related to size, shape,
and features.
• The marketer also has to decide about packaging,
important aspects of service, warranties, conditions, and
accessories.
Consumer behaviour and micro level marketing problems
• At micro level it is common for marketing managers
to face with problems which need managerial skills,
research orientation and creativity.
• It is impossible to be an effective marketing
manager over the long run without a usable
understanding of consumer behaviour
1. Consumer behavior and managerial problems;
marketing has strong link with society. But societies
are changing very rapidly in term of their needs and
wants.
2. How one anticipates the changes and react to them
determine his success in the marketplace.
Cont’d…..
A marketer who can anticipate these changes well
ahead of his competitors succeeds in the face of
acute competition
Consumer research is an indispensable input to
marketing decisions. It is impossible for a particular
company’s product to meet the demand of all
consumers in a particular product category.
• Since consumers vary in many dimensions they
need products with different features.
• How do marketers know these variations and what
they should do knowing them?
Cont’d…
• Research in consumer behavior can reveal the
differences among consumers and helps marketers
segmenting markets and offering different types of
products that best suit the differences
• Consumer research can also provide the clues for
turning a product failure into a success.
• consumer research is part of marketing research.
• Marketing research is a fact-finding process, logical
and essential for successful marketing, and
adaptable to the requirements of firms and other
types of organizations.
Cont’d…….
• Consumer research covers investigations in to buying
behavior – studying the social, economic, and
psychological influences affecting purchase decisions
whether these are taken at the consumer level, the
trade distributional level or in the industrial field
• Consumer research, as far as retail products are
concerned, includes consumer surveys to study the
opinion and behavior of ultimate users of the
products.
• It may also cover a series of “depth influences” to
analyze the motivation of people in certain buying
situations.
Cont’d…..
• marketplace is flooded with products. If you want your
product to be recognized from among the numerous
products, you must present it quite differently for the
product to be recognized.
• How do you do that? By strategically positioning your
product in the minds of present and potential
customers. To do so understanding of the consumer
need is very vital
• At macro level consumer behaviour influences public
policy makers.
• To curve abuse in the form of outright deception of
consumers by marketers, government agencies
undertake regulatory decisions in many countries.
Cont’d…

• Let for example government put embargo on the production

of polythene bags considering their impacts on the
environment. Think about what will happen if consumers do
not accept such imposition?
• After analysing customer behaviour, organizations must
realize a strong, flexible and effective marketing strategy
which will ensure sales and profit.
• This is achieved with strategic planning and objectifying the
targeted market segment
• The key in marketing strategy is to provide more value to the
targeted customers than is provided by its competitors.
• Customer value is the difference between all the benefits
derived from total product and all the costs of acquiring
those benefits.
 Cont’d….
• Logical flow in marketing strategy formulation inline
with consumer behaviour;
• Market analysis ( company, competitors, condition and
consumers)
• Market segmentation
• Marketing mix management
• Understanding consumer purchase decision process
• Examining the outcome of the decision
• Strategies seek to provide the consumer more value
than the competition.
• Marketing strategy involves the marketing mix: products,
price, communications, distribution and services
 1.4 Consumer behavior an interdisciplinary approach

• Consumer Behaviour is an interdisciplinary field of

study that draws on economics, communication,
psychology, sociology, and marketing.
• Consumer behaviour is a field that needs an
interdisciplinary approach.
• Consumer behavior studies derive from many
different academic disciplines, as well as studies
undertaken by marketing academicians.
• For marketing practitioners, understanding the ways
in which people make decisions about purchasing
behaviour is of crucial importance in planning almost
every aspect of managing the exchange process
 Some subjects influencing consumer behaviour
• Psychology is a discipline that deals with the study
of mind and behaviour. It helps in understanding
individuals and groups by establishing general
principles and researching specific cases.
Psychology plays a vital role in understanding how
consumers behave while making a purchase.
• Sociology is the study of groups. When individuals
form groups, their actions are sometimes relatively
different from the actions of those individuals
when they are operating individually
Cont’d…
• Social Psychology is a combination of sociology and
psychology. It explains how an individual operates
in a group. Group dynamics play an important role
in purchasing decisions. Opinions of peers,
reference groups, their families and opinion
leaders influence individuals in their behaviour.
• Cultural Anthropology is the study of human beings
in society. It explores the development of central
beliefs, values and customs that individuals inherit
from their parents, which influence their
purchasing patterns.
Cont’d…..
• Economic approach : The economic approach
attempts a theoretical analysis of consumer demand
based on the familiar concept of rationality of the
consumer and is interested in explaining how
consumer demand may rise or fall according to
fluctuations in objective economic criteria, such as,
the relative prices of goods and consumer’s income.
• An important aspect of the study of economics is
the study of how consumers spend their funds, how
they evaluate alternatives and how they make
decisions to get maximum satisfaction from their
purchases.
Cont’d……

• Marketing :The fundamental basis for marketing thinking is that

the customer or consumer should be at the centre of everything
the firm does.
• For marketers, customers are the key concern.
• As such, an understanding of how and why people make
purchasing decisions is crucial to formulating a marketing plan
for the firm.
• Traditional economic theory also considers consumer as a
sovereign or king for whom all production activity is undertaken.
• Thus consumer behaviour is so broad and diverse, that it is only
by identifying and combining different facets that a reasonably
complete picture can be obtained
• Therefore, CB is interdisplinery subject
1.5 Consumer behaviour and market segmentation
• Market segmentation depends on two levels – the
strategic level and the tactical level.
• At a strategic level, it has a direct link with the
decisions on positioning.
• At a tactical level, it relates with the decision of
which consumer groups are to be targeted.
• Market segmentation can be done on the bases of
many factors.
• Among such factors some are highly related with
consumer behaviour.
• Psychological segmentation and behavioural
segmentation can be taken as examples.
 Psychographic segmentation

• Psychographic Segmentation focuses on group

customers according to their life-style and
purchasing psychology.
• Many businesses offer products based on the
attitudes, beliefs and emotions, ideas, and
perceptions of the target market.
• Psychographic segmentation includes variables
such as Activities, Interests, Opinions, Attitudes,
and Values.
 Behaviouristic segmentation

• Markets can be segmented on the basis of buyer

behaviour.
• It is because the buying behaviours of consumers
differ based on the geographic, demographic and
psychographic factors.
• Marketers often find practical benefits in using
buying behaviour as a separate segmentation basis
in addition to factors like geographic,
demographics, and psychographics
 cont’d…..
• Selection and segmentation of target
markets; devising appropriate marketing
strategies most relevant to the target market
segment; evaluation of marketing programs,
strategies, and tactics; assessing the trends of
change and preparing the marketing plans to
suit the future changes
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