Consumer & Business Buyer Behavior

1. Consumer & Business Buyer Behavior

2. Perception • Process by which an individual selects, organizes, and interprets information to form a cohesive picture about an entity • Perceptions affect consumer behavior • However, remember that individuals can perceive the same entity in different ways

3. Perception • Selective Attention: Receive some messages and screen out the rest • An average person is exposed to 1500 ads or brand messages a day • Most of these are screened out; So, how do marketers capture mind space? • People are more likely to notice stimuli that relate to current needs • People are more likely to notice stimuli they anticipate • People are more likely to notice stimuli that deviate relatively larger than others • Marketers must bypass attention filters; provide unexpected stimuli (salesperson, sudden offers)

4. Perception • Selective Distortion: Tendency to interpret/distort information to be consistent with prior brand and product beliefs • Taste tests: “Blind” taste tests showed equal split; “Open” tests showed preferences • Can work to the advantage of marketers of strong brands • A car may seem to drive smoother • A beer may taste better

5. Perception • Selective Retention: Though people fail to register much information, they retain information that supports their attitudes and beliefs • Remember good points about products we like and forget good points about competing products • Works to the advantage of strong brands • Explains why marketers repeat messages – for reinforcement

6. Consumer Buying Decision Process Marketers Must Identify and Understand: Who Makes the Buying Decision Types of Buying Decisions Stages in the Buying Process

7. Understand Buying roles Buying behavior Buying decision process Initiator Influencer Decider Buyer User Consumer Buying Decision Process

8. Understand Buying roles Buying behavior Buying decision process Complex buying behavior Dissonance-reducing buying behavior Habitual buying behavior Variety-seeking buying behavior Consumer Buying Decision Process

9. Understand Buying roles Buying behavior Buying decision process Five stages in the consumer buying process The amount of time spent in each stage varies according to several factors Consumer Buying Decision Process

10. Consumer Buying Decision Process Five-Stage Model of the Consumer Buying Process

11. Need/Problem Recognition Can be triggered by internal or external stimuli Needs become wants, which lead to behavior Marketing stimuli can stimulate a desire for information Need Recognition

12. Sources of information: Internal Sources Personal Sources External Sources Time, effort and expense dedicated to information search depends on: Degree of risk involved in the purchase Amount of expertise with the product category Actual cost of the search Evoked set: A narrowed down set of alternatives that the customer is considering Information Search(1 of 2)

13. Consumer Buying Decision Process Successive Sets Involved in Consumer Decision Making

14. Evaluation of Alternatives • Customers evaluate products as bundles of attributes • Brand attributes • Product features • Aesthetic attributes • Price • Customers place different levels of importance on attributes • Important considerations in the evaluation stage: • Products must be in the evoked set • Consumers’ choice criteria must be understood • Marketing programs must be designed to influence consumers’ opinions about product or brand image

15. Purchase Decision • Purchase intention and the act of buying are distinct concepts • Potential intervening factors between intention and buying (car example): • Unforeseen circumstances • Angered by the salesperson or sales manager • Unable to obtain financing • Customer changes mind • Key issues in the purchase decision stage: • Product availability • Possession utility

16. Postpurchase Evaluation • Four possible outcomes in the postpurchase stage: • (1) Delight • (2) Satisfaction • (3) Dissatisfaction • (4) Cognitive Dissonance • Firm’s ability to manage dissatisfaction and cognitive dissonance is: • A key to creating customer satisfaction • A major influence on word-of-mouth communication

17. Business Markets and Behavior

18. Organizational Buying Compared to Consumer Markets, Business Markets Have: Fewer buyers Larger buyers Geographically concentrated buyers Closer relationships with suppliers/customers

19. The Business Buying Process • Problem/Need Recognition • Develop Product Specifications • Vendor Identification and Qualification • Solicitation of Proposals or Bids • Vendor Selection • Order Processing • Vendor Performance Review

20. Understanding Business Buying Behavior • Unique Characteristics of Business Markets • The Buying Center • Hard and Soft Costs • Reciprocity • Mutual Dependence • Four types of Business Markets: • Producer markets (a.k.a. commercial markets) • Reseller markets • Government markets • Institutional markets

21. Buying Situations Straight rebuy Modified rebuy New task Routine reorders from approved vendor list Low involvement, minimal time commitment Example: copier paper Organizational Buying

22. Buying Situations Straight rebuy Modified rebuy New task Specifications, prices, delivery terms or other aspects require modification Moderate level of involvement and time commitment Example: desktop computers Organizational Buying

23. Buying Situations Straight rebuy Modified rebuy New task Purchasing a product or service for the first time High level of involvement and time commitment; multiple influences Example: selecting a web site design firm or consultant Organizational Buying

24. Participants in Business Buying Roles Played in a Buying Center Initiators Approvers Users Deciders Influencers Buyers Gatekeepers