INTRODUCTION

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 A market is a group of individuals,
organizations or both who have needs for
products in a given category and who have
the ability, willingness and authority to
purchase such products
 Markets could be classified into consumer

and organizational markets

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 Consumer markets: the market for products
and services that are purchased by
individuals and household for personal use.
 Organizational markets: Individuals and
groups that purchase a specific type of
product for resale, for use in making other
products or for use in daily operations.
 They include Producer markets, Reseller

markets, institutional and government

markets.

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 Producer markets: purchase products for purposes
of making profit by using them to produce other
products or use them in their own operations.
 Reseller markets: wholesalers and retailers who buy
finished goods and resell them to make a profit
 Government markets: Buy goods and services to
support internal operations and to provide the
public with education, water, energy, national
defense, road system and health care.
 Institutional markets: Organizations with
charitable, educational, community or other non
business goals.

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1. Model of Consumer Behavior
2. Characteristics Affecting Consumer
Behavior
3. Types of Buying Decision Behavior
4. The Buyer Decision Process
5. The Buyer Decision Process for New
Products

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 KEY CONCEPTS
 Consumer buyer behavior refers to the
buying behavior of final consumers—
individuals and households who buy goods
and services for personal consumption
 Consumer market refers to all of the
personal consumption of final consumers

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- The environment + buyers black box= buyers
responses
- Environment= Marketing stimuli and
externals
- Buyers black box= buyers characteristics and
buyers decision process

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(I) Marketing stimuli Other stimuli
consists of the 4 include:
Ps • Economic forces
• Product
• Technological
• Price
forces
• Place • Political forces

• Promotion • Cultural forces

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(a)Cultural Factors (b) Social Factors
• Buyer’s culture • Reference groups
• Buyer’s subculture • Family
• Buyer’s social class • Roles and status

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• (c) Personal Factors (d) Psychological
• Age and life-cycle Factors
stage • Motivation
• Occupation • Perception
• Economic situation • Learning
• Lifestyle • Beliefs and attitudes
• Personality and self-
concept

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Culture is the learned values,
perceptions, wants, and behavior from
family and other important
institutions. They consist of
subculture and social class
 Subculture are groups of people

within a culture with shared value

systems based on common life
experiences and situations

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- Social classes are society’s relatively
permanent and ordered divisions
whose members share similar
values, interests, and behaviors
- Social class is measured by a
combination of occupation, income,
education, wealth, and other
variables

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The major American social classes
• Upper uppers:

Social elite who live on inherited wealth.

Own more than one home and send their
children to the finest school. drive posh
cars
• Lower uppers:

Earned income through exceptional ability.

Active in social and civic affairs and buy
expensive homes, educations and cars.

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• Upper middles:
Professionals, independent business
persons and corporate managers.
They believe in education and want
better things in life
• Lower middles:

Average employees who live in a

better side of town. Buy popular
products to keep up with trend
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• Working class:
Leads a working class life style. Reflected in
income, school background or job.
Depend heavily on relatives for economic
and emotional support, for advice on
purchase and for assistance in time of
trouble.
• Upper Lowers:

The working poor. Their living standard is

just above poverty but strive towards a
higher class. they often lack education and
are poorly paid
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• Lower lowers:
Visibly poor and poorly educated
unskilled labour.
They live on day to day assistance.

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A consumer behavior is affected by
social factors such as consumer small
groups, family and social roles and
status.

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(i) Groups and social networks
Many small groups influence a persons
behavior:
(a) Membership groups: Groups to which a
person belongs have a direct influence on
their behavior
(b) Reference groups are groups that form a
comparison or reference in forming attitudes
or behavior.
 People may be influenced by reference groups
they do not belong. E.g. aspiration groups.
 They expose persons to new behaviour and
life styles- affect choice of products and
brands
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 (i) Groups and social networks
Opinion leaders:
 special type of reference group
 Marketers must figure out how to reach
opinion leaders- people within a reference
group with special skills, knowledge,
personality, or other characteristics that
can exert social influence on others.
 They have great networks: 4 times more
likely than average consumers to belong
to 5 or more organizations

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(i) Groups and social networks
• Marketers try to identify opinion leaders for
their products and direct marketing efforts
toward them
• Opinion leaders are used as brand
ambassadors by enlisting to spread the word
about their products
Social networking is a new form of social
interaction-online social networking.
- These are online communities where people
socialize or exchange information and
opinions.
• MySpace.com
• Facebook.com

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(i) Groups and social networks
(c) Aspirational groups are groups to which
an individual wishes to belong e.g. to
emulate a successful star and play
professional football

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(ii) Family: Family members can strongly
influence buyer behaviour.
◦This is the most important consumer-
buying organization in society:
 5 Buying roles:
 Initiator: - This is person who first
suggested or thought of the idea to
purchase a particular product.
 Influencer – An influencer is a person who
carries some influence on the final
decision

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Decider – This is a person who
determines whether to buy, what to buy,
how to buy, when and where to buy.
Purchaser – This is a person who makes

the actual purchase

User – The user is the person(s) who uses

the purchased product.

(iii) Social roles and status: are the groups,
family, clubs, and organizations to which
a person belongs that can define role and
social status.
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 A role consists of the activities people are
expected to perform according to the
person around them.
 Each role carries a status reflecting the
general esteem given to it by society.
 People choose the products appropriate to
their roles and status.
 Mother may play a role of the brand
manager at office, wife at home. She may
have to buy the kind of clothing that
reflects her role and status in the
company.

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• Age and life-cycle stage
• Occupation
• Economic situation
• Lifestyle
• Personality and self-concept

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(i) Age and life-cycle stage:
 People change the goods and services
they buy over their life time.
 Tastes in food, clothes, furniture and
recreation are often age related.
 Buying is also shaped by the stage of their
life cycle: young singles-childless married
couples (Full nest) -married couples with
children-empty nest- single
parents/solitary survivor.

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(ii) Occupation affects the goods and
services bought by consumers.
 Executives buying more suits.

 Marketers may specialize in making

products needed by a given occupation.
(iii) Economic situation: marketers watch
trends in:
• Personal income
• Savings
• Interest rates

These affect product choice

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 If economic indicators point to a
recession, marketers can redesign
the products, reposition and reprice
their products.
 Some marketers target customers
who have large income.

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(iv) Lifestyle is a person’s pattern of living as
expressed in his or her AIOs (activities,
interests, and opinions).
 Major dimensions of AIO include:
 Activities: All the things people do in the
course of their lives: Such as work, hobbies,
shopping, sports, social events
 Interests: Refers to what is important to the
consumers and where their priorities lie. It
includes the things very close to them such as
food, fashion, family, recreation and
 Opinions about themselves, social issues,
business and products.

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 (v) Personality and Self-Concept
(a) Personality refers to the unique psychological
characteristics that lead to consistent and lasting
responses to the consumer’s environment.
◦Each person distinct personality influence
his/her buying behaviour
◦Traits such as self confidence, dominance,
sociability, autonomy, defensiveness and
aggressiveness are used to typify personality.
◦Brands also have personalities and consumers
are likely to choose brands with personalities
that match their own.

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Brand personality: Specific mix of human
traits that may be attributed to a certain brand
•Sincerity (down to earth, honest, wholesome

and cheerful)
•Excitement (Daring, spirited, imaginative and

up to date)
•Competence (Reliable, intelligent and
successful)
•Sophistication (Upper class and charming)

•Ruggedness (Tough)

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(b) Self-concept refers to people’s
possessions that contribute to and reflect
their identities

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Factors: motivation, perception,
learning, beliefs and attitudes
(i)Motivation
A motive is a need that is sufficiently
pressing to direct the person to seek
satisfaction
Motivation research refers to
qualitative research designed to probe
consumers’ hidden, subconscious
motivations

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Abraham Maslow’s Hierarchy of Needs
• People are driven by particular needs at
particular times
• Human needs are arranged in a hierarchy
from most pressing to least pressing
• Physiological
• Safety
• Social
• Esteem
• Self-actualization

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(ii) Perception is the process by which
people select, organize, and
interpret information to form a
meaningful picture of the world
from three perceptual processes:
• Selective attention

• Selective distortion

• Selective retention

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Selective attention is the tendency for
people to screen out most of the
information to which they are
exposed
Selective distortion is the tendency for
people to interpret information in a
way that will support what they
already believe
Selective retention is the tendency to
remember good points made about a
brand they favor and to forget good
points about competing brands
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(iii) Learning is the changes in an
individual’s behavior arising from
experience and occurs through
interplay of:
•Drives: strong internal stimulus that

calls for action

•Stimuli: A drive becomes motive when

it is directed towards a particular

stimulus object

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• Cues: Minor stimuli that determines
when, where and how the persons
respond.
• Responses: Cues that might influence a
consumer’s responses to his or her
interest in buying the product.
• Reinforcement: If the experience is
rewarding, the consumer will use the
product more and more and his/her
response will be reinforced.

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(iv) Belief is a descriptive thought that a
person has about something based on:
• Knowledge

• Opinion

• Faith

(v) Attitudes describe a person’s relatively

consistent evaluations, feelings, and
tendencies toward an object or idea

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• Complex buying behavior
• Dissonance-reducing buying behavior
• Habitual buying behavior
• Variety-seeking buying behavior

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(i) Complex Buying Behavior
 When consumers are highly motivated
in a purchase and perceive significant
differences among brands
 Purchasers are highly motivated when:
- Product is expensive
- Product is risky
- Product is purchased infrequently
- Product is highly self-expressive

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(ii) Dissonance-reducing buying behavior
occurs when consumers are highly
involved with an expensive, infrequent,
or risky purchase, but see little
differences among brands
- Post-purchase dissonance occurs when
the consumer notices certain
disadvantages of the product purchased
or hears favorable things about a
product not purchased
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(iii) Habitual buying behavior occurs
when consumers have low
involvement and there is little
significant brand differences
(iv) Variety-seeking buying behavior
occurs when consumers have low
involvement and there are
significant brand differences

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 The B/decision process: component in
the ‘Buyers black box’
 5 stages in the buyer decision process
1. Need recognition
2. Information search
3. Evaluation of alternatives
4. Purchase decision
5. Post-purchase behavior

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(i)Need Recognition
Need recognition occurs when the
buyer recognizes a problem or
need triggered by:
• Internal stimuli
• External stimuli

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(ii) Information Search
 Information search is the amount of
information needed in the buying process
and depends
 on the strength of the drive,

 the amount of information you start with,

 the ease of obtaining the information, the

value placed on the additional information,

and
 the satisfaction from searching

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(ii) Information Search
Sources of information:
Personal sources—family and friends
Commercial sources—advertising,
Internet
Public sources—mass media, consumer
organizations
Experiential sources—handling,
examining, using the product
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(iii) Evaluation of Alternatives
 Evaluation of alternatives is how the

consumer processes information to

arrive at brand choices.
 As the individual receives the
information he uses it to clarify his
alternatives and their relative
suitability.


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(iii) Evaluation of Alternatives
 A consumer may evaluate product
brands on the basis of the product
attributes.
 E.g. Cameras could have the following

attributes picture sharpness, camera

speed, camera size, price.
 Important weights to relevant
attributes may also be attached and
be useful in arriving at brand choice.

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(iv) Purchase Decision
 The purchase decision is the act by

the consumer to buy the most

preferred brand
 The purchase decision can be
affected by:
• Attitudes of others

• Unexpected situational factors

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(v) Post-Purchase Decision
 The post-purchase decision is the

satisfaction or dissatisfaction the

consumer feels about the purchase
 The consumer’s satisfaction or
dissatisfaction may influence
subsequent behavior.
 If the consumer is satisfied he will

most probably do repeat purchase.

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 (v) Post-Purchase Decision
 The satisfied consumer will also tend to say
good things about the product to others.
 Dissatisfied consumers may reduce
dissonance by abandoning or returning the
product or may seek information that might
confirm its high value.
 Marketers should be aware of the full range
of ways in which consumers handle
dissatisfaction

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(v) Post-Purchase Decision
 The larger the gap between expectation

and performance, the greater the

consumer’s dissatisfaction
 Customer satisfaction is a key to
building profitable relationships with
consumers—to keeping and growing
consumers and reaping their customer
lifetime value

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Key issue: how buyers approach the
purchase of new products, learn about the
products for the first time and decide on
whether to adopt them
New product is a good, service, or idea

that is perceived by some potential

customers as new
Adoption process is the mental process

an individual goes through from first

learning about an innovation to becoming
a regular user of the product.

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1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Adoption

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(i) Awareness: the consumer becomes
aware of the new product but lacks
information
(ii) Interest: the consumer seeks
information about the new product
(iii) Evaluation: the consumer considers
whether trying the new product makes
sense
(iv)Trial the consumer tries the new
product to improve his or her estimate of
value
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(v) Adoption is when the consumer
decides to make full and regular use
of the product

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People differ greatly in their readiness to try
new products. Different adopter categories
exists:
Innovators (2.5%) Try new ideas at some

risks
Early adopters (13.5%) are opinion leaders

and adopt new ideas early but cautiously

Early majority (34%) are deliberate and
adopt new ideas before the average person

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 Late majority (34%) are skeptical and
adopt new ideas only after the majority of
people have tried it
 Laggards (16%)are suspicious of changes
and adopt new ideas only when they
become tradition

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 Define the business market
 Major distinguishing aspects from
consumer markets
 List and define the steps in the
business buying-decision process
 Business buyer behavior refers to the buying
behavior of the organizations that buy goods and
services for use in production of other products
and services that are sold, rented, or supplied to
others.
 Also included are retailing and wholesaling firms
that acquire goods to resell or rent to others for
profit.
 Business buying process is the process where
business buyers determine which products and
services are needed to purchase, and then find,
evaluate, and choose among alternative brands

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 Consider tires business: various suppliers sell
let us say Goodyear the rubber, steel,
equipments etc. that it needs to produce the
tires. Goodyear sell the finished tires to
retailers who in turn sells them to consumers
 In some ways business markets are similar to

consumer markets.
 Both involve people who assume buying roles
and make purchase decisions to satisfy
needs.
 However they differ in many ways.
 Business markets contain fewer but larger buyers
than consumer market does
 Business buyer demand is derived from final
consumer demand. It ultimately comes from the
demand of consumer goods. If consumer demand
for tires drop then demand for tire rubber drops
too.
 Many business markets have inelastic demand.-The
total demand for many business products is not
much affected by price changes especially in the
short run.
 A drop in the price of a leather will not cause shoes
manufacturers to buy much more leather unless it
results in lower shoe prices that in turn will
increase the consumer demand for shoes.
 Business markets have more fluctuating demand.
The demand for many business goods and services
tend to change more and more quickly than the
demand for consumer goods and services. A small
% increase in consumer demand can cause large
increase in business demand.
(i) Straight rebuy is a routine purchase decision where
the buyers reorders without any modification.
(ii) Modified rebuy is a purchase decision in which a
buyer wants to modify product specifications,
prices, terms or suppliers.
(iii) New task purchase a business buying situation
where a buyer purchase a product or service for the
first time. In such a situation, the greater the cost
or risk, the larger the number of decision
participants and the greater the company efforts to
collect information. This is the marketers greatest
opportunity and challenge.
(iv) Systems selling: the purchase of a packaged
solution to a problem from a single seller thus
avoiding all the separate decisions involved in
complex buying situation.
 Compared to consumer purchases, a business
purchase involve more decision participants and a
more professional purchasing efforts
 Business buying is done by a trained purchasing
agents/officer .
 The more complex is the purchase, the more likely
is it is that several people will participate in the
decision making process
 Companies that sell must have well trained
marketers and sales peoples to deal with these
well, trained buyers.
Buying center is all of the individuals and
units that participate in the business
decision-making process
 Users
 Influencers
 Buyers
 Deciders
 Gatekeepers
 3.7.4.1. Participants in the Business
Buying Process
(i) Users are those that will use the product or service.
They initiate buying proposal and help defining product
specification
(ii)Influencers help define specifications and provide
information for evaluating alternatives. Technical
personnel are important influencers
(iii) Buyers have formal authority to select the supplier
and arrange terms of purchase. The help shape product
specifications but major role is in selecting vendors and
negotiating
(iv) Deciders have formal or informal power to approve
final suppliers. In routine buying, the buyers are often
the deciders or at lest approvers.
(v) Gatekeepers control the flow of information.
Personal secretaries, technical personnel etc.
 Buying center provides a major challenge
 Who participates in the process

◦ Their relative authority

◦ What evaluation criteria each participant
uses
◦ Informal participants
(i) Environmental factors:
 Business buyers are affected by factors in the current
and expected economic environment . E.g the level of
primary demand, the economic outlook and the cost of
money.
 The supply of key material –holding larger inventories
of scarce materials to ensure adequate supply. Other
factors are technological, political, and competitive
developments in the environment.
 Finally culture and customs can influence business
buyers reactions to the marketers behaviour and
strategies especially in the on international marketing
environment
(ii)Organizational factors: objectives, strategies,
structure, systems, and procedures. Key questions:
how many people are involved in buying decisions?
Who are they?
(iii)Interpersonal factors: It is challenging to assess the
interpersonal factors and group dynamics as
buying centre do not wear tags that label them as
key decision maker.
 Participants may influence the buying decision
because they control rewards and punishment, are
well liked, have special expertise or have a special
relationship with other important participants.
 Interpersonal factors are very subtle/delicate.
 Business marketers must try to understand them
and design strategies that take them into account

(iv) Individual factors: Each participant brings in

personal motives, perceptions and preferences.
 These individuals are affected by personal
characteristics such as age, income, education,
professional identification, personality and
attitudes towards risk.
 Also buyers have different buying styles.
Some may be technical types who make in-
depth analyses of competitive proposals
before choosing a suppliers.
 Others may be intuitive negotiators who are

adept/skillfull at pitting the sellers against

one another for the best deal
(i) Problem recognition: occurs when someone
in the company recognizes a problem or need
 Internal stimuli
 Need for new product or production equipment
 Machine breakdown
 Unhappy with the current supplier
 External stimuli
 Idea from a trade show or advertising
 Receive a call from a salesperson who offer s a
better product or a lower price.
 Change in legislation calling for a new approach in
manufacturing
(ii)Development of product specifications
Involves organization participants assessing
need or problem and determining what is
necessary to solve them. It essentially
describes the characteristics and quantity of
the needed item
(iii) Search for products and suppliers
Looking into company files and trade
directories, contacting suppliers for
information, visiting trade shows, soliciting
proposals from known suppliers and
examining catalogues and trade
publications.
(iv) Evaluate products and suppliers
Alternative products and suppliers are
evaluated.
It determines which options if any meets
product specifications.
 Multiple criteria such as price, service and
ability to deliver may be used.
(v) Selection and order of appropriate
products
 Sole sourcing or
Multiple sourcing
(vi) Evaluate product and supplier
performance
Evaluation is done by comparing performance
with specifications.