• Chapter 6: Consumer and Business Buyer Behaviour - (pages 200-245)
  • Key terms (page 239)
• Aim of Marketing = to somehow affect how customers think and behave toward the organization and its marketing offers
• Buying Behaviour = buying influences and buying processes
  • Consumers
  • Business customers
• The Consumer Market = all the individuals and households who buy or acquire goods and services for their own use or personal consumption = all individuals who are old enough to have their own money and to choose how to spend it
  • Model of Consumer Behaviour - A ► B ► C
    1. Stimuli
       1. Marketing stimuli = the 4 Ps
          • product
          • price
          • place
          • promotion
       2. Other stimuli = major forces and events in the buyer's environment
          • economic
          • technological
          • political
          • cultural
    2. Black Box model =  a simple stimulus-response model of consumer behaviour
       • the consumer's "black box" = the part of the brain that simply takes in and records information - and produce certain responses.
       • Marketing stimuli (the 4 Ps) and other major forces enter the consumer's "black box"
       • This black box has two parts:
         1. Factors Influencing Consumer Behaviour = Buyer Characteristics
            1. cultural
            2. social
            3. personal
            4. psychological
         2. Buyer's Decision Process
         3. Buyer's Decision Process for New Products
    3. Buyer Responses = Once in the black box, the inputs result in observable buyer responses
       • product choice
       • brand choice
       • dealer choice
       • purchase timing
       • purchase amount

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1. Characteristics Affecting Consumer Behaviour
1. Cultural Factors
   • Culture = the set of basic values, perceptions, wants, and behaviours learned by a member of society from family and other important institutions = culture is the most basic cause of a person's wants and behaviour
     • cultural background
     • raised in a modern society
     • set of consumer learnings and values
     • unique basic shared values and attitudes
       • Canada - see page 205
     • ethnic origins
     • language
     • etc.
     • trends
       • health and fitness
       • informality
   • subculture = a group of people with shared value systems based on common life experiences and situation
     • nationalities, religions, racial groups, geographic regions
     • Canada
       • native Canadians
       • ethnic Canadians
       • Internet users
       • etc.
   • social classes = relatively permanent and ordered divisions of a society into groups whose members share similar values, interests, and behaviours
     • occupation
     • income
     • education
     • wealth
     • other variables
     • In some social systems (countries) it is impossible to change social positions
     • People within a given social class tend to exhibit similar buying behaviour, showing distinct product and brand preferences
2. Social Factors
   • Reference groups = direct (face-to-face) or indirect points of comparison or reference in forming a person's attitudes or behaviour.
     • group = two or more people who interact to accomplish individual or mutual goals
     • membership groups = groups that have a direct influence and to which a person belongs
     • primary groups = groups with which a person has regular but informal interaction - family, friends, neighbours, co-workers
     • secondary groups = groups with which a person has less regular interaction - religious groups, professional associations, trade unions
     • aspirational groups = groups to which the individual wants or aspires to belong
     • opinion leader = a person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts influence on others
   • Family influences
     • husband/wife/girlfriend, children
   • Roles and Status
     • role = the activities that others expect from the person
     • status = the general esteem that society gives to the role
     • individuals may occupy many roles simultaneously
3. Personal Factors
   • age
   • life-cycle stage, family life-cycle, life stages = the distinct phases that a family progresses through from formation to retirement, each phase bringing with it identifiable purchasing behaviours.
     • Age - young, middle-aged, older
     • marital status - single, married, unmarried couples, widowed/divorced/separated
     • children - with, without
   • occupation
   • economic circumstances
   • lifestyle = a person's pattern of living as expressed as psychographics (AIO = Activities, Interests, Opinions) = social class + personality + a person's whole pattern of acting and interacting in the world
     • Activities = work, hobbies, shopping, sports, social events
     • Interests = food, fashion, family, recreation
     • Opinions = about themselves, social issues, business, products
     • Psychographic segmentation - values, attitudes (mind-set), interests, opinions, lifestyles
       • SRIC-BI | VALS - VALS™ is a marketing and consulting tool that helps businesses worldwide develop and execute more effective strategies
     • lifestyle classifications are not universal
   • personality = the unique psychological characteristics that lead to relatively consistent and lasting responses to one's own environment
     • traits - self-confidence, dominance, sociability, autonomy, defensiveness, adaptability, aggressiveness
     • brand personality = brands have personalities and consumers are likely to choose brands whose personalities match their own = the specific mix of human traits that may be attributed to a particular brand
     • brand personality traits - see page 215
       1. sincerity
       2. excitement
       3. competence
       4. sophistication
       5. ruggedness
     • self-concept = self-image = we are what we have = people buy products to support their self-images = people's possessions contribute to and reflect their identities
4. Psychological Factors
   • motivation = drive = a need that is sufficiently pressing to direct the person to seek satisfaction of the need = a motivated person is ready to act
     • Sigmund Freud - people do not fully understand their motivations
       • unconscious urges, consumer subconscious, underlying emotions and attitudes
       • techniques:  psychoanalysis, hypnosis, free association, inkblot interpretation
       • "touchy-feely", "mumbo jumbo"
     • Abraham Maslow's Hierarchy of Needs
   • perception = the process by which people select, organize, and interpret information to form a meaningful picture of the world
     • Stimuli = five senses:  sight, hearing, smell, touch, taste
     • Different perceptions to the same stimulus
       • selective attention = selective exposure = tendency for people to screen out most of the information to which they are exposed
       • selective distortion = tendency of people to interpret information in a way that will support what they already believe
       • selective retention = tendency of people to retain information that supports their attitudes and beliefs = people forget much of what they learn
   • learning = changes in an individual's behaviour arising from experience
     • learning occurs through the interplay of drives, stimuli, cues, responses, and reinforcement
   • beliefs = a descriptive thought that a person has about something
     • beliefs may be based on real knowledge, opinion, or faith, and may or may not carry an emotional charge
   • attitudes = a person's relatively consistent evaluations, feelings, and tendencies toward an object or idea
     • People have attitudes regarding religion, politics, clothes, music, food, and almost everything else. 
     • Attitudes are difficult to change.
2. The Consumer Buyer Decision Process - Buyer decision processes - (In more routine purchases, consumers often skip or reverse some of these stages.)
   1. need recognition = the consumer recognizes a problem or need that could be satisfied by a product or service
      • internal stimuli
      • external stimuli
   2. information search
      • personal sources = family, friends, neighbours, acquaintances = the most effective sources = legitimize or evaluate products for the buyer
      • commercial sources = advertising, salespeople, dealers, packaging, displays = source of most info = controlled by the marketer
      • public sources = mass media, consumer-rating organizations
      • experiential sources = handling, examining, using the product
   3. evaluation of alternatives = assess brands in the choice set
      • calculated/logical vs. impulse/intuition
      • alone, with friends, consumer guides, salespeople
      • weighting of the importance of the attributes of the alternatives
      • ranking of the brands = preferred brands
      • form purchase intentions
   4. purchase decision = actually buy the product
      • purchase intentions were formed in the previous step (evaluation of alternatives)
      • purchase intentions may be changed by
        • attitudes of others
        • unexpected situational factors (income, price, benefits, new info, etc.)
   5. postpurchase behaviour = the consumer takes action based on satisfaction or dissatisfaction
      • cognitive dissonance = buyer discomfort caused by postpurchase conflict = every purchase involves compromise
      • Satisfaction = relationship between the consumer's expectations and the product's perceived performance
        • disappointed = product falls short of expectations
          • 96% of unhappy customers never tell the company about their problem, but they do tell other people about their bad experience
        • satisfied = product meets expectations
        • delighted = product exceeds expectations
      • new customers - it usually costs more to attract new customers than to retain current ones
      • retained customers ► customer lifetime value
        • Satisfied customers buy a product again, talk favourably to others about the product, pay less attention to competing brands and advertising, and buy other products from the company.
3. The Consumer Buyer Decision Process for New Products
1. Adoption Process = the mental process through which an individual passes from first hearing about an innovation to final adoption.
   1. awareness
   2. interest = seek information
   3. evaluation = would it make sense to try the new product?
   4. trial = small scale testing
   5. adoption = the decision by an individual to become a regular user of the product
2. Diffusion Process = Adopter categories - Technology adoption lifecycle
   1. innovators = venturesome, try new ideas at some risk, younger, better educated, higher income, less brand loyal
   2. early adopters = opinion leaders
   3. early majority
   4. late majority = sceptical
   5. laggards = tradition bound
3. Product Characteristics influence the Rate of Adoption (page 225)
   1. relative advantage
   2. compatibility
   3. complexity
   4. divisibility
   5. communicability
   6. costs
   7. risk and uncertainty
   8. social approval
• The Consumer Buyer Across International Borders
  • values, attitudes, behaviours
  • standardize = same offering (4Ps)
  • adapt = change/adjust the offering (4Ps) to meet the unique cultures and needs of consumers in various markets

• Business Markets and Business Buyer Behaviour
  • Business Markets
    • organizations that buy goods and services
      1. for use in the production of other products and services
      2. for the purpose of reselling or renting them to others at a profit
    • Characteristics of Business Markets
      • Market Structure and Demand
        • fewer buyers
        • larger buyers - a few buyers account for most of the purchasing
        • more geographically concentrated
        • derived demand = business demand that ultimately comes from (derives from) the demand for consumer goods.
        • consumers are not their customers
      • Nature of the Buying Unit
        • more decision participants = several/many people participate in the decision-making process = buying committees made up of technical experts and top management
        • professional buyers = trained purchasing agents who spend their working lives learning how to buy better = more professional purchasing effort
      • Types of Decisions and the Decision Process
        • Complex buying decisions
          • large sums of money
          • complex technical and economic considerations
          • interactions among many people at many levels of the buyer's organization
          • decisions take longer
        • Formalized business buying process
          • detailed product specifications
          • written purchase orders
          • supplier searches
          • formal approval
        • Dependence = the buyer and seller are much more dependent on each other
  • Business Buyer Behaviour
    • The Business Buyer Market = organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others
    • Model of Business Buyer Behaviour - A ► B ► C
      1. Stimuli
         1. Marketing stimuli = the 4 Ps
            • product
            • price
            • place
            • promotion
         2. Other stimuli = major forces and events in the buyer's environment
            • economic
            • technological
            • political
            • cultural
            • competitive
      2. The Buying Organization
         • The Buying Organization has two parts;
           1. Buying Centre = the decision-making unit of a buying organization = all the people involved in the buying decision = not a fixed and formally identified unit
              • Participants
                • actual users of the product or service
                • those who make the buying decision
                • those who influence the buying decision
                • those who do the actual buying
                • those who control the buying information
              • Factors Influencing Business Buyer Behaviour (see page 232)
              1. environmental influences = external environmental factors
              • economic developments, supply conditions, technological change, political and regulatory developments, competitive developments, culture and customs
              • primary demand, economic outlook, cost of money, shortages of key materials
              • technological, political, competitive developments in the environment
              2. organizational influences = internal organizational factors
              • objectives, policies, procedures, organizational structure, systems
              3. interpersonal influences = participants with roles in the buying process, their influence, their evaluation criteria
              • authority, status, empathy, persuasiveness
              4. individual influences
                 • age, income, education, job position or professional identification, personality, risk attitudes
                 • personal motives, perceptions, preferences, different buying styles
           2. Business Buying Process
      3. Buyer Responses = Once in the Buying Organization, the inputs result in observable business buyer responses
         • product or service choice
         • supplier choice
         • order quantities
         • delivery terms and times
         • service terms
         • payment
  • Buying situations
    1. straight rebuys = routine decision
       • "In" suppliers = already in the purchasing department's list
       • "Out" suppliers = potential suppliers
       • may skip some of the stages of the business buying-decision process
    2. modified rebuys = requires some research
       • product specifications, prices, terms, suppliers
       • may skip some of the stages of the business buying-decision process
    3. new tasks = business buying situations in which the buyer purchases a product or service for the first time = requires thorough research
       • usually go through all stages of the business buying-decision process
       • Systems selling = buying a packaged solution to a problem from a single seller, thus avoiding all the separate decisions involved in a complex buying situation
  • Business Buying Process
    1. problem recognition = need recognition = the business recognizes a problem or need that could be satisfied by a product or service
       • internal stimuli
       • external stimuli
    2. general need description
    • describe the characteristics and quantity of the needed item
    • rank the importance of reliability, durability, price, and other attributes desired in the item
    3. product specification
    • value analysis = an approach to cost reduction in which components are studied carefully to determine whether they can be redesigned, standardized, or made by less costly methods of production
    4. supplier search = find the best vendors
    • trade directories, computer search, phoning other companies for recommendations
    5. proposal solicitation = the buyer invites qualified suppliers to submit proposals
    • catalogue, salesperson, detailed written proposal, formal presentation from each potential supplier
    6. supplier selection
    • list of desired supplier attributes and their relative importance
    • review the proposals
    • negotiation for better prices or better terms
    • select a single supplier or a few suppliers - Many buyers prefer multiple sources of suppliers to avoid being dependent on one supplier and to allow for comparisons of prices and performance of several suppliers over time.
    7. order-routine specification
    • technical specifications, quantity needed, expected time of delivery, return policies, warranties
    • Blanket contract = a long-term relationship in which the supplier promises to resupply the buyer as needed at agreed prices for a set period.
    8. performance review
       • users are asked to rate their satisfaction
       • the buyer may continue, modify, or drop the arrangement

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• Business Buying on the Internet or through EDI (electronic data interchange)
  • B2B
  • MRO materials = maintenance, repairs, operations = 80% of all business orders
  • IT = information technology
    • e-purchasing, cyberbuying, e-procurement
    • share marketing information
    • sell products and services
    • provide customer support services
    • maintain ongoing customer relationships
  • advantages
    • access to new suppliers
    • lower purchasing costs
    • quicker order processing and delivery
  • disadvantages
    • erode customer-supplier relationships
    • potential security problems

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