Topic 4

Understanding Consumer and Business Buyer

Behavior
Summary
• Understand the consumer market and the major factors that influence
consumer buyer behavior
• Identify and discuss the stages in the buyer decision process
• Describe the adoption and diffusion process for new products

5-2
 Definition of Consumer Behaviour

• borrow theories from other relevant social science

disciplines such as psychology and sociology
• Kurt Lewin’s general model:
B=f (P, E)
B=f (I, P)
• an understanding of both the individual’s
psychological make-up and the influences of others
Model of Buyer Behavior
Factors Influencing Consumer Behavior
Culture
Culture is the most basic cause of a person’s wants and behavior
• Culture is learned from the society, family, and other institutions
• Culture reflects basic values, perceptions, wants, and behaviors
• Cultural shifts create opportunities for new products or may otherwise
influence consumer behavior

5-6
Cultural Factors
Culture is the set of basic values, perceptions, wants
and behaviors learned by a member
of society from
family and other
important
institutions
Cultural Factors
Subculture is a group of people with shared value
systems based on common life experiences and
situations.
The Emerging Luxury Consumption
Behaviour in Asia
Upper level
needs

WEST ASIA

Self-
actualisation Status

Prestige Admiration

Belonging Affiliation

Safety Safety

Lower level Physiological Physiological

needs
Maslow’s hierarchy of needs and the Asian equivalent
Source: Schütte with Ciarlante 1998
Spending in luxury products
(China 2012)
Total expenditure :
US$13 billions (Year 2010)
US$36 billions (Year 2012) ↑277%

 One-in-four global luxury consumers are now Chinese

 Chinese consumers now make half of the luxury purchases
in all of Asia, and nearly one third of those in Europe

Source: Bain & Co. (2012)

Current Trend of Luxury Attitudes in China

Source : Luxuries Experiences in China by KPMG in April 2011

 Social Factors

• Social Class
 Exhibit similar behaviour - buying behaviour

• Reference Group
 A group of people who influence a person’s attitudes, values, and
behaviour
 frames of reference
 Primary groups
 Family life cycle

• Opinion Leaders
 People within a reference group who, because of special skills,
knowledge, personality, or other characteristics, exert social
influence on others.
 Sociocultural Influences on Consumer Behavior

• Reference Groups

• Family Influence
• Consumer Socialization
• Family Life Cycle
• Family Decision Making
Sociocultural Influences on Consumer Behavior

• Personal Influence
• (1) Opinion Leadership (2) Word of Mouth
Property Fashion

Mr. Si Wing Ching Ms. Lady Gaga

(CEO of Centaline U.S. Artist
Property Agency Ltd.)
Word of mouth influence
Personal Factors
• People within the same subculture, social class, and occupation may
have different lifestyles
• People buy the lifestyles represented by products or services

5 - 17
Personal Factors

Age & Life-Cycle Stage

Economic Situation

Lifestyle

Personality and Self-Concept

Lifestyle
• Lifestyle is a person’s pattern of living as expressed in his or her
psychographics.

AIO Dimensions
• A = Activities
(work, hobbies, shopping, sports, social events)
• I = Interests
(food, fashion, family, recreation)
• O =Opinions
(about themselves, social issues, business, products)
VALSTM
psychographic
segments
 Self Concept/ Self Image

• The way you see yourself

• People prefer to purchase brands and products that
are compatible with their own self-concept
• The basic self-concept (self-image) premise is
that people’s possessions contribute to and reflect
their identities; that is, “we are what we have.”
Brand Personality
• A Brand Personality is the specific mix of human traits that may
be attributed to a particular brand.
• Including :
1. Sincerity
2. Excitement
3. Competence
4. Sophistication
5. Ruggedness
 Psychological Factors
• Motivation
• Perception
• Learning
• Values, Beliefs and Attitudes
Factors Influencing Consumer Behavior
Psychological Factors - Motivation
• A motive (or drive)
is a need that is
sufficiently pressing
to direct the person
to seek satisfaction
of the need
Motivation
• Stimulus-response Theories
• Learning
• A motive
• Motivation
• Maslow’s Theory of Motivation
Factors Influencing Consumer Behavior
Psychological Factors - Perception
Perception is a process by which people select,
organize, and interpret
information to
form a
meaningful
picture
of the world.
Perception

• Selective Perception
• Subliminal perception
• Perceived Risk
Psychological Factors
• Learning
• Changes in an individual’s behavior arising from experience
• Occurs due to an interplay of drives, stimuli, cues, responses, and
reinforcement
• Strongly impacted by the consequences of an individual’s behavior
• Behaviors with satisfying results tend to be repeated

5 - 29
Belief and Attitude
• Belief
• A descriptive thought that a person holds about something
• Attitude
• A person’s consistently favorable or unfavorable evaluations, feelings, and
tendencies toward an object or idea
The Buyer Decision Process
Recognition of Unsatisfied Needs

• Unsatisfied need (motive)

• Internal (hunger)
• External (advertisement / sight of the product)
• conflicting or competing uses for their scarce
resources
The Value of A
Satisfied
Customer
 Evaluation of Alternatives
• Alternative Evaluation: Assessing Value
• Evaluative criteria
• Evoked set
• Past experience and attitudes towards various brands
• opinion of members of their families and other reference
groups as guide lines
• Attributes
• Hotels - location, cost
• Lipstick - colour, taste, creaminess
 Purchase Decisions
• Purchase Decision: Buying Value
• A series of decisions regarding
• brands,
• prices,
• store,
• colour and so on
Who are the decision makers?

• Initiator
• Influencer
• Decider
• Buyer
• User
Comparison of problem-solving variations
Post Purchase Behaviour

• Postpurchase Behavior: Value in Consumption or Use

• Cognitive dissonance
• Leon Festinger
 cognitive dissonance
• people strive for Internal harmony and consistency among their cognition
• knowledge,
• attitudes,
• beliefs,
• values
• Inconsistency in these cognition => dissonance
Post-Purchase Behavior
• Consumer satisfaction is a function of consumer expectations and
perceived product performance

• Performance < Expectations --- Disappointment

• Performance = Expectations --- Satisfaction
• Performance > Expectations --- Delight

5 - 39
Buying decision making for
New Products
Stages in the Adoption Process
Consumer becomes aware of the new product,
Awareness but lacks information about it

Interest: Consumer seeks information about new product

Consumer considers whether trying the new
Evaluation product makes sense
Consumer tries new product on a small scale to
Trial improve his or her estimate of its value
Consumer decides to make full and regular use
Adoption of the new product
5 - 41
The Buyer Decision Process for New Products
Product Characteristics That Influence the
Rate of Adoption
• Is the innovation superior to existing
Relative advantage products?

• Does the innovation fit the values and

Compatibility experience of the target market?

• Is the innovation difficult to understand or

Complexity use?

• Can the innovation be used on a limited

Divisibility basis?

• Can results be easily observed or described

Communicability to others?

5 - 43
Business Markets and Business Buyer Behavior
• Business buying behavior refers to the buying behavior of the
organizations that buy goods and services to:

Use in the production of

other products and services.

Resell or rent them to others

at a profit.
Business Markets
Market Structure and Demand
• There are fewer but
larger buyers
• Demand is derived
Business Markets

Types of decisions
Nature of the buying • Straight rebuy
unit • Modified rebuy
• New task
Business Markets
• Nature of the buying unit:
• Business purchases involve more decision participants
• Business buying involves a more professional purchasing effort

5 - 47
Business Buyer Behavior
Types of Buying Situations
Straight rebuy Buyer routinely reorders something without any
modifications

Modified rebuy Buyer wants to modify product specifications, prices,

terms, or suppliers

New task Buyer purchases a product or service for the first

time

Systems
(solution) selling
Becoming more common among companies

5 - 49
Business Buyer Behavior
Major Influences