Chapter 4: Buying Behaviour. When you finish this chapter, you should Chapter Objectives 1....

Chapter 4:

Buying Behaviour

When you finish this chapter, you should

Chapter Objectives

11. . Understand the economic-Understand the economic-buyer model of buyer buyer model of buyer behavior.behavior.

2.2. Understand how Understand how psychological variables, psychological variables, social influences and the social influences and the purchase situation affect purchase situation affect consumer buying behavior.consumer buying behavior.

3.3. Know how consumers use Know how consumers use problem-solving problem-solving processes.processes.

44.Know who the business and .Know who the business and organizational customers organizational customers are.are.

55. . Understand the multiple Understand the multiple buying influences in a buying influences in a buying center.buying center.

66. Understand the problem-. Understand the problem-solving behaviour of solving behaviour of organizational buyers.organizational buyers.

77. Know the basic methods . Know the basic methods used in organizational used in organizational buying.buying.

8. 8. Understand the important Understand the important newnew terms.terms.

1. What does consumer behavior study?

The aim of marketing?The aim of marketing?

Types of consumers Types of consumers (markets): (markets):

consumer markets (individuals); consumer markets (individuals);

organization markets (business; governments; organization markets (business; governments; nonprofits /social groups).nonprofits /social groups).

Consumer behaviorConsumer behavior studies how individuals, groups and studies how individuals, groups and organizations select, buy, use and dispose of goods, organizations select, buy, use and dispose of goods, services, ideas, or experiences to satisfy their needs and services, ideas, or experiences to satisfy their needs and desires.desires.

Providing clues for marketing-mix.Providing clues for marketing-mix.

7Os

OccupantsOccupants ObjectsObjects ObjectivesObjectives OrganizationsOrganizations OperationsOperations OccasionsOccasions OutletsOutlets

-Who-Who

-What-What

-Why-Why

-Who-Who

-How-How

-When-When

-Where-Where

2. Individual consumer market 2 assumptions2 assumptions Economic buyers(p160): people who know all Economic buyers(p160): people who know all

the facts and logically compare choices in the facts and logically compare choices in terms of cost and quality received to get the terms of cost and quality received to get the greatest satisfaction from spending their time greatest satisfaction from spending their time and money.and money.

Economic needs(p160): needs concerned Economic needs(p160): needs concerned with making the best use of a consumer’s with making the best use of a consumer’s time and money, as the consumer judges it.time and money, as the consumer judges it.

Economic buyers do not define or measure Economic buyers do not define or measure “quality”, “cost” or “satisfaction” in the same “quality”, “cost” or “satisfaction” in the same way.way.

2.1 A Model of Buyer Behaviour

Purchase ReasonTimeSurroundings

PurchaseSituation

MotivationPerceptionLearningAttitudePersonality/Lifestyle

PsychologicalVariables

FamilySocial ClassReference GroupsCulture

SocialInfluence

Problem-Solving Process

Person Does or Does Not Purchase (Response)

Marketing Mixes All Other Stimuli

PersonMakingDecision

Stimulus-response modelStimulus-response model

What happens in the buyer’s What happens in the buyer’s consciousness?consciousness?

2.2 Psychological influences

Psychological variablesPsychological variables

motivationmotivation

perceptionperception

learninglearning

attitude and beliefsattitude and beliefs

personalitypersonality

2.2.1 Motivation theory

NeedsNeeds: the basic forces that motivate a person to do : the basic forces that motivate a person to do something.something.

WantsWants: needs that are learned during a person’s life.: needs that are learned during a person’s life.

DriveDrive: a strong stimulus that encourages action to : a strong stimulus that encourages action to reduce a need.reduce a need.

Consumers seek Consumers seek benefits.benefits.

Do you know the story? What does it tell Do you know the story? What does it tell us?us?

Maslow’s theoryMaslow’s theory

Human needs are arranged in a hierarchy, from Human needs are arranged in a hierarchy, from

the most pressing to the least pressing. People will the most pressing to the least pressing. People will

try to satisfy their most important needs first. As try to satisfy their most important needs first. As

soon as that lower-level need is satisfied, it soon as that lower-level need is satisfied, it

ceases to be a current motivator, and people will ceases to be a current motivator, and people will

try to satisfy the next-most-important need.try to satisfy the next-most-important need.

The PSSP Hierarchy of Needs

Physiological Needs

Safety Needs

Social Needs

PersonalNeeds

Human’s diversified needs Physiological needsPhysiological needs: biological needs (food, shelter): biological needs (food, shelter)

Safety needsSafety needs: protection and physical well-being : protection and physical well-being

(health, security)(health, security)

Social needsSocial needs: things involve a person’s interaction : things involve a person’s interaction

with others ( love, status, sense of belonging)with others ( love, status, sense of belonging)

Personal needsPersonal needs: individual’s need for personal : individual’s need for personal

satisfaction (self-esteem, self-realization, freedom)satisfaction (self-esteem, self-realization, freedom)

Marketers may focus on different levels of Marketers may focus on different levels of needs considering the economic development needs considering the economic development level in the target market.level in the target market.

A particular product may satisfy more than A particular product may satisfy more than one need at the same time. (Can you give an one need at the same time. (Can you give an example?)example?)

Human’s diversified needs and marketing

2.2.2 perception

PerceptionPerception--- how we gather and interpret --- how we gather and interpret information from the world around us.information from the world around us.

Do you pay attention to all the ads around Do you pay attention to all the ads around you? Do you remember everything you read?you? Do you remember everything you read?

Selective processSelective process

Selective exposureSelective exposure: our eyes and minds seek out : our eyes and minds seek out and notice only information that interests us.and notice only information that interests us.

Selective perception/ distortionSelective perception/ distortion: people screen : people screen out or modify ideas, messages, and information out or modify ideas, messages, and information that conflict with previously learned attitudes and that conflict with previously learned attitudes and beliefs.beliefs.

Selective retentionSelective retention: people remember only what : people remember only what they want to remember. they want to remember.

People’s needs affect the selective People’s needs affect the selective processesprocesses..

Drive

Cues

Response

Reinforcement

2.2.3 The Learning Process

Learning process LearningLearning --- a change in a person’s thought processes --- a change in a person’s thought processes

caused by prior experience.caused by prior experience. Learning processLearning process: :

DrivesDrives---- thirst drive---- thirst drive Stimuli/cues-Stimuli/cues---- a 7 UP sign--- a 7 UP sign ResponseResponse---- buying a 7UP---- buying a 7UP ReinforcementReinforcement---- satisfied and buy again, or ---- satisfied and buy again, or

dissatisfied and no longer buydissatisfied and no longer buy Help customers gain positive reinforcement.Help customers gain positive reinforcement. Try to build an association between the product and some Try to build an association between the product and some

cures or images that have positive associations from cures or images that have positive associations from some other situation.( E.g. smell of lemon with fresh, some other situation.( E.g. smell of lemon with fresh, natural cleanliness.)natural cleanliness.)

2.2.4 Beliefs and Attitudes BeliefsBeliefs: a person’s opinion about something. Beliefs : a person’s opinion about something. Beliefs

may help shape attitudes but don’t necessarily may help shape attitudes but don’t necessarily involve any liking or disliking.involve any liking or disliking.

AttitudesAttitudes: a person’ point of view toward something. : a person’ point of view toward something. Attitudes involve liking or disliking.Attitudes involve liking or disliking.

Attitudes lead to expectationsAttitudes lead to expectations

ExpectationExpectation: an outcome or event that a person : an outcome or event that a person anticipates or looks forward to, often focusing on anticipates or looks forward to, often focusing on the benefits or values from a marketing mix.the benefits or values from a marketing mix.

Performance , expectations and satisfaction.Performance , expectations and satisfaction.

2.2.5 Lifestyle Dimensions

OpinionsOpinions

InterestsInterests

ActivitiesActivities??????????????????????????????????????????????????????????????????????

2.3 Social influences2.3.1 family The roles and relative influence of the The roles and relative influence of the

family member in the purchase--- who family member in the purchase--- who makes the decisions? (initiator, influencer, makes the decisions? (initiator, influencer, decider, buyer, user)decider, buyer, user)

Family life cycle ---- bachelor, newly Family life cycle ---- bachelor, newly married couples, full nest, empty nest, etc.married couples, full nest, empty nest, etc.

Household patterns---- traditional, single Household patterns---- traditional, single live-alones, single-parent, “Dink”, gay live-alones, single-parent, “Dink”, gay house, cohabitor household, etc.house, cohabitor household, etc.

2.3.2 Social Class Dimensions

Social classSocial class--- a group of people who have --- a group of people who have approximately equal social position as viewed by others approximately equal social position as viewed by others in the society. (upper, middle, and lower class)in the society. (upper, middle, and lower class)

““A rich man is simply a poor man with money” A rich man is simply a poor man with money” ??Social classed do not reflect income alone, but also Social classed do not reflect income alone, but also other indicators such as occupation, education and area other indicators such as occupation, education and area of residence.of residence.

Social classes differ in attitudes and behavior (dress, Social classes differ in attitudes and behavior (dress, speech patterns, recreational preferences, etc).speech patterns, recreational preferences, etc).

Social classes show distinct product and brand Social classes show distinct product and brand preferences in many areas.preferences in many areas.

1.5%

32%

12.5%

38%

16%

Lower-middle class

Upper-middle class

Upper-class

Lower-lower class

Upper-lower (“working”) class

2.3.3 reference groups

Reference groupReference group: the people to whom an individual : the people to whom an individual looks when forming attitudes about a particular topic.looks when forming attitudes about a particular topic.

Primary groupsPrimary groups: family, friends, neighbors, co-: family, friends, neighbors, co-workers.workers.

Secondary groupsSecondary groups: religious, professional, and trade : religious, professional, and trade union groups.union groups.

Opinion leaderOpinion leader: a person who influences others.: a person who influences others.

It is important to reach and influence the opinion It is important to reach and influence the opinion leaders in the reference groups where group leaders in the reference groups where group influence is strong.influence is strong.

2.3.4 culture

Culture: the whole set of beliefs, attitudes, and ways Culture: the whole set of beliefs, attitudes, and ways of doing things of a reasonably homogeneous set of of doing things of a reasonably homogeneous set of people.people.

People within major cultural groupings tend to be People within major cultural groupings tend to be more similar in outlook and behavior.more similar in outlook and behavior.

A marketing mix aims at people within just one A marketing mix aims at people within just one culture or subculture.culture or subculture.

Culture varies in international markets.Culture varies in international markets.

2.4 Purchase Situation Influences

SurroundingsSurroundings

TimeTime

Purchase ReasonPurchase Reason??????????????????????????????????????????????????????????????????????

Revision

Which items – psychological variables or social Which items – psychological variables or social influences --- have the most influence over influences --- have the most influence over consumer behaviour and thus are more consumer behaviour and thus are more important for the strategic market planner?important for the strategic market planner?

Assignment

In the following short case, a variety of In the following short case, a variety of psychological variables and social influences psychological variables and social influences are operating to influence a consumer’s are operating to influence a consumer’s response. Identify the relevant variables and response. Identify the relevant variables and influences and briefly explain how each item influences and briefly explain how each item is illustrated in the case. The first item has is illustrated in the case. The first item has been completed for you as an example.been completed for you as an example.

Joan and Paul Davis and their children are considering Joan and Paul Davis and their children are considering the purchase of a recreational vehicle. Paul is enthusiastic the purchase of a recreational vehicle. Paul is enthusiastic because, he argues, the RV would be perfect for family because, he argues, the RV would be perfect for family camping trips, as well as fishing trips with his friends. Joan camping trips, as well as fishing trips with his friends. Joan is less in favour of the purchase. She is nervous about is less in favour of the purchase. She is nervous about camping in remote locations. She also remembers a report camping in remote locations. She also remembers a report that RVs get low gas mileage and are, therefore, expensive that RVs get low gas mileage and are, therefore, expensive to run. Paul is quick to point out that the same report to run. Paul is quick to point out that the same report described the large potential savings of a week-long described the large potential savings of a week-long vacation in an RV compared to staying at a hotel or motel.vacation in an RV compared to staying at a hotel or motel.

a. Psychological variablesa. Psychological variables1)PSSP hierarchy Explanation: Joan is afraid of being 1)PSSP hierarchy Explanation: Joan is afraid of being isolated --- safety needs.isolated --- safety needs.2) …2) …b. Social influencesb. Social influences1) 2) …1) 2) …

Response

Marketing mixes All other stimuli

2.5The Consumer Problem-Solving Process

Purchase SituationSocial InfluencesPsychological

Variables

Need-want Awareness

Information Search

Set Criteria

Decide on Solution

Purchase Product

Routinized Response

Postpone Decision Post-purchase

Evaluation

Feedback ofinformationas attitudes

Person making decision

2.5.1 consumer problem-solving process

Becoming aware of – or interested in – the problem. ( remind, Becoming aware of – or interested in – the problem. ( remind, heighten)heighten)

Recalling and gathering information about possible solutions. Recalling and gathering information about possible solutions. (marketing communications can ensure messages are seen, (marketing communications can ensure messages are seen, understood and remembered)understood and remembered)

Evaluating alternative solutions----perhaps trying some out. Evaluating alternative solutions----perhaps trying some out. (marketing must ensure the other Ps are the right set of (marketing must ensure the other Ps are the right set of characteristics for a buyer.)characteristics for a buyer.)

Deciding on the appropriate solution.( variations in decision)Deciding on the appropriate solution.( variations in decision)

Purchasing the product. (anticipate the problems and make Purchasing the product. (anticipate the problems and make sure not to lose sales it should receive)sure not to lose sales it should receive)

Evaluating the decision. (after-sales services and contacts)Evaluating the decision. (after-sales services and contacts)

2.5.2 Levels of Problem Solving

Extensive Problem Solving

Limited Problem Solving

Routinized Response Behaviour

Involvement Continuum

Low Involvement High Involvement

Low involvementFrequently purchasedInexpensiveLittle riskLittle information needed

High involvementInfrequently purchased

ExpensiveHigh risk

Much information desired

Which of the following three levels of problem solving Which of the following three levels of problem solving offers marketers the most opportunity? The lease offers marketers the most opportunity? The lease opportunity? Why?opportunity? Why?

Extensive problem solvingExtensive problem solving-----to put much effort to ---to put much effort to satisfy a completely new or important need. (ideal satisfy a completely new or important need. (ideal targets for marketing programs)targets for marketing programs)

Limited problem solvingLimited problem solving----- have some previous --- have some previous experience but uncertain which choice is best. experience but uncertain which choice is best.

Routinized response behaviourRoutinized response behaviour----- regularly --- regularly selected way, considerable experience, no need for selected way, considerable experience, no need for additional information. (ideal target consumers, additional information. (ideal target consumers, encourage repeat business with special services, encourage repeat business with special services, discounts, build a good relationship)discounts, build a good relationship)

Assignment

Think of three recent purchases that you made Think of three recent purchases that you made that involved extensive problem solving, limited that involved extensive problem solving, limited problem solving, and routinized response behaviour. problem solving, and routinized response behaviour. For each of these purchases, outline the problem-For each of these purchases, outline the problem-solving process that you used. solving process that you used.

1.Routinized response behaviour: Product _______1.Routinized response behaviour: Product _______

Explanation:Explanation:

2. …2. …

3. …3. …

2.5.3 The Adoption ProcessAwareness

Interest

Evaluation

Trial

Decision

Confirmation

Relating the Processes

Problem-solving steps

1. Becoming aware of or interested in the problem

2. Gathering information about possible solutions

3. Evaluating alterative solutions

4. Deciding on the appropriate solution

5. Evaluating the decision

Adoption process steps

Awareness and interest

Interest and evaluation

Evaluation, maybe trial

Decision

Confirmation

Learning steps

Drive

Cues

Response

Reinforcement

3. Buying behavior of organizations

Business-to-business marketing Business-to-business marketing Who are they?Who are they? What do they buy?What do they buy?

3.1 Different Types of Customers

All business and organizational

customers

Producers

Intermediaries

Governments

Nonprofits

Manufacturers

Farms, mines, etc.

Financial Institutions

Other providers

National

Local

Federal

Provincial and Local

Wholesalers

Retailers

The following is a summary of the characteristics of business to business markets when compared to consumer markets:

Sales volume Greater SmallerPurchase volume Larger SmallerNumber of buyers Fewer ManySize of individual buyers Larger SmallerLocation of buyers Geographically concentrated DiffuseBuyer-seller relationship Closer More impersonalNature of channel More direct More indirectNature of buying More professional More personalNature of buying influence Multiple SingleType of negotiations More complex SimplerUse of reciprocity Yes NoUse of leasing Greater SmallerPrimary promotional method Personal selling Advertising

Source: Bingham, F.G., Jr., and Raffield, B.T., Business to Business Marketing Management, Irwin, 1990.

CharacteristicBusiness to Business

Market Consumer Market

3.2 Business vs. Consumer Buying

They don’t usually buy for ultimate consumptions by They don’t usually buy for ultimate consumptions by

themselves but for resale or to produce other themselves but for resale or to produce other products and services. ( industrial buyers or products and services. ( industrial buyers or intermediate buyers)intermediate buyers)

The basic purchasing needs are largely economic The basic purchasing needs are largely economic and they try to consider the total cost, service, speed and they try to consider the total cost, service, speed of delivery, dependability, and general co-of delivery, dependability, and general co-operativeness.operativeness.

More people are involved in the purchase and each More people are involved in the purchase and each brings a particular set of concerns to the task.brings a particular set of concerns to the task.

There are some basic methods used in organizational There are some basic methods used in organizational buying such as inspection, sampling, description and buying such as inspection, sampling, description and negotiated contracts.negotiated contracts.

3.3 Buying Centers

BuyingCentre

InfluencersUsers

Gatekeepers Deciders

Buyers

Multiple buying influences in a buying center

Multiple buying influenceMultiple buying influence: several people share in making a : several people share in making a purchase decision.purchase decision.

Buying centerBuying center: all the people who participate in or influence : all the people who participate in or influence a purchase.a purchase.

RolesRoles played in the buying process played in the buying process

InitiatorInitiator----need awareness----need awareness

InfluencersInfluencers----search for information----search for information

DecidersDeciders----set criteria and evaluate alternative solutions----set criteria and evaluate alternative solutions

BuyersBuyers----purchase the product----purchase the product

UsersUsers----use and post-purchase evaluation of the product----use and post-purchase evaluation of the product

3.5 organizational buying processes New-task buyingNew-task buying: when an organization has a new : when an organization has a new

need and the buyer wants a great deal of information.need and the buyer wants a great deal of information.

Straight rebuy:Straight rebuy: a routine repurchase that may have a routine repurchase that may have been made many times before.been made many times before.

Modified rebuyModified rebuy: the in-between process where some : the in-between process where some review of the buying situation is done--- though not as review of the buying situation is done--- though not as much as in new-task buying or as little as in straight much as in new-task buying or as little as in straight rebuys.rebuys.

Assignment

Assume the role of marketing manager for a large firm Assume the role of marketing manager for a large firm that produce stain-resistant fabrics that are used by that produce stain-resistant fabrics that are used by furniture companies. Recently, you learned – from your furniture companies. Recently, you learned – from your sales force – of three potential customers whose needs sales force – of three potential customers whose needs might be satisfied by the fabric you sell. 1)Determine might be satisfied by the fabric you sell. 1)Determine which level of problem solving applies to each situation. which level of problem solving applies to each situation. 2)Discuss the nature of the firm’s buying behaviour in 2)Discuss the nature of the firm’s buying behaviour in each situation. 3)Try to explain how your firm might vary each situation. 3)Try to explain how your firm might vary its marketing mix to satisfy the potential customer’s its marketing mix to satisfy the potential customer’s needs in each situation?needs in each situation?

Situation I

The potential customer has been selling a very The potential customer has been selling a very successful line of furniture for a number of years. The successful line of furniture for a number of years. The company has not been using a stain-resistant fabric. But, company has not been using a stain-resistant fabric. But, furniture retailers have recently been complaining that the furniture retailers have recently been complaining that the furniture gets soiled very easily. The potential customer furniture gets soiled very easily. The potential customer thinks that your stain-resistant fabric could possibly be thinks that your stain-resistant fabric could possibly be used instead of the fabric it gets from its current supplier.used instead of the fabric it gets from its current supplier.

a.a.Level of problem solving:Level of problem solving:

b.b.Nature of buying behaviour:Nature of buying behaviour:

c.c.Marketing mix:Marketing mix:

Situation II

The potential customer has been purchasing a The potential customer has been purchasing a similar fabric from one of your firm’s competitors for similar fabric from one of your firm’s competitors for several years, but is dissatisfied with its present several years, but is dissatisfied with its present supplier’s delivery service and technical support.supplier’s delivery service and technical support.

a.a.Level of problem solving:Level of problem solving:

b.b.Nature of buying behaviour:Nature of buying behaviour:

c.c.Marketing mix:Marketing mix:

Situation III

The potential customer has been purchasing all of The potential customer has been purchasing all of its fabric from one of your competitors on a regular its fabric from one of your competitors on a regular basis for several years. No change in this procedure is basis for several years. No change in this procedure is expected.expected.

a.a.Level of problem solving:Level of problem solving:

b.b.Nature of buying behaviour:Nature of buying behaviour:

c.c.Marketing mix:Marketing mix:

LittleSomeMuch

NoneSomeMuch

LittleSomeMuch

LittleMediumMuch

Information Needed

Review of Suppliers

Multiple Influences

Time Required

CharacteristicsNew-Task

BuyingModifiedRebuy

StraightRebuy

Type of Process

Organizational Buying Processes

Stages in the Purchasing process

New New tasktask

Modified Modified rebuyrebuy

Straight Straight rubuyrubuy

Problem Problem recognitionrecognition YesYes MaybeMaybe NoNo

General need General need descriptiondescription YesYes MaybeMaybe NoNo

Product Product specificationspecification YesYes YesYes yesyes

Supplier searchSupplier search YesYes MaybeMaybe NoNo

Proposal Proposal solicitationsolicitation YesYes MaybeMaybe NoNo

Supplier selectionSupplier selection YesYes MaybeMaybe NoNo

Order-routine Order-routine specificationspecification YesYes MaybeMaybe NoNo

Performance Performance reviewreview YesYes YesYes YesYes

BasicMethods

Inspection

Description

NegotiatedContracts

Sampling

3.6 Basic Methods in Organizational Buying

Inspection buying: looking at every item. (products Inspection buying: looking at every item. (products not standardized and require examination)not standardized and require examination)

Sampling buying: looking at only part of a potential Sampling buying: looking at only part of a potential purchase. (more standardized productspurchase. (more standardized products

People in less-developed economies do a lot of People in less-developed economies do a lot of buying by inspection or sampling for skepticism about buying by inspection or sampling for skepticism about quality, or lack of faith in the seller.quality, or lack of faith in the seller.

Description (specification) buying: buying from a Description (specification) buying: buying from a written (or verbal )description of the product. ( most written (or verbal )description of the product. ( most manufactured items, many agricultural commodities, manufactured items, many agricultural commodities, services)services)

Negotiated contract buying: agreeing to a contract Negotiated contract buying: agreeing to a contract that allows for changes in the purchase that allows for changes in the purchase arrangementsarrangements